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Housing Market Crash in North America

The US economy is witnessing one of the worst recessions of all times. It is often said that this recession is comparable to The Great Depression. The brunt of mass layoffs, high gas prices, company declaring bankruptcy and ailing banks and financial institutes has severely affected millions of American households. In addition, the housing market crash has surged a wave of massive home foreclosures and has led to tremendous drop in the prices of properties all over North America. The housing bubble that reached its zenith in 2005 started to weaken and crumble in 2006 and is now on the edge of bursting ensuing in a nationwide collapse in the real estate market and sharp decline in the housing prices.

For decades, investment in real estate has always been one of the key profit areas of for banks and other financial institutions. Investing in a house was always considered to be the one of the safest way to safeguard one’s money. Owing to this investment fundamental, people continued investing in real estate during the period between late 1990’s and 2005 even though the prices were reaching their all time highs. With banks and financial institutes sinking, the condition of housing market has become even more volatile. Read more

An Argument For a Progressive Income Tax

If you want to initiate a heated debate anywhere in the United States, all you have to do is mention income taxes. Everyone has an opinion ranging from one extreme to another: the Socialist wants to tax the wealthy and middle class until they are as poor as everyone else; the Capitalist says no, we need a simple flat tax; and the Libertarian says you’re all wrong; if we eliminate all inefficient government programs, we won’t need any income tax. In spite of this diversity in opinion, nearly everyone thinks the tax code is far too complex and must be simplified no matter the cost. Regardless of political ideology, finding someone who is truly satisfied with our current income tax laws is extremely rare. However, a realistic look at the facts indicates we do need some type of tax system to fund necessary government services and a progressive income tax is the fairest and least complex method to raise the required funds.

The first important question is whether or not we need an income tax. Hard core capitalists and libertarians would have us believe that the private sector can provide all the services we need, with the exceptions of national defense and protection of our constitutional rights, “better and cheaper” than our government. (Libertarian 1,2) They would have us believe that government services, programs, and regulating agencies are unnecessary and even harmful to our economy. This belief simply denies our history and fails to recognize why our federal government instituted the social programs and regulations in the first place. As ineffective and counterproductive as our government may be at times, a brief study of history proves the ramifications of unrestrained business are even worse. One need not travel far back into our history to realize that our quality of life, from working conditions to pollution, was hardly utopian when there were fewer government regulations and social programs. The federal government didn’t pass child labor laws, pollution regulations, minimum wage laws, and workplace safety regulations just to hamper business. Read more

European markets fall as investors book profits; Asia markets rise ahead of US earnings

European markets dipped Monday as investors booked profits from last week’s gains, while Asian stocks edged higher as the Chinese premier’s positive assessment of the world’s third-largest economy helped soothe nerves ahead of key earnings reports from leading U.S. companies.

By noon in mainland Europe, Britain’s FTSE 100 was down 1.2 percent to 4,044.22, Germany’s DAX fell 2.5 percent to 4,561.76 and France’s CAC 40 faltered 2.1 percent to 3,026.19.

Wall Street was set to open lower. Dow Jones industrial average futures slipped 1.3 percent to 7,978.00 and Standard & Poor’s futures lost 1.5 percent to 853.90.

Markets were largely encouraged last week by upbeat reports from U.S. banks Citigroup Inc., JPMorgan Chase & Co., Wells Fargo & Co. and Goldman Sachs Group Inc., although investors know that difficulties in the banking sector remain. Financial stocks, along with mining and oil companies, dragged on European indexes Monday. Read more

Bank of America posts 1st-qtr profit, beating Street, in sign that banks may be recovering

CHARLOTTE, N.C. (AP) — Bank of America Corp. managed to avoid a loss in the first quarter, surpassing analysts’ expectations and providing further evidence the banking sector might be improving.

But the bank also took a hefty $13.4 billion provision for loan losses and its shares fell 55 cents, or 5.2 percent, to $10.05 in premarket trading.

The Charlotte, N.C.-based company earned $2.81 billion after paying preferred dividends, or 44 cents per share, compared with a profit of $1.02 billion, 23 cents per share, in the year ago period. Analysts surveyed by Thomson Reuters expected profit of 4 cents per share.

The higher-than-expected earnings could take some pressure off Chief Executive Ken Lewis who has faced calls from some shareholders to either give up his job as chairman or be ousted. Read more

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