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The Benefits Of Contract Abrogation According To Mark Zandi: 6 Million People Not Making Mortgage Payments Frees Up $8 Billion Each Month
We have disclosed on numerous occasions how excess refunds by the Federal Government despite subpar withholdings is goosing up consumer spending. Now we hear from none other than Mark Zandi of Moody's Economy that the government's tacit encouragement for "homeowners" to not pay their mortgage dues is freeing up $8 billion each month that is artificially increasing consumer spending and iPad preorders. And with banks not marking anything to market, all these houses that generate no cash flow are still marked at 100 cents on the books. If you ever needed a justification to not pay your credit card, your mortgage, or anyone else you owe money, now you know - contract law in America no longer exists. Just stop paying everything. And please dont save. Saving is for non-banana republics. Remember - the market is never wrong. And nobody can remember when was the last time we had a downday. So all must be well.
From Diana Olick's blog:
I opened up a big can of debate Monday, when I
repeated some chatter around that consumer spending might be juiced by
all those folks not paying their mortgage.
They have a little extra cash, so they're spending it at the mall.
Some of you thought the premise had some validity, others, as is often the case, told me I was an idiot.
Well after the blog went up Erin Burnett put
the question to Economist Robert Shiller, of the S&P/Case Shiller
Home Price Index, during an interview on Street Signs.
He didn't deny the possibility, and added:
"In some sense there might be a silver lining in that."
Then I decided to ask Mark Zandi, of Moody's Economy.com, who will often shoot down my more ridiculous theories.
I asked him if this was a crazy idea:
No, not crazy. With some 6 million homeowners not making mortgage payments (some loans are in trial mod programs and paying something but still in delinquency or default status), this is probably freeing up roughly $8 billion in cash each month. Assuming this cash is spent (not too bad an assumption), it amounts to nearly one percent of consumer spending. The saving rate is also much lower as a result. The impact on spending growth is less significant as that is a function of the change in the number of homeowners not making payments.
I'm not sure I would say this is juicing up spending, but resulting in more spending than would be the case otherwise.
Many of these stressed homeowners (due to unemployment) are reducing their spending, just not as much as they would have if they were still making their mortgage payment.
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Mark to market, anyone? Ohhh, the unintended consequences of rewarding bad behavior at the corporate level. As goes Wall St., so goes Main St.
I hope most of these purchases are on credit cards with the TBTF's and we will, in the end, see justice, as the ones who walked away from their mortgages also walk away from their bills. After all, what is there to seize? A used iPad? Ewwwww....
"A used iPad?"
Not bloody likely I'm afraid...
I'd like to apologize in advance...
"A used Max-iPad?"
I'm afraid is likely bloody...
Not that it will matter in this FUBAR market..... but the DOW just kissed the weekly 200 MA.
In normal times - we would get a pullback here........ most likely this time - we go through it like a hot knife through butter.
well Pat Quinn just extended the retirement age for pensioners in (ILL)inois.
Good post. And furthers the reasoning to buy stocks. Until that easing ends and the Fed takes money away, you HAVE to buy. It could be a long way up (all time index highs) until that changes.
I could be wrong, but my impression is that average ZH space monkeys well understand the market dynamics of which you speak. The issue isn't one of knowledge, but of concern for a country & way of life that was built on certain fundamental values: liberty & freedom.
ZH is full of analysts, such as myself, who began drilling into the type of information contained in this post long ago. There is no end to the efforts both the Fed and fed.gov are willing to undertake to extend & pretend until some type of economic miracle occurs.
If you take a moment to peruse many of the comments (and snarky TD posts), you may notice most share this same sentiment. If you want to cheerlead and promote market manipulation without any hint of irony, may I suggest you take your ass elsewhere, perhaps Yahoo or some other tout sites?
I suspect he'll wake up one morning and find his "investments" have gapped down 50% overnight, he can't get his broker on the phone, the TD Ameritrade website has crashed, he can't use his ATM card, the bank has sealed his safe deposit box, and the grocery store has been looted. And I'm wearing my rose-colored glasses today, by the way.
Don't forget his pants down around his ankles, and some nasty smelling ooze coming out of his abused and sore, chafed nether aperture.
With Cramer calling the play-by-play on his soundboard...
