JUST READ THE HEADLINES
If you want to know the general direction of the economy and thus the housing market, since it makes up almost 21% of the economy, just read this selection of headlines.
05/11/09U.S. Economic Growth Seen Resuming in Third Quarter - ReutersRupert Murdoch:
The Worst Is Over - MoneyNEWS
05/12/09The Return Of The Homebuilders -
CNNMoney
05/13/09Illinois Home Foreclosures Slow In April - AP
'Good Bad' Economy Inspires Consumers as Slump Eases (Update 1) - Bloomberg Press"Consumer confidence rose last month by the most in two years, and the pace of job losses declined. The Standard & Poor's 500 Index climbed 34 percent, as of yesterday, from a low March 9 -- the biggest such move over a similar time span since the 1930s..."
"Fifty-two economists predict personal consumption will start rising in July, according to a Bloomberg survey..."
"A Bloomberg survey of users on six continents showed that confidence in the global economy rose to the highest level in 19 months."
05/14/09Housing Market May Be Healing Itself - Forbes
Obama Administration To Expand Housing Plan – AP
05/15/09U. S Industrial Production Falls Less Than ForecastBloomberg - Courtney Schlisserman - "Industrial production in the U.S. fell in April at the slowest pace in six months, signaling manufacturing may be stabilizing." U.S. CPI Data Points To Easing RecessionReuters - Lucia Mutikani and Emily Kaiser - "U.S. consumer prices were unchanged in April from March and industrial output declined at a slower pace, reports showed on Friday, providing more evidence that the worst phase of the recession may be over..."
Prices Suggest Little Deflation RiskWall Street Journal - Brian Blackstone - "Annual U.S. inflation measures plunged deeper into the red last month, as falling energy and food prices brought consumer prices down by their fastest 12-month rate in over a half century."
While it wasn't all good news last week, the overwhelming theme in these headlines is, the economy is showing signs of recovery and so does housing.
This article was taken from the ECONOMIC FORCAST Volume 13, Issue 19
Saturday, May 16, 2009
Friday, March 20, 2009
FROM ECONOMIC FOCUS
Volume 13, Issue 11
For the week of March 13, 2009
AN ATTACK ON "A SACRED COW"
There is a number of economists who are advocating that home mortgage interest deductions be radically revised.
Edward L. Glaeser, a professor of economics at Harvard recently published a piece on the New York Times blog Econimix that suggests it is time to reevaluate the "sacred Cow" as he puts it, home mortgage deductions.
According to Glaeser a wide range of economists are faulting the deduction for several reasons:
1. "Subsidizing interest payments encourages people to leverage themselves to the hilt to bet on housing markets...that leverage means that a housing price swings can easily wipe people out."
2. "The deduction pushes up prices in places where the supply of new homes is constrained, as it is in many coastal markets...the only effect is to make prices go up"
3. "The deduction is wildly regressive." Thus the higher the mortgage interest amount the higher the deduction.”
4. "The deduction encourages people to buy larger, single-family detached home, and that increases carbon emissions and pushes people oft of cities. The deduction encourages people to buy more expensive homes, which are generally bigger homes. Bigger homes use more energy."
5. "The home mortgage interest deduction is poorly designed to encourage homeownership, which is, after all, the alleged desideratum."
Glaeser then proposes:
"Enact legislation now that will gradually decrease the cap on the mortgage principal for which homeowners can deduct interest payments by $100,000 a year over the next seven years until it hits $300,000."
"The effect during the next two years should be sufficiently small that it will be unnoticeable in the current environment. Ending the madness of encouraging Americans to be everything on housing, we can hopefully reduce the odds of a tragic repeat of the current boom-bust cycle."
In an extensive search of the factors contributing to the current housing crisis mortgage interest deductions didn’t even rate a mentioned, except in academic circles.
To the contrary, interest deduction has proven to be an encouragement for and an exclusive benefit of homeownership. The deduction has also proven to be a stabilizing factor in homeownership. It has been a central pillar in the housing industry for many years and there is no evidence of any negative impact on the housing market. However, tweaking with the benefit could very well have a disastrous effect.
Volume 13, Issue 11
For the week of March 13, 2009
AN ATTACK ON "A SACRED COW"
There is a number of economists who are advocating that home mortgage interest deductions be radically revised.
