Ah, seventeen! The CR Commentariat gets a hold of that number, and naturally, the conversation elevates to this contribution from a reader called “Soylent Green Is People.”

Friday: Freedom failed.
Cost Today: Thirty Six Mil.
Upward Soars Our Tab.

Meanwhile, the Wall Street Journal reports:

Click on image for access to WSJ article.

Legislation, introduced late Thursday by Senate Banking Committee Chairman Christopher Dodd, would temporarily allow the FDIC to borrow $500 billion to replenish the fund it uses to guarantee bank deposits, if the Federal Reserve and Treasury Department concur. Those funds would be distinct from the contentious $700 billion financial-sector bailout, which lawmakers are loathe to expand….The bill was championed by FDIC Chairman Sheila Bair, Fed Chairman Ben Bernanke and Treasury Secretary Timothy Geithner. In a Feb. 2 letter to Mr. Dodd, Mr. Geithner said he supported a move as it would allow the government to respond to “exigent circumstances.” Mr. Bernanke sent Mr. Dodd a similar letter the same day, suggesting a coordinated effort was at work.One difference between the FDIC’s insurance fund and the TARP is that any money the FDIC borrows from the Treasury would likely have to be repaid through assessments levied on banks rather than on taxpayers. The FDIC finances its fund through bank fees. Many struggling banks argue that the government should ease up on fees until the credit crisis abates.

Now, haiku that.

So, whether those in the real estate field are feeling admirable or not, Fortune’s come along with its list of those organizations who’re a cut above the rest.

Here’s their take, including some residential multifamily players we think a lot of ourselves.

Geithner for Treasury

The Barack Obama plan–change from what’s just been back to a little more of what was [under Bill]–is taking shape decisively. With Timothy Geithner, Treasury will be able to play offense in a cross-the-aisle way necessary to build both consensus and conviction. The New York Times reports:

Mr. Geithner, 47, for weeks has been the subject of speculation for the administration’s top economic post, a job that has gained out-sized stature as the economy has weakened and the Treasury secretary has been put in charge of a $700 billion financial bailout program. His chief rival was his former boss at Treasury, Lawrence H. Summers, President Bill Clinton’s final Treasury secretary.

Check in tomorrow for a look at a “whew” moments from the past week worth reviewing.

On Time Diana Olick

Great, I thought, an ulcer noshing on exactly the wrong tissue of my ample gut. The message was from CNBC analyst Diana Olick, due at the Gaylord National Harbor Conference center for her featured role as moderator for our CEO panel that election evening. I’d asked my boss’s boss’s boss, Hanley Wood CEO Frank Anton, to do the honors of introducing Ms. Olick to our general session audience at 4:50 p.m. He was stationed backstage, ready to take the podium, and she was stuck in bumper to bumper traffic on her way from the Falls Church, Va., Community Center, a polling place CNBC posted her at for live coverage that evening. I wondered, then, who Frank would wind up introducing.

A flurry of calls, emails, texts were also flowing in from the office of Ara Hovnanian, CEO of Hovnanian Enterprises. Ara was one of the three CEOs–along with Standard Pacific’s Jeffrey Peterson, and Taylor Morrison’s Sheryl Palmer–whom Diana Olick was sheduled to interview in a matter of minutes. He too was stuck in traffic traveling from downtown D.C. to our venue. It looked at that moment for all the world as if I’d be asking Frank Anton on the spot to sit down with me for a spur of the moment conversation with our two present-and-accounted-for CEOs, Peterson and Palmer.

One more sidenote. I’d asked my friend and the honoree of Big Builder’s first Leadership Legends Apex award, Ryland Homes’ founder Jim Ryan, to speak for a few minutes–15 to be exact–as part of the program that would lead into the CEO panel with Diana Olick. Jim, mind you, is never at a loss for words, but 95% of them are wise, funny, incisive, or all of the above. Jim, thank heavens, went long.

Jim spoke for about 30 minutes. His tale of growing up in his mother’s household, one of four children mostly raised by a single parent who worked full-time outside the home in the Pittsburgh area in the 1930s and 40s, and what shaped he and older brother Ed into two of home building’s true pioneers, brought our audience to tears through laughter. Jim regaled 300 of us, not only with a slice of his personal journey, but with a splash of needed insight into how home builders might weather the roughest time in the industry he’d ever seen. It was an inspiration. 

