“I thought a “housing crisis” was when people couldn’t find housing, not when it got cheaper.”
14 Replies to “The 6.6% Solution”
If I recall correctly, the previous year-on-year increase was 15 percent. And this adds to the approximate doubling of the previous decade.
Crisis indeed.
The “crisis” is in whoever holds the bad debt from stupidly financing grossly over-inflated sale prices with little security from the buyer except the hope the inflationary housing price bubble will continue to expand indefinately.
Consequently when the price bubble burst, creditors were left with mortgage defaults that (in hot markets) were almost 25%-50% more than the current deflated value of the home they took back…now even these can’t be sold so the prices plummet.
Realty mutuals, institutional lenders and mortgage companies are folding and going chapter 7…after their devalued realty holdings are liquidated they are on the string to the Fed insurance fund for billions in unrecoverable debt.
You’re fond of trickle down economics, well here it is in the debt cycle…what will the impact on a fed reserve note be when that note now represents billions in unrecoverable debt?
the last time a similar mess to this happened it was induced by the federal liberals with the NEP. took away the revenue and then jacked the interest rates. millions lost , but it was just a correction on those rotten western children.
It is not really a housing crises at all it is a debt crises. There are just too many people that owe too much. All debt must at some point be repaid. If the borrower can’t repay it then it will be paid by the lender or the taxpayers in the case of a government bail out.
It is really only a crisis if you are the fools that lent the money with too little commitment on the part of the buyer, or if you were silly enough to over-extend yourself to buy a home.
Crisis? Are you buying or selling?
The so called “Housing Crisis” had its beginnings in the mid 90’s, when Pres. Clinton signed the new banking laws which mandated banks to loan;a percentage and annually reported, mortgages in minority and slum areas, where traditionally risk adverse banks did not go.
With easing credit and a go go economy sparked by the Bush tax cuts, the fast buck boys entered the game, packaged them and we are off to the races.
Before we all decide the world has come to an end economically speaking, the proposed gov’t aid package to some home owners, a strong job market, and productivity growth, growing exports with the weaker $U.S. will slow the economy but not become a resession.
Like many decisions taking place in business today, there are huge rewards for short term results, at the expense of longevity and stability , while the perpetrators of bad decisions are long gone and avoid facing their own music.
The US mortgage system rewards brokers for originating loans – not quality loans, just any old loan. The originator escapes an immediate penalty for writing a bad loan. There is the problem, right there – it plays so well into a banking system based on debt assets rather than a gold standard.
One would think that the Democrats, the true champions of the people, would have used their newfound power in Congress to introduce legislation that would bring feedback to the loan originators, thus protecting the little people. We should all be sleeping better at night knowing that Reid and Pelosi are on the job, ever watchful for business practices the have dangerous positive feedback loops.
Not to worry, the Hildebeast will save us. Not only is she the smartest woman in the world, she has all that experience.
Crisis or a blessing from heaven?
I think that is strictly defined by whether one is a buyer or a seller.Of course,if your agenda is to damage the Bush admin.,crisis is what you sell.
BTW,I suspect the msm has been somewhat protective of the mortgage/banking industry throughout this story.
I was a loans officer for a while,many years ago,and it seems to me these financial institutions have broken almost every one of their own rules that have protected their solvency for over a hundred years.
They,along with greedy developers,have threatened the actual stability of our economy in a reckless orgy of profit-taking.
WLM reducks said
“”””You’re fond of trickle down economics, well here it is in the debt cycle…what will the impact on a fed reserve note be when that note now represents billions in unrecoverable debt?””””
good demonstartion on lack of knowledge in REAL ESTATE:-)))))))
It could have been worse. It could have been (gasp!) 6.66 percent.
Well, good news is always bad news, Kate.
We’ve been hearing for years about the collapse of the cod stocks in Newfoundland, about the migration of Newfoundlanders to other provinces, and about Newfoundland’s stagnation, poverty, despair, unemployment, etc. etc.
Now, with a huge bonanza of oil, it’s all going to turn around. CTV:
“The future of Canada’s youngest province has never shone brighter. But the prosperity that awaits Newfoundland and Labrador threatens to bring a new set of problems it has never experienced before.”
Yeszz, “Prosperity…threatens.”
@EBD:
As I’ve said before, the Liberals have all-but muscled into old Tory memespace. You’ll hear more about how “prosperity…threatens” in the years to come.
