They use to refer to John Kerry as a flip flopper when he was running against George W. Bush for the presidency. Now both Bush and Ben Bernanke, in a matter of a week, change their stance on the state of the American economy. Only last Friday did the two come to terms with a reality the rest of the United States was living.

President Bush on Friday acknowledged more starkly than ever that the economy has slipped into trouble, dogged by falling home prices and turmoil in financial markets.

“Our economy obviously is going through a tough time,” the president told the Economic Club of New York in a morning speech at a Midtown Manhattan hotel.

Shortly after Mr. Bush spoke, Ben S. Bernanke, the Federal Reserve chairman, issued fresh warnings about the gathering wave of home foreclosures while pledging new regulations to limit the impact and crack down on predatory mortgage lending.

“Foreclosure rates have increased substantially,” Mr. Bernanke said during a speech in Washington before a meeting of the National Community Reinvestment Coalition.

“Behind these disturbing statistics are families facing personal and financial hardship and neighborhoods that may be destabilized by clusters of foreclosures,” Mr. Bernanke said. (NYT)

I’ve never expected anything from our president. As Maureen Dawd points out, “Boy George crashed the family station wagon into the globe and now the global economy. Yet the more terrified Americans get, the more bizarrely carefree he seems.”

But Bernanke is someone I respected. He doesn’t come from a family that made most money by owning oil companies, like the man who appointed him. And he is an intelligent individual that understands, and has always been fascinated with, economic depression and the Fed”s role during these times. He wrote “Essays on the Great Depression“.

One would think Bernanke would be more in tune with the struggles of middle and lower class American families. But we’ve yet to see him take any real action to slow down their affliction. Instead, he bails out rich douche bags breaking his own conservative rule about the Fed interfering too much in the financial markets.

The Federal Reserve seemed to toss out the rule book altogether when it assumed the role of white knight, temporarily bailing out Bear Stearn.

Mr. Bernanke has become Wall Street’s most important and most powerful friend. Many executives are praising him for his creativity and willingness to act boldly. (NYT)

Back in 1998, when the Long Term Capital Management hedge fund required a Fed-arranged bailout, Bear Stearns refused to join the rescue effort. Jimmy Cayne, then chief executive at the firm, told the Fed to take a hike. (NYT)

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Don’t believe any comment is necessary from my part. What do you think?

“The Federal Reserve is not currently forecasting a recession,” Bernanke said. “We are forecasting slow growth.” (MSNBC)

On one issue particularly worrisome to American consumers, there are indications that paying $4 for a gallon of gasoline is not out of the question once the summer driving season arrives. Asked about that, Bush said “That’s interesting. I hadn’t heard that. … I know it’s high now.” (AP)

“I would say, by any commonsense definition, we are in a recession,” Buffett said.(AP)

Home foreclosures hit new highs and the amount of equity in homes reached new lows as the housing crisis escalated across the country in 2007, new figures showed Thursday.

The number of foreclosures was at the highest level since the Mortgage Bankers Association began keeping records in the 1970s. (LAT)

A jobs report yesterday showed that employers nationwide slashed 85,000 jobs since the beginning of the year, in the clearest sign yet that the economy has entered or is verging on recession. (WashingtonTimes)

The dollar sank to a new low Friday against the euro, which extended its first-ever rise above $1.54 after data showed U.S. job cuts hitting the biggest monthly number in five years.(SOS)

With prices continuing to march higher for commodities ranging from corn to wheat, food companies are cutting costs, raising prices and otherwise adjusting to tighter margins for the long haul.

For consumers, it means higher grocery bills and restaurant tabs. Consumer food prices are expected to increase 3% to 4% this year, on top of the 4% increase in 2007, according to the Agriculture Department. (WSJ)

houseINhandsAs houses foreclose in many parts of the country faster than they are sold, many homeowners struggling to make their mortgage payments find that it is much easier to simply walk out of their homes. Since their property values are only going down, the option to refinance is not possible. So their resolution seems more logical than to continue to barely make payments in order to delay the inevitable.

Late, but eventually, many policy makers have realized that the cause of the deteriorating American economy is due in great part to subprime borrowing and predatory lending. And in order to avoid the looming recession, there have been many attempts to keep the troubled homeowners to stay in their homes.

Treasury Secretary Henry Paulson and banks representing half the U.S. mortgage market agreed to offer 30-day freezes on foreclosures, acknowledging the need for a stronger response to the worst housing slump in a generation. (Bloomberg)

The 30-day freeze program, dubbed Project Lifeline, is an effort to give the distressed borrowers additional time to modify their loans with their loan servicer to a more affordable monthly payment.

But the attempts proves to be futile. And the foreclosure rates continue to climb at record high levels.

During January, it was reported this week by RealtyTrac, there were 153,745 initial foreclosure notices sent out in the United States. That dwarfed the 43,000 total sales of newly built single-family homes and amounted to nearly half the total sales figure, which includes sales of existing homes and condominiums. (NYT)

But one of the latest proposals could very well be the light at the end of the tunnel. Office of Thrift Supervision Director John Reich proposes the most viable plan yet yesterday on Capitol Hill.

Under the OTS proposal, homeowners would be able to refinance their mortgages at the current market values, with the lenders getting “negative-equity certificates” to be redeemed once the home is sold.

Negative-equity certificates may help servicers limit their losses and avoid an “avalanche of borrowers who choose to walk away from the mortgage,” Scott Polakoff, the OTS senior deputy director, said yesterday. The Federal Housing Administration could help homeowners refinance, he said. (Bloomberg)

Essentially, the troubled borrower can refinance his or her house at current market value — which likely is lower than when the house was initially purchased — during which time the OTS will agree to cover the difference. The difference is what is here being referred to as “negative-equity certificates.”

When it eventually comes time to sell the home — ideally when the home value rises above the initially bought price — the negative-equity certificates will be redeemed by the OTS.

This plan seems to be the most viable of all laid out on a grand scale. It’s not a hand out, because it’s not asking the government to purchase the mortgage directly. It simply allows the homeowners to modify their loan while remaining in their homes with dignity.

The plan is at its infancy stage and only time will tell if it’ll come to fruition over the course of the next few weeks.