Weren’t other posters giving us a hard time when we suggested that the economy is benefitting from massive numbers of people who suddenly have no house payments? I’ll have to find that thread…[/quote]
That’s right. I think it was FormerSanDiegan that explained his point of view and I understood it. However, in the immediate sense, money that is being spent into the economy versus their mortgage is keeping the wheels moving.
In any case, I remember saying this a long time ago when someone, I think TG, was mentioning how the economy wasn’t so bad and lines/wait were long at restaurants. I think that was the first time I said something about if one isn’t paying the mortgage, they can afford to go out to dinner.
In the end, we the taxpayers are propping up consumers who are buying things rather than paying their mortgage. Everyone paying taxes, pat yourself on the back![/quote]
Yes, that was me. Just caught this thread.
For every dollar not paid back to the lender, there is one less dollar for the holder of the note that was secured by that property. The holder of that note has one less dollar to spend, be it on pension payouts, development, venture capital or whatever.
The net sum is not positive, since we have an economic system based on credit. For every dollar lost in reserve at a bank there are several dollars not available to lend. The net effect is negative.
If people NOT paying their mortgages is a net positive to the economy, why did our economy approach the brink of the next great Depression when the sub-prime borrowers stopped making payments ?
Paul Jackson’s analysis quoted in this CNBC article ignores the other side of the ledger and is thus incomplete.