Re Hillory’s experience as first lady. Does that mean than it will be Laura Bush in 2012. She has 8 yrs experience as first lady.
If I recall correctly, the previous year-on-year increase was 15 percent. And this adds to the approximate doubling of the previous decade.
Crisis indeed.
The “crisis” is in whoever holds the bad debt from stupidly financing grossly over-inflated sale prices with little security from the buyer except the hope the inflationary housing price bubble will continue to expand indefinately.
Consequently when the price bubble burst, creditors were left with mortgage defaults that (in hot markets) were almost 25%-50% more than the current deflated value of the home they took back…now even these can’t be sold so the prices plummet.
Realty mutuals, institutional lenders and mortgage companies are folding and going chapter 7…after their devalued realty holdings are liquidated they are on the string to the Fed insurance fund for billions in unrecoverable debt.
You’re fond of trickle down economics, well here it is in the debt cycle…what will the impact on a fed reserve note be when that note now represents billions in unrecoverable debt?
the last time a similar mess to this happened it was induced by the federal liberals with the NEP. took away the revenue and then jacked the interest rates. millions lost , but it was just a correction on those rotten western children.
It is not really a housing crises at all it is a debt crises. There are just too many people that owe too much. All debt must at some point be repaid. If the borrower can’t repay it then it will be paid by the lender or the taxpayers in the case of a government bail out.
It is really only a crisis if you are the fools that lent the money with too little commitment on the part of the buyer, or if you were silly enough to over-extend yourself to buy a home.
Crisis? Are you buying or selling?
The so called “Housing Crisis” had its beginnings in the mid 90’s, when Pres. Clinton signed the new banking laws which mandated banks to loan;a percentage and annually reported, mortgages in minority and slum areas, where traditionally risk adverse banks did not go.
With easing credit and a go go economy sparked by the Bush tax cuts, the fast buck boys entered the game, packaged them and we are off to the races.
Before we all decide the world has come to an end economically speaking, the proposed gov’t aid package to some home owners, a strong job market, and productivity growth, growing exports with the weaker $U.S. will slow the economy but not become a resession.
Like many decisions taking place in business today, there are huge rewards for short term results, at the expense of longevity and stability , while the perpetrators of bad decisions are long gone and avoid facing their own music.
The US mortgage system rewards brokers for originating loans – not quality loans, just any old loan. The originator escapes an immediate penalty for writing a bad loan. There is the problem, right there – it plays so well into a banking system based on debt assets rather than a gold standard.
One would think that the Democrats, the true champions of the people, would have used their newfound power in Congress to introduce legislation that would bring feedback to the loan originators, thus protecting the little people. We should all be sleeping better at night knowing that Reid and Pelosi are on the job, ever watchful for business practices the have dangerous positive feedback loops.
Not to worry, the Hildebeast will save us. Not only is she the smartest woman in the world, she has all that experience.
Crisis or a blessing from heaven?
I think that is strictly defined by whether one is a buyer or a seller.Of course,if your agenda is to damage the Bush admin.,crisis is what you sell.
BTW,I suspect the msm has been somewhat protective of the mortgage/banking industry throughout this story.
I was a loans officer for a while,many years ago,and it seems to me these financial institutions have broken almost every one of their own rules that have protected their solvency for over a hundred years.
They,along with greedy developers,have threatened the actual stability of our economy in a reckless orgy of profit-taking.
WLM reducks said
“”””You’re fond of trickle down economics, well here it is in the debt cycle…what will the impact on a fed reserve note be when that note now represents billions in unrecoverable debt?””””
good demonstartion on lack of knowledge in REAL ESTATE:-)))))))
It could have been worse. It could have been (gasp!) 6.66 percent.
Well, good news is always bad news, Kate.
We’ve been hearing for years about the collapse of the cod stocks in Newfoundland, about the migration of Newfoundlanders to other provinces, and about Newfoundland’s stagnation, poverty, despair, unemployment, etc. etc.
Now, with a huge bonanza of oil, it’s all going to turn around. CTV:
“The future of Canada’s youngest province has never shone brighter. But the prosperity that awaits Newfoundland and Labrador threatens to bring a new set of problems it has never experienced before.”
Yeszz, “Prosperity…threatens.”
@EBD:
As I’ve said before, the Liberals have all-but muscled into old Tory memespace. You’ll hear more about how “prosperity…threatens” in the years to come.
Re Hillory’s experience as first lady. Does that mean than it will be Laura Bush in 2012. She has 8 yrs experience as first lady.