+ LMAO
His ringtone on his I phone
http://www.youtube.com/watch?v=d-diB65scQU&a=GlBj28mY11g&playnext_from=ML
I think he'll be woken by a CSR for Ameritrade telling him why they are selling him out in the pre-market when bid and ask are 1-2 points apart. "Sir your margin has reduced your equity to 7% in your account and we just can't afford to let it go negative. We are sorry, but we just don't have time to let you wire money in as the banks don't open for hours if they open at all. No we don't take Paypal" "Eh what does she mean 7% equity. you mean my retirement lost 93% wait 98% she sold it to a guy bidding 10 points lower. I have nothing therefore I am nothing. Fucking ZH , it's all their fault, those bastards, I 'm going to call my...wait, I told him to buy this stuff too..."
Call me the Duke Of Snark. Just getting started.
Call us stupid but we are taking the high road and playing by the rules and not playing the game. Payback is a bitch. I'd rather pay the price that I understand now - mortgage, cc's, - spend less and be happy doing it.
Those who'd rather 'pay it backward' are treading in uncharted waters without a lifeboat. Like I said...payback is a BITCH.
Actually, I don't have to buy... and I choose not to. Gains could be 1000% but I won't participate in that kind of a blatant ponzi. Choosing the moral high ground is not easy when everyone is debauching themselves, but I sleep well at night.
PMs are just as likely to rise, and don't have the counter-party risk, or the stench of rapidly decaying ponzi on them.
PMs rise in real terms, as they have against the stock market for the last decade.
isn't protecting your wealth (even in a corrupt system) protecting the probability of your continued survival, and therefore the survival of your kind (thinking, involved, caring, analytic, etc.).
i *hate* the current choices, and due to fear, *not* principle, i too am essentially out of the game. and missing the rewards.
e.g. if everyone in our realm were to buy a 'safe' asset, regardless how manipulated, and be the only ones with assets after 'the crash', would there be any moral problem with having resources with which to rebuild?
i mean this question in the most constructive way.
i recall a few years back when the 'religious' followers of Amy Grant (christian singer) were pissed-off because she went mainstream and therefore, sold out.
her response was pretty simple, when she said "i can help a lot more people as a mainstream artist, than as a starving christian singer" (paraphrased...)
i would even wager that george soros is a huge fan of progressive wealth redistribution ideologies... and is using the very system he eschews to destroy it. or perhaps we could cite the middle-easterners using american dollars to destroy america.
while non-participation is a great principle, is it the best course of action?
again, i often say "by picking the lesser of two evils, you still get evil", so i take your response seriously. i don't know the answer, but if i'm completely out of the game, i can't change much in the game.
totally agree with you, hard to watch it grind higher with so little invested but these moves put everyone to sleep. If it kicks off and heads lower with some violent ranges....will people average down because in the end everyting rises or will they remember last year and liquidate, taking what they can from the mkt today? If that thinking catches on we are well through the march low of 667.
Do you think we'll hit the wall on oil before reaching stock highs? Or will the Government come in and subsidize fuel costs for those 'temporarily' unemployed, sell oil futures etc..etc..
The basic road map laid out over a year ago is pretty clear. I'm not sure consumer oil subsidies are included - the focus is more on production. That's why we have multiple carrier groups, dozens of submarines and thousands of occupation troops deployed in the ME.
For any who are interested, here's a brief recap of the extend & pretend strategy being carried out by the Fed, fed.gov and its proxy GSEs, Fannie/Freddie:
OK, add it all up and here's what we have:
Feel free to add anything to the list. As you can see, there isn't really any vehicle, other than nuclear powered naval craft, to support/subsidize or enforce any $USD/BTU ratio higher than what we currently are experiencing.
.
Interesting presentations..
http://www.simmonsco-intl.com/files/NMS%20Investment%20Mgmt%20Forum.pdf
http://www.simmonsco-intl.com/files/Marsh.pdf
http://www.simmonsco-intl.com/files/Mardi%20Gras%20Economic%20Lunch.pdf
http://www.simmonsco-intl.com/files/AON%20Annual%20Energy%20Insurance%20...
http://www.simmonsco-intl.com/files/ASPO%202009%20Final.pdf
Twilight in the desert??
MS Ghawar water pumping.....
With the Ghawar water cut averaging over 50%, trouble is brewing.
simmons at least is telling the truth when he says: Shale Oil Plays Are Also A Hoax
and horizontal drilling. fracking in western colorado's hovenweep lewis mancos field. use so much water to extract this shale shit. they have to drill down two to three hundred feet. just to inject chemicals to get this crap out. this is worst than what we did to the native americans. i had shale water as my domestic use water source. there isn't any water. we have peaked water use. the colorado plateau is getting pimped just like us people by government and corporations. i get so angry at it all. destroy the land, ocean and people all at once. BOOM than it is over.
