Mortgage Defaults May Be Driving Consumer Spending

[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.

[jpinpb]

[quote=poorgradstudent]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]

Throw in the caveat that once people are booted out of their house and have to start shelling out rent every month, they will have less money for dinners and movies and clothes and cars and trips and toys, etc. That translates to less money in the economy and potentially more job losses. Last I check, banks still want you to have a job to buy a house.

[jpinpb]

[quote=poorgradstudent]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]

Throw in the caveat that once people are booted out of their house and have to start shelling out rent every month, they will have less money for dinners and movies and clothes and cars and trips and toys, etc. That translates to less money in the economy and potentially more job losses. Last I check, banks still want you to have a job to buy a house.

[jpinpb]

[quote=poorgradstudent]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]

Throw in the caveat that once people are booted out of their house and have to start shelling out rent every month, they will have less money for dinners and movies and clothes and cars and trips and toys, etc. That translates to less money in the economy and potentially more job losses. Last I check, banks still want you to have a job to buy a house.

[jpinpb]

[quote=poorgradstudent]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]

Throw in the caveat that once people are booted out of their house and have to start shelling out rent every month, they will have less money for dinners and movies and clothes and cars and trips and toys, etc. That translates to less money in the economy and potentially more job losses. Last I check, banks still want you to have a job to buy a house.

[jpinpb]

[quote=poorgradstudent]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]

Throw in the caveat that once people are booted out of their house and have to start shelling out rent every month, they will have less money for dinners and movies and clothes and cars and trips and toys, etc. That translates to less money in the economy and potentially more job losses. Last I check, banks still want you to have a job to buy a house.

[livinincali]

What’s really interesting about this situation is I thought about the possibility of this but dismissed it because of how stupid it would be to take the free rent and spend it all in the economy. Why wouldn’t you save it so you would be fairly well setup when you eventually lose the house. Of course by dismissing it as being a dumb decision, I made other mistakes about judging the economy. This is one of the traps that I’ve fallen into countless times. You apply you’re personal experience and values to the macro situation which turns out to be wrong because people don’t think like you do. I’ll never understand the “American Idol” thing but because I don’t, I’m not a very good judge of the macro thought process of the American psyche.

Anyways that said it should be interesting to see what happens in the next 6 months. Lots of new uncertainties although people seem to becoming pretty convinced this is no longer just a bear market rally that the trend has changed back to a long term bull. Let’s see if that’s really the case. Bear market rallies usually top once people are convinced the larger degree bull market trend is back in tact. That’s the whole goal of a bear market rally to convince you things have turned the corner.

[livinincali]

What’s really interesting about this situation is I thought about the possibility of this but dismissed it because of how stupid it would be to take the free rent and spend it all in the economy. Why wouldn’t you save it so you would be fairly well setup when you eventually lose the house. Of course by dismissing it as being a dumb decision, I made other mistakes about judging the economy. This is one of the traps that I’ve fallen into countless times. You apply you’re personal experience and values to the macro situation which turns out to be wrong because people don’t think like you do. I’ll never understand the “American Idol” thing but because I don’t, I’m not a very good judge of the macro thought process of the American psyche.

Anyways that said it should be interesting to see what happens in the next 6 months. Lots of new uncertainties although people seem to becoming pretty convinced this is no longer just a bear market rally that the trend has changed back to a long term bull. Let’s see if that’s really the case. Bear market rallies usually top once people are convinced the larger degree bull market trend is back in tact. That’s the whole goal of a bear market rally to convince you things have turned the corner.

[livinincali]

What’s really interesting about this situation is I thought about the possibility of this but dismissed it because of how stupid it would be to take the free rent and spend it all in the economy. Why wouldn’t you save it so you would be fairly well setup when you eventually lose the house. Of course by dismissing it as being a dumb decision, I made other mistakes about judging the economy. This is one of the traps that I’ve fallen into countless times. You apply you’re personal experience and values to the macro situation which turns out to be wrong because people don’t think like you do. I’ll never understand the “American Idol” thing but because I don’t, I’m not a very good judge of the macro thought process of the American psyche.

Anyways that said it should be interesting to see what happens in the next 6 months. Lots of new uncertainties although people seem to becoming pretty convinced this is no longer just a bear market rally that the trend has changed back to a long term bull. Let’s see if that’s really the case. Bear market rallies usually top once people are convinced the larger degree bull market trend is back in tact. That’s the whole goal of a bear market rally to convince you things have turned the corner.

[livinincali]

What’s really interesting about this situation is I thought about the possibility of this but dismissed it because of how stupid it would be to take the free rent and spend it all in the economy. Why wouldn’t you save it so you would be fairly well setup when you eventually lose the house. Of course by dismissing it as being a dumb decision, I made other mistakes about judging the economy. This is one of the traps that I’ve fallen into countless times. You apply you’re personal experience and values to the macro situation which turns out to be wrong because people don’t think like you do. I’ll never understand the “American Idol” thing but because I don’t, I’m not a very good judge of the macro thought process of the American psyche.

Anyways that said it should be interesting to see what happens in the next 6 months. Lots of new uncertainties although people seem to becoming pretty convinced this is no longer just a bear market rally that the trend has changed back to a long term bull. Let’s see if that’s really the case. Bear market rallies usually top once people are convinced the larger degree bull market trend is back in tact. That’s the whole goal of a bear market rally to convince you things have turned the corner.

