The author is an ignoramus, and I think the original poster was being tongue in cheek.
I managed to get a hold of the mortgage equity withdrawal raw data, and modeled what would happen to the economy if the ATM effect went into reverse. It all can be summarized as, what is the effect of reversing the growth of the pool of mortgage debt, which grew from 50% of GDP at about 1999 to 79% of GDP today.
Bottom line was growth was impaired by a couple of percentage points per quarter through 2008, assuming that the reversal happens over this year. Then growth resumes whatever underlying trend it follows, save for any change in the rate at which the pool of mortgage debt changes in size.
Incidentally, the pure “wealth effect” was estimated at 10%, and I did not include this in the calculations. I figured that the wealth effect was buried in the mortgage debt change, as the funding for wealth effect spending has to come from somewhere.
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