[pencilneck]

“Folks, here’s my prediction. Car prices across the board are about to plummet.”

This chart of overall car sales offers some support of your prediction. There has been a breathtaking plunge in sales post 2008.

http://martincapital.com/chart-pgs/Pg_sales.htm

Note the cash for clunkers program visible in mid 2009.

[pencilneck]

“Folks, here’s my prediction. Car prices across the board are about to plummet.”

This chart of overall car sales offers some support of your prediction. There has been a breathtaking plunge in sales post 2008.

http://martincapital.com/chart-pgs/Pg_sales.htm

Note the cash for clunkers program visible in mid 2009.

[pencilneck]

“Folks, here’s my prediction. Car prices across the board are about to plummet.”

This chart of overall car sales offers some support of your prediction. There has been a breathtaking plunge in sales post 2008.

http://martincapital.com/chart-pgs/Pg_sales.htm

Note the cash for clunkers program visible in mid 2009.

[pencilneck]

“Folks, here’s my prediction. Car prices across the board are about to plummet.”

This chart of overall car sales offers some support of your prediction. There has been a breathtaking plunge in sales post 2008.

http://martincapital.com/chart-pgs/Pg_sales.htm

Note the cash for clunkers program visible in mid 2009.

[pencilneck]

I slightly disagree. Recent events would suggest the opposite. The tech bubble of 2001, the housing bust, the banking crises, etc. lead me to believe that, call them what you will, perfect storms obviously happen. And recently with alarming frequency.

I agree that by timing a future perfect storm in the 2010-12 time frame makes the (rather ridiculous) assumption that there will be no changes to current policy. But it is the coming changes to these policies that will help to determine the timing, size, and scope of our next crisis.

To correct an inaccuracy in my hypothetical scenario: It is the date that the debt is forgiven that is key to tax implications, rather than the date of foreclosure.

[pencilneck]

I slightly disagree. Recent events would suggest the opposite. The tech bubble of 2001, the housing bust, the banking crises, etc. lead me to believe that, call them what you will, perfect storms obviously happen. And recently with alarming frequency.

I agree that by timing a future perfect storm in the 2010-12 time frame makes the (rather ridiculous) assumption that there will be no changes to current policy. But it is the coming changes to these policies that will help to determine the timing, size, and scope of our next crisis.

To correct an inaccuracy in my hypothetical scenario: It is the date that the debt is forgiven that is key to tax implications, rather than the date of foreclosure.

[pencilneck]

I slightly disagree. Recent events would suggest the opposite. The tech bubble of 2001, the housing bust, the banking crises, etc. lead me to believe that, call them what you will, perfect storms obviously happen. And recently with alarming frequency.

I agree that by timing a future perfect storm in the 2010-12 time frame makes the (rather ridiculous) assumption that there will be no changes to current policy. But it is the coming changes to these policies that will help to determine the timing, size, and scope of our next crisis.

To correct an inaccuracy in my hypothetical scenario: It is the date that the debt is forgiven that is key to tax implications, rather than the date of foreclosure.

[pencilneck]

I slightly disagree. Recent events would suggest the opposite. The tech bubble of 2001, the housing bust, the banking crises, etc. lead me to believe that, call them what you will, perfect storms obviously happen. And recently with alarming frequency.

I agree that by timing a future perfect storm in the 2010-12 time frame makes the (rather ridiculous) assumption that there will be no changes to current policy. But it is the coming changes to these policies that will help to determine the timing, size, and scope of our next crisis.

To correct an inaccuracy in my hypothetical scenario: It is the date that the debt is forgiven that is key to tax implications, rather than the date of foreclosure.

[pencilneck]

I slightly disagree. Recent events would suggest the opposite. The tech bubble of 2001, the housing bust, the banking crises, etc. lead me to believe that, call them what you will, perfect storms obviously happen. And recently with alarming frequency.

I agree that by timing a future perfect storm in the 2010-12 time frame makes the (rather ridiculous) assumption that there will be no changes to current policy. But it is the coming changes to these policies that will help to determine the timing, size, and scope of our next crisis.

To correct an inaccuracy in my hypothetical scenario: It is the date that the debt is forgiven that is key to tax implications, rather than the date of foreclosure.

[pencilneck]

I agree. My point is that time may be running out for some of those playing kick the can.

Under current law, some people will be much better off if the bank forecloses before January 2013.

Currently:
If you are behind on your payments: Bad
If the bank forecloses: Bad
In the foreclosure, the bank forgives, say, $100k of debt: Bad

If they foreclose after December 31, 2012, in this scenario you would also then owe the IRS $38,000: That’s real bad

For some borrowers (those underwater, with recourse loans), its better to get out before then.

[pencilneck]

I agree. My point is that time may be running out for some of those playing kick the can.

Under current law, some people will be much better off if the bank forecloses before January 2013.

Currently:
If you are behind on your payments: Bad
If the bank forecloses: Bad
In the foreclosure, the bank forgives, say, $100k of debt: Bad

If they foreclose after December 31, 2012, in this scenario you would also then owe the IRS $38,000: That’s real bad

For some borrowers (those underwater, with recourse loans), its better to get out before then.

[pencilneck]

I agree. My point is that time may be running out for some of those playing kick the can.

Under current law, some people will be much better off if the bank forecloses before January 2013.

Currently:
If you are behind on your payments: Bad
If the bank forecloses: Bad
In the foreclosure, the bank forgives, say, $100k of debt: Bad

If they foreclose after December 31, 2012, in this scenario you would also then owe the IRS $38,000: That’s real bad

For some borrowers (those underwater, with recourse loans), its better to get out before then.

[pencilneck]

I agree. My point is that time may be running out for some of those playing kick the can.

Under current law, some people will be much better off if the bank forecloses before January 2013.

Currently:
If you are behind on your payments: Bad
If the bank forecloses: Bad
In the foreclosure, the bank forgives, say, $100k of debt: Bad

If they foreclose after December 31, 2012, in this scenario you would also then owe the IRS $38,000: That’s real bad

For some borrowers (those underwater, with recourse loans), its better to get out before then.

[pencilneck]

I agree. My point is that time may be running out for some of those playing kick the can.

Under current law, some people will be much better off if the bank forecloses before January 2013.

Currently:
If you are behind on your payments: Bad
If the bank forecloses: Bad
In the foreclosure, the bank forgives, say, $100k of debt: Bad

If they foreclose after December 31, 2012, in this scenario you would also then owe the IRS $38,000: That’s real bad

For some borrowers (those underwater, with recourse loans), its better to get out before then.

[pencilneck]

Observation about point 4 above and shadow inventory:

If the vast pool of shadow inventory still exists into the near future, won’t it be funny if these people actually start begging the banks to foreclose before 2013? Otherwise they could face financially crippling tax bills when the banks do finally get around to foreclosing.

Delayed foreclosure could be a boon for the IRS.

[Author]

Posts