Mortgage Defaults May Be Driving Consumer Spending

[(former)FormerSanDiegan]

[quote=jpinpb]FormerSanDiegan – the reason why I don’t completely agree w/your comments is b/c the banks/lenders, although not receiving money on the note, are still being compensated by the government, I mean the taxpayers.
[/quote]

The banks still took huge losses. 140 banks closed their doors in 2009, so their lending went to zero. Lack of available funds for lending shrunk across the board. Loans for businesses dry up.

Lenders, real estate and construction jobs were reduced/eliminated due to people not paying their mortgage.

How could the net effect be positive ?

Now, top it off with the taxpayer now having less after tax dollars to spend. The net result is negative.

Example:
Suppose there is an increase in theft in the city of San Diego. The thieves now have extra money to spend on TVs, electronics, booze, crack, or other consumer goods. This is good for the economy, right ?

Mr. Jackson’s analysis only looks at one side of the equation.

[kev374]

I know someone who has quit making their payment on an investment property 10 months ago but the bank has still not foreclosed, and in addition she has a tenant in there and is collecting rent so it’s pretty much a bonanza for her…and oh, she also managed to extract equity out of the place before stopping the payments.

[kev374]

I know someone who has quit making their payment on an investment property 10 months ago but the bank has still not foreclosed, and in addition she has a tenant in there and is collecting rent so it’s pretty much a bonanza for her…and oh, she also managed to extract equity out of the place before stopping the payments.

[kev374]

I know someone who has quit making their payment on an investment property 10 months ago but the bank has still not foreclosed, and in addition she has a tenant in there and is collecting rent so it’s pretty much a bonanza for her…and oh, she also managed to extract equity out of the place before stopping the payments.

[kev374]

I know someone who has quit making their payment on an investment property 10 months ago but the bank has still not foreclosed, and in addition she has a tenant in there and is collecting rent so it’s pretty much a bonanza for her…and oh, she also managed to extract equity out of the place before stopping the payments.

[kev374]

I know someone who has quit making their payment on an investment property 10 months ago but the bank has still not foreclosed, and in addition she has a tenant in there and is collecting rent so it’s pretty much a bonanza for her…and oh, she also managed to extract equity out of the place before stopping the payments.

[jpinpb]

FSD – True there were some sacrificial banks that closed. Yes, there were jobs lost, though that’s why there’s unemployment and extension after extension of unemployment. The job lost would have been much greater IMO, were it not for the freeloaders spending.

I’m not arguing it is good for the economy. My preference would have been to take the lumps, rather than kick the can. Indirectly, whether intentional or not, it has kept the economy from suffering a greater downturn. People going out to eat for dinner have kept restaurants open. People buying clothes have kept stores open. People buying cars have kept all kinds of other people employed.

As far as taxpayers, we have not seen the bill for this yet, but it will come and be as ugly as a bill after a big wedding.

[jpinpb]

FSD – True there were some sacrificial banks that closed. Yes, there were jobs lost, though that’s why there’s unemployment and extension after extension of unemployment. The job lost would have been much greater IMO, were it not for the freeloaders spending.

I’m not arguing it is good for the economy. My preference would have been to take the lumps, rather than kick the can. Indirectly, whether intentional or not, it has kept the economy from suffering a greater downturn. People going out to eat for dinner have kept restaurants open. People buying clothes have kept stores open. People buying cars have kept all kinds of other people employed.

As far as taxpayers, we have not seen the bill for this yet, but it will come and be as ugly as a bill after a big wedding.

[jpinpb]

FSD – True there were some sacrificial banks that closed. Yes, there were jobs lost, though that’s why there’s unemployment and extension after extension of unemployment. The job lost would have been much greater IMO, were it not for the freeloaders spending.

I’m not arguing it is good for the economy. My preference would have been to take the lumps, rather than kick the can. Indirectly, whether intentional or not, it has kept the economy from suffering a greater downturn. People going out to eat for dinner have kept restaurants open. People buying clothes have kept stores open. People buying cars have kept all kinds of other people employed.

