Broad Says U.S. Economy in Worst Recession Since World War II -Billionaire spills the beans here....what do you expect from 7 years of war.....prosperity....idiots.!!!....having friends is much better than having enemies....its that simple.....PeaceTime Economies flourish upon foundations that are much more long lasting minus suffering and injustice....the Planet needs to overhaul the basis of its economics.....or well...the " wages of sin are death" .....
Broad Says U.S. Economy in Worst Recession Since World War II
By Anthony Massucci and Erik Holm
July 1 (Bloomberg) -- Billionaire investor Eli Broad said the U.S. economy is in the `worst period' of his adult life as a housing market recovery remains ``several years'' away.
``This is worse than any recession we've had since World War II,'' Broad, 75, said in an interview yesterday. Broad, the founder of homebuilder KB Home, said the U.S. should avoid a depression on the scale of the 1930s because the country now has sufficient ``safety nets.''
The economy expanded at an annual rate of 1 percent in the first quarter, the Commerce Department said last week. That caps the weakest six months of growth in five years. The U.S. lost 49,000 jobs in May, when the unemployment rate rose to 5.5 percent, the fifth straight month with a drop in payrolls and the biggest jump in the jobless rate in more than two decades.
``This is the worst period of my adult lifetime,'' Broad said, speaking about the U.S. economy. ``I do not think things are going to get any better'' before the next president takes office in January.
The banking industry may need additional capital to protect against bad loans, Broad said. U.S. banks may have to raise $65 billion as losses and writedowns extend into the first quarter of 2009, Goldman Sachs Group Inc. analysts said last month.
The world's biggest financial firms have posted about $400 billion in writedowns and credit losses tied to the U.S. housing slump, according to data compiled by Bloomberg.
Selling off vacant, unsold homes could take ``several years,'' Broad said.
Waiting for a Bottom
``The problem is, people don't believe prices have bottomed out,'' he said. ``You've got to induce people to buy houses'' with federal policies including tax incentives.
Broad, whose main focus is his $2.63 billion philanthropic organization, last month joined investors in pushing for the ouster of Martin Sullivan as chief executive officer of American International Group Inc., after the world's largest insurer posted record losses.
AIG, where Broad served as a director from 1999 until 2003, lost half its market value in the past year and has posted $13 billion in losses tied to the subprime mortgage market collapse over two quarters.
``It will turn around in due time,'' Broad said of New York- based AIG. ``It's not going to be overnight.''
Broad said in a television interview that consumer confidence and home sales won't improve this year, while unemployment will rise.
U.S. borrowers will continue to default on home, auto and credit-card loans, he said. More than 100 mortgage companies have suspended operations, closed or sold themselves since the start of 2007. American Express Co. CEO Kenneth Chenault said last week that credit indicators including late payments have worsened beyond the company's expectations.
The U.S. government stimulus checks helped support economic growth and more federal help is needed to fuel growth, he said.
``I think housing is going to continue to have a corrosive effect on consumer psychology and the economy in general to a far greater extent than people think, or even far greater than I thought about a month or two ago,'' he said.
The number of Americans in danger of losing their homes to foreclosure rose to the highest in at least three decades during the first quarter, according to data from the Washington-based Mortgage Bankers Association.
Sales of new and existing homes in the U.S. began to drop in mid-2005, bringing the five-year housing boom to a close. Prices for existing homes finished last year below 2006 levels, according to the National Association of Realtors in Chicago.
Repairing the damage to the U.S. economy will require political leadership on U.S. energy, health care and education policies, Broad said. Those areas are the focus of his foundation.
``I worry about the future of America,'' said Broad. ``It's time to regroup and redefine our place as a country and that's tough to do.''
-- With reporting by Michael McKee, Timothy Homan and Hugh Son in New York. Editors: Rob Urban, Dan Kraut
To contact the reporters on this story: Anthony Massucci in New York at firstname.lastname@example.org; Erik Holm in New York at email@example.com
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