The economic crisis we are in started with housing so it would only make sense that a recovery in the housing sector is what is needed to bring us out of it.
Unfortunately all of the news on housing has been pretty grim. It started Tuesday with word that existing home sales for July dropped 27.2% from July of 2009. And July of 2009 wasn’t a really good month. Wednesday it was reported that new homes sales in July drop 12.4% from June and 32.4% from July 2009.
In the midst of reading about a protest against naming a new institute at the University Chicago for one of its best known Nobel laureates, Milton Friedman, I received an e-mail with a recent speech given by Leo Melamed, chairman emeritus of CME Group, to the Financial Innovation Conference at Vanderbilt University. This was quite ironic as Friedman was a hero to Melamed and played a central role in legitimizing the CME’s International Monetary Market (IMM), which transformed the futures industry from a niche agricultural market to one of global finance.
Melamed was standing up for free markets as surely Friedman would be doing if he were still alive.
As the economic crisis moves from Wall Street to Main Street, one of the early manifestations may be the lack of sponsors in Nascar and the Indianapolis 500.
According to Bloomberg, “General Motors Corp., Chrysler Corp., Sears Holdings Corp. and Chevron Corp. will cut or drop sponsorships next season.” And Dario Franchitti, winner of last year’s Indianapolis 500, has had to drop out this year due to a lack of sponsorship, which can cost as much as $7 million to compete in the season’s 35 races.
The intense storm created by the credit crisis that pounded the financial sector for the past year and resulted in the collapse of Bear Stearns claimed two more victims this weekend. Lehman Brothers, which was surrounded by possible sale or Fed bailout rumors on Friday, announced Monday that it is filing for Chapter 11 bankruptcy. Also on Monday, Merrill Lynch announced it would be purchased by Bank of America for $50 billion or $29 a share.
