Trying to bail out housing is a nightmare.
By Daniel at 18 October, 2009, 10:21 pm
In order to get the market moving the government is doing loans 105% LTV and some to people who end up with 60% debt service to income when the mortgage is combined with other debt. The government is becoming a subprime lender with high default rates that Barney Frank says was to be expected but that it is still good “policy?” Allowing people who shouldn’t be given a loan is good policy? For who?
Why are they doing it? This is part of the reason they are so desperate
quote
“What do you think?” asked a friend at dinner last night. “The way I see it, Obama’s goose is cooked. He’s stuck. He can’t go forward and he can’t back up. He can’t back away from all those promises – including his promise to rescue the US economy. If he does, the voters and his own party will revolt. On the other hand, he doesn’t have the money to go forward. He has to borrow it. And if tries to borrow much more, the Chinese will revolt.
“His only hope is that the economy revives…so he doesn’t have to do anything. And that’s not going to happen.”
Why not? Wait a minute…you already know the answer to that question. Because it’s a depression. It’s the end of the road for the consumer credit economy. Consumers did their best. They borrowed as much as they could. They spent like there was no tomorrow.
But now, it IS tomorrow. And now, they’ve got to settle up.
http://dailyreckoning.com/a-retirement-society/
==============================
Enough of the positive spin! Housing market is awful at best. I do not believe the number of housing starts for one moment. Why would builders risk creating properties that nobody will buy?? Economy is in no way on the rebound. 500,000 more of our fellow Americans will become jobless this week. NO new jobs are being created (outside of burocratic layers of fat made to tax us into oblivion) Retail is dead. Christmas season will be awful and possibly a finale for many businesses. I can go on, but most folks who are breathing already know the score.
So how about some possible solutions, rather than painting a positive outlook over a grim situation?
When the majority of spending for GDP comes from government stimulus and “cash for clunker” type programs, you are in a depression. How deep a one depends on how long they can keep getting foreign loans to keep the economy propped up.
-JP
No comments yet.