September New Home Sales Drop 3.6%

" That -- her new home sales missing the mark what does that number tell us about what the overall economy. And maybe the future that first time home buyer tax credit joining us from west -- We're -- if director at Moody's economy dot com and you beard joke how close. What do you think in terms of all the government stimulus is going and housing we're only getting the most -- for our buck could speak in -- maybe not. From this first time on our tax credit. "

" Well I'm not so sure about that I think when you're looking at government support for the housing market. You've got to look at it in its totality it's not just the first time homebuyers tax credit. But it's also the steps the Federal Reserve has taken 300 billion purchases for treasuries the purchase of mortgage backed securities and agency -- together those have been. Work that actually stabilize the the housing market. The problem is is. In the question we really want to ask is are the training we'll really be taken up the economy. The dated today Telus may be not. In fact we do think that the home buyer tax credit should be extended and expanded we should move from an 8000 dollar tax credit to a 15000 dollar tax credit. Eligibility level should be raised from 150000. Per household to 300000 per household. Our economy metro customers tell us that if we do that we'll see an extra 600000 units sold next year and another 25 basis points in GDP growth. Meaning for roughly 33 billion in real GDP growth. I think what we get through this very intensive next seven to ten days of data we're going to see GDP. We're going to cheaper simpler income and spending ever going to see that employment report next Friday which I expect to see a 10% unemployment rate. I would bet she's a bit too little bit of money that our political class in Washington it's going to take another hard look. That maybe we need to provide more support to end especially in the first part of next year."

" Just -- we debated internally yesterday. Was the impact for the first time homebuyers tax credit on the existing home market right the the median home price. Is a 175000. Dollars and if you take an 8000 dollar tax credit all the way up that 175. There you go that's pretty much your FHA required down payment no words. You wouldn't have to put in any of your own money you can use the eight grant that gives you a three and a half percent. It's so you wonder where we and the high into the housing market is pretty much all that but shut down what what the housing market look like if we did not."

" How that first time homebuyers tax credit. Well our comic customers tell us that for this particular tax credit will see an extra 400000 -- Right so it's it's did -- it's important to understand that without tax credit. Without the Fed initiatives though the housing market would -- whole -- worse and there's there's no -- to really put lipstick on the -- right. I mean we were we were a problem -- government took aggressive steps to support the market. It's good did inventories come down it's good that prices have come down. But what we're seeing here is that foreclosures at the upper end of the market are increasing. You know it doesn't make sense to just you know. Provide support for the low entry an entry level part of the market and let the other upper and the market go I think we're going to have to look at the market in totality."

" with a longer -- government stays in the middle of it as if it wasn't involved with his -- Mae and Freddie Mac and the favorable tax treatment. The last how harder is perhaps to remove itself from all these incidents now. Well couple things first we're not for an open ended."

" Commitment if if they're gonna extend and expand. The tax credit we think got to put a bid dead -- something like July 2010. Second on the reason why you want to take these these steps. His because what we're seeing here is a GDP growth in second half the year it's largely fueled by government support. In provide more support and what's going to be a difficult first quarter second quarter of next year. And give the -- private sector trying to repair itself and rebuild itself so they can step back in and the government can step back out. I understand the fear that once the government steps in and it never leaves. But in the dire circumstances that we've seen over the past two years in the current conditions require a bit more help on the margin from the federal."

" Well why don't they want to -- what are they didn't know list that we can fall back and double death won't why doesn't the government then just cut taxes and let corporations decide. Where they want to hire people sort of throwing billions of dollars of the problem and having everybody suddenly with a new playing field trying to figure out how to use that money. Why not just court cut corporate taxes -- the second highest industrialized world and let corporations decide where best the needs are to add payroll."

" Was two things they think that we're talking about the housing market I think those steps are necessary I like your idea about cutting -- I think that's a great idea. But you know that's -- policy makers in Washington I think that would be wonderful way. To get. Jobs. The you don't get companies to begin hiring again. One of the things I saw on this and the durable good reports this morning was that. Outlays on capital expenditures looking forward we'll put the going to increase and that's key when he firms to begin spending again on capex and then. You see a follow on increasing demand for labor I think those ideas that you -- for our great they're not the ones that are currently being discussed and fortunately in Washington."

" Joe's good to see you thanks so much for being here you -- with -- director at Moody's dot com -- economy dot com what is the website you. Quit the economy dot com. This economy dot com in the dismal dot com which is our affairs thank you thank -- good -- well."