J.C. Penney announced lower earnings today, which signals that the average American continues to struggle to pay the bills. A combination of lower housing prices and a tough credit market has made it increasingly difficult for consumers to go to the mall and shop. Thousands of others are facing bankruptcies and foreclosures that is further hurting their spending. It could be awhile before these consumers start heading back to the stores... and that could continue to hurt the retailers.

From The New York Times:
J. C. Penney on Friday slashed its earnings forecast for the first three months of the year by 33 percent, blaming an outright drop in consumer spending that bodes poorly for competitors. The profit warning came as the Commerce Department reported that overall consumer spending had stagnated in February, increasing 0.1 percent. If Penney is feeling the pinch of tightening wallets, investors reasoned, so is the rest of the retail industry.

“J. C. Penney,” he said, “counts half of American families as its customers, and they are feeling macro-economic pressures from many areas, including higher energy costs, deteriorating employment trends and significant issues in the housing and credit markets.”

Hundreds of thousands of Americans are self-employed in what is the economy's single largest workforce. Thousands more are making the jump every year as well, but there are many things that they should consider first. One of the largest considerations is healthcare. Rising costs among larger employers are also being faced by individuals who must insure themselves. Often times, these policies aren't as strong as those provided by employers and may cost substantially more. Luckily, they are deductible in some cases and there are many choices. Some of the favorite referrers are the Small Business Service Bureau and the AARP. Meanwhile, Blue Cross Blue Shield remains one of the largest independent providers.

From The New York Times:
If there is one thing that separates the self-employed from those employed by others, it is their preoccupation with health insurance ... Many readers shared recommendations based on where they buy their insurance. Popular sources were local chambers of commerce, the Small Business Service Bureau (sbsb.com), AARP (aarp.org) (for those over 50), industry-specific trade associations like a bar association or the Institute of Electrical and Electronics Engineers. In states that permit it, small-business owners can also start a group with as little as one member. In that case, a good insurance agent comes in handy. For the reasonably healthy who know what they are looking for, ehealthinsurance.com got fairly good reviews.

The problems associated with many financial collapses can be traced back to excessive greed. Today's mortgage crisis is no different as new reports surfaced showing that high-flying mortgage companies were hiding losses in order to ensure the bonuses kept coming for executives. These losses were hidden by illegally lowering its loan loss reserves even as it was forced to repurchase more and more from investors. As a result, the overall cash position remained neutral or positive despite a distribing trend to the contrary. To many, it sounds like another Enron scandel...

From The New York Times:
KPMG, one of the Big Four accounting firms, endorsed a move by New Century Financial, a failed mortgage company, to change its accounting practices in a way that allowed the company to report profits, rather than losses, at the height of the housing boom, an independent report commissioned by a division of the Justice Department concluded. The scathing 580-page report documents how New Century lowered its reserves for loans that investors were forcing it to buy back even as such repurchases were surging. Had it not changed its accounting, the company would have reported a loss rather a profit in the second half of 2006. The profit was important because it allowed executives at the company to earn bonuses and allay concerns that the company was healthy when in fact its business was coming apart, the report contends.

Many parents with children entering their teens are now facing a dilemma- to pay for college or to save for retirement. College expenses continue to spiral higher while fewer Government dollars are available to go around. Meanwhile, retirement costs continue to rise as unemployment soars and the stock markets decline. The ideal solution appears to be using all the loans you can get for students and covering the rest while saving enough to retire in the future. After all, retirement dollars can compound in the future while student loans simply incur a small interest charge every month.

From CNN Personal Finance:
With three teenage children, Lorri and Bruce Wilke of Danville, Calif. are caught in the perfect parental spending storm. Between laptops, cell phones and clothes, the Wilkes seem to outgrow their budget the way kids outgrow shoes. "You just feel like you're writing check after check after check," says Lorri. With Leah, 17, heading to college in the fall - and Dana, 15, and Carl, 13, soon to follow - the financial pressures are only going to grow. The Wilkes have set up custodial accounts for each of their kids, but the $16,000 in Leah's name won't cover a year of expenses at the University of California schools she hopes to attend. Most of the couple's net worth is tied up in their $1.2 million home, so they must find a way to help their children pay for school without jeopardizing retirement.

Wall Street may have seen a recover yesterday, but those on Main Street may have to wait awhile for their relief. The Fed's move to lower interest rates, the bailout packages, and other measures have all helped companies at the expense of consumers. In fact, the same companies that hurt consumers in the first place. Meanwhile, shareholders are also stuck footing the bill while executives fly out in golden parachutes. The lower dollar, credit card defaults, bankruptcies and foreclosures may last for at least the next year, all while the burden has been shifted from Wall Street to taxpayers.

From The New York Times:
In Seattle, sales at a long-established hardware store, Pacific Supply, are suddenly dipping. In Oklahoma City, couples planning their weddings are demonstrating uncustomary thrift, forgoing Dungeness crab and special linens. And in many cities, the registers at department stores like Nordstrom on the higher end and J. C. Penney in the middle are ringing less often. With Wall Street caught in a credit crisis that has captured headlines, the forces assailing the economy are now spreading beyond areas hit hardest by the boom-turned-bust in real estate like California, Florida and Nevada. Now, the downturn is seeping into new parts of the country, to communities that seemed insulated only months ago. The broadening of the slowdown, the plunge in home prices and near-paralysis in the financial system are fueling worries that what most economists now see as an inevitable recession could end up being especially painful.

The mortgage and credit crisis that has hit the United States for the past seven months has many consumers confused about what happened. So, let's sum it up: The subprime mortgage market collapsed when interest rates reset higher and consumers couldn't afford the mortgages; this led to defaults that caused the loans to become worth less money; the banks holding these loans had to mark down the value of these securities (loans); the write-down forced many of these banks to come up with more cash thanks to government regulation and investor demand; the banks could not sell the securities to get the cash since nobody wanted to buy them; and this caused banks like Bear Stearns to go under.

From The New York Times:
Raise your hand if you don’t quite understand this whole financial crisis. It has been going on for seven months now, and many people probably feel as if they should understand it. But they don’t, not really. The part about the housing crash seems simple enough. With banks whispering sweet encouragement, people bought homes they couldn’t afford, and now they are falling behind on their mortgages. But the overwhelming majority of homeowners are doing just fine. So how is it that a mess concentrated in one part of the mortgage business — subprime loans — has frozen the credit markets, sent stock markets gyrating, caused the collapse of Bear Stearns, left the economy on the brink of the worst recession in a generation and forced the Federal Reserve to take its boldest action since the Depression?

Inflation fears continue to rise as the Producer Price Index jumped 0.5 percent, which was the biggest gain since November 2006. Overall, producer prices declined but these sharp rises in the cost of prescription drugs, motor vehicles, and capital equipment indicated that inflation remains a clear threat. The report was a disappointment to economists who had been optimistic following a flat CPI last week. Which report proves to be more significant remains to be seen.

From The New York Times:
Businesses paid more for gasoline, automobiles and most products last month, reinforcing fears that inflation is rising. While prices for grain and gasoline have skyrocketed in recent months, the pressures had not appeared to seep into the broader economy. But the core measure of the Producer Price Index, which excludes volatile energy and food products, jumped 0.5 percent in February, the Labor Department said on Tuesday. It was the biggest gain since November 2006.

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.