Take a look. Almost 180,000 foreclosures were filed in July. While certainly not all of these will go through, it is sobering to think that the rate per year is around 2 million homes annually, and even more sobering to think that this occurs when there are only 44 million homes with mortgages nationwide. In the local paper, several pages are devoted to foreclosure notices each week--and this for a town of only 20,000 souls.
Notice, by the way, the use of the wrong units in the article. It should not be foreclosures/households, but rather mortgages/ households with mortgages. Moreover, it's calculated on a monthly basis, not an annualized basis; this obscures what's going on by dividing it by 12.
Whatever units are used, it will hopefully become clear that a cartel of government with banks colluding to set money supply and interest rates has a downside.
Know Your Lifts: The Romanian Deadlift (RDL)
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In the Know Your Lifts series, we’ve covered the high-bar back squat, the
low-bar squat, the power jerk and split jerk, and the overhead press. It’s
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16 hours ago
6 comments:
Do you think Greenspan was partially to blame by setting interest rate so low?
Absolutely. Those were the teaser rates that got people to take those ARMs that are blowing up on them now.
Now certainly any sane borrower knows that the Fed is going to do this, and to make hay while the sun is shining, but reality is that most people can't remember what they had for lunch, let alone what Greenspan was doing 5 years ago.
The long & short of it is simple; when you subsidize borrowers, you end up subsidizing bad investments and pushing out good ones.
I hope things don't get worse, of course, but we need to be reminded that Fed manipulation has a price.
...and the banks are to blame as well as they were hungry for $ and speculative like investors by relaxing their underwriting standards. Countrywide is in trouble but not Wells Fargo since the latter didn't ease restrictions. The side effect is that the mortgage companies that are closing means making many thousands unemployed.
Keep in mind that if the subprime lenders go down, that ought to server as a reminder to many not to mess with bad debt.
It's also worth noting that even the 30 year mortgage is more or less a creation of the Fed. At the end of WWII, it was started as a way to "reduce the cost" of homeownership. What happened? You got it; increased demand has about doubled the real cost of a home per square foot.
You can fool voters, but not the marketplace, in the long term.
Well, now they have 40 & 50 yr mortgages designed so that the "American Dream" can come true @ an affordable rate. Perhaps they will have 100 yr loan for our grandkids.
Yeah, you can save what--2% or so on the cost of your payments with a loan term like that? Seems to me like the Fed is on a mission to eliminate basic thought in finance. :^)
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