Yes - the subprime lending issues hit Australia as well.  No suprise that those collateral debt obligations otherwise known as mortgaged backed securities were purchased by everyone.  National Australia Bank has now stated that they have lost over $798 million dollars American due to the subprime crisis.  The bank CEO has stated that the reason they were purchased as that the mortgaged backed securities because were given AAA ratings.   As well, National Australia Bank stock has fallen by at least 12.7 percent.

The Australian dollar has also dropped from $96.18 to $95.53.  Cost of living has also increased at increasing rate, the most in 17 years.

The short answer is maybe. There is quite a bit to know about the economic stimulus before we can gauge what impact, if any, it will have on the economy. Currently, congress and the white house are still trying to create a deal as to what will be in the economic stimulus plan, but there is some positive news. Basically, Bush and congressional leaders have come up with a plan to try to keep the economy afloat, so that a recession does not occur. There is strong belief in congress that if a law is not passed soon, the United States will have a recession, and some are suggesting that we are currently in a recession.

The definition of a recession is when there have been three consecutive quarters of negative GDP (Gross domestic product) have occurred. For the last 3 quarters we have been having positive GDP, in the third quarter it increased 4.9 percent and in the second quarter 3.8 percent. So a recession, not according to the definition and we are not even close until we begin to start having at least one quarter of negative GDP.

So what does this plan entail? This plan costs the American people $150 billion dollars; it gives individuals a tax rebate equating $600 for an individual and $1200 for married couples making less than $75,000 individual and $150,000 married couple. If you, either single individual or married couple, made at least $3000 in 2007 you will still receive $300 for an individual and $600 for a married couple. By throwing money back into consumer’s pockets the hope is that this will ensure that the GDP continues to keep positive and does not become negative. But there is still a clear problem of energy costs being high, and consumer confidence being very low. As well, this little amount of money will not help the ability of millions of homeowners to purchase.

But, there are some parts of this plan that would help individuals purchase and refinance their properties. Specifically, they are stating that they will increase the GSE for a conforming loan from $417,000 to $625,000 which will allow individuals to refinance at a much lower interest rate. As well, they are speaking about increasing the conforming loan limits for FHA loans from $362,000 to $725,000. By taking these two steps coupled with the reduction of the Federal Reserve interest rate, this will allow individuals that currently have subprime loans to be able to refinance them, in theory. The problem still lies in the ability for these individuals to now get approved for loans under the new guidelines which continue to keep changing. This is especially difficult if the individual has been late, and their credit scores have dropped as a result of late payments. This will make it increasingly more difficult for them to refinance their property before the loan readjusts, if their loan is an ARM.

U.S. mortgage applications rose 1.1% for the week ended July 6, the Mortgage Bankers Association reported July 11. Applications were 10.5% above their year-ago level.

Meanwhile, the National Association of Realtors (NAR) said on July 11 that it expects existing-home sales to rise to nearly 6.4 million units in 2008, up from the 2007 estimate of more than 6.1 million. Nearly 6.5 million existing homes were sold in 2006, NAR said.

As for new homes, NAR projected sales of 865,000 in 2007, and 878,000 next year, but the 2008 projection would still be down more than 20% compared with the nearly 1.1 million new homes sold in 2006.

Consumer borrowing rose at an annual rate of 6.4% in May, far above the small 1.1% gain in April and double what analysts had forecast, the Federal Reserve reported July 9. According to David Wyss, chief economist at Standard & Poor’s, some of the credit card surge reflects the fact that tightening bank standards are making home equity loans harder to obtain and home values are not soaring as they did during the housing boom.

Addressing a National Bureau of Economic Research conference on July 10, Federal Reserve Chairman Ben Bernanke noted that Americans’ expectations about inflation play an important role for Federal Reserve policy makers in their efforts to tame inflation. His talk dimmed hopes for a reduction in the Fed’s key interest rate, which has held steady at 5.25% for just over a year.

This week look for updates on the Producer Price Index on July 17 and the Consumer Price Index on July 18.

Sales of new single-family homes fell 1.6% in May, far better than the 6.2% decline Wall Street had anticipated, the Commerce Department said June 26. The median price of a new home fell 0.9% to $236,100 in May, down from $238,200 in May 2006.

Existing home sales fell 0.3% in May to 5.99 million units, the slowest sales pace in four years, the National Association of Realtors said June 25. The median price of an existing home was $223,700, down 2.1% from a year earlier, marking the 10th straight month that the price has shown a year-over-year decline.

Construction spending in May climbed 0.9%, the largest jump in nearly 18 months, and well above Wall Street’s expectation of a 0.1% rise, the Commerce Department reported June 29. Spending on residential construction, however, fell 0.8% to an annually adjusted rate of $549 billion, the 15th consecutive monthly decrease.

Orders to U.S. factories for big-ticket manufactured goods — expected to last three or more years — dropped by 2.8% in May, the largest amount in four months, and a far bigger slide than the 1% decline economists had forecast, the Commerce Department said June 27. A 22.7% plunge in commercial aircraft orders paced the decline.

Meanwhile, consumer spending in May rose by 0.5% for the second month in a row, the Commerce Department said on June 29. Incomes, which fuel spending, rebounded in May by 0.4%, after falling 0.2% in April.