“Houston, We Have A Problem” is beyond question.
How we reduce our addiction to oil is simple:
–End long-distance commuting
–Grow food locally
–Ship people and goods by water first, then light rail, then double track rail, with truck use as last choice
–Produce goods close to where they are consumed
buy a bike†
Ghawar water cut? what is this?
"Ghawar water cut? what is this?"
This 2004 article will help explain. The problem has grown much worse since then.
When an oil field is young and hot like you, oil comes out under high pressure. If the field has been mismanaged (like many of the Saudi Arabia (SA) fields were in the 70's) or is just plain used up, more and more (ground) water mixes with the oil, mostly because mature fields have water pumped under high pressure into the field to drive the remaining pockets of oil to the extraction wells.
Once the water/oil mix (the water cut) passes 50%, the field is in trouble. When it hits 80%, the end is very near. Separating out the water is very expensive.
Saudi Arabia would like the world to believe it has unlimited amounts of oil to pump and pump and pump. The illusion is full of holes and no new giant field (let alone super giant) have been discovered in SA since the 50-60's depending on who you trust has the most accurate info. SA considers it's oil info a state secret, meaning they don't want the world to know they are scraping the bottom of the oil barrel compared to what they had in the 70's.
http://www.energybulletin.net/node/1269
honestly CD i just cry. really, i walk around like a zombie lately. i had no idea any of what i have been reading on ZH for the last five months was true. i mean, i knew what has happened to me financially for the last 15 years. but this political new world takeover has just humbled me. ZH and it's witty members just put everything into perspective for me personally. i just care so much about the wildlife and nature that don't have a spokesmen. i need to quit†
i just hate getting so emotional over my realizations. cause i was so, had my head in the sand.
probably literally.
velobabe
I've heard the cries of anguish in your voice over the past few weeks and I heart goes out to you.
You are experiencing trauma similar to what you would feel if you lost a child or spouse or any close friend or family member. Take your time, let it happen, allow it to take its course and it will pass. Don't forget your extended family here on ZH, a great source of inspiration and comfort during your difficulties.
The next few years will require people who have experienced severe loss and pain rather than those who are striking out in anger and frustration and are looking for retribution. The most important emotion one can marshall for the coming troubles will be empathy, not for the bastards currently running the world, but for the walking wounded who will soon be streaming into help centers like ZH.
I found my mom and dad here: MsC and CD.
maybe i can find a husband¿
You most certainly could do far worse Wings. Lots of wisdom to be found there. Velobabe, remember to love, be & trust yourself first.
When someone tells me I HAVE to buy, I am CERTAIN it is time to get the hell out.
Is this Kool-Aid salesman for real?
"Buy, buy, buy. All the way, babeeeee. Why? Great question! Because the market says so. Don't be a dummy, just 'cause there's no rhyme, reason, logic or science to it. It's a trade, man. Get with the winning team. Don't be a loser. You just don't get it. The market is telling you what to do: buy anything. Get it? Are you deaf? The time is now. What time is it? Time to buy!"
good grief.
Seems like the penny stock promoters are out in force. I'm pretty sure this was a prelude to the great Nasdaq dump. I'm just not sure when I noticed a flood of penny stock emails. Was it 2 Months befor March of 2000 or a Year before. Am I feeling lucky today? We'll am I ? Punk!
Alright hotshot (Harry) it's been about due time to pump your brakes on the CNBC regurgitation act. I rarely waste my time or that of others with comments such these but you're detracting from the experience of this site with your nonstop drivel and acting like you're such a brilliant person.On a side note, we all know the retail guy is finally going in as this ass hat has finally come to the realization that he better get in "before it's too late".
After his 3x leveraged buy and hold trades wipe him out he can go out into the real world and see what 17% underemployment looks like first hand and hopefully come back with something useful and meaningful to report. However, I won't be holding my breath.
I've heard the same drivel since August '09. Word for word. Same as I'm hearing now. And we keep going higher. It's not cheerleading, nor bullish nonsense but solely what the market is giving and telling us. And it's telling us that all the Fed b.s., etc. is driving us higher and higher. And, with exception of a few shallow pull backs, will do so until we battle for new highs.
You just come off like a Las Vegas condo salesman circa 2006. No offense. Its just humorous.
Junk? Are you guys crazy? I'm throwing in common sense here regarding equities. I'm not cheerleading and see many problems afoot. However, to think the market will crash is ridiculous for all the reasons posted at ZH.
