More and more people are turning to debt settlement as a means to eliminate credit card debt and other unsecured debts during the tough economic times. The process involves a third party organiation not only consolidating your bills but also negotiating with lenders in order to lower the principal amount owed. This can help you save a ton of money on your monthly payments, but may adversely affect your credit rating. Of couse, if the only other alternative is bankruptcy, then this may be your only option. Those in trouble from the mortgage mess may want to consider this option.

From TransWorldNews:
For those with mounting, uncontrolled unsecured debt there are several debt settlement programs available. Another option is consumer credit counseling. This program will some times lower your monthly payment. Keep in mind it is only lowered while in the CCCS program. Should you or the counselor be late in getting the payment to the creditor, that interest you had lowered will raise its ugly head again making things even worse than ever. Keeping the above in mind, they want you to think they are non-profit and manage your money well.Consumer Credit Counseling your going to go through a counselor who will tell you what you already know. After you have paid your enrollment fee, and agreed to automatic bank drafts they will start your program. Your counselor will then contact your creditors and "attempt" to lower your interest.

Colleges have long found themselves at the feet of credit card companies promising to donate millions in exchange for making billions off of their vulnerable student population. Now, some colleges are taking these promotions a step further by actually integrating debit cards in with their existing student ID cards. So, how much longer will it be until Visa or Mastercard step in and offer these student IDs a line of credit? We'll just have to wait and see...

From USA Today:
The ID card at Portland State University in Oregon has long been the key to campus life, allowing students to check out books, get into buildings and access their meal plans. A few years ago, the school created another use for the IDs: buying books and school supplies. Students just had to activate their ID as a debit card by opening a bank account promoted by the university. The school, under an exclusive deal with a bank, earned money when students swiped their cards and signed for a purchase. It also profited based on how much money students kept in their accounts. Hundreds of students protested, angry that the school was promoting a bank account they felt cost students more than other banking options. Their objections now are being echoed by a growing number of consumer groups and college students across the nation. They argue that universities are profiting at students' expense through exclusive debit card and checking account deals that can net a school hundreds of thousands of dollars a year.

Countrywide announced that mortgage applications fell last month by a wide margin as fewer home buyers appear to be entering the market. This is bad news for existing homeowners and banks holding foreclosures since they are now either stuck with their homes or will be forced to lower prices further in order to attract interest. Meanwhile, many experts are predicting that the U.S. could see such trends through the end of 2009 and into 2010 as more and more people are expected to default on their home mortgages.

From Reuters:
Countrywide Financial Corp. (CFC.N: Quote, Profile, Research), the largest U.S. mortgage lender, said on Thursday that average daily loan applications for February totaled $1.9 billion, down from $2.6 billion in January. Countrywide lost $704 million in 2007, and according to a Feb. 13 regulatory filing the company believed it might have faced "financial distress" had it not agreed to the takeover.

The nation's top lawmakers revealed new plans to ensure that the credit crisis doesn't happen again within the United States today. Sound familiar? This time around policymakers recommended implementing licensing standards and more restrictions to avoid extending credit to those who cannot afford it. The other significant tidbit was a push for directing credit rating firms to differenciate ratings that cover complex structured products compared to conventional bonds. In the end, this is not the first time that the government has found a "solve-all" solution, so many investors remain skeptical...

From the Wall Street Journal:
The nation's top economic policy makers released their broadest blueprint yet for avoiding a recurrence of the credit crunch now threatening the economy. "Regulation needs to catch up with innovation and help restore investor confidence but not go so far as to create new problems, make our markets less efficient or cut off credit to those who need it," Treasury Secretary Henry Paulson said Thursday in a speech at the National Press Club. The policy makers' recommendations extend to nearly every niche in the credit markets -- from mortgage brokers to the Wall Street firms that package home loans into securities, to the credit-rating firms that assess the risk of those securities, to the regulators who police the system.

Central banks around the world may have finally made the right move by coordinating their attempts to inject liquidity into the credit markets. The banks will provide around $250 billion in replacement securities in order to help get the flow moving while the Fed will auction $200 billion of US government bonds and take unwanted mortgage bonds as collateral. The move also comes just after the Fed announced that it would be increasing the size of its "term auction facility" by $140 billion to give companies easier access to credit. These measures could end up saving things like student loans and city bonds that are just beginning to feel the heat.

From The Independent:
Central banks around the world made a second co-ordinated attempt to ease the credit crisis, three months after their first efforts failed to kickstart lending across the financial system. After days of gathering fears that falling mortgage bond prices could trigger a wave of forced selling by highly indebted hedge funds and other investors, the Federal Reserve said that it would lead a global effort to inject around $250bn (£125bn) of replacement securities into the system.

