Mortgage Defaults May Be Driving Consumer Spending

[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.

[Arraya]

[quote=FormerSanDiegan][quote=jpinpb]

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

.[/quote]

Well, we actually did not have a need for them in the first place. It was artificial demand. Another way to put it is the FBs employed people longer than they should have been. Used like pawns to fake a strong economy

The bubble employed many people for many years with all of the fake money pumping through the economy.

But alas, it was all an illusion created with money manipulation.

Welcome to beginnings of the real economy

[Arraya]

[quote=FormerSanDiegan][quote=jpinpb]

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

.[/quote]

Well, we actually did not have a need for them in the first place. It was artificial demand. Another way to put it is the FBs employed people longer than they should have been. Used like pawns to fake a strong economy

The bubble employed many people for many years with all of the fake money pumping through the economy.

But alas, it was all an illusion created with money manipulation.

Welcome to beginnings of the real economy

[Arraya]

[quote=FormerSanDiegan][quote=jpinpb]

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

.[/quote]

Well, we actually did not have a need for them in the first place. It was artificial demand. Another way to put it is the FBs employed people longer than they should have been. Used like pawns to fake a strong economy

The bubble employed many people for many years with all of the fake money pumping through the economy.

But alas, it was all an illusion created with money manipulation.

Welcome to beginnings of the real economy

[Arraya]

[quote=FormerSanDiegan][quote=jpinpb]

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

.[/quote]

Well, we actually did not have a need for them in the first place. It was artificial demand. Another way to put it is the FBs employed people longer than they should have been. Used like pawns to fake a strong economy

The bubble employed many people for many years with all of the fake money pumping through the economy.

But alas, it was all an illusion created with money manipulation.

Welcome to beginnings of the real economy

[Arraya]

[quote=FormerSanDiegan][quote=jpinpb]

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

.[/quote]

Well, we actually did not have a need for them in the first place. It was artificial demand. Another way to put it is the FBs employed people longer than they should have been. Used like pawns to fake a strong economy

The bubble employed many people for many years with all of the fake money pumping through the economy.

But alas, it was all an illusion created with money manipulation.

Welcome to beginnings of the real economy

[poorgradstudent]

[quote=meadandale]We still have high unemployment and a looming debt crisis at all levels of government that is being virtually ignored.

Any call of a bottom is extremely premature and certainly qualifies as ‘irrational exuberance’.[/quote]
Then call me “Irrationally Exhuberant”.

Employment is a lagging indicator. And Rich has posted several graphs showing that employment is improving. The second derivative is positive, and there’s some evidence there may actually have been job growth in the past month or two. Unemployment is still very, very high, but it has flatlined in recent months, another indicator we’re probably at a bottom.

Booms don’t last forever, and neither do busts. The tea leaves are still a little muddy, but what I’m seeing from all the numbers is we almost certainly bottomed in Jan or Feb 2010. This does mean we’re only 1-2 months into what is shaping up to be a slow recovery, and still in pretty bad shape. 19,500 feet below sea level is better than 20,000 feet, but it’s still pretty deep.

I’ll throw in one caveat that San Diego *housing* may not have hit a true bottom yet. As other threads have pointed out, artificially low interest rates and tax credits are propping it up, and if those end it may cause another dip.

[poorgradstudent]

[quote=meadandale]We still have high unemployment and a looming debt crisis at all levels of government that is being virtually ignored.

Any call of a bottom is extremely premature and certainly qualifies as ‘irrational exuberance’.[/quote]
Then call me “Irrationally Exhuberant”.

Employment is a lagging indicator. And Rich has posted several graphs showing that employment is improving. The second derivative is positive, and there’s some evidence there may actually have been job growth in the past month or two. Unemployment is still very, very high, but it has flatlined in recent months, another indicator we’re probably at a bottom.

Booms don’t last forever, and neither do busts. The tea leaves are still a little muddy, but what I’m seeing from all the numbers is we almost certainly bottomed in Jan or Feb 2010. This does mean we’re only 1-2 months into what is shaping up to be a slow recovery, and still in pretty bad shape. 19,500 feet below sea level is better than 20,000 feet, but it’s still pretty deep.