If the Fed keeps pumping money, and they are; if people continue to walk away from debt, and they are; if inflation picks up steam, and it will; the market will continue to drive higher. That's not junk. That's not cheerleading, it's common sense.
We haven't had a run like this since the July low when we rallied unabated about 17% SPX. Right now, we've done the same off the January low to 16% higher. 1222-1224 puts us at 17%. There's your chance for a 4% pull back as we saw in mid August '09.
Common sense. You and everyone at ZH may have a hundred reasons why the market should tank but those same reasons are responsible for its current run.
Hey dipshit, every single reader here understands what the fuck you are saying. It isn't insightful, it isn't useful, and in fact it's just a big fat nothing burger. Guess what? We're still fully invested (blame the wife) & we're still making mortgage payments. My family lives well within its means & our house is still 100% over water.
But that doesn't make me keenly aware that the Fed + fed.gov cannot continue this insane course of action. If 6+ million former mortgage paying homeowners are currently enjoying a free ride, how long will it be before another 6+ million wise up & join the fun? If Fannie/Freddie combined are hemorrhaging $100+ billion/year, exactly how long can this continue at its present rate, much less double?
It's not a matter of what you are saying - it is all undoubtedly true. It's just that your posts lack a certain, shall we say, je ne sais quoi. As Stein said, 'There's no there, there". Most people who achieve your level of banality typically choose to remain anon.
There's an element of truth in this. The fact is that all asset classes move higher simultaneously - bond yields and equities are usually one or the other; and to compound this, gold moves up as well.
This all makes sense if inflation is knocking on the door.
So doesn't that make it "Attack of the Sub-prime Zombies II - The Sequel"??
That story alone guarantees the ^GSPC will hit 1500.
Nobody wants to borrow from you Tyler. This website is starting to get to the point where it's nutballs that don't understand easy Math.
You want people to save? Who are you going to lend to? What people consider savings is actually lending, yet there is no one to lend to.
IT'S CALLED GAME OVER.
Mako, please relax & take a chill pill dude. You're just beginning to get people to understand what the hell you are talking about. Smart, math oriented engineers like Mish & Denninger admit they were never exposed to the fundamentals of exponential math as they pertain to compounding principle+interest.
I have found that some find useful the following, short description:
The law of exponential math dictates that compounding principle+interest can never be (re)paid. This results in the forfeiture of real property & productive assets pledged as collateral, reducing borrowers to debt peonage. Systemic failure is a design feature of the credit-money system.
but who gets the real collateral in the end-game? that's the quadrillion-dollar question.
the usual suspects in that equation are the ones defaulting this time! :^)
not all of them and not yet...which is precisely the point.
To those who posess the silver and gold shall go all the capital in the world.
but who gets the real collateral in the end-game?
...rothschilds, et al, think they will...
...but they are scared
...the conflict as i see it, will be between the banksters and the progressive tyrants...and the tyrants will confiscate the property of the banksters in the interest of forming a true "centralized bank"...so, when this battle is over, the progressives will have vanquished the banksters to form a more perfect "USSA"...
http://www.youtube.com/watch?v=5BmEGm-mraE
I guess I should not pay the mortgage or credit cards but use the money and plow it into the stock market, preferrably companies like C, ABK, BAC, FNM, FRE, COF. Makes perfect sense.
Heh, people who are about to be out on the street are blowing their dough. This supports prices which sucks for the unemployed and the rest of us who should be enjoying some benefits of deflation (ha,ha). So everyone gets to go broke at once, when the losers finally get kicked out of their squats, run out of unemployment, can't afford $10 gas, can't live in their ipad...
Well just imagine the real life concerns and hardships of many of these 6 million households... oh,, that's right, the recession is Over!!
If they would let the price of housing crash, and lower taxes, these people would be willing and able to accept jobs with lower salaries, and US businesses would be more competitive globally.
We have done this to ourselves with our assinine policies.
the biggest stupidity that won't die.. Global labor costs will just sit pretty while we lower ours to compete !!! HAHAHAHAHAHA you want to race to the bottom? just bring back slavery before they do... because that is where it will go
I was just sitting down to pen a few checks, including THE BIG ONE, and suddenly I had an idea.
Damn, I could've had a V-8.
http://www.youtube.com/watch?v=J-pyGdJCV04
Same here, but only to discover that I was down to my last physical check. Time to reorder I thought. But why order plain vanilla checks or some featuring cute puppies when I can order checks with a custom image like the Zimbabwean hundred trillion dollar bill perhaps.
http://www.checksyourway.com/gallery/galleryfamily.html
BTW, I usually enjoy your comments CD.
