When cJ first penned this page we were worried about sounding too doomsday-y, lest our alarmism add to the fear cycle that leads to economic collapse. No point in worrying about that anymore. There's little doubt the global financial world is in seriously bad shape these days - and there are few economists who think we aren't in a deep recession - but how deep is still an open question.
The Treasury, the Federal Reserve (the US's lending arm which tries to keep the economy on an even keel) and Congress got an early start in intervening in the economy in ways they hoped will cushion the crash - although critics say many of their interventions were too little, too late, and too confused. Through interest rate tweaks, stimulus plans, heavy lending, new regs and bail-outs big and bigger they're hoping to give the economy enough bounce to keep the crisis from turning to catastrophe.
Bills in Brief
Congress kicked off its year working on an economic stimulus plan, but it could get to other business-related bills left hanging from '07 later in the year.
Housing: With everyone blaming the subprime market for turning the economy sour, Congress started last year looking for ways to keep foreclosures to a minimum while taming the subprime market from future excess. It didn't get far, but this year the pressure is on to wrap up a series of bills introduced last year - from expanding federal loans to making it harder for brokers to sign off on risky loans. See our "Housing Jitters" page for more.
Food and Oil Futures: with gas and food prices on heady upswings, Congress is moving to tame commodities' future markets, which some believe are helping to nudge prices up.
With economists, Wall Street and Americans increasingly leery a recession was on the horizon, DC hustled to put a "stimulus" plan in place to give the economy a little pre-emptive boost in early '08. Congress followed up with a second, mini-stimulus - really just extending unemployment benefits (as part of a war funding bill - WP) - in June '08 and then tossed in another extension for benefits in November. Other measures to shore up the economy - by tossing life lines to homeowners and financial institutions - followed later in the year.
In 09, with worries a recession could become that "d" word, Congress patched together a second - mammoth - stimulus package it passed mid-February.
The US's once rock-solid housing market starting seeing cracks in '06, but it wasn't until a spring '07 report on home-owner defaults (WP) and a couple of mortgage-related funds going belly up over the summer of '07 that Wall Street really started to feel the housing jitters. When Bear Stearns, a bigwig investment firm with lots of fingers in mortgage pies, practically disintegrated in March '08 there was no denying housing market woes were spilling over to the rest of the financial world.
Just how long the market will wobble along - and how much the housing crash will continue to slow down the rest of the (world) economy is unclear. What is clear is that a lot of low-income families will be losing their dream homes - and a few Wall Streeters will be deferring on that new yacht.
Bills in Brief
The new Democratic Congress continues to work on business issues that dogged last year's Congress - at the same time as giving a Democratic twist to new and old issues.
Bill in Brief
Before the housing market started trembling, Congress was looking at ways to tame Fannie Mae and Freddie Mac, the "government sponsored" companies that have fueled the housing market, but which - some have long feared - were on fiscally shaky ground. This year, things got even shakier - with Fannie and Freddie first becoming part of the rescue posse to help prop up defaulting mortgages - and then later with the weak housing market sending both lenders into financial free-fall.
In '08, partly as part of a giant housing bill passed in July, Congress and the administration ended up doing three things: setting tighter regulatory reins onto the two companies; at the same time loosening the leash on the mortgages they can cover; finally, allowing the Fed broad scope to shore up the companies' finances through loans and direct investment.
Partly fueled by low mortgage rates and in part by an improving economy, homeownership in the US reached record levels this decade. As with any hot market, there are fears – even from the head of the fed himself - that the “housing bubble” will eventually burst or that, indeed, it's already started to pop. Cracks in the "subprime" mortgage
market may be giving way to larger problems in the market. We won't offer any predictions here, but we will give you a statistical glance at the state of housing today – among homeowners and renters.