Even worse, when capacity goes down, getting it back up is not easy: it involves retooling, restarting furnaces, etc...

I am only guessing but much of the decline is probably in construction related materials like carpet, paint, cabinets, engineered lumber, etc. Many of these plants are relatively small and scattered around the country making their impact less noticeable.

AMERICA needs something new to sell to the world. I would suggest THE MOON. Sell the moon in the form of Lunar Colonization. The Military Industrial Complex is already tooled up in that direction and need only expand. REMEMBER AMERICANS are the only humans to have walked on the moon.

There's still manufacturing in America? How quaint. Oh, I know, just as they have historical recreations like Colonial Williamsburg to show how people lived in the colonial era, they must now have them to show how people lived in the industrial era. They probably have folks in period costumes working at "factory" recreations.

Come on folks, this is the 21st century. America's economic strength comes from exporting its financial services. How's that going?

No, I think they were too busy blaming the stock market tanking on Obama's stimulus and housing plans helping out the undeserving losers and lower middle class/poor leaches who are stealing from the great benefactors of wealth. They are also trying to obfuscate on the inevitable nationalization of a few of the biggest banks. Psst...don't tell them thats coming.

Dean ... haven't you heard ?

We are a service economy now ...

lol

"Even worse, when capacity goes down, getting it back up is not easy: it involves retooling, restarting furnaces, etc..."

There will be a massive demand for retooled plants capable of outputting wind turbine components, post-Dec/09. IDK the cost of retooling but it was done during WWII in a heartbeat.

Baker cites numbers describing an economy in free fall. This will continue until the banking system is stabilized. All entities that perform banking functions and are insolvent or deep in the oats that have passed through the horse must be placed into receivership, the managers replaced, and the institutions made whole before being released to private management again (this time, with appropriate and active federal regulation). This isn't a radical notion: the FDIC does it all the time. But it needs to be done; to be done now; to be done decisively.

If today's news on manufacturing were dated 1930, we would think it was a report from Hoover's administration.

NOTHING stabilizes until confidence is restored. The world still thinks WE're George Bush. Until that's resolved "the old confidence' won't be back. Since such a solution looks unlikely, WE will be needing someting new to instill confidence in, something new for the world to INVEST in

Mfg. is down because consumer demand is down. Consumer demand had been inflated by, among other factors, trillion dollar withdrawals of cash from home equity. Now cars and new construction are down hugely, to mention the two big ones in the private sector. Governments are taking care of their own, with CA just raising taxes. And that $1T/year habit has gone cold turkey.

commenter James Conner thinks this is due to, or will be solved by, banking being stabilized.

What does this have to do with banks? It has to do with deleveraging away from a fantasy component to the economy. Homeowners in effect ripped off investors for spending money for about a decade, but esp. from 2003-2007.

To blame the financial crisis on homeowners is crazy. They played a role in the game, much like pawns in chess, but the comment from eds is infuriating. I mean, if I could reach through the computer and beat the daylights out of eds, I would.

The homeowner, which to me means the average American, was the victim of the suits who work on Wall Street and the Fed and in the Congressional Banking Committees. Please note, they are all the same people.

Hey folks!

When I saw that my job was ending in a few months, I knew I wouldn't be able to pay my mortgage. So I sold my house and rented an apartment which I could afford.

Where's my bail-out? Where's MY subsidy to stay in MY home where I had lived for 12 years?

I talked last night with a friend who works in the real estate industry. He tells me I absolutely should not be looking to buy now as prices have to come down a whole lot more to compare with rents. And this is Chicago, not a real bubble market.

"Patience," he says, "is the great virtue now."

But I'm still waiting for the government to bail me out for being prudent. I'll probably have to wait a long time. Patience.

Rant over.

Ethan,
You are among the 92% of the population that didn't overextend themselves. Unfortunately the boys and girls in Washington are focusing on the 8% that did and allowing the tail to wag the dog. Unless you and the rest of America who are outraged by this effort make a great deal of fuss, nothing, absolutely nothing will be done to change the modus operandi. I do not think what you said was a rant but rather a factual commentary on the state of life in the U.S. today.

The funny thing about all of this is -- we all need to extract as much $ from the situation that the 8% were involved in. Because the people who lent in that direction are of the type that actually, er, provide credit.

But let's be clear about a thing or two. Credit runs the show. A business can run itself aground increasing profitable sales if it doesn't have access to credit. Loans play huge roles in business investment. Do you know how expensive it is for a company to issue equity? Er, it is.

By the way, right-leaning folks. Aim your arrows properly please. The 8% did stupid things. The creditors, otoh, have the power in that lending relationship.

It's the credit providers' lack of due diligence that allowed this to happen. But hold on. Here's the chain.

You have mortgage brokers doing no diligence -- or flat out engaging in fraud. They kick the loans over the fence to the banks. The banks kick the loans over the fence internationally as investment products.

Then international lenders start getting losses. They stop buying the investment products. The banks stop being able to sell them, and they stop buying. The mortgage brokers were preparing more and they go under too.

A number of banks' business model had foreclosure built in, by the way. They just figure that if they have a bad loan then they sit on a house. If the price is above what they spent, they still don't lose.

Capiche? A very small number of employees at mortgage brokers and banks made out by taking a healthy commission for creating and then reselling a whole series of bad loans internationally.

Aim your arrows where they're deserved.