Edward L. Glaeser, a professor of economics at Harvard recently published a piece on the New York Times blog Econimix that suggests it is time to reevaluate the "sacred Cow" as he puts it, home mortgage deductions.
According to Glaeser a wide range of economists are faulting the deduction for several reasons:
1. "Subsidizing interest payments encourages people to leverage themselves to the hilt to bet on housing markets...that leverage means that a housing price swings can easily wipe people out."
2. "The deduction pushes up prices in places where the supply of new homes is constrained, as it is in many coastal markets...the only effect is to make prices go up"
3. "The deduction is wildly regressive." Thus the higher the mortgage interest amount the higher the deduction.”
4. "The deduction encourages people to buy larger, single-family detached home, and that increases carbon emissions and pushes people oft of cities. The deduction encourages people to buy more expensive homes, which are generally bigger homes. Bigger homes use more energy."
5. "The home mortgage interest deduction is poorly designed to encourage homeownership, which is, after all, the alleged desideratum."
Glaeser then proposes:
"Enact legislation now that will gradually decrease the cap on the mortgage principal for which homeowners can deduct interest payments by $100,000 a year over the next seven years until it hits $300,000."
"The effect during the next two years should be sufficiently small that it will be unnoticeable in the current environment. Ending the madness of encouraging Americans to be everything on housing, we can hopefully reduce the odds of a tragic repeat of the current boom-bust cycle."
In an extensive search of the factors contributing to the current housing crisis mortgage interest deductions didn’t even rate a mentioned, except in academic circles.
To the contrary, interest deduction has proven to be an encouragement for and an exclusive benefit of homeownership. The deduction has also proven to be a stabilizing factor in homeownership. It has been a central pillar in the housing industry for many years and there is no evidence of any negative impact on the housing market. However, tweaking with the benefit could very well have a disastrous effect.
Saturday, February 14, 2009
A VIEW OF THE BOTTOM
From: ECONOMIC FOCUS
Volume 13, Issue 6
For the week of February 16, 2009
A VIEW OF THE BOTTOM
Celia Chen of Economy.com delivers some of the most insightful and accurate observations in the industry. Recently, she published her commentary, "Housing in Crisis: A Bottom Comes Into View", in which she highlighted some interesting observations and predictions:
"The worst housing downturn in memory will stabilize by the end of the year.
The severe correction has helped to rebalance many of the excesses that built up earlier in the decade.
Although economic conditions are dark, swift and strong policy action will help end the correction.
The subsequent recovery in housing markets will be weak.”
The main theme is that the U.S. housing market has gone from bad to worse and dragged the broader economy into a serious downturn. Washington has not yet been able to break the downward spiral. But key to her prediction is that President Obama and the new Congress will quickly act to stimulate the economy and to mitigate mortgage foreclosures.
What Is The Evidence Of A Bottom?
"Prices are coming back to earth", say Ms. Chen. This is evidenced by many of the pricing excesses of recent years having corrected, noting that housing prices have fallen in about 70% of all metro areas, according to Fiserv's Case-Shiller home price index.
"Counting on help - thus, notwithstanding the intensifying economic gloom, the bottom of the nation’s housing downturn is coming into view. This outlook assumes stronger action by policymakers. Even with further government intervention, the recession will keep the housing market form fully recovering until the end of 2009. But with such help, sales are likely at bottom, stabilized by foreclosures. Construction will hit bottom in the first half of this year, although the pace of housing starts will remain depressed until 2011. The national Chase-Shiller house price index will stabilize by year end. From peak to trough, Moody’s Economy.com expects that total single-family home sales will have declined by 40%, housing starts by 70%, and the CSI by about 36%."
"...if the government is unable to implement an effective plan, the housing market could weaken further. In our worst-case scenario, depreciation in house prices would continue and deepen for a total 45% peak-to-trough decline."
WASHINGTON, ARE YOU LISTENING?? Key Economic Reports Released This Week
RELEASEDATE
ECONOMICINDICATORS
RELEASEDBY
CONSENSUS
Wt.
