• all the gloomy headlines we’ve absorbed since the fall, we still can’t quite  accept the full depth of our economic abyss either. Nicole Gelinas, a financial  analyst at the conservative Manhattan  Institute, sees denial at play over a wide swath of America, reaching from  the loftiest economic strata of Wall Street to the foreclosure-decimated boom  developments in the Sun Belt.
• In states like Nevada, Florida and Arizona, Gelinas sees “huge neighborhoods  that will become ghettos” as half their populations lose or abandon their homes,  with an attendant collapse of public services and social order. “It will be like  after Katrina,” she says, “but it’s no longer just the Lower Ninth Ward’s  problem.” Writing in the current  issue of The Atlantic, the urban theorist Richard Florida suggests we could  be seeing “the end of a whole way of life.” The link between the American dream  and home ownership, fostered by years of bipartisan public policy, may be  irreparably broken

• Today, years after the recovery, even well-off Japanese households use old  bath water to do laundry, a popular way to save on utility bills. Sales of  whiskey, the favorite drink among moneyed Tokyoites in the booming ’80s, have  fallen to a fifth of their peak. And the nation is losing interest in cars;  sales have fallen by half since 1990.

• By then, Tokyo’s main Nikkei stock index had lost almost three-quarters of  its value. The country’s public debt had grown to exceed its gross domestic  product, and deflation  stalked the land. In the end, real estate prices fell for 15 consecutive  years.

• But it also means that the supply of houses is lagging behind population growth,  which will eventually prompt a housing revival.
• But at current sales rates, as the finance blog Calculated Risk points out, it  would take about 27 years to replace the existing stock of vehicles. Most cars  will be junked long before that, either because they’ve worn out or because  they’ve become obsolete, so we’re building up a pent-up demand for cars.

• The National  Association of Realtors reported that existing-home sales, fell to an annual  rate of 4.49 million in January, the slowest rate in more than a decade. Sales  were down 8.6 percent from January 2008.

   

  The median home price fell to $170,300, its lowest point since March 2003.  The median price in January was down 26 percent from its peak of $230,100 in  July 2006.

• Separately, new-home sales tumbled a sixth time in a row during January as  bloated inventories kept prices on a stubborn retreat in a recession scaring  people away from the housing market. And in another sign of economic weakness,  durable goods orders plunged in January, a sign of future demand fell, and a  barometer of capital spending by businesses dropped, according to data showing  how the recession is battering the factory sector.
• the largest monthly drop in over 30 years last month.
• The Federal Reserve projects that the unemployment rate could climb as high as  8.8% by the end of the year, a forecast supported by the latest claims figures.

• The unemployment rate for workers with unemployment insurance rose 0.1  percentage point to 3.8%, the highest since July 1983.

• A deepening recession has meant lower demand, leaving companies with excess  supplies of goods. Output by manufacturers has fallen; in January, U.S.  industries' production dropped 1.8% on the month and 10% on the year. Their use  of capacity shrank to 72.0% -- the lowest since February 1983.

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• The gross domestic product for the last quarter of the year came in far worse  than economists had estimated, underscoring the depth and severity of the  recession that has seen consumer spending plummet by more than at any time in 28  years
• It's significantly worse than what the consensus forecasts of economists have  been," Bernard Baumohl, chief economists at the Economic Outlook Group, told  NPR. "No one really has a clue when it comes to how severe this recession is."

• No one knows how bad it's going to be!!! - Rabbi Steven Lebow on 2009-02-27

• Declaring the decline in its insurance fund an emergency, the board of the Federal  Deposit Insurance Corporation imposed on Friday a one-time $15 billion  increase in insurance premiums on the nation’s 8,300 banks.

  • This is probably the scariest thing I've read all month...
• banks must pay $27 billion to replenish the insurance fund this year, nine times  more than last year.

• The agency, which currently insures deposits on accounts worth up to  $250,000, estimates it will lose $65 billion through 2013 as a result of bank  failures. Already this year, 16 banks have failed, compared with 25 last year  and just three in 2007. Another 252 banks are currently on the agency’s watch  list, meaning they are at risk of failing. There were 76 banks on the list as of  the end of 2007.
• Without the emergency assessment, they believed that the fund would have run out  of money

  • Which basically means "In an immediate downturn, your money is temporarily NOT safe in the bank!!!

