Housing Trouble; Is There No End?
Good Morning Middle America, your King of Simple News is on the air.
U.S. NEWS: I can see that our government needs my services at this difficult time and place. They need for me to explain a few economic details that are bewildering to our leadership. Of course, third grade math is bewildering to our leadership, so such things as a 14% drop in mortgage applications is pure wizardry in comparison.
This calls for an in-depth study of the dwindling mortgage application situation, a study applying the advanced method of Mikeronomics.
To begin with, the latest month of foreclosure proceedings was 115% higher than the same month a year earlier. Throw in the steepest continual decline in home values seen in recent history and what you have are suicidal real estate people.
Asking someone to purchase a home in this market would be like watching a bungee jumper hit the ground and asking if anyone else wanted to try it.
However, there are far more serious issues to the housing market than those just discussed. After years of allowing anyone who could pass the fog-on-the-mirror-breath-test to qualify for a no-down low-down deal, we have about weeded out all of the buyers who shouldn’t have been given a loan to begin with, which seems to have accounted for the majority of the housing sales.
Going from zero down without the bothersome proof of the income necessary to pay the loan back, to having to provide a down payment and actually having a job, seems to have slowed down the process even more. Go figure.
Add to this the fact that some 3 million folks are putting their homes back on the market due to foreclosure and you would think that would be pretty much be the icing on the cake…wouldn’t you?
Well, not quite. There is the issue of job losses. For the past 6 consecutive months, the U.S. rather than reporting job gains in the hundreds of thousands, has instead reported job losses in the hundreds of thousands.
Under the new ridiculously strict lending rules, unemployed people can no longer qualify for a $300,000 home loan. To make matters worse, the unemployed people aren’t making payments on their present homes; a fact that is totally mystifying to Congress.
Congress people have difficulty understanding the correlation between unemployment and not having any money. After all, most of them haven’t worked in 20 years and get a check every month.
You can see that my Mikeronomics presentation of the housing debacle would be extremely difficult to comprehend for pre-schoolers and Congress people, but for Middle America… it’s crystal clear.
Tomorrow we’ll take a little trip into the future of housing.
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I have still never figured out how we got here on housing, or why.. I still can’t believe that bankers simply threw the rule book out the window, and started lending like they did..
Somebody had to show them that they would be bailed out.. Why ?? I have no idea.. But, even short term greed is a stretch.. I don’t believe these people are that stupid.. They have too much money.. WmA..
Willy,
I don’t believe in past years that being stupid is confined to those without money. Also remember that the big boys got out with the money before the building burned.
After the tech bubble burst, housing became the only sector that could be exploited in America. Industry had already been shipped to China and Korea.
Housing then began to grow on itself fueled by record low interest provided by the Fed and low qualifing standards provided by the banks. But, as a stand alone industry, housing is unsustainable, which is now perfectly evident.
Most of the bad loans were sold quickly into the secondary markets such as Fannie Mae and Freddie Mac. Thus the current bailout.
Do I believe that Fannie and Freddie knew they would be bailed out? Absolutely, they hired the best lobbyists that money could buy to influence Congress.
The problems we have will continue after the next election and into the foreseeable future unless we choose to participate. Sure it would be a much better deal for everyone in the end if a legitimate candidate, like Dr. Paul were to be elected to lead us in this area. It seems unlikely at best that this will happen however, and Ron Paul realizes this. And even if he, by some miracle, was elected, we would still have to do our part or he would rapidly become a lame duck (by virtue of a brain dead congress). If Dr. Paul were president today, many (millions) of us would have to contact our representatives anyway, or congress would de-rail every effort he made to get us back on track. We might just as well get started and into the habit, because it does work and we really do not have all that much time to spare. But it will not work without massive participation.
I feel this is the message Dr. Paul is attempting to get out; inform yourselves. Talk amongst your family and peers about your newly substantiated information. Attempt to stimulate enthusiasm with everyone you meet about the changes we need to make based on your research. Regularly contact your representative with informed e-mails and letters, identifying the direction we must pursue. The number of people participating are growing. At some point, if the momentum does not stop, this could become a massive movement, to take our government back.
Had we been doing this all along, the two front runners in the presidential race might have been forced to begun working to change our flawed economic policy of exponential growth (the foundation of our problem), instead of fighting about who has more hair or straighter teeth or whatever they are babbling about these days.
It is up to us. But then it always has been. We just got lazy a while back (quite a while back). -bb
Keep this address on your desk top for ease of use. As you become more educated on various topics, slap it on a note to your representative. Encourage your friends and family to act also. It can be done, but not without your participation.
http://www.usa.gov/Contact/Elected.shtml
Billy B,
Thanks for posting the contact list again, we need to keep after them.
How true it is, neither of our presidential front runners are talking about anything that will make a difference. Well…they will make a difference, we will be broke much sooner.