murray, you don’t need job losses to cause foreclosures. All you need is the borrower’s inability to make the mortgage payment. Economists are so stupid, when they say you need job losses to create foreclosures: ARMs will do the same thing. With $2 trillion of ARMs adjusting in the next 18 months, you’ll see millions of homeowners with mortgage payments increasing 30% – 70%, but mostly 40%. They won’t be able to make the payments, so they will default.

So what is the difference between not being able to make your payment because your mortgage permanently increased 40%, or you lost your job? The outcome is the same: no mortgage payment is made, and foreclosures rise.

The inability of economists to see this, is pathetic. I, as a housewife, have seen this as clear as day. But Chris Thornberg of the UCLA Anderson Forecast, have not figured this out. I sent him an e-mail, explaining all this. I hope he can improve on his future forecast. I am tired of having to educate economists and reporters.

murray, I do not blame you for your faulty conclusion on the foreclosure/job loss relationship. It is the economists who are to blame. Go through the forums and read my analysis of the UCLA Anderson Forecast. I cover this topic of recession/foreclosure/job loss in Part 1.