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Who would of thought one year ago that we would be in this mess?.... I did :)
The best thing about blogging is it gives you a voice. However, a voice means nothing without someone to listen. You the readers make the blog worthwhile, and I hope we can do this for another year.
Thanks.
Pretty interesting article that talks about how Americans traded the dream of home ownership for the nightmare of home debtorship.
Falling prices are eroding the value of U.S. homes. According to a new Fed report, the equity that Americans have in their homes has dropped to the lowest level on record.
BY PAT SUMMERS
Home equity is defined as the market value of a property minus the amount owed on mortgage debts.
Since homes are the biggest asset that most people have, equity is pretty important. Unfortunately for the American people, home equity is a dwindling resource.
A Federal Reserve report released Thursday shows the amount of equity held by U.S. homeowners slid to 46.2 percent in the first quarter of 2008--the lowest percent on record.
Equity has been on the decline since the housing boom. Although home prices were rising at the time, there were a lot of homeowners who took advantage of lines of credit and cash-out loans.
Mortgage debt rose to historic proportions during this period and is still rising despite the presence of a full-blown credit crunch. During the first quarter of 2008, Americans' mortgage debt increased from $10.53 trillion to $10.6 trillion.
Rising debt and vanishing equity has contributed to an underwater mortgage phenomenon.
An estimated 16 percent of people with mortgages have little to no home equity left, according to Moody's Economy.com. By 2009, one in four mortgage holders will owe more on their home than it is worth.
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Source: Zillow.com
Homeowners with new mortgages are suffering the worst. At the beginning of 2008, 39 percent of the people who bought a home in 2006 were underwater in their mortgage. Thirty percent of those who bought in 2007 were in the same predicament.
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Source: Zillow.com
Negative equity rates are highest in bubblicious states like Nevada, California, Florida, and Arizona. A whopping 77 percent of the people who bought a home in Stockton, California in 2007 owe more on their home than it is worth today.
In many of these cases, negative equity problems can be traced back to the origination of the mortgage. Between 2006 and 2008, median down payments were between zero and 5 percent in boom states like California.
A lot of buyers (and lenders) gambled on the market, thinking that home prices would continue to rise--despite all evidence to the contrary. The conditions that we are seeing now are a direct result of their follies.
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
I wanted to share this hilarious article with you because it is just so... true. I added some other "despair" pictures I found on other news media outlets that really prove this stereotype. :)
It was a bittersweet phone call, but one for which Hank Hallman had been waiting years. It was Oct. 2, and Hallman recalls picking up the phone and listening to the message that every professional despair model longs to hear.
“I’ll be there,” Hallman told the caller, “briefcase — and head — in hand.”
Despair models have, until recently, had a rough go of it. The soaring stock market of just a few years ago favored high-end luxury-goods models, and many despair models were unemployed for much of the bubble. Before that, the 2001 terrorist attacks were initially greeted by despair models as potentially being a nice little earner, but the despair market was quickly glutted, “co-opted by amateurs,” as Hallman puts it.
“Ironically, we do some of our best work when we ourselves are out of work,” said Chris Flump, a despair model whose work can be seen this week on the front pages of USA Today, the Wall Street Journal, and the Chicago Sports Digest.
But Wall Street’s recent losses have been gains for the despair modeling industry. Unbreakable, written rules dictate that media outlets are required to publish daily photographs “of a middle-aged man in state of shock, frustration or surrender” alongside stories detailing financial crises.
“Cha-Ching,” said Hallman, before striking a “No-No-Noooooo!” pose for New York Times photographers. The photographers guide him through a series of poses.
“You’ve lost all of your clients’ money, and are now switching religions, and mentally composing a prayer to your new dark lord,” the photographer calls out. “Try this: head down, staring at the ticker over the rims of your glasses, a centrifuge is pulling all the skin on your face toward the floor … good. Now, your brain is expanding and pushing against your skull … nice. OK, you’re watching your wife cheat on you on the floor of the stock exchange — Got it! That’s the one.”
Flump feels that work will be plentiful in the coming weeks.
“I’m having to come up with new poses, because the hand-on-scalp thing is just overplayed now,” said Flump. “It looks like the same picture with every story right now. I’m experimenting with the kneel-and-sob and the hand-over-heart mixed with a hateful leer, so I can stand out a little.”
In an economic sign-of-the-times, Hallman is taking out a large loan to purchase two condo units that are still under construction a little more than a mile inland of the Miami coastline.
“Oh, it’s a massacre out there in the financial sector, so my gig is pretty safe,” says Hallman, as he practices frowning while leaning his head against a corded, wall-mounted telephone, the same kind that legally must be featured in 40% of photographs of the stock-exchange floor. “I’m trying to diversify, so that I’m not invested entirely in despair. I’m looking into slack-jawed disbelief and migraine-nose-bridge-pinching, and for my safety backup I’m developing a pose in which I squeeze back tears by putting both index fingers in the inside-corners of my eyes in anticipation of complete molecular separation of my body.”