I wonder if the company I order my checks from would accept this custom order.
BTW, thanks for the compliment....I think. Have I done something wrong to warrant "usually" or am I just paranoid? :>)
the pic looks like a dick
The mascot of Zim is just a stack of frickin' rocks. With some weird poop looking thingy to thwart non-gov counterfeiters.
That's a damn good idea, only I'll do it with a $100 trillion FRN.
"stocks are going up because stocks are going up" is becoming a more palatable reason for buying than some of this other, more ridiculous reasoning.
Sure feels like a capitulation day for gloating bulls & towel throwing bears
I think it does juice up the spending, along with many spenders that can't break the habit of overspending even though they can't afford it. There will be another cycle down when the overspenders are forced to tighten up again. This will negate the recovery trend in consumer spending which would continue in a true recovery. A slow tortuous decline that will break bad habits of consumers and the backs of banks.
"...contract law in America no longer exists."
Sweet. Whoomp! There it is
http://www.youtube.com/watch?v=1V6T0lJc3dU
Come on people! Max the cards, get a couple new ones, max them too, and throw'em in the garbage. Skip some mortgage payments to get that modification. Come on y'all, let's take a piece of that government ass. You don't want to be the last sucker on the block do you? MmmmHmmm. Love it. It's a going out of business sale, get it while you can.
Don't worry people. Obama is going to pay for your gas and your mortgage.
http://www.youtube.com/watch?v=P36x8rTb3jI
It's just more of the same "casino" mentality that's taken root in this country the past 20 some years or so and once again it will come to a screaching halt when somebody yells "FIRE!" and morbid fear takes hold. Seems we just can't learn from history's mistakes even when then happend only two years ago!
I honestly think the situation as it stands can continue with little modification for 10 years.
After that nobody remembers any other way and it's then "just the way we do things."
But I wonder how they'll sell houses when default rates hit 20% annually. The contract to pay will be laughed at, and nobody will bother sending in a check even the first month.
I pay mortgage insurance against default because my down payment was minimal. I'm fine with that. So will PMI premiums go ballistic? But if you never send in a payment, your not paying your PMI either. Catch 22 for someone out there loan origination land.
I think all that is bunkus. Your prior home will empty on your foreclosure and you'll move into the recently emptied foreclosed house next door in the middle of the night, taking no loan at all in the process. When 50% of any given community is (armed) squatters just doing what the system set them up to do, how will the system sell anything ever again?
If foreclosure becomes an art form and the accepted way of operating, I don't see how the housing industry and their associated kin can endure. I guess people will build where they want themselves, using recycled materials from suburban McMansions, and thumb their noses at the authorities.
I believe that the Fed and their partners can-- and will-- perpetuate cycles of reflation and deflation... at least until the investing public is milked almost completely dry. This is about as easy as a transfer of wealth we will ever see without the risk of total revolution. Well at least as things stand now.
It appears we are in the latter stages of squeezing out as many shorts as entirely possible -- and getting those last tangible 'benefits' from reflation (could be wrong on the timing). Moreover, there is data that can rationalize squeezing these markets even higher in the near term. Unfortunately, those that continue to short are the nexus of the problem, helping perpetuate the new equity highs at low volumes.
At this point, The Fed has shown signs that they are pulling away from the mass liquidity/monetization they poured into the system. While the Fed has certainly stopped their MBS buying program and closed off the Alphabet Soups, many here are (rightly) doubting they have are withdrawing from buying Treasuries or equities for that matter. They could well be. I think banks are buying the Treasuries, though, and foregoing the loan route.
If the Fed hasn't finished the reflation stuff, I think pretty soon we will begin to see serious inflation in the oil/gasoline complex. Once we get to triple digits in oil and $5 per gallon in gasoline, there will be ample political pressure to pull in the reigns-- perhaps even after the mid-terms. That will be plently of time to reverse the process for the kleptocracy, and position for deflation all over again. Bagholders will be reunited in misery. Again.
For the oligarchs, this is probably playing out better than their wildest dreams. If you were in early, locking in gains incrementally should be a feel good moment right now. Congrats for those who were thinking like criminals. I went partial on the criminality, but hedged my bets that Bernanke wasn't going to accelerate the Ferrari off the 200 foot cliff.
Talk about feeling like Wile E. Coyote in reverse. Oops.
They are really walking a tightrope. One false move and it's look out below.
+10
Great post. Yes, you must think like a criminal.