Home-equity loans may be the next thing to fall as borrowers are struggling to pay off their mortgages and credit card bills. As a result, banks are set to lose billions more as a result of increases in loan loss provisions as borrowers continue to default on payments. Unfortunately, these lenders will not have any recourse as with mortgages since many of these loans are no longer secured by enough assets.

From the Wall Street Journal:
Here comes another headache for banks suffering from the mortgage downturn: Losses on home-equity loans are soaring, even at some lenders that avoided big blunders on subprime loans. When times were good, banks raked in billions of dollars in profit from home-equity loans, which allow borrowers to tap the accumulated value in their property with either a loan for a specific amount or a line of credit. As long as home prices were rising, lenders had little to worry about. But falling home values are leaving banks with little or nothing to collect on many home-equity loans in case of default. Some stretched borrowers are keeping up with their mortgage and credit cards -- but not their home-equity loan.

The real estate market is finally showing signs of life after the number of homes on the market in major metro areas has begun to level off. The shift in demand is the result of an increasing number of homebuyers pulling their homes from the market amid tough competition from those homes forced on the market due to foreclosures and bankruptcies. This swing could help slow the decline in housing prices and prevent further erosion in the downward spiral that we have been seeing to date.

From the Wall Street Journal:
The supply of homes available for sale in major metropolitan areas grew modestly in February, new data show. Total listings of homes in 29 metro areas at the end of last month were up 1.2% from a month earlier, according to figures compiled by ZipRealty Inc ... After rising rapidly since 2005, the inventory of unsold homes has leveled off at a high level in recent months. Economists and other market watchers say that is partly because some people who don't have an urgent need to sell soon have pulled their homes off the market and are awaiting a recovery in the market.

The world relies on the U.S. Dollar to price many of its good, so when the dollar experiences a steep drop in value people start to notice! You see, when the dollar weakens, commodities priced in dollars become cheaper for buyers holding other currencies. This causes an increase in demand that in turn causes the prices of commodities to rise since they are getting paid in less-valuable dollars. This pressure of rising prices has forced many central banks to allow their currency prices to appreciate against the dollar. Obviously, this is a big problem for the dollar which then faces increased scrutiny.

From the Wall Street Journal:
A rising tide of inflation pressure around the globe is putting more stress on the beleaguered U.S. dollar, as central banks from China to Chile fight rising prices by letting their currencies strengthen ... One big source of inflation worries: soaring prices for raw materials. Yesterday, oil closed at a new high of $107.90 a barrel on the New York Mercantile Exchange, jumping $2.75, or 2.6% as more investors piled into the hottest commodity around. Oil's rise is fueling gasoline prices: The average U.S. retail price of a gallon of regular gas rose 6.3 cents to a new high of $3.225 this week, the U.S. Energy Information Administration said yesterday.

The housing markets continue to decline by more measures now, with a record number of homes entering foreclosure. Meanwhile, the deterioration in household financing is likely to continue throughout the year as housing prices continue to fall. In fact, the market value of a home minus the size of a mortgage dropped to 47.9% in the final three months of 2007, which illustrates the fact that mortgage debt is rising faster than home prices. Finally, delinquencies hit 5.82% which is up a quarter percentage point from the pervious quarter and the highest since 1985.

From the Wall Street Journal:
Two crucial barometers of the nation's housing market have worsened markedly in recent months, ratcheting up pressure on policy makers in Washington for action to stem the growing housing crisis and its widening impact on the nation's financial system. Among the latest trouble signals, the number of American homes entering foreclosure rose to the highest level on record in the fourth quarter of 2007. Meanwhile, homeowners' share of the equity in their homes fell to a post-World War II low.

Americans are losing their jobs faster than ever before, according to a recent employment report. The economy shed 63,000 jobs in February as consumers continue to feel the heat from housing declines and a tighter credit market. The loss shocked some, however, given the fact that companies are holding record amounts of cash on their books. The decline also increased speculation that the Fed will lower interest rates sharply during its next meeting. The government is also planning to increase the availability of cash to corporations, hoping to spur companies to increase their hiring and salaries.

From the New York Times:
The economy shed 63,000 jobs in February, the government said on Friday, the fastest falloff in five years and the strongest evidence yet that the nation is headed toward — or may already be in — a recession. Manufacturers and construction companies, reeling from the worst housing slump in decades, led the declines in payrolls. But the losses were spread across a broad range of businesses — including department stores, offices and retail outlets — putting increased pressure on consumers’ pocketbooks.

Consumers started to spend a little more money last month, but many retailers are still finding themselves swimming with the sharks. Wal-Mart was one of the companies to report improved earnings while apparel companies like J.C. Penney dropped sharply. These earnings announcements are clear indications that consumer spending is quickly shifting from luxury goods to just the necessities. Credit card companies like MasterCard have confirmed this sentiment in their own earnings announcements saying that consumers are now purchasing more staples than anything else. So, while this is a relief to some consumers it is a clear indication that there are still many problems facing the economy...