INFLUENCE ONINTEREST RATES
Tue 02/171:00 pm et
Weekly Bill Auction
Dept. of the Treasury
N/A
**
If strong demand If weak demand
Tue 02/171:00 pm et
NAHB Housing Indexfor Feb '09
National Associationof Home Builders
N/A
**
Undetermined
Wed 02/187:00 am et
MBA Mog Apps Survey for week ending 02/13
Mortgage Bankers Association of America
N/A
*
Undetermined
Wed 02/188:30 am et
Housing Sts / Bldg Permitsfor Jan '09
Bureau of the CensusDept. of Commerce
530.00M
***
If above consensus If below consensus
Wed 02/188:30 am et
Import & Export Pricesfor Jan '09
Bur. of Labor StatisticsDepartment of Labor
ImPrice -1.5%
*
If above consensus If below consensus
Wed 02/189:15 am et
Ind Prod/Cap Utilizationfor Jan '09
Federal Reserve Board
IP -1.4%CU 72.4%
***
If above consensus If below consensus
Wed 02/182:00 pm et
FOMC Meetingsfor 01/27 - 01/28 meeting
Federal Reserve BoardFed Open Market Committee
N/A
****
Determines Policy
Thu 02/198:30 am et
Jobless Claimsfor weekending 02/14
Bur. of Labor StatisticsDepartment of Labor
623K
*
If above consensus If below consensus
Thu 02/198:30 am et
Producer Price Indexfor Jan '09
Bur. of Labor StatisticsDepartment of Labor
0.2%core 0.1%
***
If above consensus If below consensus
Thu 02/1910:00 am et
Philadelphia Fed Surveyfor Feb '09
Federal Reserve Board
-25.0
**
Undetermined
Fri 02/208:30 am et
Consumer Price Indexfor Jan ' 09
Bur. of Labor StatisticsDepartment of Labor
0.3%core 0.1%
***
If above consensus If below consensus
* Low Importance
** Moderate Importance
*** Important
**** Very Important
Volume 13, Issue 6
For the week of February 16, 2009
A VIEW OF THE BOTTOM
Celia Chen of Economy.com delivers some of the most insightful and accurate observations in the industry. Recently, she published her commentary, "Housing in Crisis: A Bottom Comes Into View", in which she highlighted some interesting observations and predictions:
"The worst housing downturn in memory will stabilize by the end of the year.
The severe correction has helped to rebalance many of the excesses that built up earlier in the decade.
Although economic conditions are dark, swift and strong policy action will help end the correction.
The subsequent recovery in housing markets will be weak.”
The main theme is that the U.S. housing market has gone from bad to worse and dragged the broader economy into a serious downturn. Washington has not yet been able to break the downward spiral. But key to her prediction is that President Obama and the new Congress will quickly act to stimulate the economy and to mitigate mortgage foreclosures.
What Is The Evidence Of A Bottom?
"Prices are coming back to earth", say Ms. Chen. This is evidenced by many of the pricing excesses of recent years having corrected, noting that housing prices have fallen in about 70% of all metro areas, according to Fiserv's Case-Shiller home price index.
"Counting on help - thus, notwithstanding the intensifying economic gloom, the bottom of the nation’s housing downturn is coming into view. This outlook assumes stronger action by policymakers. Even with further government intervention, the recession will keep the housing market form fully recovering until the end of 2009. But with such help, sales are likely at bottom, stabilized by foreclosures. Construction will hit bottom in the first half of this year, although the pace of housing starts will remain depressed until 2011. The national Chase-Shiller house price index will stabilize by year end. From peak to trough, Moody’s Economy.com expects that total single-family home sales will have declined by 40%, housing starts by 70%, and the CSI by about 36%."
"...if the government is unable to implement an effective plan, the housing market could weaken further. In our worst-case scenario, depreciation in house prices would continue and deepen for a total 45% peak-to-trough decline."
WASHINGTON, ARE YOU LISTENING?? Key Economic Reports Released This Week
RELEASEDATE
ECONOMICINDICATORS
RELEASEDBY
CONSENSUS
Wt.
