2012May13 To Stay or Leave?
"A man in love is incomplete until he has married. Then he's finished." ~ Zsa Zsa Gabor
The recession reduced the rate at which Americans set up new homes or apartments by at least half. Although the number of new households has begun to recover over the past year, its growth rate continues to lag behind its historic pace, according to Census Bureau statistics.
More than one in five adults between ages 25 and 34 live with their parents or in other “multi-generational” living arrangements, the highest level since the 1950s, according to the Pew Research Center.
Analysts estimate that there are more than 2 million fewer occupied homes than there would have been had Americans continued moving into new homes and apartments at the rate they did before the recession. Not only are young people returning to the nest in numbers not seen in generations, but also the weak job market and increased border enforcement have caused a marked decline in immigration, hobbling another major source of new households.
The slowdown has broad implications for the economy. It has trimmed demand for housing, even as the economy struggles to absorb the oversupply of new homes that came with the housing bubble and the millions of foreclosures that continue to weigh on the market.
As the slump in the number of people finding their own places to live has chilled demand for new housing, it also has reduced sales of furnishings and appliances that typically accompany home sales, creating an additional drag on the recovery.
Housing has led the United States out of most of the recessions experienced since 1960, but if that vital industry is to significantly strengthen the current recovery, Americans are going to have to find their own homes at a more vigorous pace.
The Financial Times has an overview of some things that might happen when Greece exits the euro: Eurozone: If Greece goes ...
In any exit scenario, the new drachma would depreciate rapidly. ... Goldman Sachs has estimated ... a devaluation of 30 percent is needed compared with the rest of the euro zone, and more than 50 per cent with Germany.
Even if all interest payments were stopped [Greece defaults again], additional austerity would still be needed for a period because Greece’s tax revenues still fall short of its public spending – a primary deficit.
The price for imports would soar (like oil prices), and living standards would fall - and Greece would have to immediately bring their primary budget into balance. The hope would be that competitiveness would be restored, and the economy could start growing again.
A key question is spillover to other countries.
Professor Krugman has some thoughts on timing: Eurodämmerung
Some of us have been talking it over, and here’s what we think the end game looks like:
1. Greek euro exit, very possibly next month.
2. Huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany.
3a. Maybe de facto controls: banks forbidden to transfer deposits out of country and limits on cash withdrawals.
3b. Alternatively, or maybe in tandem, huge draws on ECB credit to keep the banks from collapsing.
4a. Germany has a choice. Accept huge indirect public claims on Italy and Spain, plus a drastic revision of strategy — basically, to give Spain in particular any hope you need both guarantees on its debt to hold borrowing costs down and a higher eurozone inflation target to make relative price adjustment possible; or:
4b. End of the euro.
And we’re talking about months, not years, for this to play out.
Chancellor Angela Merkel's conservatives suffered a crushing defeat on Sunday in an election in Germany's most populous state, a result which could embolden the left opposition to step up attacks on her European austerity policies.
The election in North Rhine-Westphalia (NRW), a western German state with a bigger population than the Netherlands and an economy the size of Turkey, was held 18 months before a national vote in which Merkel will be fighting for a third term.
While she remains popular at home because of the strength of the economy and her steady handling of the euro zone debt crisis, the sheer scale of the defeat in NRW leaves her vulnerable at a time when a backlash against her insistence on fiscal discipline is building across Europe.
"The question arising from this election is whether people still follow Merkel's way of doing politics in Germany," said Erik Floegge, 26, a student and SPD supporter, who attended the party rally in Duesseldorf.
"People don't want us to make hard cuts in social funding, what we want is a 'New Deal' where both the social welfare state and fighting debt will work."