I think we see $100 oil before this cycle is over.
always love your posts assetman and this one is particularly in the money.
i just saw Haiti from above. Every tree or bush has a shack near or under it across most of the island. In the cities the shacks are closer together. reminds me of our tent cities and the cardboard homes on our city sidewalks.
By and by we look more like a third world country
1234 on the /es is the 61.8% fib retrace of the move from 1586.75 to 665.75. i believe you will find out at that point whether we continue skyward, or the market really rolls over hard.
in 1930, after the crash, the market retraced to the 61.8 fib and then crashed. i believe we will follow the same path.
Yes but the same people running the current burn the shorts campaign know this too. As much I would like to believe in history rhyming or even repeating, after the behaviour of markets over the past year I am not holding my breath on this Fib number getting any more than passing respect.
Don't forget palladium. Can you spell "exponential" boys and girls?
www.Gold-Silver.US/forum
This is the new economy. Homeowners default on mortgages and use the money from the payments to buy 'stuff'. Consumer activity drives up corporate revenue and hence stock prices. Banks lose the income on the mortgages, but don't have to mark-down the asset value, and make the money back in trading, and are ultimately back-stopped by bailouts. FED/Treasury funds the bailouts by issuing debt, for which there is an infinite demand at .1%. Its all so simple and obvious to me now.
Absolutely perfect summation, Al.
And all of this has been endorsed by the Federal Reserve Chairman and the Obama Administration.
Don't forget the many folks in congress who believe the fed & administration are not doing enough to support the process. You are on a roll as well Assetman.
Al Huxley:
If someone had asked me ten years ago whether what you just described would be the financial and economic order of the day, I would have probably laughed at them. Now, I just take note on how close the description you just made is to economic insanity,and, of course, how close it is to the actual events and process as it stands today. I guess what irritates me most is the MSM and our overlords continually pushing the notion that the current state affairs is not just good, but sustainable. I am no art lover, but I now seem to somehow understand that Munch painting of the screaming man.
For me, a more contemporary scream seems to fit the current state of affairs:
http://www.youtube.com/watch?v=HFjfGO0ODDM
It's like a train wreck in super-slow motion. No matter how shocking at first, eventually there comes a point where you realize it will go on and on and on and you just start watching for lack of anything better to do. The outcome has already been determined.
You nailed it. Succinct, accurate, every bit of it true.
I hope CNBC calls you for Guest Host on Squawk. You can simply repeat this description over and over again and make them prove you wrong, which of course they cannot.
This is all more weird than my wildest fantasies could have conjured up.
Looking over JPM results today, it is clear that their profits from what we might quaintly call "traditional banking" do not exist, but the hedge fund side of the firm---the NEW traditional banking---was great.
So the US taxpayer has the distinct pleasure of bailing out hedge funds who add absolutely no value to the common good. So long as there is a Steve Jobs to toss the masses an occasional loaf of bread that no one could possibily live without, the masses are appeased and the rape of generations yet born can continue unabated.
We really are a simple species, us sheeple.
I'm just waiting for the Major from Monty Python to walk onto the set on CNBC and say his "this is getting too silly" line.
i could see that during a period of extreme disruption (earthquake, etc.) how it would be rational and humane to temporarily 'forgive' lapses in financial responsibility for those most impacted.
until the dust settles.
appreciating that financial system 'hurricanes' may last years, and the dust settling, years more (see japan), it has to eventually catch up. it's a loan that's perceived as a gift. what a fun surprise when guido comes for the cash plus interest. americans have no idea...
the current, and very progressive extensions of forgiveness (ignoring the yet-to-be realized pension deficits) :
will not only have to end, but will, in virtually all cases, catch up with the beneficiaries of these policies at a later date, compounding the liabilities of that time (as in we don't stop consuming/paying in the future either - double the load). and we're all in this titanic together, so there is little hope of anyone truly dodging this bullet.
quite simply, not only are these financial IV's (hospital term, not financial :^) running dry, but the recipients are now rabid addicts, with little hope of efficient rebound. to be sure, it's *not* their fault in *many* cases, but the 'opiates' still have their effect, both good and bad.
i fear that the costs and necessary adjustments will be more cultural than economic. it will be a hell of a task realigning the expectations of the 'entitled' amongst us - both at the highest and lowest levels of our society. banker and plumber both have expectations that might not be realistic anymore. but who will put the bell on the cat. any of the current crop of political forces have the guts? heh.
like Robert Fulghum might have said in one of his "All I needed to know, I learned in Kindergarten" series: If it feels too good to be true, it most certainly is. Free lunches aren't.