And it bought me time. Diana Olick’s and Ara Hovnanian’s cars respectively showed up within moments of one another, just seconds before it was time to introduce them. Diana handled the interview with professional rigor, grace, and aplomb. The aplomb part peaked in one exchange with Standard Pacific’s Peterson. “Back in March, we were hanging by a string,” he said as he began an explanation of builders’ need for access to new capital in today’s tough markets. Without missing a beat, Olick injected, “You still are.” Aplomb.

The way this moment worked out broadly reflects how plans and circumstance and mighty efforts and an all-pervasive graciousness and aplomb converged last week. These forces coalesced in a single moment, during an event that by all rights probably should never have happened given the business conditions of the home building landscape. From the moment our program chairman M.D.C. Holdings chairman and CEO Larry Mizel imparted his blend of straight-from-the-heart wisdom, candor, and urgency to open Monday’s general session proceedings, to the wrap-up session conducted by our conference partner, Boiling Point principal Jerry Shrair, with a real-live blueprint for improved operational profitability, our participants crossed from disbelief, doubt, and uncertainty to renewed focus on what can be done today, tomorrow, and next week to survive.

• We’ve summarized the session toplines and take-aways in a series of articles on Big Builder ‘08 on the Big Builder Web site.

One-hundred-and-fifty home building executives, representing companies that account for more than one in three new homes being sold into the teeth of today’s market, came to Big Builder ‘08 with the purpose of learning to keep themselves, their organizations, and the very industry itself very much in the game. We had asked our trusted advisors in the industry how we could make the program more critically relevant than it had ever been. Their answer: Make it high level; make it about real issues and opportunities; and make peer knowledge an anchor of the educational format. We took apart talking-head panels and rescoped topic specific, collaborative workshops aimed at driving toward real-time, real-world ideas, practices, and solutions. We took apart a conference formula and made it up from scratch.

Attendees have been getting back to us for a week now. The ones that have been in touch say it  worked for them, and that they got a lot of value from the program. They have themselves to thank. What we tried to do was to create a way for those facing like challenges across competitive boundaries to engage one another; focus on systemic disconnects; and create collaboratively inspired approaches to dealing with them.

My personal highlight reel for the conference included the almost paternal embrace I got from Jim Ryan as he accepted his Leadership Legend honor from us. I also relished the way M.I.T. professor,  behavioral economist, and best-selling author Dan Ariely won his audience over from skepticism to spellbound fascination in a nanosecond. JP Morgan vp of government affairs Tom Block’s prediction on Monday of what would happen in an historic Tuesday Presidential Election was brilliant, as was Harvard JCHS executive director Eric Belsky’s articulation of the forces at work and scenarios possible in the 2009 housing economy. 

Don’t tell anyone about my new crush on Diana Olick, despite the fact that she kept me waiting. She handled the CEO roundtable panel better than we’ve ever done that piece of the program before, and we got more insight from three public company leaders than we had any business doing. Ara, Jeff, Sheryl were each an articulate and compelling voice at a moment that calls for all that we can possibly get in this business right now.

On Wednesday morning, JP Morgan executive director for equity analysis for home buiding and building materials Michael Rehaut began to connect the dots between where the money is–tied up–and where home building strengths are–barely pulsing. An expansive conversation managed by JP Morgan managing director Margaret Whelan drilled into topics that ranged from recapitalizations among builders to M&A and the future of  the public home builder business model. Lennar’s Bruce Gross, Hovnanian’s Larry Sorsby, and Morgan Stanley’s Laurence Pelosi were a font of provocative and incisive thoughts, ideas, and analysis.

But the “posterizing” highlight of highlights for me came just before I almost had my meltdown moment when I got the text from Diana Olick that said she might miss her gig with us thanks to the traffic from Falls Church.

It all came together when five pairs of executive attendees stood up before the assembled general session and presented the fruits of their day’s labor on Tuesday afternoon. Dynamic duo by dynamic duo, each presented “Opportunity Areas” and “Initiatives” aimed to capture real cash preservation or revenue generation in 2009, in finance, land & design, operations, purchasing, and sales & marketing.

At that moment, I could see what the passions, the focus, and the determination of our conference attendees had wrought. They’d worked together for five hours straight in a collaborative way many had never experienced before. And it bore real results, money saving, money making results. Our designated “program directors” took a lead in catalyzing the brain storms, the brain dumps, and the brain children into pragmatic, achievable action points. Bravo, Thought Leaders!

So the attendees of the conference–home builders, home building materials, manufacturers, services sponsors, consultants, financial services representatives–made Big Builder ‘08 work.