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• Economy in Worst Fall Since '82

   

  Output Sank 6.2% Last Quarter; Plunging Trade, Investment  Signal Trouble Ahead
• The U.S. economy deteriorated far more than previously thought in the fourth  quarter, according to new revisions of government data, casting fresh doubt  about the chances of a recovery this year.
• 6.2% annual rate in the fourth quarter of 2008

• The more recent figure -- which represents the steepest dropoff since the  depths of the 1982 recession -- raises pessimism among economists. Until  recently, many had been hoping for a rebound in 2009 and now sound downbeat  about the remainder of this year.
• Every week in February, more than 600,000 people filed new claims for  unemployment insurance, and the unemployment rate rose to 7.6% in January, from  7.2% in December.

  • Unemployment rises by 600,000 every week.

• Private investment, which encompasses everything from business spending to  homebuilding, fell at a 21% annual rate in the fourth quarter. That portends  poorly for the first quarter of this year since one company's cutbacks in  spending can lead another to do the same.
• Some economists have a much dimmer view, arguing the best the stimulus can do is  prevent a recession from turning into depression. "There's no way we are going  to be able to avert a deep and long recession," says Joshua Shapiro, chief U.S.  economist at research firm MFR, Inc. Conrad DeQuadros, senior economist at RDQ  Economics in New York, forecasts "a fairly lackluster recovery in 2010," and  projects that unemployment will graze double digits from
• perhaps the most challenging the company has faced in its 84-year history."  Leather-goods retailer Coach Inc. laid off 150 employees, or about 10% of its  U.S. corporate staff. It is also reducing prices and paring back new-store  openings this year.
• Kohl's Corp. said Thursday its fourth-quarter net income dropped 18%

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• Temporary layoffs, once confined to blue-collar workers, are hitting  white-collar culture as employers dig deep to cut costs.
• Now furloughs are happening in state governments and universities, publishing,  technology companies and even the arts and entertainment industry.

• This tells you how deep this recession is, that layoffs alone won't do it, as  was the case in prior recessions,"
• Twenty-four percent of respondents said they expect to raise the percentage that  workers pay for health-care coverage, and 12% said they plan to reduce  contributions to workers' 401(k) plans
• At the same time, the telecommunications company said it will suspend both its  401(k) matching contribution and tuition-reimbursement programs, and that there  will be no merit salary increases for 2009

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• General Electric Co. shrank its dividend by 68% -- the first such cut since  the Great Depression by one of the nation's most widely held stocks. GE is the  latest in a parade of cash-strapped giants to cut their quarterly payouts, long  considered sacrosanct by investors.

• The need for action is clear enough. Many banks, including some of the  largest, are effectively insolvent or very close to it. If these banks fail  outright, some of their creditors will become insolvent as well. But there has  been no easy and affordable way to proceed.

  • Many banks are close to failing. If they do,then their creditors will also fail!

• The most obvious problem with nationalization is the risk of contagion. If  the government wipes out equity holders at some banks, why would investors want  to put money into healthier but still marginal institutions? A small number of  planned nationalizations could thus lead to a much larger number of undesired  nationalizations.

  • If they nationalize the banks, it may get even worse. Who will want to put money into the banks if they fear that their assets will be lost?
• It’s easy to call for “transparency” in a banking plan — as is the ostensible  goal behind Mr. Geithner’s “stress tests” of the big banks. But transparency  isn’t a simple concept, especially in hard times with poorly functioning asset  markets and uncertain valuations.

  • It's easy to call for transperency, but no one knows what the true valuations of failed banks is.

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• My long term opinion is that the bear market has several years left to run, and  stock prices will go a lot lower," a  Reuters article quoted Prechter as saying, "so any rally that happens is  going to be a bear market rally."
  
• As a general strategy, Precther recommends betting against popular investments,  but he's still optimistic about cash equivalents: "I am still in favor of [U.S.]  T-bills. The dollar bull market has more to run. That is one reason to hold  them."

• LOS ANGELES (Feb 23) - Teen  clothing retailer Aeropostale Inc. on Monday said it would close its 11-store  Jimmy'Z chain to focus on its namesake store and a new concept that will target  younger shoppers.

  • One more retail closing.
• Tim Boyle, Getty Images

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  Ritz Camera Centers,  which operates under such names as Ritz Camera, Wolf Camera, Kits Cameras,  Inkley's and The Camera Shops, filed for Chapter 11 bankruptcy

  • Another retail closing.

• SUNNYVALE, Calif. -Struggling  flash memory maker Spansion Inc. and its U.S. subsidiaries filed for Chapter 11  bankruptcy protection Sunday, in an effort to restructure $625 million worth of  debt as the company continues to explore a possible sale or other alternatives.  

   

  The news comes a week after  Spansion, one of the world's largest makers of chips used in digital cameras,  cell phones and high-definition televisions, said it would slash its global work  force by 35 percent, or 3,000 employees.

  • Another major business tanks.