INFLUENCE ONINTEREST RATES
Tue 02/171:00 pm et
Weekly Bill Auction
Dept. of the Treasury
N/A
**
If strong demand If weak demand
Tue 02/171:00 pm et
NAHB Housing Indexfor Feb '09
National Associationof Home Builders
N/A
**
Undetermined
Wed 02/187:00 am et
MBA Mog Apps Survey for week ending 02/13
Mortgage Bankers Association of America
N/A
*
Undetermined
Wed 02/188:30 am et
Housing Sts / Bldg Permitsfor Jan '09
Bureau of the CensusDept. of Commerce
530.00M
***
If above consensus If below consensus
Wed 02/188:30 am et
Import & Export Pricesfor Jan '09
Bur. of Labor StatisticsDepartment of Labor
ImPrice -1.5%
*
If above consensus If below consensus
Wed 02/189:15 am et
Ind Prod/Cap Utilizationfor Jan '09
Federal Reserve Board
IP -1.4%CU 72.4%
***
If above consensus If below consensus
Wed 02/182:00 pm et
FOMC Meetingsfor 01/27 - 01/28 meeting
Federal Reserve BoardFed Open Market Committee
N/A
****
Determines Policy
Thu 02/198:30 am et
Jobless Claimsfor weekending 02/14
Bur. of Labor StatisticsDepartment of Labor
623K
*
If above consensus If below consensus
Thu 02/198:30 am et
Producer Price Indexfor Jan '09
Bur. of Labor StatisticsDepartment of Labor
0.2%core 0.1%
***
If above consensus If below consensus
Thu 02/1910:00 am et
Philadelphia Fed Surveyfor Feb '09
Federal Reserve Board
-25.0
**
Undetermined
Fri 02/208:30 am et
Consumer Price Indexfor Jan ' 09
Bur. of Labor StatisticsDepartment of Labor
0.3%core 0.1%
***
If above consensus If below consensus
* Low Importance
** Moderate Importance
*** Important
**** Very Important
Saturday, February 7, 2009
Oblivious and Clueless
Volume 13, Issue 5
For the week of February 9, 2009
OBLIVIOUS ON WALL STREET CLUELESS IN WASHINGTON
Wall StreetWhatever has led the executives on Wall Street to believe they can take taxpayer's bail out dollars and not be accountable for how they spend it? Nobody should expect to spend like a drunken sailor with one hand while dipping the other into public coffers. But that is exactly what the bailed out banks and corporations have been doing.
High end corporate junkets to plush spas, humongous golden parachutes for loser executives, expensive new corporate jets, private jets to chauffeur about, and gigantic bonuses for the non-achievers. Oh, what’s a few million here or there? The problem is, the Wall Street players don’t play with their own money; it’s supplied by the endless flow of stockholders. So when that pipeline dries up and they are in dire straits they just turn on the spigot to public funds...bailout dollars. Should we be surprised when those in a habit of using OPM (other people’s money) turn to taxpayer’s (Washington), for their next fix?
Then there is Madoff, who made off with billions of investor dollars. How in the world did he fly so many years under the radar of industry and regulatory watchdogs? But, then again there was at least one industry stalwart that cried wolf for nearly a decade and was ignored by both Wall Street and Washington. Madoff maybe the prince of the Ponzi. This may be the largest private scheme, but it pales in comparison to the king, more about that later.
We are being led to believe that no one on Wall Street had any idea that the junk-loan house of cards would one day implode, just party on.
WashingtonNow, let’s talk about Washington. All through this, the regulators and overseers are clueless to the inevitable disaster as they encourage and promote the bad behavior.
This crew suffers from the same addiction to other people’s money, only it's the taxpayers'. Their behavior mirrors Wall Street.
Consider the recent four star junkets taken by members of Congress and their families. Perhaps the use of government planes to commute between home and Washington. Or special interest contributions to the campaign coffers.
It is little wonder that first bailout dollars go first to their twins on Wall Street and then into their own earmarks and pork barrel projects. They can always raise taxes or borrow from China.
Do you remember the prince of the Ponzi? Well, meet the king. Take a close look at the social security system or any number of other entitlement programs and you have the model Wall Street is mimicking.
Oblivious and clueless, you bet, the whole lot. And now they’re going to fix it with more of our money?
Key Economic Reports Released This Week
RELEASEDATE
ECONOMICINDICATORS
RELEASEDBY
CONSENSUS
Wt.