But, as they say, you’ve got to be good to be lucky. The people I got to work with on this effort are unequalled in their devotion and talent. The Hanley Wood Market Intelligence team were heroes in bringing in builders we never would have seen without their direct contact and help. The marketing and events team–Ann Seltz, Stacey Chattman, Kimberly Grover, Nicola Sterling, Laura Smith, Hillary Slovak, and Christina Hong–were extraordinary at ensuring BB08 participants’ delight at every turn. Conference director Michael Bendickson was everywhere at once, and made logistics at the Gaylord work like clockwork.

Warren Nesbitt and Jeff Calore’s team of regional sales managers are among the hardest working group in show business. The sponsors stood by us and they have my heartfelt thanks. My boss Boyce Thompson, his boss Peter Goldstone, and his boss Frank Anton are each an inspiration on both ambition and execution. No other companies in my three decades of experience set the bar of quality and innovation as high as Hanley Wood, and the efforts of the entire company reflected themselves in this event.

Jerry Shrair and I started talking about this event last February. He worked tirelessly to help us shape the conference into a one-of-a-kind experience that put us together as trusted partners trying to survive so that we can once-again thrive. Jerry deserves our thanks and a big salute for a program that brought something new to the table at a critical moment.

My biggest thanks go to my immediate staff. They, after all, have to live with me every day in addition to having to work as hard as they do. They are Lisa Brown, Teresa Burney, Chester Hawkins,  Bill Gloede, Lynn Norusis, Les Shaver, and Sarah Yaussi. All of the affirmation you have been sending us regarding your experience at the conference goes most to them. I hope you got to meet them. They’re why l love my job; they’re why I can be confident that Big Builder will continue to offer you highly valuable knowledge throught the dark months ahead.

This week, we’ve had hardly needed confirmation that the economy’s in recession, consumer confidence is at an all-time low, housing prices are still plummeting, and rescue and stimulus plans are proliferating. Volatility is so engrained now in equity and commodities markets that keeping track of where everything is has become “like watching a National Basketball Association game,” says one housing and financial services industry observer. “It doesn’t matter what happens for most of the four quarters,” he says. “The part you have to see always happens in the last two minutes. It’s getting that way with the stock market.”

In the 11th Hour, as U.S. Treasury Secretary Henry Paulson begins to map a transition plan for over $1 trillion in rescue monies the U.S. will borrow vs. the $52 trillion in total U.S. wealth and as voters take their final moment to consider who to put into the Oval Office for the next four years, an issue at the crux of trying to prioritize focus is as simple as this: The American Dream. The global economy’s listing now relates more to those who have in the past five years joined the ranks of America’s 76-million-plus homeowers than many of us would like to admit.

There are hugely significant decisions and initiatives to make around what can and should be done about growing numbers of housing units in financial distress, and the real families dwelling in many of them. Here’s two critical facts to remember as healthy debate about plans takes place. One is that of almost 130 million households and 76 million-plus homeowners, one in three of the homeowner group does not even have a mortgage (51 million homeowners do have a mortgage, according to U.S. Census 2007 American Community Survey data). The other is that an all-time high of 14% of housing units are counted as vacant. That’s 7 empty places for every 100 housing units. It’s a lot of those places that are among the 10 million “homes” apparently underwater on mortage loans, and among the 3 million “homes” counted as either in or headed for foreclosure.

It’s important to realize this because a goodly number of so-called homeowners in distress are actually investors who bought and don’t live in their now-vacant housing units. So we should not imagine a family put out on the street for each and every one of the homebuyers in trouble on their distressed deeds. New Strategist editorial director Cheryl Russell analyzes the data to try to pry apart myth and reality in looking at the mortgage mess.

• A Wall Street Journal analysis sums up the latest GDP reading, and the political traction news of a deep downturn may offer the respective presidential campaigns leading into Tuesday’s election.
• CNBC reports on consumer spending declines in September 2008, the first in two years.
• Barry Ritholtz’s “The Big Picture” takes on the issue of moral hazard amid the dueling homeowner rescue packages circulating in and around The Hill.
• Builder editor Boyce Thompson reports on efforts among leading home building companies to get the new home construction industry’s interests–a sizeable tax credit and a mortgage buy-down–reflected in rescue and stimulus packages that get consideration in Congress.

In fact, a question that may need to be asked and answered is how much the increase in homeownership rates from 63% or 64% in the mid-1990s to almost 70% in 2005 is worth. Expanding the sphere of American Dream was going to have its price as well as its value. How do we look in a realistic way at the risks and liabilities involved as well as the benefits and opportunities of bringing America’s homeownership rate closer to many nations of the world?

