A Pregnant Interruption.


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Sources: National Association of Realtors, National Association of Home Builders ... Sources: National Association of Realtors, National Association of Home Builders ...
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A Pregnant Pause Economic Prospects for the Remainder of 2008 Carl R. Tannenbaum Economic Consultant CRTannenbaum@comcast.net 630-234-7548

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Let\'s Not Forget: Things Haven\'t Been That Bad! Quarterly Change in US GDP, Annualized "Potential"

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Expansions: Not Always Smooth Sailing Year over Year Growth in Real GDP Growth retreats punctuated the long extensions of the \'80s and \'90s

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The Housing Correction Trends in Home Sales Sources: National Association of Realtors, National Association of Home Builders

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Putting the Hammer Down Sources: National Association of Realtors, National Association of Home Builders

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Home Prices Year over Year Change, Case-Shiller Index

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FICO Scores Weighted Average of FICO Scores for Total Originations

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ARM Share of new beginnings

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Past Their Prime home loans 30 or more days past due Source: Mortgage Bankers Association

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Senior Loan Officer Survey: Home Mortgages Net Percentage of Respondents Tightening Credit Highest on record Source: Federal Reserve

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Views on Sub-Prime Not a complete calamity, yet some extremely faulty practices Break in lodging costs causes infection to other home loan fragments A reminder for borrowers and moneylenders Losses: $200 billion; broadly scattered

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The Modern Financial Reality Borrowers Financial Intermediaries Investors

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Spiraling Downward Subprime misfortunes brief speculator and moneylender flight Rating organizations wade in with downsizes CDO/ABCP: acronyms to be abstained from Selling to raise money/capital Rumor ventures speedier than truth Poor data + moving danger voracities solidify some business sectors

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Corporate Creditworthiness Composite of Credit Default Swaps Source: Bloomberg

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New Debt Issues Source: SIFMA

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Annualized Growth: 27% Annualized Growth: 13% Commercial and Industrial Loans All Commercial Banks Source: Federal Reserve

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Tightening the Vise? Rating Agencies Congress Bond Insurers Regulators?

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Senior Loan Officer Survey: Commercial Real Estate Net Percentage of Respondents Tightening Credit Highest on record Source: Federal Reserve

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Impacts on Venture Capital/Private Equity Difficult to raise obligation; hard to offer organizations Capital all the more exorbitant or basically distracted Covenants more tightly More internal center: overseeing existing arrangements instead of looking for new ones Smaller arrangements, more minority interest Robin Hood financial matters: the discourse of conveyed intrigue More confinements exactly when we require crisp capital the most?!

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Signs of Investor Conservatism This cash will in the long run need to about-face to work!

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Conclusions: Credit We\'re attempting to maintain a strategic distance from a credit crunch Wall Street firms stay under anxiety; high defenselessness to occasion hazard Effect on group banks has been restricted, yet interpretation from Wall Street down to Main Street is conceivable We\'re seeing the drawback of the present day monetary markets

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Real Personal Consumption Year over Year Change

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Employment Trends Source: Bureau of Labor Statistics

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Mr. Bernanke\'s Big Test Doesn\'t have any desire to compensate foolhardy conduct Expansion is less secure Inflation above safe place The budgetary framework verged on dissolving down Tough decisions, yet hauling out all stops

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The Scorecard

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Conclusions The lodging droop is more profound and more enduring than most expected After-stuns are as yet being sorted out; capital markets still not working admirably Some forward energy has been lost We\'ve customarily belittled the versatility of the US economy After this "pregnant respite," the extension ought to proceed

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A Pregnant Pause Economic Prospects for the Remainder of 2008 Carl R. Tannenbaum Economic Consultant CRTannenbaum@comcast.net 630-234-7548

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