INFLUENCE ONINTEREST RATES
Mon 02/091:00 pm et
Weekly Bill Auction
Dept. of the Treasury
N/A
**
If strong demand If weak demand
Tue 02/1010:00 am et
Wholesale Tradefor Dec '08
Bureau of the CensusDept. of Commerce
-0.7%
**
Undetermined
Tue 02/101:00 pm et
3-Year Note
Dept. of the Treasury
$32.0Boffering
**
If strong demand If weak demand
Wed 02/117:00 am et
MBA Mtg Apps Survey for week 02/06
Mortgage Bankers Association of America
N/A
*
Undetermined
Wed 02/118:30 am et
International Tradefor Dec '08
Bureau of the CensusDept. of Commerce
-$37.0B
**
If above consensus If below consensus
Wed 02/111:00 pm et
10-Year Note
Dept. of the Treasury
$21.0B
**
If strong demand If weak demand
Wed 02/112:00 pm et
Treasury Budgetfor Jan '09
Dept. of the Treasury
-$78.5B
*
Undetermined
Thu 02/128:30 am et
Jobless Claimsfor week ending 02/07
Bur. of Labor StatisticsDepartment of Labor
612K
*
If above consensus If below consensus
Thu 02/128:30 am et
Retail Salesfor Jan '09
Bureau of the CensusDept. of Commerce
-0.8%x-autos -0.4%
****
If above consensus If below consensus
Thu 02/1210:00 am et
Business Inventoriesfor Dec '08
Bureau of the CensusDept. of Commerce
-0.6%
*
If above consensus If below consensus
Thu 02/121:00 pm et
30-Year Treasury Bond
Dept. of the Treasury
$14.0B
**
If strong demand If weak demand
Fri 02/1310:00 am et
Consumer Sentimentfor Feb ' 09
University of Michigan
61.1
*
If above consensus If below consensus
* Low Importance
** Moderate Importance
*** Important
**** Very Important
This Economic Report was sent to: schwarde@hotmail.com
For the week of February 9, 2009
OBLIVIOUS ON WALL STREET CLUELESS IN WASHINGTON
Wall StreetWhatever has led the executives on Wall Street to believe they can take taxpayer's bail out dollars and not be accountable for how they spend it? Nobody should expect to spend like a drunken sailor with one hand while dipping the other into public coffers. But that is exactly what the bailed out banks and corporations have been doing.
High end corporate junkets to plush spas, humongous golden parachutes for loser executives, expensive new corporate jets, private jets to chauffeur about, and gigantic bonuses for the non-achievers. Oh, what’s a few million here or there? The problem is, the Wall Street players don’t play with their own money; it’s supplied by the endless flow of stockholders. So when that pipeline dries up and they are in dire straits they just turn on the spigot to public funds...bailout dollars. Should we be surprised when those in a habit of using OPM (other people’s money) turn to taxpayer’s (Washington), for their next fix?
Then there is Madoff, who made off with billions of investor dollars. How in the world did he fly so many years under the radar of industry and regulatory watchdogs? But, then again there was at least one industry stalwart that cried wolf for nearly a decade and was ignored by both Wall Street and Washington. Madoff maybe the prince of the Ponzi. This may be the largest private scheme, but it pales in comparison to the king, more about that later.
We are being led to believe that no one on Wall Street had any idea that the junk-loan house of cards would one day implode, just party on.
WashingtonNow, let’s talk about Washington. All through this, the regulators and overseers are clueless to the inevitable disaster as they encourage and promote the bad behavior.
This crew suffers from the same addiction to other people’s money, only it's the taxpayers'. Their behavior mirrors Wall Street.
Consider the recent four star junkets taken by members of Congress and their families. Perhaps the use of government planes to commute between home and Washington. Or special interest contributions to the campaign coffers.
It is little wonder that first bailout dollars go first to their twins on Wall Street and then into their own earmarks and pork barrel projects. They can always raise taxes or borrow from China.
Do you remember the prince of the Ponzi? Well, meet the king. Take a close look at the social security system or any number of other entitlement programs and you have the model Wall Street is mimicking.
Oblivious and clueless, you bet, the whole lot. And now they’re going to fix it with more of our money?
Key Economic Reports Released This Week
RELEASEDATE
ECONOMICINDICATORS
RELEASEDBY
CONSENSUS
Wt.
