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Archive for the ‘Larry Summers’ Category

Larry Summers, who is the director of the ‘White House’s National Economic Council’, said in an interview yesterday that the economy will be in for a rough time in the coming months and added that unemployment can be expected to rise regardless of how effective or ineffective the stimulus package proves to be but he did say that he hopes that it won’t go above 10%.

Summers said, “I fear the economy will probably be showing decline and jobs will probably be being lost for some time going forward” and then went on to stress the importance of lowering monthly payments, saying that that doing it, “would have a quite substantial impact on foreclosure rates”.

“We’re prepared to do what is necessary. Going directly at the problem means addressing affordability by addressing payments. One of the principles that we’ve tried to operate with is to recognize that the risks of doing too little are much greater than the risks of doing too much in the face of a crisis this serious. The White House is willing to spend more than the $50 billion already pledged to curb home foreclosures and intends to focus its efforts on reducing monthly mortgage payments, rather than principal”.

Since the present crisis began, U.S. banks have sustained around $758 billion in credit losses and they’re warning that there’s still more to come due to ongoing the losses on mortgage-related investments.

Obama is set to release his housing plan in Phoenix, Arizona on Feb. 18, which is the same day that a ‘Commerce Department’ report is expected to show a further decline in U.S. housing starts.

Mounting foreclosures are worsening an already weak housing market and are presently driving the economy into a deeper recession and forecasts suggest that GDP (Gross Domestic Product) will contract by 2% this year which would make it the biggest decline since 1946.