As far as taxpayers, we have not seen the bill for this yet, but it will come and be as ugly as a bill after a big wedding.

[jpinpb]

FSD – True there were some sacrificial banks that closed. Yes, there were jobs lost, though that’s why there’s unemployment and extension after extension of unemployment. The job lost would have been much greater IMO, were it not for the freeloaders spending.

I’m not arguing it is good for the economy. My preference would have been to take the lumps, rather than kick the can. Indirectly, whether intentional or not, it has kept the economy from suffering a greater downturn. People going out to eat for dinner have kept restaurants open. People buying clothes have kept stores open. People buying cars have kept all kinds of other people employed.

As far as taxpayers, we have not seen the bill for this yet, but it will come and be as ugly as a bill after a big wedding.

[jpinpb]

FSD – True there were some sacrificial banks that closed. Yes, there were jobs lost, though that’s why there’s unemployment and extension after extension of unemployment. The job lost would have been much greater IMO, were it not for the freeloaders spending.

I’m not arguing it is good for the economy. My preference would have been to take the lumps, rather than kick the can. Indirectly, whether intentional or not, it has kept the economy from suffering a greater downturn. People going out to eat for dinner have kept restaurants open. People buying clothes have kept stores open. People buying cars have kept all kinds of other people employed.

As far as taxpayers, we have not seen the bill for this yet, but it will come and be as ugly as a bill after a big wedding.

[briansd1]

[quote=FormerSanDiegan]
The banks still took huge losses. 140 banks closed their doors in 2009, so their lending went to zero. Lack of available funds for lending shrunk across the board. Loans for businesses dry up.[/quote]

All true. But it would have happened regardless. Once that happened, the government encouraged banks (through bailouts and accounting rules) to slow down the foreclosures.

Now you have people living for free spending in other areas of the economy.

Their non-payments will affect lending and consumption later, but for now, it’s all good.

Nobody is concerned about down the road right now. The policies are all aimed at stabilizing the economy right now — keeping GDP and consumption constant or growing.

[briansd1]

[quote=FormerSanDiegan]
The banks still took huge losses. 140 banks closed their doors in 2009, so their lending went to zero. Lack of available funds for lending shrunk across the board. Loans for businesses dry up.[/quote]

All true. But it would have happened regardless. Once that happened, the government encouraged banks (through bailouts and accounting rules) to slow down the foreclosures.

Now you have people living for free spending in other areas of the economy.

Their non-payments will affect lending and consumption later, but for now, it’s all good.

Nobody is concerned about down the road right now. The policies are all aimed at stabilizing the economy right now — keeping GDP and consumption constant or growing.

[briansd1]

[quote=FormerSanDiegan]
The banks still took huge losses. 140 banks closed their doors in 2009, so their lending went to zero. Lack of available funds for lending shrunk across the board. Loans for businesses dry up.[/quote]

All true. But it would have happened regardless. Once that happened, the government encouraged banks (through bailouts and accounting rules) to slow down the foreclosures.

Now you have people living for free spending in other areas of the economy.

Their non-payments will affect lending and consumption later, but for now, it’s all good.

Nobody is concerned about down the road right now. The policies are all aimed at stabilizing the economy right now — keeping GDP and consumption constant or growing.

[briansd1]

[quote=FormerSanDiegan]
The banks still took huge losses. 140 banks closed their doors in 2009, so their lending went to zero. Lack of available funds for lending shrunk across the board. Loans for businesses dry up.[/quote]

All true. But it would have happened regardless. Once that happened, the government encouraged banks (through bailouts and accounting rules) to slow down the foreclosures.

Now you have people living for free spending in other areas of the economy.

Their non-payments will affect lending and consumption later, but for now, it’s all good.

Nobody is concerned about down the road right now. The policies are all aimed at stabilizing the economy right now — keeping GDP and consumption constant or growing.

[Author]

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