INFLUENCE ONINTEREST RATES
Mon 02/091:00 pm et
Weekly Bill Auction
Dept. of the Treasury
N/A
**
If strong demand If weak demand
Tue 02/1010:00 am et
Wholesale Tradefor Dec '08
Bureau of the CensusDept. of Commerce
-0.7%
**
Undetermined
Tue 02/101:00 pm et
3-Year Note
Dept. of the Treasury
$32.0Boffering
**
If strong demand If weak demand
Wed 02/117:00 am et
MBA Mtg Apps Survey for week 02/06
Mortgage Bankers Association of America
N/A
*
Undetermined
Wed 02/118:30 am et
International Tradefor Dec '08
Bureau of the CensusDept. of Commerce
-$37.0B
**
If above consensus If below consensus
Wed 02/111:00 pm et
10-Year Note
Dept. of the Treasury
$21.0B
**
If strong demand If weak demand
Wed 02/112:00 pm et
Treasury Budgetfor Jan '09
Dept. of the Treasury
-$78.5B
*
Undetermined
Thu 02/128:30 am et
Jobless Claimsfor week ending 02/07
Bur. of Labor StatisticsDepartment of Labor
612K
*
If above consensus If below consensus
Thu 02/128:30 am et
Retail Salesfor Jan '09
Bureau of the CensusDept. of Commerce
-0.8%x-autos -0.4%
****
If above consensus If below consensus
Thu 02/1210:00 am et
Business Inventoriesfor Dec '08
Bureau of the CensusDept. of Commerce
-0.6%
*
If above consensus If below consensus
Thu 02/121:00 pm et
30-Year Treasury Bond
Dept. of the Treasury
$14.0B
**
If strong demand If weak demand
Fri 02/1310:00 am et
Consumer Sentimentfor Feb ' 09
University of Michigan
61.1
*
If above consensus If below consensus
* Low Importance
** Moderate Importance
*** Important
**** Very Important
This Economic Report was sent to: schwarde@hotmail.com
Friday, November 28, 2008
October home sales in Lake Havasu, plus YTD
The attached link gives you some general information for the LHC market. The media loves to quote national sales numbers, which is so not helpful. Pay attention to your
local market. Yes, what is happening on a national level is good information, but local is unique and where your focus should be. Lake Havasu is especially unique, we host several types of buyers, vacation, retirement,and of course your regular families.
You will see some positive and negative numbers in this report, sales are up, sales price's are down.
Sept 07-Nov 07 Sold 117 homes, price range 129k-1.1 mil
Solds Sept. 08 Nov 08 174 homes price range 60k-1 mil.
Active in LHC as of Nov.24th
SINGLE FAM: active 1273
local market. Yes, what is happening on a national level is good information, but local is unique and where your focus should be. Lake Havasu is especially unique, we host several types of buyers, vacation, retirement,and of course your regular families.
You will see some positive and negative numbers in this report, sales are up, sales price's are down.
Sept 07-Nov 07 Sold 117 homes, price range 129k-1.1 mil
Solds Sept. 08 Nov 08 174 homes price range 60k-1 mil.
Active in LHC as of Nov.24th
SINGLE FAM: active 1273
Monday, November 24, 2008
Are we bailing fast enough?
700 Billion dollars!!! I can not even wrap my mind around this number. The more and faster Uncle Sam pours money into failing company's , the faster the boat fill with more water.
Maybe its time to fix the leak, and stop bailing? Good information in this months
Economic Focus;
Volume 12, Issue 43
For the week of November 24, 2008
ENTER THE NEW GUARD
With Congress and the current Administration concentrating their attention on big Wall Street players and the Auto industry, other sectors of big business are lining up with tin cups vying for "their" share of the bail-out funds.
The thing is this whole financial mess was created by loose mortgage lending standards adapted at the government's insistence. Practices that continued with little government oversight and escalated into the international whirlwind we now have.
Now, Washington is rescuing the Wall Street and other financial intuitions and investors that have been disrupted by the mess but continue to overlook the housing industry that has propped up the economy for the past decade plus.
Enter the new guard
President-elect Barak Obama is floating intentions to appoint New York Federal Reserve President Timothy Geithner to become his Treasure Secretary. Geithner, who is Barak Obama's age, has been a crucial player in the government’s attempt to cure the credit crisis.
In the meantime, FDIC chairwoman Sheila Bair has proposed a plan for troubled mortgage holders.
Bair was appointed by President Bush to a five year term as head of the FDIC. In July the FDIC took over the bank IndyMac and has been unwinding thousands of their loans. Bair proposes this model for mortgage modifications nationwide. The target is to lower existing interest rates and/or extend amortizations.
Under this plan home loans would have to meet FDIC conformance limits, which would exclude more expensive homes. If the borrower defaults on the new loan, the FDIC would share up to half of the losses with the mortgage lender.
This is a large number but currently there are 7.5 million homeowners who owe more than their homes are worth, with another 2.1 million following if home prices decline another 5 percent.