A necessary vantage point on this issue for all those in residential real estate and construction is one Multifamily Executive editor Shabnam Mogharabi raises in her essay, “Which One are You?,” about the need to count people in rented homes as equally critical parts of housing’s equation.

Her assertion?

Unfortunately, renting gets a bad rap—one that it doesn’t deserve. In an age where high density and anti-sprawl are the drivers, proximity to transit and walkability the amenities, and sustainability the ultimate goal, the multifamily industry has a responsibility to educate consumers about the benefits of renting in live/work/play hubs throughout the country. Homeownership may be the fastest way to wealth creation for many families in the country, but homeownership is not for everyone.

Among the most important factors in how the correction will ultimately sort out may not be who’s model works best in a spreadsheet. Human behavior and psychology weigh too heavily in the balance for even the most excellent econometric solution to fully apply. The important thing is to make a plan that will keep its head as the 800-pound gorilla of misplaced trust tosses its weight around in the middle of things.

People want their homes, and the logic of building trillions of dollars of global business upon the premise that the loss of one’s home would be too devastating for people to let that occur is showing its flaws in all their glory. Too many variables came into play with that bet.

What people also want now is not so tangible as a home, its safety, security, and protectiveness. They want revenge and they want justice, big motivators in who’ll support which rescue plan in the last two minutes of the game.

Props and Sources:

The Wall Street Journal, Data Stoke Campaign Battle Over Economy, October 31, 2008, http://online.wsj.com/article/SB122536898235884019.html?mod=testMod

CNBC, Consumers Cut Spending For First Time in Two Years, October 31, 2008, http://www.cnbc.com/id/27470443

The Big Picture, Barry Ritholtz, Moral Hazard of the Coming Mortgage Bailout, October 31, 2008, http://bigpicture.typepad.com/comments/2008/10/moral-hazard-of.html

American Consumers Newsletter, Cheryl Russel, October 14, 2008, Hot Trends:  DON’T BLAME MAIN STREET  http://www.newstrategist.com/store/index.cfm/feature/35_15/dont-blame-main-street.cfm

Multifamily Executive, Shabnam Mogharabi, Which One are You?, October 1, 2008, http://www.multifamilyexecutive.com/industry-news.asp?sectionID=537&articleID=782831&refresh=true

Image source: Bloke’s Blog, What Do you Call an 800 Lb. Gorilla? http://www.strategicmarketingmontreal.ca/otherbb/2005/09/what-do-you-call-800-lb-gorilla.html

Maybe it’s because they don’t know how to report the news. This lame CNN clip-job splices inference, innuendo, and hearsay and a couple of aggrieved home buyers into a completely unfounded, and unhelpful, corporate crucifixion. We won’t suggest the possibility that Time Warner and its executives might have venal motivations as they develop sensationalized muckraker wannabee reports that don’t get at the real truth of why the American and global economies have undergone such stress to their systems.

How does CNN owner Time Warner get a way with this? The “heavy-lifting” reporting was to get two families originally found by the Charlotte Observer more than a year ago to go on camera and shed tears.  What’s not amazing is that this type of latter-day witch hunt gets viewers, because it appeals to the supermarket check-out counter media set.

Stakes in the pin-the-blame game have gotten pretty serious. We saw a piece in Sunday’s New York Times that hovered around implication and indictment of Henry Cisneros via his association with two companies that stumbled legally and strategically in the past few years. At least the Times did the reporting and seems to have concluded that Mr. Cisneros probably didn’t do anything wrong… But it’s hard to tell from the headlines and packaging of the story.

Ironic, isn’t it? We want the Federal government’s moves, measures, and initiatives to work somehow to stem the negative vibe, and calm the tide of fear consuming the world of equities trading. But every time the duo of Ben Bernanke and Henry Paulson steps into action, it’s as if their action alone adds gravity to the next leg of transactions.

Life in a fish bowl

Their interventions are extraordinary, so it figures that what must have gone wrong is equally if not even more extrordinary. Anticipation is the sentiment of the moment; watching overseas markets gobble up some little bit of the ground they lost in the previous two week now becomes a practically unavoidable blood sport. The futures point upward.  People so want to rock & roll.

Here’s some Monday a.m. toplines, primarily if you’ve spent the weekend living under a rock.

• Existing shareholders in banks stand a better chance of seeing their equity investments protected as the U.S. Treasury directly injects capital into financial institutions.

