Good News, Bad News on Economy
If we can take a moment to look away from Wall Street's gyrations and focus on the underlying, or real, economy, there were a couple developments this morning that had a good news/bad news aspect to them.
On housing, the good news: The National Association of Realtors showed a surprise 8 percent jump in pending housing sales in August.
The bad news: Many of those sales were of homes that had been foreclosed on.
On retail sales, the bad news: September sales were down across the board, with giants such as Target reporting a bigger-than-expected sales drop.
The good news: Leading-edge indicator Wal-Mart reported strong sales in September, but there's a hint of bad news even in this. Sales were solid for groceries and other essentials, but softer for discretionary items.
On CNBC this morning, billionaire/former presidential candidate/noted flat-taxer Steve Forbes said the federal government needs to do two things, and pronto:
1) Eliminate mark-to-market accounting, which requires companies to value assets on their books for the price they'd sell for right now. Banks carrying toxic assets -- such as the mortgage-back securities based on failed loans -- are having to record them at fire-sale values, thanks to mark-to-market. If mark-to-market accounting were eliminated, or suspended, banks could value these assets at what they're likely to be worth when the economy recovers (if it recovers), helping out the banks in the short-term.
2) "Start shoveling out" the $700 billion Wall Street bailout/rescue money. "Don't worry about criticism that you may be paying too much for the assets," Forbes said. "Get this stuff off the books."
-- Frank Ahrens
October 8, 2008; 10:28 AM ET
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