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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: gregor_us who wrote (526)	2/24/2004 11:36:57 AM
From: mishedlo	Respond to of 116555

Feb. Consumer Confidence Slumps U.S. consumer confidence fell unexpectedly hard in February as Americans grew disenchanted with the economy, mainly because of a dearth of new jobs, a report published on Tuesday said. The Conference Board, a private research firm, said its index of consumer confidence dropped to 87.3 in February from a downwardly revised 96.4 in January. Economists had forecast a drop to 92.5. February's reading was the lowest since October. "People are not happy. The big problem is the jobs situation. The lack of jobs has people scared," said David Wyss, chief economist at Standard & Poor's in New York. "When people are scared they don't spend money, and the consumer has been the mainstay of this economy. At the same time, peoples' spending tends to be more influenced by their income than by their confidence," he added. U.S. stock indexes and the dollar fell sharply while Treasuries rallied on the grim news because it bolsters the case for the Federal Reserve to leave benchmark U.S. interest rates steady at 1 percent, their lowest level since 1958. The International Council of Shopping Centers and investment firm UBS issued a joint report saying sales at U.S. chain stores dipped 0.2 percent in the week to Feb. 21, although on a year-on-year comparison, sales accelerated to their best level in nearly five years. Last year at this time U.S. consumers tightened their purse strings as war in Iraq loomed, which is a factor contributing to the favorable comparisons. reuters.com

To: gregor_us who wrote (526)	2/24/2004 11:40:54 AM
From: mishedlo	Respond to of 116555

Greenspan warns about Fannie, Freddie Fed chairman says mortgage financiers could threaten financial system if they grow unchecked. February 24, 2004: 11:19 AM EST WASHINGTON (Reuters) - Federal Reserve Chairman Alan Greenspan Tuesday urged Congress to curb the growth of Fannie Mae and Freddie Mac, warning if the housing finance giants keep growing unchecked, they likely will threaten the U.S. financial system. "Most of the concerns associated with systemic risks flow from the size of the balance sheets that these GSEs (government-sponsored enterprises) maintain," Greenspan said in prepared testimony to the Senate Banking Committee. "GSEs need to be limited in the issuance of GSE debt and in the purchase of assets, both mortgages and non-mortgages, that they hold," he added. Greenspan, in a speech that made no reference to monetary policy, repeated his call for any GSE regulator to be able to adjust minimum capital levels to ensure their safety and soundness and coupled that with a strongly worded criticism of some of their existing ability to grow without restriction. The Fed chief said Fannie Mae (FNM: Research, Estimates) and Freddie Mac (FRE: Research, Estimates) , shareholder-owned but congressionally chartered entities, faced a number of risks, particularly interest-rate risks associated with fixed-rate mortgages. "I should emphasize that Fannie and Freddie, to date, appear to have managed these risks well and that we see nothing on the immediate horizon that is likely to create a systemic problem," Greenspan said. "But to fend off possible future systemic difficulties, which we assess as likely if GSE expansion continues unabated, preventive actions are required sooner rather than later," he added. Greenspan's testimony comes as Congress works to create a new agency to oversee the two mortgage finance giants, along with the 12 Federal Home Loan Banks, after an accounting scandal at Freddie Mac and other woes last year. "There are many ways to enhance the attractiveness of homeownership at significantly less potential cost to taxpayers than through the opaque and circuitous GSE paradigm currently in place," the influential Fed chief said. Greenspan said he supports the privatization of Fannie Mae and Freddie Mac, and said they will soon look beyond mortgage markets to sustain growth. "I must say to you these are very effectively run organizations, and I wish they would be running without their subsidy because I think they would still be doing very well," Greenspan said in response to a question from the Senate Banking Committee. "If you project into the future, you effectively get a system in which they will be increasingly pressing to move beyond the mortgage markets because they need continuous growth rates in the profitability to maintain the existence of their stock price," Greenspan said. money.cnn.com