I’ll throw in one caveat that San Diego *housing* may not have hit a true bottom yet. As other threads have pointed out, artificially low interest rates and tax credits are propping it up, and if those end it may cause another dip.

[poorgradstudent]

[quote=meadandale]We still have high unemployment and a looming debt crisis at all levels of government that is being virtually ignored.

Any call of a bottom is extremely premature and certainly qualifies as ‘irrational exuberance’.[/quote]
Then call me “Irrationally Exhuberant”.

Employment is a lagging indicator. And Rich has posted several graphs showing that employment is improving. The second derivative is positive, and there’s some evidence there may actually have been job growth in the past month or two. Unemployment is still very, very high, but it has flatlined in recent months, another indicator we’re probably at a bottom.

Booms don’t last forever, and neither do busts. The tea leaves are still a little muddy, but what I’m seeing from all the numbers is we almost certainly bottomed in Jan or Feb 2010. This does mean we’re only 1-2 months into what is shaping up to be a slow recovery, and still in pretty bad shape. 19,500 feet below sea level is better than 20,000 feet, but it’s still pretty deep.

I’ll throw in one caveat that San Diego *housing* may not have hit a true bottom yet. As other threads have pointed out, artificially low interest rates and tax credits are propping it up, and if those end it may cause another dip.

[poorgradstudent]

[quote=meadandale]We still have high unemployment and a looming debt crisis at all levels of government that is being virtually ignored.

Any call of a bottom is extremely premature and certainly qualifies as ‘irrational exuberance’.[/quote]
Then call me “Irrationally Exhuberant”.

Employment is a lagging indicator. And Rich has posted several graphs showing that employment is improving. The second derivative is positive, and there’s some evidence there may actually have been job growth in the past month or two. Unemployment is still very, very high, but it has flatlined in recent months, another indicator we’re probably at a bottom.

Booms don’t last forever, and neither do busts. The tea leaves are still a little muddy, but what I’m seeing from all the numbers is we almost certainly bottomed in Jan or Feb 2010. This does mean we’re only 1-2 months into what is shaping up to be a slow recovery, and still in pretty bad shape. 19,500 feet below sea level is better than 20,000 feet, but it’s still pretty deep.

I’ll throw in one caveat that San Diego *housing* may not have hit a true bottom yet. As other threads have pointed out, artificially low interest rates and tax credits are propping it up, and if those end it may cause another dip.

[poorgradstudent]

[quote=meadandale]We still have high unemployment and a looming debt crisis at all levels of government that is being virtually ignored.

Any call of a bottom is extremely premature and certainly qualifies as ‘irrational exuberance’.[/quote]
Then call me “Irrationally Exhuberant”.

Employment is a lagging indicator. And Rich has posted several graphs showing that employment is improving. The second derivative is positive, and there’s some evidence there may actually have been job growth in the past month or two. Unemployment is still very, very high, but it has flatlined in recent months, another indicator we’re probably at a bottom.

Booms don’t last forever, and neither do busts. The tea leaves are still a little muddy, but what I’m seeing from all the numbers is we almost certainly bottomed in Jan or Feb 2010. This does mean we’re only 1-2 months into what is shaping up to be a slow recovery, and still in pretty bad shape. 19,500 feet below sea level is better than 20,000 feet, but it’s still pretty deep.

I’ll throw in one caveat that San Diego *housing* may not have hit a true bottom yet. As other threads have pointed out, artificially low interest rates and tax credits are propping it up, and if those end it may cause another dip.

[briansd1]

[quote=poorgradstudent]
Booms don’t last forever, and neither do busts. The tea leaves are still a little muddy, but what I’m seeing from all the numbers is we almost certainly bottomed in Jan or Feb 2010. This does mean we’re only 1-2 months into what is shaping up to be a slow recovery, and still in pretty bad shape. 19,500 feet below sea level is better than 20,000 feet, but it’s still pretty deep.