On the 1 out of 8 on Food stamps? See JP Morgan runs that program through Chase Food Stamp cards. They had the head of that division on CNBC. He reminded me of a buy here pay here used car salesman. When the CNBC groid asked him how business was , he could barely contain himself. First he tried to look sympathetic to the plight of the-everything-you can-eat-in-one-month-for-$112.32-segment, but then his obvious glee at being the head of a division of JP Morgan that was growing like a weed set in and this goofy smile appeared. He had to comb his hair out of his face as flakes of dandruff came down. I think his tie popped out too. Even the CNBC groid looked confused.
I remember thinking, "I wonder if he's playing 8 ball down there".
JP Morgan had 781 different govt contacts from 2000 - 2009. So people who think that JP Morgan somehow is the govt , well , go ahead and take of that tin-hat and welcome home.
Read it and weep...
http://www.realclearpolitics.com/articles/2010/04/10/a_v-shaped_boom_is_...
You're all just a bunch of gloom and doomers!
By the CNBC buffoon Larry Kudlow, I think I'll pass.
Hey froggie, hows that warm steaming water you're in? Oh, you say you didn't notice?
It's getting hot in here...
This Kudlow guy saved my financial ass in 2007. I was puttering around the house one night in November 2007 with Kudlow on CNBS in the background. The Dow was about 500 points off its alltime high and he had a panel of pumpers on, and he was going around to each one of them having them say "I think this is a great time to buy stocks!" Then he had some big shot from Goldman Sachs on saying that when the housing bubble burst they would find another bubble to blow up, probably in equities. Now, I knew before hearing this that trouble was on the horizon, but hearing this insanity coming out of my TV gave me the jolt I needed to call my broker the next morning and tell him to sell all my equities immediately and park me in cash, where I remained for quite a while. Thank you Larry, I am eternally greatful to you.
of course, we don't want homeless. food assistance seems to be increasing.
homeless, schmomeless, they're short term renters!
http://www.huffingtonpost.com/2010/04/14/bloomberg-homeless-must-w_n_537...
An interesting solution to the kobayashi maru:
http://www.youtube.com/watch?v=z49bBPf7b4g
Oh, the days, when Kirstie Alley was skinny!
Thanks for the blast from the past.
I've never cared for Mark Zandi, something just makes me want to punch him in the face.
I will grant that his comment on this issue is reasonable...but I still find myself making a fist.
Holy moral hazards Batman!
And I would argue that the contribution to consumer spending is more like 3% than 1%; people trying honestly to keep their homes and pay their debts are spending nothing, while someone willing to throw off the traces is likely to spend more because that's what they need to do (or that's how they cope with suckitude).
Just guesses of course.
looks like 'the ants and the grasshopper'...
how does this story end when the grasshopper feels entitled. and may resort to violence to get his fair share...
Easy, at least here in the US anyway, the grasshopper gets shot.
:^)
depends on the ratio of ants to grasshoppers, and the relative firepower of each group.
the ants are more likely to practice regularly with their boomsticks.
and perhaps the grasshopper will entitle themselves to death. Free Chinese tainted imports for everyone!
Al, bang up job. However, we must add that banks will keep those mortgage loans at 100 cents on the dollar until those loans are no longer in existence (i.e. foreclosure)
Bank of America is ramping up foreclosures by 600% this year, and it started last month. If they foreclose on a home and sell it at auction, that mortgage now disappears off their balance sheet, and so does the imaginary mark.
There is a tidal wave of foreclosures and short sales that will hit the market for the rest of this year. Home prices will be dropping quickly again in the 2nd half of the year, and housing-related losses will be back again.
But wait. There is hope. Bankrupt Kalifornia is offering $ 200 million in housing purchase tax credits to anyone fogging an FHA-approved mirror.
What's a couple hundred mil when you're $ 20 billion in the hole ??
www.doctorhousingbubble.com
"....government websites tell us a general rule we already know and that is you should not take on a mortgage that is 3 times larger than your annual household income"
ROTFLMA... That's a good one... LOL
Median household income in Mountain View, CA -$92,528
Mean price Detached house $1,011,950
A lot like Piedmont to this eastbayer.
Piedmont ?? I thought that was park of Oakland.
You're not a liberal are you? LOL
That's awfully close to Berzerkeley
The bears are everywhere.
http://en.wikipedia.org/wiki/Berkeley_Mafia
It can't be said better or more briefly than this:
"For the firmest possible guarantee of a country's security is sound credit, and, once you cease to regard the repayment of debts as mandatory, soundness of credit is no more."
-Cicero, 44 B.C. On Duties (II):23,84 "On the Good Life", translated by Michael Grant.
