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More U.S. Economic Data and Commentary

The following is the text of an e-mail I sent today to Subscribers of, a research website that provides coverage on the approximate 1,600 Mining and Oil & Gas stocks listed on the Toronto and Toronto Venture Stock Exchanges.

U.S. Housing Update

An article late last week titled ‘U.S. housing crisis hits new level‘ says that a record one in seven U.S. mortgages are in foreclosure or delinquent, that even those with safe credit ratings are losing homes, that mounting unemployment is pushing foreclosure rates higher in the United States, and that all this is driving even Americans with good credit from their homes in greater numbers. The article also says:

· the housing market accounts for about 20 per cent of the U.S. economy where a strong housing sector is seen as key to any economic recovery, but rising unemployment and a stagnant economy threaten to erase recent signs of stabilization;

· worsening the problem, millions of unconventional mortgages issued to Americans who didn’t even have to prove they had a job are due to reset in the next two years, further harming the sector’s prospects;

· the Mortgage Bankers Association said on November 19 (a record) one in seven U.S. mortgages, or four million homeowners, were in foreclosure or at least one payment late in Q3 2009;

· Americans with solid credit ratings comprised 33% of Q3 2009’s foreclosures; and,

· analysts said the next wave of bad loans will likely come from alternative mortgages that de-emphasized credit ratings and employment, most of which have five-year reset rates that start coming due in January.

U.S. Resident ‘Dependency Factor’

A second article titled ‘In Survey, Hard Times Before Slump‘ reported a 2005 survey by the U.S. Census Bureau of 14% of all Americans suggests that even before the recession, more than one in five Americans could not pay for basic needs (paying bills for basic needs, avoiding foreclosures, and buying sufficient food) without help from family, friends or outsiders.

U.S. Government Frustration

A third article titled ‘House Attacks Fed, Treasury‘ late last week said “Political frustration over the rescue of Wall Street and high unemployment erupted in the House Thursday, with one committee threatening to impose tighter scrutiny on the Federal Reserve and another trading verbal insults with Treasury Secretary Timothy Geithner”.

My Comments

· first, I can’t imagine the U.S. jobs/unemployment situation is likely to improve in a meaningful way in the near term. In fact, I think it more likely to deteriorate over the next few months than to improve. I will be very surprised if the overall U.S. housing situation improves prior to the U.S. jobs/unemployment situation turning positive. That said, it was reported yesterday by the U.S. National Association of Realtors that sales of previously owned U.S. homes jumped 10.1% month/month in October to their highest level in more than 2-1/2 years;

· second, it seems obvious that if the same ‘Resident’s Dependency’ survey were done today the results would be worse, and likely far worse, that the 2005 survey results. I consider the results from the 2005 scary for the U.S. economy going forward from here - although I would like to know more about the components of the demographic cited in the referenced article; and,

· third, it strikes me that any elected U.S. politican who thinks Timothy Geithner or any other individual is capable of waving an magic wand and returning the U.S. economy to a pre-September, 2008 condition is, to state it charitably, unrealistic. I see this type of ‘politican commentary’ as nothing more than ‘looking for a scapegoat’. The U.S. bi-annual election process will get seriously underway early 2010 in anticipation of fall-2010 elections. I think it will be very interesting to see how the U.S. populace deals with its current elected representatives both during that process, and when it votes.