@ Homeowner -- I don't know where your rage comes from but to ignore the economic fact that home equity was cashed out to the tune of $9T over a decade would be insane. Your need to afix blame is misguided and wrongheaded. I'm talking about reality, not moral judgments. Homeowners who took equity to spend were not pawns of bankers, they were willing participants. Now those "pawns" have been taken out of the game, and left investors holding the bag (it doesn't matter whether loans were predatory or not, the fact is that the cash flow flowed and propped up the economy - now that cash flow is gone).

eds: who are these "investors" and what "bag" are they "left holding" by homeowners who borrowed money against the equity in their houses?

Dean, reporters weren't deliberately overlooking the industrial production numbers. Those numbers were released Wednesday, which happened to be the day of the announcement of the foreclosure reduction plan. I spent all day writing about that plan, and didn't have time to blog or write an article about industrial production. A lot of my brethren and sistren in the press were in the same bind.

Journalistic production has gone down even more than industrial production, as reporters are being laid off in giant numbers. A couple of years ago, an outlet might have one reporter to cover industrial production, and two reporters to cover the Obama plan. Now there's just one reporter to do all of that work, so some things have to slide. Taking reporters to task for not covering the industrial production numbers, when they were busy writing and broadcasting about the Obama plan, is like castigating autoworkers for not making more cars. It's not their fault that capacity has been slashed.

Plainly, plenty of Americans, including Dean, want more news coverage, not less of it. But are they willing to pay for it? And if so, how? No one has figured out the answers to these two questions.

For the press critics here, please don't confuse the talking heads on TV with the reporters who do the actual work, and who understand things like industrial production and vacancy rates. We are two sets of people, with widely differing pay packages.

Also, where does this bogus "8 percent" come from? That number was snatched from thin air. Facts don't support it.

The latest solid delinquency numbers we have come from the third quarter of 2008, from the Mortgage Bankers Association. This quarterly survey is the most reliable, in my opinion. In the third quarter last year, 2.97 percent of mortgaged homes were in foreclosure, and another 6.99 percent were at least 30 days past due. The delinquency plus foreclosure rate was 10 percent, not 8 percent. Doubtless it has got worse since the end of September.

Perhaps you think it should be phrased "only" 10 percent. What if 10 percent of the population had a communicable disease? Would you shrug off the 10 percent figure in that situation? Foreclosures beget more foreclosures, and economic pain begets more economic pain. This is no time to be smug about your moral superiority because you've been making your debt payments on time.

Ethan, when did you sell your house and move into an apartment?

While it's certainly true that your action was prudent, you may have taken it at a time when it was still possible. If you purchased your home more than 12 years ago, you purchased it before the big 2000-2005 runup in prices. Then, if you sold it a couple of years ago, you did so before the big fall.

Homeowners today don't have this option.

"No, I think they were too busy blaming the stock market tanking on Obama's stimulus and housing plans helping out the undeserving losers and lower middle class/poor leaches"
Posted by: Courtney H

My daughter is one of your 'leaches'. She has paid dearly for her education, worked extremely hard as a school teacher, drives a nine year old car, grows a lot of her own food, heats her house to 62 degrees, and works out when she can to keep healthy. Her 970 sq ft house is underwater, and Obama's plan will enable her to refi at a 1.3% decrease in interest. This will cut her monthly payment by $111/mo. I say she deserves it, and it will help her survive everything she has had to deal with these past few months. She makes $43k, and her home mortgage is 40% of her take home. Foolish, or a hard worker? Her entire neighborhood, an older one in Asheville, is made up of young people rehabing 60 year old houses.

Why would you prevent people like this from refi? What's it to you if she gets it, and keeps right on making her payment and working to improve that community?

Can you think past the
Fox news noise?

Ed in Chattanooga

Say there Ed in Chattanoogaland,

Methinks that Courtney H was being a little sarcastic, if you read a little more carefully.

The story that really got my attention was Paul Volcker quoted as saying the global economy is deteriorating at a faster rate than in the opening stages of the Great Depression:

Volcker noted that industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.

"I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world,'' Volcker told a luncheon of economists and investors at Columbia University.

This is Tall Paul talking here -- a man who has seen more than his fair share of economic calamaties.

It's starting to feel like the last few seconds on the tape in the black box, when you hear someone in the cockpit yell "We're not going to make it!"

@ Th -- Is your question supposed to be funny? Where did money come from to give homeowners 1) mortgages, 2) equity loans?

Investors.

Now those investors effectively own foreclosed properties worth way less than what was loaned out on them. This is basic current events, not rocket science.

eds: I was not really sure you were actually blaming homeowners because investors bought mortgage backed securities without researching the contents of the bonds. I have 25 years experience watching equity financed home improvements crooks, real estate agents whose success is based on partnering with mortgage brokers who will shop a loan application around until some fool says yes and new home builders selling condos and houses based on introductory monthly payments. For someone to now say it is these homeowners who are leaving the mortgage security investor "holding the bag" was just too stupid for me to wrap my head around.

Manufacturing in America...well that has become quite a joke. Those fat cat CEO's took the manufacturing out of America to 3rd world and 3nd world countries to make a cheap buck for themselves. I saw it go on for a long time and could not understand why the government was letting it happen, but then we know why the fat cats in government where helping there fat cat buddies in business make those bucks off the backs of the American worker. So yeah how do we get manufacturing back, that is a good question. Yeah and they were trying to sell us some crap like us being a service orientated community..yeah like "Ya want fries like that". The rich MF'rS sold us down the river..why should they care..they have their money, their family their childrens children will have the money and we will be nothing but dregs of society left....someone was saying that when it gets to 12% unemployed revolution will begin..well it's a long time coming..let's see what happens this year, if jobs don't start popping up.