You can't drive your house, you can live in your car. Welcome to the new USA!
You should spend more time in the south. Quite a lot of "houses" have wheels down here ;)
I lived in a mobley home outside of J-ville, NC about 30 years ago, redneck practice I suppose. I put lawn sprinklers on the roof for A/C. :)
why do so many houses in the south have wheels? lol hilarious!
hahhhahahahahahahaahhah, well if it goes over with volume, i bail with a 20% loss.
sometimes i have the machiavellian thought that gs/jpm will initiate a huge selloff to take profits and i'll be on the right side of the trade for the first time since 3/09.
They have to get the retail investors in first.
...to the funny farm,,,,,where life is beautiful all the time, there coming to take me away ha ha!!!
http://www.youtube.com/watch?v=TXZMZ-XvvzI
overheard 2 cashiers a starbucks discussing how both had bought their kids ipads in the last week.
one wonders if either kid has a college fund (rhetorical question)?
I doubt it.
They probably intend to finance 100% with student loans and then default on those.
student loans cannot be absolved even in bankruptcy.
you either pay, prove poverty or they garnish your wages.
period.
But Obama promised to forgive student loans if you work for the govt for 10 years. And since that is where all the jobs are....
Really ??
http://www.youtube.com/watch?v=5ZvWilRn0L8
The Bullshit meter has exploded...there is no repairing it.
This is the most shameless spin job I've ever seen.
Out of the 6 million people who are not paying their mortgage a large percentage cannot due to job loss and financial distress.
Then there are those who bought their house a few years ago and is now worth half of what they paid for it, they have given-up - pissing in the wind syndrome.
Finally their are the small percentage of scumbags gaming the system who could pay their mortgage but decide to go out and buy an iPad instead.
what an insane world
shall we all just go out and splurge on our cards
makes me think about that
and not paying any mortagage
yippee the fed really is just giving out free money
. Great we don't even have to work . we just put money into the stock market and out comes more money. Its a magic market
The OBAMA administration DOES NOT CARE because the vast MAJORITY of these mtgs are guaranteed by either FN/FH or FHA and the losses will be absorbed by the tax payers. Just another stealth wealth transfer. Banks DO NOT hold more than 25% of these mtgs.
Exactly, this is just another way to turn private into public debt.
if they've walked on the mortgage, their credit cards are pretty much unusable.
not really - people are actually paying credit cards and second liens and not paying their first mortgage. Data from the MBA supports it.
hahahahahahahahaha
"If you ever needed a justification to not pay your credit card, your mortgage, or anyone else you owe money, now you know - contract law in America no longer exists."
irs 'debt'?
Chinese GDP beat and inflation less than expected. Looks like they hit the sweet spot as well.
Nice try... Not that gullible to believe that steaming pile of lies. 20 million under-employed do not have the 8 billion per month that they are not spending on their mortgages, nor are they spending it on ipads... I suppose TD needs to try to slip bogus crap on us every once in a while to test us...
Come on..........this can't be correct! Katie Couric said on tonight's CBS News that we are in a strengthening recovery. Say it ain't so!
Why isn't the leader of the Republican party, Rush Limbaugh, talking 3 hours every day about the sanctity of contracts, if they are so important? He's only going to reach 20 million people, or less, but shouldn't he be the one preaching the sanctity of contracts for 3 hours M-F?
I have considered this strategy of ignoring the bills each month. I own PMs, which is good but also a problem if one chooses this increasingly popular strategy of giving the TBTF banks the middle finger by refusing to pay their obscene interest rates and penalties.
I have heard individuals on this site advocating maxing out credit cards and buying PMs, which does sound like a lot of fun. However, there will be no shortage of lawyers and debt collectors working on behalf of the banks. Their armies are endless. They will not stop until they get your assets (gold). If you declare bankruptcy and lie under oath that you do not own PMs, do you really want to risk going to jail for it?
The only hope of pulling it off is if there is some mass reset that screws the banks as bad as everyone else (i.e. my PMs skyrocket in price while my debts [a lot] and USD savings [none] are inflated away). It is becoming clear to me that this scenario is a fairy tale that won't come to pass.
Conclusion: don't stop paying your bills if you own gold.
.
Diana can lick my O anytime.
The broken window fallacy persists.
Why isn't the leader of the Republican party, Rush Limbaugh, talking 3 hours every day about the sanctity of contracts, if they are so important? He's only going to reach 20 million people, or less, but shouldn't he be the one preaching the sanctity of contracts for 3 hours M-F?
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