I’ll throw in one caveat that San Diego *housing* may not have hit a true bottom yet. As other threads have pointed out, artificially low interest rates and tax credits are propping it up, and if those end it may cause another dip.[/quote]

I’m a bear but I agree with poorgradstudent.

And like poorgradstudent said, 19,500 feet below is better than 20,000.

Economists define a recovery as any movement up from the the very trough. The general public thinks of a recovery as a return to previous boom levels.

So when a recovery is declared by the establishment, it creates a nice psychological boost to the economy.

A GDP recovery is also not the same at a house price recovery.

I’m expecting an economic recovery in 2010 – 2012. But we could certainly fall back into recession beyond that.

[briansd1]

[quote=poorgradstudent]
Booms don’t last forever, and neither do busts. The tea leaves are still a little muddy, but what I’m seeing from all the numbers is we almost certainly bottomed in Jan or Feb 2010. This does mean we’re only 1-2 months into what is shaping up to be a slow recovery, and still in pretty bad shape. 19,500 feet below sea level is better than 20,000 feet, but it’s still pretty deep.

I’ll throw in one caveat that San Diego *housing* may not have hit a true bottom yet. As other threads have pointed out, artificially low interest rates and tax credits are propping it up, and if those end it may cause another dip.[/quote]

I’m a bear but I agree with poorgradstudent.

And like poorgradstudent said, 19,500 feet below is better than 20,000.

Economists define a recovery as any movement up from the the very trough. The general public thinks of a recovery as a return to previous boom levels.

So when a recovery is declared by the establishment, it creates a nice psychological boost to the economy.

A GDP recovery is also not the same at a house price recovery.

I’m expecting an economic recovery in 2010 – 2012. But we could certainly fall back into recession beyond that.

[briansd1]

[quote=poorgradstudent]
Booms don’t last forever, and neither do busts. The tea leaves are still a little muddy, but what I’m seeing from all the numbers is we almost certainly bottomed in Jan or Feb 2010. This does mean we’re only 1-2 months into what is shaping up to be a slow recovery, and still in pretty bad shape. 19,500 feet below sea level is better than 20,000 feet, but it’s still pretty deep.

I’ll throw in one caveat that San Diego *housing* may not have hit a true bottom yet. As other threads have pointed out, artificially low interest rates and tax credits are propping it up, and if those end it may cause another dip.[/quote]

I’m a bear but I agree with poorgradstudent.

And like poorgradstudent said, 19,500 feet below is better than 20,000.

Economists define a recovery as any movement up from the the very trough. The general public thinks of a recovery as a return to previous boom levels.

So when a recovery is declared by the establishment, it creates a nice psychological boost to the economy.

A GDP recovery is also not the same at a house price recovery.

I’m expecting an economic recovery in 2010 – 2012. But we could certainly fall back into recession beyond that.

[briansd1]

[quote=poorgradstudent]
Booms don’t last forever, and neither do busts. The tea leaves are still a little muddy, but what I’m seeing from all the numbers is we almost certainly bottomed in Jan or Feb 2010. This does mean we’re only 1-2 months into what is shaping up to be a slow recovery, and still in pretty bad shape. 19,500 feet below sea level is better than 20,000 feet, but it’s still pretty deep.

I’ll throw in one caveat that San Diego *housing* may not have hit a true bottom yet. As other threads have pointed out, artificially low interest rates and tax credits are propping it up, and if those end it may cause another dip.[/quote]

I’m a bear but I agree with poorgradstudent.

And like poorgradstudent said, 19,500 feet below is better than 20,000.

Economists define a recovery as any movement up from the the very trough. The general public thinks of a recovery as a return to previous boom levels.

So when a recovery is declared by the establishment, it creates a nice psychological boost to the economy.

A GDP recovery is also not the same at a house price recovery.

I’m expecting an economic recovery in 2010 – 2012. But we could certainly fall back into recession beyond that.

[Author]

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