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2007-12-09 Home Front Economy

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Posted by badanov 2007-12-09 06:08|| || Front Page|| [11132 views ] Top

#1 The mortgage mess is bad, but the real problem was all of the other crazy crap....things like people treating their homes like ATM's, getting HELOC's so they could buy plasma tv's/cars/vacations, even getting a second mortgage to make the down payment. It's frightening how many people have virtually no equity in their homes.

That's what's going to make this ugly as hell, especially in California, Arizona, Nevada and parts of Florida.

Posted by Swamp Blondie 2007-12-09 13:29|| 2007-12-09 13:29|| Front Page Top

#2 What I worry about is the impending wave of baby boomer retirements. I suspect that way too many in my generation have been planning to cash in what they considered to be reliable house equity value, forgetting that it isn't real until you've actually sold for that amount.

It really and truly is more than time for the US public to grow up, face limits and make responsible and prudent choices -- financially, politically and socially.

Posted by lotp 2007-12-09 13:43|| 2007-12-09 13:43|| Front Page Top

#3 Ditto Lotp.... and I've got concerns about 401k's as well. All said however, our pensions and standard of living are far superior to that of the Europeans, even with their inflated currency.

Posted by Besoeker 2007-12-09 13:46|| 2007-12-09 13:46|| Front Page Top

#4 lotp must hold one of two fears to justify her concern; in the long run either the population of the US will fall or the GDP per capita will fall. I believe neither is remotely possible for the nation as a whole, though some segments may sustain such secular declines, as has the Rust Belt for a good portion of the last 25 years and as may much sprawl development during the next 25.

But if you believe that prosperity will continue to grow and that the US will continue to drive away immigrants, it's hard to see a decline in the price of anything due to the disappearance of the execrable boomers.

Posted by Nimble Spemble 2007-12-09 13:55|| 2007-12-09 13:55|| Front Page Top

#5 Take this article with some salt. It is written by someone pushing a book he had published sometime in 2006.

Of course the real estate market will get worse in places (as Swamp Blondie points out) and yes, this will take a point or two off economic growth nationwide.

However, people should keep in mind that there are always problem sectors even when the general economy is moving in the right direction.

Posted by mhw 2007-12-09 15:09|| 2007-12-09 15:09|| Front Page Top

#6 after the markets, run by racketeers, make off with their savings.

Anyone who makes a comment like that should not be taken even remotely seriously.

I'm with NS and growth. With exeption of a the possible negative quarter here and there, growth will continue.

I'm also with lotp re irresponsible citizens.

If lotp is correct about boomers counting on their house prices providing in part for their retirement, the decline in house prices should keep them in the job market longer than they would have otherwise been. Reducing draws on Social Security and keeping productive people working. A win-win.

Posted by Mike N. 2007-12-09 15:42|| 2007-12-09 15:42|| Front Page Top

#7 Here's a choice passage: The example above is what happens when a government creates an expectation on Main Street that the government is there to make them whole after the markets, run by racketeers, make off with their savings. We aren't seeing any U.S. citizens taking to the streets. But as the economic problems intensify in 2008, the stresses will crop show up ever more obviously in the political process and perhaps the crime rate.

This article is written by a crank, plain and simple. There are valid pro and con arguments as to whether the economy is tied to the housing market. But you're not gonna get much that is enlightening or useful from this guy's tirades. Note that property prices have gone down big before, without the economy following in tandem. Back in the early 90's, property prices fell in the NYC area by as much 30% without the economy falling suit (i.e. by 30%). You get bulls and bears on real estate who have one thing in common - they are convinced that any rise or drop in real estate prices has an outsized impact on the economy. The reality is quite reversed - outsized gains or losses in real estate have only a small effect on the economy. Real estate prices went up 20% a year during the boom years. Did annual GDP go up by an equivalent amount? Now real estate is falling and people are talking about another Great Depression. People need to get a sense of proportion - real estate is just a place to live. Continuous technological innovation, not real estate, is what provides for increased output and improved living standards.

Posted by Zhang Fei 2007-12-09 18:49|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com] 2007-12-09 18:49|| Front Page Top

#8 If lotp is correct about boomers counting on their house prices providing in part for their retirement, the decline in house prices should keep them in the job market longer than they would have otherwise been.

Or - and in my cranky darker moments I expect this to happen - we get a federal administration that tries all out economy control on behalf of my coddled and cossetted generation, who know in their egotistical heart of hearts that they are OWED comfort, luxury and self-indulgence without consequences.

Forgive me, but I happened to page through a NYT sunday Magazine today. I washed my mouth out twice but there's still a bad taste .....

Posted by lotp 2007-12-09 19:01|| 2007-12-09 19:01|| Front Page Top

#9 The price of houses spiraled upward in reaction to the low loan interest rates. This was a tad bogus, because if you had cash, you were stuck with buying at the inflated prices, therefore, the actual average house price is inflated. With a housing boom on a limited amout of ground, builders opted for large houses on small lots, McMansions. So, we have far too many loans that should have never been made for big houses on small lots, and the price of most property inflated as a result.
Prices will fall as sure as rain. Too many houses for sale, and too few buyers. Soon, there will be those who MUST sell. And those who can't keep pace with their loan will lose their shirts.

Posted by wxjames 2007-12-09 19:05|| 2007-12-09 19:05|| Front Page Top

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