Home Mortgage Crisis off to a roaring start

Remember, I have talked about how the home loan crisis is nowhere near over? We have gotten a good start on it, though. Remember, now start the Alt A and Option ARM crises (nicknamed ARMaggaedon), prime default crisis, and commercial real estate meltdown. Also there is the "extend and pretend" inventory that are homes that banks are holding by the hundreds of thousands. At the moment they are pretending the homes haven't defaulted so they don't have to admit they're broke. Also, there is this regarding loan modifications and their abyssmal record so far:


Bob Chapman International Forecaster Dec. 23, 2009

“But nearly 40% of homeowners who had their monthly payments cut 20% or more last year were delinquent again within a year, according to a report Monday from the Office of the Comptroller of the Currency and the Office of Thrift Supervision.
With the economy still weak and employers continuing to cut jobs, "even if you've gone through a modification, your situation may deteriorate," said Fred Phillips-Patrick, director for credit policy at the thrift office.

That's an ominous sign for the Obama administration's plan to stem the foreclosure crisis. Lenders participating in the program have offered trial loan modifications to 760,000 eligible borrowers since it was launched in March. As of last month, just 31,000 of them had been made permanent, which requires at least three on-time payments and proof of income. Nearly the same number had dropped out of the program or were found to be ineligible.

The meager success rate means the $75 billion program may bring little relief to struggling homeowners. A record 14% of homeowners with a mortgage are either behind on their payments or in foreclosure. And that affects many more homeowners because deeply discounted foreclosures are hurting property values in many parts of the country, especially Arizona, California, Florida and Nevada.”


By the way, Obama has spent $12 Trillion on bailouts, handouts, stimulus, and guarantees. That's $39,087.95 for each and every American. For a family of six like mine, that's a quarter of a million dollars of new debt we need to pay off. Have you gotten your $39,000 check yet? Yeah, me neither. Have you gotten anything? I didn't think so. Must be the holiday season slowing down the mail.

Stimulus is silliness: Heritage Foundation explains

I just read the best article I have ever seen explaining how government stimulus doesn't work and why. I think it is very understandable for most people.

www.heritage.org/Research/Economy/bg2354.cfm

The only thing I would add is to comment on why politicians are infatuated with Keynesian stimulus programs instead of things that work in real life. It's really, really simple. They are politicians, drunk with power and not too concerned about the future. Stimulus and fiscal policy in general involve very publicly handing out money to people (who now owe you). The other choices are monetary policy, which has to do with open market operations, interest rates, YAWN. Then there is tax policy, which sometimes can be sexied up so people understand they owe you. Overall, it's a no-brainer if you're a politician. The only thing that could make it better is if they gave you truckloads of cash to shovel off the back of a truck to likely voters. It's almost the same, but it would be nice if people could physically watch you do it.

Of course, when you give the trillions to bankers, unions, Fortune 500 companies, and various scuzzy friends of yours instead of regular citizens, there's a question what benefit there could possibly be. Do I want to know?

Am I missing something?

U.S. Government Revenue vs. Outlays


Is there something wrong here? Hmmm. So, our "unfunded liabilities" (money we owe because we promised) are in the $100 TRILLION range, yet we feel free to spend far, far more than we take in, and plan to year after year? Somehow, that doesn't seem smart. Or maybe it's so stupid it's smart? No, it's straight-up stupid. There's no way those numbers work.

There is one amusing thing on these. In the year 2000 it shows a surplus. If you remember, Clinton changed the accounting rules so that the shoebox of IOU's for Social Security counted against the deficit, conjuring up a phantom "surplus" for a few years. Kind of cute in a cheap card trick kind of way. Some people even report those "surpluses" as if they were real-life numbers, which is fun.