NEWSWEEK's Business Roundtable experts assess the damage—and offer solutions.
Comment: No finagling at the top alone will restore the American economy. 75 percent of the economy is driven by the spending of ordinary consumers and they are frightened. Call it PTS and it will not be cured easily. The distribution of free booze and Prozac will jerk start spending again. That is the only quick fix that is possible.
Comment: There is no doubt that if there is a deep and long recession homes will have to be shared. No humane government would allow a large segment of the unemployed to go homeless while others have empty rooms. Those that refused to share their space would be seen as criminals and punished by eviction. Our lives would be difficult but eventually the economy would return to normal and we all would get back our privacy.
There would be no time to choose a compatible roommate in times of an emergency.The problems of sharing a home with a stranger can be severe. The distribution of food and sex would have to be negotiated fairly. Fortunately the arrangement will be temporary. But in some cases strangers will become compatible and will be strangers no more. Faith,Hope and Charity can open all doors.
Comment: In a few weeks we will make a choice that will decide our future.
I follow an economist named Bob Proctor. He has called the top and bottom of every market crash since the 70s correctly.
Also, he perfectly predicted the current real estate market meltdown and the picture he paints about what will happen in the next couple years
is terrifying.He thinks it will be worse then the great depression.
The banks in the U.S. are going under one after the other. Countrywide the largest morgage bank in the world,Bear Stearns, Lehman Brothers and Merrill Lynch which are 3 out of the top 5 wall street firms. Also, Fanny and Freddy Mae which hold 50 percent of the home loans in the United States.
The government took them over because they are essentially bankrupt.If they didn't the entire financially system would virtually shut down, the stock market would crash and we would suffer beyond what any of us have seen before.
McCain just like Bush " doesn't understand the economy".
That not just my opinion its his own words. Not only does he not understand how to fix it but he does not understand exactly what is broken.
It is no surprise that he doesn't. The people that make up these securities use complex mathematical models very few people understand.
Bush and McCain both can take the credit for this mess since they helped deregulate the laws that were protecting us.
Bush's economic advisor Phil Graham wrote the deregulation bill that allowed banks to take huge risks with all of our future.
Now, Phil Graham is the head of McCain's economic policy.He is also McCain's choice for the next secretary of the treasury.
No one in this country can afford for that to happen. The last time Bush met with his economic advisors was in March. He either didn't care or didn't realize that anything was wrong. Phil Graham had the guts to say that we are in a mental recession after he helped create the worst economy meltdown in our lifetime.
It will take the best and brightest minds in the world to get us out of this nightmare. As bad as Bush has done, McCain would be
even more destructive because things are in much worse shape. The next president will not inherit a surplus like Bush did but a tanking economy and a 11,600,000,000,000 (trillion) dollars deficit. Most of it Bush created and it will take decades to pay it back.
If you do what you have always done then you will get what you have always got.
When it comes to policy Bush and McCain are the same 90 percent of the time.
So why are the polls even close then ?
The chairman of McCains campaign recently said that people don't vote on issues they vote on a personality composite. Which means he is trying to sell you personality instead of results.
He believes people will vote against their own interests.
Let's teach him we are smarter than that .
Hold them accountable NOW! while it will still help.
Elect Obama Biden 2008
Comment: What rebate check? I never received the one that was due to me after filing my taxes in April. The rebate check and the income tax refund I was due, was snatched up by Uncle Sam. It was put toward a defaulted student loan, which was discharged in a bankruptcy in 1984, but re-appropriated again due to the change in the bankruptcy code in the 1980's, with less than a $1700 balance on it. And I might add the US Dept of Ed was regularly receiving a payment dutifully every month. Evidently the repayment amount wasn't swift enough to suit Uncle Sam. The balance has now dropped to below $400, and I'll be able to pay it off by the end of the year, and finally a 27 year old albatross will no longer be around my neck. And maybe, just maybe, I'll be able to start enjoying income tax refunds and any future rebate checks that might come my way.
Awfully hard to stimulate a household's economy, if Uncle Sam keeps stepping in and "taking" money out of a household's coffers consistently, and on many levels.
Comment: hey wonderer, if you were not a dead beat on your student loan that was federally backed to begin with. you would have your rebate. IRS taxes and student loans are not ever discharged in a bankruptcy. It would appear that from 1984 to 2008 you would have made enough to pay back the sum. Perhaps you were too busy spending it on yourself. Don't expect many of us to feel sorry for you. we floated you a free 29 year loan that we paid back for you to boot. CRY BABY!
Comment: The pain will go away when the price of vehicle fuel drops significantly. Lower fuel costs induce more "mobility" into the economy which is a potent catalyst for economic growth. Greater mobility means that I can not only sell my product to the people in my county, but also in my entire state, my entire country or my entire world. Similarly, greater employment mobility means that I can not only be employed in my own county, but also in my entire state, my entire country or my entire world.
Comment: If a few of these REO homes sell at 20%-30% below the most recent comparable sales within a mile radius of your home, your value will be negatively impacted. Very quickly, America???s real estate is being marked-to-market by the bank???s shadow inventory, accelerating a natural process that should take years. This causes even greater numbers of home owners to go into a negative equity position, causing even more loan defaults. It is a vicious cycle that has never been seen before.
Be it ever so crumbly, there's no place like Rome.
Nero, he was the emperor, and the palace was his home.
But he liked to play with matches and for the fire yearned;
So, he burned Rome to ashes and fiddled while it burned.