According to First American CoreLogic, a data tracking service, in 3Q08 nearly one in five homes went upside down.
It is estimated that interest-rate resets will equal $30 to $50 billion a month in 2009 through 2011.
Maybe its time to fix the leak, and stop bailing? Good information in this months
Economic Focus;
Volume 12, Issue 43
For the week of November 24, 2008
ENTER THE NEW GUARD
With Congress and the current Administration concentrating their attention on big Wall Street players and the Auto industry, other sectors of big business are lining up with tin cups vying for "their" share of the bail-out funds.
The thing is this whole financial mess was created by loose mortgage lending standards adapted at the government's insistence. Practices that continued with little government oversight and escalated into the international whirlwind we now have.
Now, Washington is rescuing the Wall Street and other financial intuitions and investors that have been disrupted by the mess but continue to overlook the housing industry that has propped up the economy for the past decade plus.
Enter the new guard
President-elect Barak Obama is floating intentions to appoint New York Federal Reserve President Timothy Geithner to become his Treasure Secretary. Geithner, who is Barak Obama's age, has been a crucial player in the government’s attempt to cure the credit crisis.
In the meantime, FDIC chairwoman Sheila Bair has proposed a plan for troubled mortgage holders.
Bair was appointed by President Bush to a five year term as head of the FDIC. In July the FDIC took over the bank IndyMac and has been unwinding thousands of their loans. Bair proposes this model for mortgage modifications nationwide. The target is to lower existing interest rates and/or extend amortizations.
Under this plan home loans would have to meet FDIC conformance limits, which would exclude more expensive homes. If the borrower defaults on the new loan, the FDIC would share up to half of the losses with the mortgage lender.
This is a large number but currently there are 7.5 million homeowners who owe more than their homes are worth, with another 2.1 million following if home prices decline another 5 percent.
According to First American CoreLogic, a data tracking service, in 3Q08 nearly one in five homes went upside down.
It is estimated that interest-rate resets will equal $30 to $50 billion a month in 2009 through 2011.
Saturday, November 8, 2008
To spend or not to spend...
Trust, hard to gain , and once lost, how do you trust again? The report below, on our current financial mess, speaks to the heart of the issue. As Bill O'Reilly explains and explores in his book, "Who is looking out for you?" there aren't many out there who are looking out for you.
Does our Government? Our financial leaders? It appears they not only don't look out for us, they have no shame in their overt grab for more of our hard earned money. How many more bail outs of these monolithic , miss-managed companies are we expected to save? GM, Chrysler et al; next, will it be the airlines? Because, God forbid, it will be the taxpayers fault if jobs are lost.
No! it is no-one's fault but the greedy un-inspired leaders of these companies and agencies!
These guys feel so bad, they need another 400k retreat to get them back on track.
How hard was it in 1974, to figure out that smaller cars might be the way to go. So we bought smaller cars,then, gas became plentiful again and we got lulled into believing the spin, bigger, faster more luxurious, homes, cars, toys.
I remember saying to all who would listen, I will never pay more for a car, than I did my first home (which BTW, was 24k) That squealing in my brain over spending more than that for something which will loose value faster than Big Mac sitting under the warming lamp over an hour, that sound ,was my common sense. Hmm... where did that go? Because of course sometime in the last few years, I broke that vow to self. No more I say! When the common sense squeals , I will listen. So who do you trust? Trust that squeal, you may want to listen to the seductive sounds assailing you night and day. "you are qualified for a 500k mortgage" "you deserve this leather and GPS system" " we are FDIC insured"
Close your eyes and plug your ears, you know the answer , start listening to the squeal!
Volume 12, Issue 42
For the week of November 10, 2008
HE WHO CONTROLS CREDIT CONTROLS THE MARKETS
Time was when cash was the currency that ran through the veins of the economy. Over the years we have replaced cash money with credit as the currency that runs in our financial veins. So when the purse strings of credit tighten, as they have in recent months, we find the entire global economy turned upside down.
The economic spotlight continues to beam on credit...consumer, commercial, institutional, government and every other conceivable source of credit and borrowing. The new axiom is "whoever controls credit controls the markets."
That will work so long as there is trust within the economy’'s circulation. But when trust has been broken the whole system runs a risk of imploding.
The U.S. economy runs on the slogan "in God we trust" or is it "in Uncle Sam we trust." Well, it is the latter, as we have grown to place our total financial well being in the credit and good faith of the government of the United States.