Treasury’s program would be voluntary and aimed at healthy banks, not failing institutions. While details are still being worked out, most banks likely would be able to participate in the program, though seriously troubled banks already close to failing might not be allowed to partake. The government would be a passive investor, using funds granted as part of the $700 billion bailout package. The program could be up and running shortly, according to people familiar with the matter.

• The limits come off as the Fed begins to provide unlimited funding via swap facilities with three European central banks, per the Wall Street Journal. We’ll see if that measure eases financial strains as the banks will be able to draw as many dollars from the Fed as they need. 
• The G7 leaders decided, finally, that the moment had arrived for concerted, collaborative, and cooperative approaches to stabilize reeling economies. Now the world holds its breath to see what that decision adds up to, and whether it can do anything to thaw credit markets and stir sentiment in a positive direction as opposed to its recent free-fall. CNBC offers its take with a global lens on how the respective economies connect and rely on each other. 

Closer to home, eyes in the home building segment will look, but not be surprised on Thursday, as the National Association of Home Builders releases its monthly housing market index, which contains a measure of home builder sentiment and expectations. The NAHB, you’ll remember, anticipated that the Housing Rescue bill, signed off on in July, eliminating seller down payment assistance on October 1, and introducing a $7,500 home buyer government, would do the job of kick starting the market as soon as people got the swing of it. Hasn’t happened.

Now the NAHB has joined the chorus that a more significant and genuine home buyer credit, of say $15,000, would be what it takes to prime the pump of demand in the market.

That ranks as one of the too-little-too-late gestures that leave so many of us thinking, “why can’t they get ahead of the curve” on at least one part of this host of challenges?

Also coming this week will be U.S. Census Bureau data on housing starts. One can only hope that they’re as close to flatline as possible, so that people start getting the notion that home builders are “overshooting” suppression of supply in order to eventually restore the sense of scarcity to the market at some point.

Here’s some folks in the HousingCrisis.com space chiming in on the passage in Congress of the $700 billion Emergency Economic Stabilization Act of 2008.

• The National Association of Home Builders
• The National Multi Housing Council

The most significant [NMHC] action of the year came in the last two weeks in the form of the financial rescue package passed today and a Continuing Resolution (CR) that funds the government through March 6, 2009. NMHC was fully engaged with lawmakers and their staffs as these measures were debated.  We actively urged lawmakers to pass the Emergency Economic Stabilization Act of 2008 (H.R. 1424) as part of our comprehensive efforts to restore liquidity to the credit markets and stability to the economy through Congressional action and our outreach to Fannie Mae’s and Freddie Mac’s new conservator.  We also successfully opposed efforts to include new homeownership incentives in the bills, such as the seller-financed downpayment assistance programs noted above.  The following is a summary of the key provisions in both bills of interest to apartment firms.

• Associated Builders & Contractors

The bill will move a lot of destabilized monetary and hard assets off the books of financial institutions, reset leverage levels, and, it is hoped, kick start the business of lending money for more money.

But what if Congress had passed a meaningful home purchase tax credit before things got this bad? BIG BUILDER senior online editor William Gloede comments.

Hugely complicated even without the complexity of eliminating a 43-cent excise tax on wooden archery arrows, the measure in its first incarnation was three pages, and balooned from there to 110 pages, and then quadrupled before today’s second-time’s-a-charm vote in the House of Representatives. One of the historic bill’s two key architects, U.S. Treasury Secretary Henry Paulson, has 21 working days left before he must resort to simply lining up the papers on his desk in neat vertical lines until he’s succeeded in his Cabinet post by, who else? His successor.

As the program takes shape, the falling knife will finally hit ground, bids and asks will finally converge, foreclosure sales will diminish and real new-home sales will resume. This will happen, perhaps slowed by economic recession, and beginning late in 2009 or early 2010 the big dig out of the hole of vacancies and overbuild will get underway.

We know this. The markets–farmers markets, supermarkets, automobile markets, test markets, spice markets, futures markets, etc.–are not going to calm themselves merely on the news nor the magnitude of the measure. From the most enthused to the most skeptical, people will have to see how the plan works for them to actually believe in its ultimate effectiveness or lack thereof.

This will take time. More time than Hank will be around to do what he’d probably be really good at, which is to execute this monster. So, the question is, what happens during the limbo period that starts now and runs through the moment these assets start meandering into the newly-funded maw of the Fed? And who’ll be the ones who can actually run this as a business?

Big assignment. Trust may just have to regain currency while the legal tender is so scarce. That won’t be such a bad thing.