From the New York Times:
Consumers gave the nation's stores some relief in February, spending a little more freely although they mostly gravitated toward discounters and grocers. The challenge for merchants in coming months is to get shoppers to splurge on spring fashions -- a tough task when Americans are worried about plunging home values, tighter credit and rising gas prices.

The mortgage mess is still not even close to being sorted out and today's news continues to reflect that belief. Defaults on home mortgages soared to another all-time high at the end of 2007 as resets on adjustable-rate and teaser-rate mortgages continue to wreak havoc on consumers. The news sent the stock markets lower while regulators are feeling more and more heat to move faster to contain losses and help troubled homeowners. Just how bad is it? According to the Mortgage Banker's Association, the number of loans past-due or in foreclosure jumped to 7.9 percent from just 6.1 percent in December of 2006.

From the New York Times:
Defaults on home mortgages touched another all-time high at the end of the last year as foreclosures surged on adjustable-rate mortgages, an industry group reported on Thursday. The latest data is expected to put further pressure on policy makers and the mortgage industry to move faster to contain losses and help more homeowners. In recent days, regulators and lawmakers have begun suggesting that the federal government might need to take a more interventionist role in the mortgage business.

The problems in the real estate market has been largely confined to subprime loans and ARM mortgages, but some are now fearing the commercial developers may begin to feel the heat. Previously, these loans were considered "safe" in that they are backed with operating and rent income, but now that these numbers are declining, banks are finding themselves in trouble. The credit crisis has many concerned that less companies and people will be willing to rent offices and homes, which may prompt an increase in defaults for commercial real estate loans. This could in turn cause more banks to fail in the coming years and make loans for everyone much harder to obtain.

From BusinessWeek:
Loans to homebuilders and other developers are the latest slice of the credit market under duress, and analysts say banks could face hundreds of millions of dollars in losses as a result. As commercial and residential real-estate prices decline, banks of all sizes face a growing number of loan defaults from builders unable to sell houses, and from developers whose malls and other properties turned out to be less desirable than anticipated.

Oil prices continued their rise today after a small drop on Tuesday despite concerns that OPEC is concerned about a fall in global demand for crude during the second quarter. Consumers have been hit hard by rising oil prices coming as a result of the lower U.S. dollar and supply-and-demand issues. Meanwhile, a Fed bent on continued interest rate cuts means consumer goods and energy prices are only likely to go higher while stocks and investments trend lower amid continued financial turmoil. And in the meantime, unemployment is on the rise with job pay remaining steady despite the declining dollar.

From BusinessWeek:
Oil prices rose Wednesday after dropping sharply in the previous session on the possibility that OPEC will raise output and on expectations that U.S. crude supplies are continuing to rise. Chakib Khelil, president of the Organization of Petroleum Exporting Countries, said the cartel is shying away from boosting production due to expectations that global demand for crude will fall during the second quarter.

Recent earnings reports from the private sector are showing a disturbing new trend - companies are holding onto their cash. Many people believe this is a good thing since companies are now able to pay off their debts and distribute more wealth to shareholders. Unfortunately, the goal of the Fed cuts (at the expense of the US dollar) was to give companies more cash to pay employees in order to boost wages and jumpstart consumer spending. The fact that companies are stockpiling this cash does not bode well with consumers who now face stagnant wages, rising prices, and a declining US dollar. In fact, it appears as if the Fed's strategy is backfiring... again.

From the New York Times:
Unlike most American consumers, whose failure to save has exasperated economists for years, the typical American corporation has increased its savings so sharply that it probably has enough cash on hand to completely pay off its debts. That should be good news in an economy unsettled by rising energy prices, tightening credit, gyrating stock prices and declining values for the dollar and the family homestead. Indeed, the Federal Reserve chairman, Ben S. Bernanke, cited strong corporate balance sheets as a bright spot in the darkening forecast he presented to Congress last week.

Many homeowners are facing a troubling dilemma these days as they are making payments on a home loan worth far more than their house. Fed Chairman Ben Bernanke addressed this issue today by imploring lenders to reduce the principle on loans for many people facing this problem as delinquency rates and foreclosures are continuing to soar amid declining housing prices. In their view, foreclosures must stop first in order to curb the falling housing prices and therefore curb the number of future delinquences and forclosures. The government's own attempts to stop this dangerous spiral have clearly not gone far enough and now private sector support may be needed.

From The New York Times:
The chairman of the Federal Reserve, Ben S. Bernanke, urged mortgage lenders and investors on Tuesday to reduce the principal on loans for many people whose homes are no longer worth as much as the amount they still have to repay. Noting that delinquency and foreclosure rates have soared over the last year, and that housing prices have not stopped falling, the Fed chairman warned that efforts by the government and by industry to prevent foreclosures had not gone far enough.