[livinincali]

What’s really interesting about this situation is I thought about the possibility of this but dismissed it because of how stupid it would be to take the free rent and spend it all in the economy. Why wouldn’t you save it so you would be fairly well setup when you eventually lose the house. Of course by dismissing it as being a dumb decision, I made other mistakes about judging the economy. This is one of the traps that I’ve fallen into countless times. You apply you’re personal experience and values to the macro situation which turns out to be wrong because people don’t think like you do. I’ll never understand the “American Idol” thing but because I don’t, I’m not a very good judge of the macro thought process of the American psyche.

Anyways that said it should be interesting to see what happens in the next 6 months. Lots of new uncertainties although people seem to becoming pretty convinced this is no longer just a bear market rally that the trend has changed back to a long term bull. Let’s see if that’s really the case. Bear market rallies usually top once people are convinced the larger degree bull market trend is back in tact. That’s the whole goal of a bear market rally to convince you things have turned the corner.

[briansd1]

[quote=livinincali] Of course by dismissing it as being a dumb decision, I made other mistakes about judging the economy. This is one of the traps that I’ve fallen into countless times. You apply you’re personal experience and values to the macro situation which turns out to be wrong because people don’t think like you do. I’ll never understand the “American Idol” thing but because I don’t, I’m not a very good judge of the macro thought process of the American psyche. [/quote]

Yes, we make the same mistakes.

When Windows came out, my uncle who was a great software engineer dismissed Windows as fun and games and unnecessary. He missed the fact that people wanted color and music rather that plain black and white. So he didn’t buy Microsoft stocks.

Arraya posted before a link about how consumption has been made part of our identity. That’s the American way of life.

You are what you buy and consume. I know that most people on Piggington would think of that as shallow and stupid. But that’s how most Americans behave these days.

If you want to be successful in commerce, you have to cater to the common denominator.

I’m not surprised at all that defaulters spend their money rather than save it. These days Americans believe that cars, cell phones, cable TV, Starbucks, brand name clothing, dinner out, packaged meals, and other “affordable luxuries” are basic necessities of life which they cannot give up.

[briansd1]

[quote=livinincali] Of course by dismissing it as being a dumb decision, I made other mistakes about judging the economy. This is one of the traps that I’ve fallen into countless times. You apply you’re personal experience and values to the macro situation which turns out to be wrong because people don’t think like you do. I’ll never understand the “American Idol” thing but because I don’t, I’m not a very good judge of the macro thought process of the American psyche. [/quote]

Yes, we make the same mistakes.

When Windows came out, my uncle who was a great software engineer dismissed Windows as fun and games and unnecessary. He missed the fact that people wanted color and music rather that plain black and white. So he didn’t buy Microsoft stocks.

Arraya posted before a link about how consumption has been made part of our identity. That’s the American way of life.

You are what you buy and consume. I know that most people on Piggington would think of that as shallow and stupid. But that’s how most Americans behave these days.

If you want to be successful in commerce, you have to cater to the common denominator.

I’m not surprised at all that defaulters spend their money rather than save it. These days Americans believe that cars, cell phones, cable TV, Starbucks, brand name clothing, dinner out, packaged meals, and other “affordable luxuries” are basic necessities of life which they cannot give up.

[briansd1]

[quote=livinincali] Of course by dismissing it as being a dumb decision, I made other mistakes about judging the economy. This is one of the traps that I’ve fallen into countless times. You apply you’re personal experience and values to the macro situation which turns out to be wrong because people don’t think like you do. I’ll never understand the “American Idol” thing but because I don’t, I’m not a very good judge of the macro thought process of the American psyche. [/quote]

Yes, we make the same mistakes.

When Windows came out, my uncle who was a great software engineer dismissed Windows as fun and games and unnecessary. He missed the fact that people wanted color and music rather that plain black and white. So he didn’t buy Microsoft stocks.

Arraya posted before a link about how consumption has been made part of our identity. That’s the American way of life.

You are what you buy and consume. I know that most people on Piggington would think of that as shallow and stupid. But that’s how most Americans behave these days.

If you want to be successful in commerce, you have to cater to the common denominator.

I’m not surprised at all that defaulters spend their money rather than save it. These days Americans believe that cars, cell phones, cable TV, Starbucks, brand name clothing, dinner out, packaged meals, and other “affordable luxuries” are basic necessities of life which they cannot give up.

[briansd1]

[quote=livinincali] Of course by dismissing it as being a dumb decision, I made other mistakes about judging the economy. This is one of the traps that I’ve fallen into countless times. You apply you’re personal experience and values to the macro situation which turns out to be wrong because people don’t think like you do. I’ll never understand the “American Idol” thing but because I don’t, I’m not a very good judge of the macro thought process of the American psyche. [/quote]

Yes, we make the same mistakes.

When Windows came out, my uncle who was a great software engineer dismissed Windows as fun and games and unnecessary. He missed the fact that people wanted color and music rather that plain black and white. So he didn’t buy Microsoft stocks.

Arraya posted before a link about how consumption has been made part of our identity. That’s the American way of life.

You are what you buy and consume. I know that most people on Piggington would think of that as shallow and stupid. But that’s how most Americans behave these days.

If you want to be successful in commerce, you have to cater to the common denominator.

I’m not surprised at all that defaulters spend their money rather than save it. These days Americans believe that cars, cell phones, cable TV, Starbucks, brand name clothing, dinner out, packaged meals, and other “affordable luxuries” are basic necessities of life which they cannot give up.

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