Now, all of the alternative proposals you may have been considering as the free-market vs. government intervention furor steeped have stood up to a challenge or so from your friends. Keep those ideas coming and fresh for continued battle.

This moment, necessary as it might be, is only a start to a long period whose primary goal must be to relieve our children and their children of the weight of some of our folly. It’s not all about us, although we thought for a while it was.

One of our friends in the business writes:

It has been a strange year.  We have taken over an existing homebuilding company, increased sales 300% (should sell around 350 this year), are making a small profit each month but we have seen a significant drop in the last 60 days and the banks are nervous. So, I am in the field working with our sales team to focus on what I would teach….  However, if I can’t make it happen with my reps, we won’t be in business next year. As you know, the stakes are very high right now for anyone in the industry, but especially for private builders like ourselves.

BUILDER senior editor John Caulfield canvassed the home builder landscape in search of survival tips and tactics, and shares your peers’ insights into how they’ll try to manage the long, dark days of 2008 and 2009. Getting across the chasm isn’t going to be easy, but the rewards of doing so will be significant. 

 “Cutting expenses is only one-quarter of the solution” to survive, says Jalal Farzaneh, CEO with Home Creations in Norman, Okla., whose business is actually up this year by 10% and is on track to close 420 homes. Farzaneh thinks builders need to spend more on marketing to explain the value of purchasing a new home versus an existing house. Farzaneh also recommends that builders align themselves more closely with Realtors and create incentives such as extended warranties to boost sales, “especially when you’re competing with so many bank repos,” he says.

Care to dare to share your plan to weather the economic pain ahead, and become one of the heroes of a future upturn fueled by housing’s reignited engine?

Fox News Reports on Senate Vote

From CONSTRUCTION PULSE, by John McManus: Call it a bit of breathing room for business, perhaps, or a 451-page cure for insomnia. Still, at least the Senate acted. And decisively at that. For the 20-minute cup-of-coffee lowdown, start with the Wall Street Journal’s account of the 75-24 vote to add a dash of Splenda to the $700 billion financial system rescue plan. Then, rather than getting caught up in the kazillion-plus high-minded op-eds, I’d head straight for the idiot-savant menagerie of cynics, skeptics, and such on Barry Ritholtz’s The Big Picture “Bailout Plan Open Thread,” for a more rewarding debrief on what the plan’s designers are trying to accomplish, and their odds of doing so. Odds are one or more of the 175-plus comments that follow Barry’s coy “What say ye?” teaser will have you thinking, “I wish I’d said that.”

• Check-out this highlight reel of housing and real estate finance executives addressing CNBC questions on the credit crunch spiral.

What puts the crisis in housing crisis now, as in this minute, is access to working capital. Builders, remodelers, architects, apartment owners, developers and managers, and trades of all stripes are more apt than not to operate among the ranks of the U.S.’s 27 million companies that employ 500 people or less, but that collectively employ 40% of the U.S. workforce.

Are you having trouble getting banks to front you the cash you need to run your everyday operations?

The New York Times reports:

Even with the current turmoil in the credit markets, big established businesses generally have far greater access to credit than their smaller cousins. For borrowing, small businesses often rely on banks, credit cards and small-business loans. Big businesses have substantial bank lines of credit that they can draw down as needed if they have trouble issuing new debt, usually a less expensive option. While the markets remain cool to financial companies and those with any hint of debt problems, many corporations have been able to sustain their financing, often by selling commercial paper, a form of short-term financing, albeit at higher rates than a month ago.

• For an informative backgrounder on the link between the global economic slowdown and the credit lock up, have a look at Business Week’s analysis.

When housing is the engine of the economy, the economy prospers. When housing vapor locks, which it does cyclically, the economy sputters and stalls. The moment consumers started to spend more at Wal-Mart and less at LVMH, it should have become clear that statements like, “The fundamentals of the economy are strong” must be taken with many grains of salt. Or dismissed.

Yes, we have new jobs data from the Labor Department this morning. It should come as no surprise that the data surprised Wall Street economic forecasters, exceeding their estimates. 

The four-week average of new claims, which attempts to smooth out volatility, rose 11,500 to 474,000. That’s the highest since October 2001 and well above levels typically consistent with declines in monthly employment.

The “benign scenario” for where things may head, per [HousingCrisis.com parent Hanley Wood's majority shareholder] JP Morgan U.S. chief economist Bruce Kasman on CNBC this a.m., is for a peak of 7% unemployment, and a six to nine month global economic contraction. After a string of “worst-case scenarios,” maybe we’re due for a “benign scenario.”