Trying to Throw His Arms Around the Housing Crisis
Investment adviser John Lounsbury today tries to wrap his arms around the national housing crisis in a post on the investment blog Seeking Alpha. Here are three of his nine summary points: 1. It has been estimated that there will be 8.1 additional foreclosures by the end of 2012. This is 21% of all mortgages….
Investment adviser John Lounsbury today tries to wrap his arms around the national housing crisis in a post on the investment blog Seeking Alpha. Here are three of his nine summary points:
1. It has been estimated that there will be 8.1 additional foreclosures by the end of 2012. This is 21% of all mortgages.
2. It has been estimated that 19 million mortgagees will owe more than their house is worth by 2010. This is 50% of all mortgages.
3. It has been estimated that about 6.5 million mortgagees will not be able to afford their mortgage payments at some time during the term of the mortgage. This is 17% of all mortgages.
His conclusion? “Federal intervention to solve the housing crisis would consume too much resource that would be better used to stimulate future economic growth.”
Housing: Where Is the Bottom? [Seeking Alpha]
Graph from Credit Suisse
theandrewlee low interest rates are not going to fix the problem especially the housing market. You said home mortgages are at record lows. So what! the issue is that the asking price is 100-200 times greater that what is was 10-15 years ago. In the early 90’s brownstones were selling for 600-400,000 dollars do I need to tell you what homeowners are dreaming of asking until the housing bubble popped? See what Greenspan’s low interest rates got us? Easy financing so we could all buy million dollar homes. What a fake idea of wealth. The housing crises will end when home prices come down, way down. Of course that will make all those that bought homes at very high prices very very bitter. I wonder how it will feel when some buys a home next to you and pays half or two thirds less then you? Talk about feeling stupid!
Oh Mopar, you’re such a tease.
Oh Sam, you’re such a dreamer.
“The only way out of this mess is to produce something that people really need and buy.”
This is the truth.
Unfortunately, we have spent many many many years outsourcing more and more of the productive work and having more people work in sales and finance.
The internet actually accelerated this as a lot of “white collar” jobs started getting outsourced as well (call centers, IT support, medical and legal records processing, etc. — even some lawyers jobs are being outsourced to India).
The result was that goods and services kept getting cheaper and cheaper in inflation adjusted dollar terms but America was actually producing fewer and fewer objects of value.
Yet we still had enough dollars to buy those cheaper goods.
How?
Borrowing borrowing borrowing borrowing borrowing.
And a strong dollar.
Both have to change.
China is going to get burned by this too. Instead of taking all the money they made selling stuff to us to improve life in China or to enrich the citizens of China, they lent the profits back to us (by buying Treasuries) so that our government could afford to keep fighting 2 wars without raising taxes so that the American consumer would have enough money to keep buying stuff from China.
Now we are going to buy less of their stuff and the profits they stored away in US Treasuries are going to get devalued right along with the dollar.
And people in American are going to learn that not everyone is going to get a Hummer, a flat screen TV, a $300 phone, and a home of their own.
sam, you’re right. This is the only tam-o-shanter you’ll ever find me in.
http://www.lawrysonline.com/tamoshanter_gen_info.asp
Biff: The hat joke was certainly in jest, as was BRG’s silly picture of some guy golfing in plaid pants. I do not believe you would be caught dead in a white tam-o-shanter.
sam, no problem at all. I know (hope, anyway :-)) it’s all in good fun. I think your posts are funny and intelligent.
Thanks Biff, I will look at it. You’re a great guy.
I’m sorry for having made fun your white headgear the other day.
sam, I saw this CNN item on Vista you might be interested in:
http://www.cnn.com/2009/TECH/01/08/microsoft.ballmer/index.html