“Ms. Zelman says her research suggests defaulters do spend much of the money on consumer services and goods. “People are taking what they would have been spending on a mortgage and spending it somewhere else,” she says……
“I don’t think that’s the kind of consumer recovery we want, if the only reason they’re spending a bit more is that they’re not paying their other bills,” said Joseph Carson, director of global economic research at AllianceBernstein in New York.”

I agree with the guy, but I’m also wondering where were these economic research people during the “healthy economy” of the early to mid-aughts? I had friends and acquaintances all around me during that time constantly telling me, “The economy is doing great!!” I would then ask them how an economy could be healthy when everything that was being bought was either on some sort of unsecured consumer credit agreement or financed with the equity in people’s homes. I would point out that our “thriving economy” was not based on stuff that our nation’s people were manufacturing but was actually based on financial services: making loans and servicing them. Without exception, every one of responded, “The stock market is up, and housing prices are going through the roof.” It *never* occurred to them that the situation could change, nor could they accept that as a possibility when they were apprised of it. Who could blame them? The financial “experts” in the media weren’t telling them that.