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05 mars 2012

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in its regional bunesiss survey.“Most districts noted reduced or low activity across a wide range of industries,” the Fed said today in its Beige Book release, published two weeks before officials meet in Washington to set monetary policy. “Overall economic activity continued to weaken across almost all” regions, the report said.Today’s Beige Book underscores the picture of a downturn that both private forecasters and Fed officials predict will be the longest since the 1930s. Fed Chairman Ben S. Bernanke and his colleagues are forecast to keep the main interest rate close to zero and explore taking on more assets to unfreeze credit when they meet Jan. 27-28.The economy will shrink 1.5 percent this year, discouraging Fed policy makers from raising rates until 2010, according to a Bloomberg News survey of economists published yesterday. The contraction is a half percentage point more than projected last month, according to the median of 59 forecasts in the survey.“Growth declined slightly in the third quarter, but it is likely to record a much sharper decline in the fourth quarter,” Philadelphia Fed President Charles Plosser said today. “The first half of 2009 is not likely to be much better.”

doom and gloom for the day:as of 2006 about 67% of all credit came from sriteiuczation, and 33% came from banks. In the current mess, sriteiuczation is mostly dead. There we have seen the fall of the IB giants from bear to GS. If we assume that 60% of the 67% sriteiuczation credit has died, and banks are hoarding the remaining cash to preserve themselves therefore reducing their 33% to only about 15%. We have now seen about 80% of previously existing credit effectively disappear as the economy continues to worsen.GDP could be facing a drop of 30-40%, unemployment at 20%+And the end result will be homes that will not sell. IF home sales are based on supply and demand but demand is based on credit being available to pay the price and a job being available to repay the loan, then housing is dead.Housing will never recover to 2006 highs. Look at japan. we are much worse off then japan was in the early 90 s and their housing market and stock market have never recovered.cheers!!!

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