From Volume 7, Issue 49 of EIR Online, Published Dec. 2, 2008

U.S. Economic/Financial News

Existing Home Sales Crash, Average Price Plummets

Nov. 24 (EIRNS)—Existing home sales, which constitute 90% of the housing market, fell by 3.1% in October, while the median sale price fell by 11.3% from a year ago—the most since the National Association of Realtors began collecting data in 1968. The median price is at 2004 levels, $183,300.

The number of previously owned unsold homes on the market at the end of October represented a 10.2-month supply at the current sales pace, up from 10 months at the end of the prior month.

Builders are scaling back residential projects. Construction of new homes plummeted 65% through October, from a peak in January 2006. The number of building permits issued last month fell to the lowest level since record-keeping began in 1960.

Durable Goods Orders Down 6.2%; Consumer Spending Down 1%

Nov. 26 (EIRNS)—Orders for durable goods fell by 6.2% in October, twice as much as forecast, the Commerce Department reported today. Non-defense capital goods, excluding aircraft, dropped by 4%; transportation equipment fell 11%; commercial aircraft fell 4.7%; and auto orders dropped by 4.5%.

Consumer spending, as reported by the Commerce Department, fell by 1% for October, bringing the total decline for the third quarter to 3.7%—the first drop in 17 years, and the largest in 28 years.

Total Bailouts To Reach More than $7.7 Trillion

Nov. 24 (EIRNS)—The U.S. government is now on the hook for more than $7.76 trillion in combined bailout monies, Bloomberg News calculates. Bloomberg tabulated data from the Federal Reserve, the Treasury, and the Federal Deposit Insurance Corp., and interviewed regulatory officials, economists, and academic researchers, to derive the figure. Bloomberg has requested details of the Fed's lending under the U.S. Freedom of Information Act, and filed a Federal lawsuit against the Fed on Nov. 7, seeking to force disclosure of the borrowing banks and their collateral.

FDIC Plan: Another $400 Billion in New Government Debt

Nov. 24 (EIRNS)—Goldman Sachs and Citigroup plan to sell bonds under a new Federal Deposit Insurance Corp. (FDIC) plan as soon as this week, "starting a wave of issuance that some analysts said will exceed $400 billion," according to Bloomberg. Although the plan for FDIC-backed corporate bond issues was announced in September, the FDIC last week changed the terms to give the debt the "full faith and credit of the U.S. government" and reduce issuing fees, giving the securities an implicit AAA rating. Because of the collapsing market, banks haven't been able to sell dollar-denominated bonds since September. Banks dominated corporate bond sales last year, accounting for 71% of $1.02 trillion of investment-grade new issuance, according to Bloomberg. U.S. corporate debt sales so far this year total $733.1 billion, compared with $1.07 trillion in the same period in 2007.

The new FDIC rules assure that creditors of these banks will get paid first and in a timely manner if the banks fold, rules which "match those of the U.K., where banks have sold about $34 billion of debt since Oct. 22," says Bloomberg.

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