Are we starting to see some light at the end of the tunnel?

[Prez Duke]

Right. If we go by median housing prices, we are still about halfway to making it back to where we should be. I couldn't believe how expensive housing had become until I saw the charts.

[Sam Spade]

This is for you jmcfst, on the toxic stuff:

http://zerohedge.blogspot.com/2009/03/ridiculous-marks-of-toxic-assets.html

And a chart:

http://2.bp.blogspot.com/_FM71j6-VkNE/Scka7JcKKeI/AAAAAAAABkA/pS34gaIK1jY/s1600-h/toxic+assets.jpg

[opebo]

Right. If we go by median housing prices, we are still about halfway to making it back to where we should be. I couldn't believe how expensive housing had become until I saw the charts.

Keep in mind that a good deal of the problem was also lack of income growth in the lower 90-95% of the population.  Inflating these incomes would be another effective way to 'regain a balance' that would be much less damaging than the heavy deflation caused by the housing decline.

[RomneyGekko Situation Hairgel]

Right. If we go by median housing prices, we are still about halfway to making it back to where we should be. I couldn't believe how expensive housing had become until I saw the charts.

Keep in mind that a good deal of the problem was also lack of income growth in the lower 90-95% of the population.  Inflating these incomes would be another effective way to 'regain a balance' that would be much less damaging than the heavy deflation caused by the housing decline.

Well, something's gotta give.

[ChrisFromNJ]

Wall Street may be "recovering", but Main Street certainly isn't. The unemployment rate continues to rise, the cost of living keeps getting higher, wages are stagnant, and the rich are getting richer while the poor are getting poorer.

Don't kid yourself; there will not be a TRUE recovery to this recession until we fix the very real and urgent problem of today's stratified class system and its income inequality.

[J. J.]

First, a disclaimer.  I'm on the board of a group getting some stimulus money.

The stimulus is a joke; I've seen the job estimates and expect it to be, at best, two-thirds of estimated job creation.  It will also be substantially slower than anticipated.  I expect the negative effects to be seen by September.

The toxic asset program buying is needed and is a long term plus.

The proposed budget partially eliminates two important deductions, charity and mortgage deductions.  It will have an effect of slowing housing sales next year and will kill charities (Sojourner, take note).  2010 looks bleak. 

[Sam Spade]

JJ - the charity deduction partial elimination will simply not occur.  It is dead because the votes will never be there for it.

For that matter, I expect the mortgage deduction partial elimination to face the same fate.

[Prez Duke]

This rally may be over. Bloomberg is reporting that the GDP will be worse than the Street forecasted. It will be -6.6% instead of the expected -6.2%...

Good thing I was out of C today. I'll probably dump BAC tomorrow if I still have a profit at $4... then back to MO for the return of the bear market.

[J. J.]

JJ - the charity deduction partial elimination will simply not occur.  It is dead because the votes will never be there for it.

For that matter, I expect the mortgage deduction partial elimination to face the same fate.

I hope so!  Both are hideous ideas.

[pbrower2a]

Wall Street may be "recovering", but Main Street certainly isn't. The unemployment rate continues to rise, the cost of living keeps getting higher, wages are stagnant, and the rich are getting richer while the poor are getting poorer.

Don't kid yourself; there will not be a TRUE recovery to this recession until we fix the very real and urgent problem of today's stratified class system and its income inequality.

Such is the truth. Not since the 1920s have we had so lopsided a boom -- a boom so completely dedicated to the enrichment of the upper 10% of income-getters and to ensuring that those who get the highest incomes have no responsibility toward anyone. The Gini coefficient, a measure of inequality of income,  for most of Europe is somewhere between .25 and .35; for the United States it is around .40. We now have the same sort of economic stratification that Mexico has. Such reflects the economic values of Dubya and his backers.

We had an administration that believed that if the Right People got everything, then miracles would happen for the rest of us. Profits would have to come first, and only those who got the profits or were the best-paid retainers deputized to squeeze and cheat others out of all possibility of happiness  achieved what they deemed necessary, then there would be such prosperity that all questions of equity would become irrelevant.

The capacity for elites to never cease in their rapaciousness amazes me. I have yet to know of a tycoon who has said that he has made enough. The most exploitative elites -- mobsters, swindlers, feudal lords, and corrupt politicians -- never find that they have made enough even though they do great harm and wreck the system whence they derive their lucre.

...Did you know that 20,000 Americans die each year because they can't afford their medicines or medical treatments? That's roughly half the toll from motor vehicle accidents.

[opebo]

The most exploitative elites -- mobsters, swindlers, feudal lords, and corrupt politicians -- never find that they have made enough even though they do great harm and wreck the system whence they derive their lucre.

Um, no.  The most exploitative elite is simply the elite - the owners.  Rich people.

And they haven't wrecked the system which gives the their privilege yet - the prisons, police, and armies are still functioning just fine.

[Beet]

The world economy is showing signs that it will stabilize and recover in the future-- but if this occurs, and this is a big if, we may run the risk of net capital outflow from the United States, as we saw in the Fed's latest report in January.

Currently, there is capital flight from emerging markets to safety in the United States. This has reversed the decline of the U.S. dollar which had been taking place in 2007 and early 2008, and was the market's way of reacting to the United States current account deficit. There is even capital flight from China, which has for several months in late 2008 and early 2009 negative pressure on its currency, the RMB, despite its record of huge reserves and a huge current account surplus. Now there are signs that emerging market currencies are recovering, and the futures markets are predicting a slight (though still slight) uptick in the RMB in the coming months.

If the world economy stabilizes, emerging markets will have a lower risk premium and there will be capital flight from the U.S. This will make it harder for the U.S. to borrow. The Fed should respond to this situation by quantitative easing. The world community must allow the dollar, the pound and other countries that have traditionally run significant current account deficits to depreciate their currency in an orderly fashion. This could be a one-off or it could be a gradual process. Mass capital flight as a result of psychological panic must be avoided at all costs.

As the dollar and pound depreciate, import costs will rise in the U.S. and U.K., creating inflationary pressures. But exports will also become more competitive. Conversely, in current account surplus countries, exports will become less competitive, and fiscal stimulus measures must be used to increase domestic demand.

The G-20 should help Arab nations such as Egypt, Iraq, Jordan, Syria and Algeria develop their capital markets. This will allow the Arab members of OPEC to invest in productive resources in their own backyards, if the U.S. is unable to continue its role in vendor financing.