The United States of America has a phony economy based on debt and consumer spending.
66% of the GDP of the USA is now based on consumer spending.
Americans are starting to spend less money right now because the credit cards are maxed out, the home equity loans are dried up, and the unemployment rate is rising.
When Americans stop spending money, which they have too, 2/3 of the economy is going to collapse.
America once again must become a nation that produces things instead of consumes things using someone else's money.
This is not the bottom of the stock market, contrary to what you hear on the media, this is just the beginning.
Nothing has fundamentally changed with the market; it is simply a matter of value investors starting to accumulate positions or short-sellers beginning to cover. The stock may in fact be dead with no hope of ever recovering, but it will still bounce now and again, giving false hope to its investors. This is known as a "dead cat bounce."
What makes this video so great is that it was made in 2007 at the peak of the stock market.
"The U.S. consumer is now on the ropes. The only light at the end of the tunnel is that of the incoming train wreck.'' -Nouriel Roubini
This is the most important 10 minutes of of radio you will listen too.
"The government will make it illegal for American citizens to buy gold or foreign currency"
-Peter Schiff
Please watch 3:56->4:40
ARE YOU KIDDING ME?!?!!!!!!!!!!!!
This is the Republican Candidate saying this?
If McCain is president your irresponsible neighbor who took out a bad mortgage not only gets a lower interest rate than you. THE GOVERNMENT WILL SELL THE HOUSE BACK TO THEM AT THE TRUE MARKET VALUE, TENS OF THOUSANDS DOLLARS, IF NOT HUNDREDS OF THOUSANDS DOLLAR LESS THAN WHAT YOU ARE PAYING!
You get nothing for doing the right thing. Even though your home lost just as much value, you still get to pay the higher price at a higher interest rate because you were smart enough to buy a house you could afford.
Sorry, I can't write anymore, my head just exploded...
Herbert Hoover was one of the top 10 worst presidents this country has ever seen. His actions helped exacerbate the Great Depression, and it was because he ignored the good advice given to him by Andrew Mellon, His secretary of Treasury.
Read the following quote from this Forbes Magazine article very closely;
Mellon remembered 1907 and 1920 and knew that a key to capitalism is allowing badly run businesses to go bust in a down cycle. He told President Hoover that the destructive forces unleashed by the crash should be left free to "liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate [and so] purge the rottenness from the economy."Unfortunately, social engineer Hoover rejected this wise advice and began to do a great deal of fiddling. As the recession deepened and persisted, he fiddled more and more. But all this fiddling did, in effect, was to keep badly run and fundamentally insolvent businesses afloat.
Jump ahead 80 years later and you have Ron Paul, Peter Schiff, Many Free Market Economist and Internet bloggers saying the same thing Mellon did... Lets let the bad debt be liquidated and the insolvent companies and banks go bust. Instead, the congress and senate pass the bailout package and continue to try hopeless fiddling, just as Hoover did, and make the problems worse.
Hoover Ignored Andrew Mellon and the Great Depression became a reality. Now we are once again ignoring the same voices of reason and repeating the same mistakes that will inevitably lead lead to the next depression.
Dear HousingFEAR,
Where should I put my money now to survive the coming financial armageddon?
In times like these the best place to put your money is in the five G's. Remember that law and order as we know it will begin to erode and you have to be prepared to survive, and hopefully thrive during these hard times.
Now is a great time to start "slowly" buying barrels of oil or investing in gasoline futures. I don't think we have hit the bottom yet as of October 6th, however, when you enter an inflationary environment people always flee to oil and other commodities as a safe haven to protect their wealth.
All fiat currencys eventually become worthless, History has proven this. The one thing that never becomes worthless is Gold. In fact, Precious metals are the only real "money" that you can ever count on not losing its purchasing power.
If you have the money, buy some vacant farm land you will need it to grow some food.
Speaking of Food, now is a good time to make sure you have a year or two supply of food stocked up in your home or shelter. There were global food riots earlier this year and it won't be long before it comes to America. Especially if Farmers can't get loans to grow food.
These are one of the G's that we don't want to see, but will be a reality when law and order break down. Gangs will form to prey on citizens and take what is yours.Peter Schiff has been proven right above every economic prediction he has made. Today he explained that instead of having a severe recession, the passing of the bailout legislation will be the cause of a hyperinflationary depression.
If you read this blog you know I have predicted Hyperinflation for the past year also.
A Hyperinflationary depression is coming...
The sky really is falling...
And the US Dollar is doomed.
Enjoy.
Instead this country is going to get exactly what it deserves.
We are now just a Bananna Republic with Nukes.
Please make a note to remember this day, and this vote, and to actively campaign against anyone in your district who voted Yes to this bill. 171 Congressmen voted No and are fighting for the American people. Unfortunately 263 voted yes, many of whom are Republican. Please make it a point to cross party lines and vote them out of office. I also want to note that any Republican who voted yes, does not have the right to ever utter the word Conservative again, much less call themselves one. This bill really is treason against the American people, and the congressmen who voted yes below have committed it.
