Long-term rates fell again last week as concern for the economy deepened: the 10-year Treasury fell to 3.27 percent, taking mortgages a hair under 5 percent.

However, much of the new data in the holiday-shortened week was quite favorable: new claims for unemployment insurance nosedived to 466,000 last week, a huge drop from the prior 505,000 threshold and 200,000 below the worst of last winter.

Another happy surprise: October sales of existing homes surged 10.1 percent, sales of new ones by 6.2 percent, and even purchase loan applications showed a little life.

Long-term rates fell again during the week of Thanksgiving as concern for the economy deepened: the 10-year Treasury fell to 3.27 percent, taking mortgages a hair under 5 percent.

However, much of the new data in the holiday-shortened week was quite favorable: new claims for unemployment insurance nosedived to 466,000 last week, a huge drop from the prior 505,000 threshold and 200,000 below the worst of last winter.

Another happy surprise: October sales of existing homes surged 10.1 percent, sales of new ones by 6.2 percent, and even purchase loan applications showed a little life.

So why the long face? Orders for durable goods dumped 1.3 percent in October, canceling a positive trend, and the 3.5 percent U.S. gross domestic product growth in the third quarter was chopped to 2.8 percent.

The greatest concern flowed from national finances. More than 10 percent of U.S. mortgage loans are now delinquent, with that share on the rise; and the FDIC reported that bank loans fell by $210 billion in the third quarter, the biggest decline since data began 25 years ago — a 12 percent annual pace.

As for Thanksgiving, a positive tone is in order but I can’t quite make it to give-thanks-because-everything-will-be-OK, nor can I avoid a holiday sermon. However, I can offer hope and solutions available mostly from each of us, to each other.

For an alternative to runaway deleveraging here, see China. Bank loans in China during the first half of 2009 grew by a little more than $1 trillion, roughly equal to one-half of China’s GDP (half of our GDP would be $7.5 trillion), and about the same loan-growth as in 2007 and 2008 combined.

Authorities in China told bankers to lend, and they did. Novel concept. This burst of lending is undoubtedly excessive and creates bubble risks throughout South Asia. However, it also reflects the absolute determination of China not to be derailed by a little problem in the West.

Here at home we flipped, flopped, "TARPed" (see Troubled Assets Relief Program)  and fizzled altogether because we don’t trust our bankers to loan wisely, and the bankers don’t trust us as capital-supplying co-owners. Sensible policy lies somewhere between China’s binge and our puritanical shutdown. …CONTINUED

For one thing, much as President Obama likes to talk, how about a speech challenging bankers’ public spirit? Give them emergency authority, and mention that any who abuse the authority will be removed permanently from the trade.

Another opportunity for progress: "Dear media, regulators, Congress, and administration: Stop looking at the rearview mirror and try the windshield." If we don’t get out of this, how we got into it will not matter a whit.

Fine reporters at the New York Times (and their editors) are addicted to chasing historical ambulances. How AIG was saved, and who else with it, no longer matters. If there is a terrible forest fire on the horizon that has jumped a dozen old firebreaks, you build the widest break you can, and could care less how much healthy forest goes down in the process.

The search for Bad Guys is now a pointless bore, but has a destructive side: those who would invest in distressed assets will not, fearing accusations of profiteering; those who would sell such assets will not for fear of assault for giveaway.

The regulatory rage today: cut down the rest of the forest lest there be another fire someday — Smokey Bear with chainsaw and chipper.

Trying to prevent a recurrence of the late, great Credit Bubble is a waste of time. If we don’t do a thing, there won’t be another one like it. The next one will be different.

Congress is, of course, beyond help, but here again may lie opportunity for the First Talker. If somebody would speak plainly to Congress and the people at the same time (like that Franklin Delano Roosevelt fellow), we might get somewhere.

A possible opener: "Leave the Fed alone. You know you can’t be trusted with money. Stop your competition to invent new regulators. We need the ones we have to do their jobs, and they need authority to regulate a world that has changed since 1933. Then, if we don’t get the economy moving, we’re all going to be looking for work."

Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@pmglending.com.

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