The Wall Street Journal reports that just two days after announcing plans to sell as much as $5 billion in shares of Citigroup, the U.S Treasury Department has canceled the sale.
This has been done due to the low prices that would have caused the agency to lose money.
Yesterday President Obama said that after the government bailed the nation’s banks out of a crisis “largely of their own making”, so now they are obliged to help in accelerating the U.S. economic recovery.
After a White House meeting with bank executives Obama said that as extraordinary assistance has been received by America’s banks from American taxpayers so now as they’re back on their feet, so the government is anticipating an extraordinary commitment from them to help rebuild the economy.
It is possible that the market may see a two-thirds chance of a rate rise by the end of this year, with the rate having risen by 1 percentage point by the middle of next year.
The outlook for interest rates is moving really quickly, so it is possible that the decision to start raising could come by the end of this year. But many factors need to be considered before a decision is made.
Defaults and Late payments on home-equity loans and credit cards are climbing to the highest levels. According the the American Banker’s Association the figures are alarming and disturbing. The worst hit area is home-equity loans. If this trend continued, it has a potential to develop into a major credit crisis in near future.
In my opinion availability of cheap credit and rising house prices during early part of this decade created a window for home owners to take home-equity loans. Consumers were literally treating their homes like they were liquid assets (cash in bank or ATM). They were buy consumables and services(insane). All was well until the home prices started going down and down. The market collapsed and the consumers were left in pile of debt. 
The data shows that default rates on home equity loans have climbed to more than 3.5 percent in first quarter of 2009. The late payments on credit cards is also touching 2% levels. This is a big jump compared to the figures this time last year.
The major contribution in this mess is Un-employment. According to official data, every 1 in 10 person is out of job. This is national average. there are states where every 1 in 8 people is out of job. worse thing is that is just a beginning. Job losses will keep on rising and people’s ability to pay their bills will come to a grinding halt.
On Monday morning there has been a slump in the energy sector and so the worries about the upcoming earnings season weighed on U.S. stocks.
Along with the stock market the commodity had been putting in solid gains, which is helped by an influx of speculative bets by those traders who are willing to take on risk. But during the recent sessions, this has been hurt by the investor’s worries about the weakness in demand due to the global recession, which now probably looks like that it will last longer than what is expected by many traders expected. 
In New York recently crude futures were down $2.54 to $64.19 a barrel, which leads to a broad decline in raw materials. The Dow Jones-UBS Commodity Index was off 2.9%.
One relatively encouraging thing however come from the relatively low-bar set by the year-ago period taken as a comparison to the forthcoming numbers. It has been said by veteran traders and analysts that it’s getting much easier for companies to beat analysts’ earnings expectations with each passing quarter since the U.S. economy has now been in recession for more than a year and a half.
It was said by Warren Buffet a Billionaire investor that a recovery in the U.S. economy will take time as signs of any rebound is not being seen by him at his businesses spanning retailing, manufacturing and energy.
Buffett is the chairman and chief executive officer of Omaha, Nebraska-based Berkshire Hathaway Inc. Buffet told CNBC that In terms of the economy coming back, it will take sometime. He further said that “Everything we see about the economy is we’ve had no bounce.”
It was said by the Commerce Department on May 31 that the U.S. gross domestic product has fallen in the first quarter, it is dropping at an annual pace of 5.7 percent, the said May 31.
In May 2009, Interest rates were at their lowest. 4.75% was indeed a historic low. If we look at national averages for June 2009, the interest rates are swinging around 5.75%.
If we look at trends, Interest rates for fixed mortgages are climbing up all over United States. This pressure on mortgage rates is mainly external. As some news reports suggest, The major players in US Debt market , are still not satisfied with the economical and fiscal measures taken by US Govt. This adds pressure on interest rates and liquidity situation in housing market is still very bleak. 
Those borrowers who have decided to refinance, as well as those who are passing through the process of refinancing, should take the decision keeping in view the current market conditions and interest rates, the current conditions of housing market are indicating that the borrowers should not refinance at this stage. So what should they do? Should they quit and try again later?
I don’t think so that the only solution is to quit. Here are a few things that you should take into consideration before giving up on a mortgage refinance.
We might say that the rates are higher than they were, But they have not reached their peak,they’re still relatively low.
As once said by a very smart man, in the form of a mathematical formula, “It’s all relative.” Now this statement seems to be more true in the area of mortgage interest rates. Last month a full point rise like we’ve seen has been a part of conversation among the media people, they talked about this depressing stuff like a “stillborn housing recovery.”
It is not possible to recover the US economy unless house prices are allowed to fall to such levels that can be easily paid by an individual on a normal salary. Housing “affordability” programs are the prime evil of the economy due to which debt is encouraged; this makes prices higher, not lower.
True Affordability
What true affordability means is not more debt but it rather means lower prices. More debt has been created by the government’s false affordability programs that can ever possibly be repaid. Credit rating agencies are speaking falsely about the value of this debt, scaring off investors.
The economy will work again when house prices finally fall to affordable levels, instead of investing on financial speculation, there will be investment based on real production, jobs will be created, and people will earn and spent money.