Fanny Mae and Freddie Mac, while under government oversight, instigated and promoted the mortgage debacle we now face. Washington's first response was to dip further into the taxpayers’ pockets to cover their mismanagement and attempt to right the ship. This first rescue package is just the tip of this credit-less iceberg.
It is no wonder that private sector banks are holding onto cash. When trust is broken as it has been, with the misrepresented quality of mortgage investments, it is natural for those at risk (lenders and investors) to shut off credit.
Trouble is, the mess has spread into the entire global economy and we can't hope to float this out of treacherous waters on the backs of U.S. taxpayers. It is going to take a fundamental change in the way governments and their citizenry handle cash and credit. It can no longer be business as usual. Everyone has to take financial responsibility and keep spending in line with income.
Today, we see what can happen when we try to fill the sink hole with a few trillion dollars. The crisis will require more money, for sure. But a stiff measure of spending restraint and self-discipline in Washington must accompany it in order to restore confidence on Main Street. Great leadership is what is needed to turn on the tap that opens the flow of credit again.
Does our Government? Our financial leaders? It appears they not only don't look out for us, they have no shame in their overt grab for more of our hard earned money. How many more bail outs of these monolithic , miss-managed companies are we expected to save? GM, Chrysler et al; next, will it be the airlines? Because, God forbid, it will be the taxpayers fault if jobs are lost.
No! it is no-one's fault but the greedy un-inspired leaders of these companies and agencies!
These guys feel so bad, they need another 400k retreat to get them back on track.
How hard was it in 1974, to figure out that smaller cars might be the way to go. So we bought smaller cars,then, gas became plentiful again and we got lulled into believing the spin, bigger, faster more luxurious, homes, cars, toys.
I remember saying to all who would listen, I will never pay more for a car, than I did my first home (which BTW, was 24k) That squealing in my brain over spending more than that for something which will loose value faster than Big Mac sitting under the warming lamp over an hour, that sound ,was my common sense. Hmm... where did that go? Because of course sometime in the last few years, I broke that vow to self. No more I say! When the common sense squeals , I will listen. So who do you trust? Trust that squeal, you may want to listen to the seductive sounds assailing you night and day. "you are qualified for a 500k mortgage" "you deserve this leather and GPS system" " we are FDIC insured"
Close your eyes and plug your ears, you know the answer , start listening to the squeal!
From: Econonmic Focus
Volume 12, Issue 42
For the week of November 10, 2008
HE WHO CONTROLS CREDIT CONTROLS THE MARKETS
Time was when cash was the currency that ran through the veins of the economy. Over the years we have replaced cash money with credit as the currency that runs in our financial veins. So when the purse strings of credit tighten, as they have in recent months, we find the entire global economy turned upside down.
The economic spotlight continues to beam on credit...consumer, commercial, institutional, government and every other conceivable source of credit and borrowing. The new axiom is "whoever controls credit controls the markets."
That will work so long as there is trust within the economy’'s circulation. But when trust has been broken the whole system runs a risk of imploding.
The U.S. economy runs on the slogan "in God we trust" or is it "in Uncle Sam we trust." Well, it is the latter, as we have grown to place our total financial well being in the credit and good faith of the government of the United States.
Fanny Mae and Freddie Mac, while under government oversight, instigated and promoted the mortgage debacle we now face. Washington's first response was to dip further into the taxpayers’ pockets to cover their mismanagement and attempt to right the ship. This first rescue package is just the tip of this credit-less iceberg.
It is no wonder that private sector banks are holding onto cash. When trust is broken as it has been, with the misrepresented quality of mortgage investments, it is natural for those at risk (lenders and investors) to shut off credit.
Trouble is, the mess has spread into the entire global economy and we can't hope to float this out of treacherous waters on the backs of U.S. taxpayers. It is going to take a fundamental change in the way governments and their citizenry handle cash and credit. It can no longer be business as usual. Everyone has to take financial responsibility and keep spending in line with income.
Today, we see what can happen when we try to fill the sink hole with a few trillion dollars. The crisis will require more money, for sure. But a stiff measure of spending restraint and self-discipline in Washington must accompany it in order to restore confidence on Main Street. Great leadership is what is needed to turn on the tap that opens the flow of credit again.
Subscribe to:
Posts (Atom)