~ Bugs Bunny, 1953
Part 3
Comment: 2. Notice of Trustee Sale (NTS ) were at a record 34, 564 new filings. This is a 15.6% increase over last month???s 28,992. This is huge. This means much fewer people are curing their NOD???s than in the past. These are from Notice of Default???s 3-4 months prior, as by law the NTS can be filed 90-days after the NOD. However, the average time it took a lender last month to file the NTS was 105-days due to the volume. Lenders can take a home to auction 21-days following the NTS. Jan NOD???s were 38,500 so the percentage that made it from NOD to NTS was 89.77%. This is a new record.
3. Total homes that went to auction increased 11.8% to a total of 25,523 properties. This was also a record. Of those, 24,831 or 97% received no bid higher than the lenders opening bid and became lender REO. This is where the $10.4 BILLION figure going back to banks comes from.
One thing to note, 3% of the 25,523 properties were bought by 3rd parties vs. 2.3% last month.
4. Discounts at auction were at a record.86% of all homes were discounted at an average of 28%. The largest subprime areas such as Sacramento, San Joaquin, Stanislaus and Merced saw larger discounts from 31-37%.
Important Notes???
For those of you who live and die by the monthly existing and new home sales report, remember that in most cases, bank REO sales are counted in the existing sales number. As a matter of fact, Data Quick reported that 38% of last month???s total CA Existing Home Sales had foreclosure action within the past 12 months, meaning much was bank REO shadow inventory. The foreclosure market has very quickly become ???the real estate market???
With so much new foreclosure inventory entering the system and discounts getting deeper each month, there should continue to be more bank REO sales of existing homes in the future, making it seem as if the housing crisis is ending. This is the primary problem with so many analysts??? positive housing predictions.
But, how can you truly judge sales and inventory numbers when the banks are taking back as many homes at auction as sell each month? Remember, the ???month???s supply??? number is calculated using ???listed??? inventory and a very small percentage of bank REO inventory is listed. The amount of ???non-listed??? bank REO, shadow inventory, is staggering ??? over 4.25-years supply in CA.
What is most frightening is how quickly values are dropping as a result of this. With as much bank REO inventory selling for as deep of discounts as we are seeing, it is forcing an immediate and swift mark-to-market change in values of entire neighborhoods all over the state. We have never seen a real estate market in which one seller (banks) controlled so much inventory and has the ability to sell it for whatever it takes to move it quickly.
Part 2
Comment: Take a close look at the data from the May Monthly Mortgage California Foreclosure Report:
California broke a major foreclosure record in May with $10.4 BILLION in loans going back to lender???s balance sheets. This was a near 9% increase month-over-month. Last month $9.237 Billion went back to the bank. It is obvious that the foreclosure crisis is continuing to worsen. If the banks are lucky and sell the homes for 60% of the new appraised value or BPO, this represents another $6 Billion+ in losses for the nation???s largest banks in one state for one month!
Just think how many second mortgages were completely wiped out. It???s no wonder why mortgage bonds have began tanking again. They never should have rallied off of the lows in March in the first place.
Let???s break it down.
1. Notices of Default (NOD), the first step in the CA foreclosure process when borrowers go down 90-days in payments, were down 2.5% to 43,011 new filings. However, the average daily filings were actually up 2.4% to 2,009 per day. Last month the total was 44,100 or 1961 per day. These are from people who began missing payments in Jan and Feb. If you remember, in Jan and Feb, there was a mini refi-boom, as rates fell sharply. If not for that, the NOD count could have been much worse. Since then, rates are up sharply and mortgage application volume has been consistently falling. This means more people maybe missing payments due to the lack of financing options, which will lead to an increase in NOD???s over the next few months from these already historic levels.
The vast majority of NOD???s are first mortgages because second mortgage holders quit filing NOD???s months ago, due to values falling to levels that make it futile. If you are a second mortgage holder and there is no value in the property, there is no reason to foreclose because the first mortgage holder gets it all. For this reason, second mortgage loan defaults are soaring and the loans are essentially worthless. People know that lenders have to use more traditional means of collection and are not paying their second mortgage payment. A second mortgage lender is usually completely wiped out when a home goes into foreclosure. This problem will not go away.
Roughly 75% of NOD???s make it all the way through the foreclosure auction stage and end up on banks??? balance sheets. About 25% of NOD???s are cured by various means by the time auction hits. If you combine last month???s NOD???s of 44,100 and this month???s you get a total of 87,111 meaning banks will take back 65k homes 4-5 month out, because that???s how long it takes to get through the auction phase. This means October and November will have record REO coming back to the banks. 65k homes going back to banks is more than the total homes sold in CA in the past two months and will likely be much more than sold in Oct and Nov, which are historically poor sales months.
Part 1
Part 1
Comment: Hillary Supporters beware and rememeber the wolf's clothing Republican!!!!
John MCCain and his dog pack Republican impreached BILL CLINTON out of Oval office,for Monica lewisky scandal,Even Republican party Knows John MCCain scandal during his Military serivce in Vietnam to and fro from his base doing his sinful Bigamy affairs being allowed with Military Blessing ???cheat his first Wife...Just because at that time his Father incharge and Admiral right????/Now You Republican nominate him as Candidate??? what a Hypocrites Bunch!!!!!!
If US has a PRESIDENT of this magnitude appeals WOW !!!!!!really AMAZING real Talented never in AMERICAN history before,Im really PROUD to be American Again,,he's Zionist, Muslim, Christian, Black, White,Buddist,Hindu,Bengali,African,Red-Indian,Chinese,Japanese,Hawaiian,..........WOW this all are an ASSETS smart Americans can be proud of,only the FOOL and STUPID can treats this as LIABILITY that look exactly like themselves.
Barack Obama would actually be much better for America security. There's no doubt to me McCain would be better than Bush, the Bush years being probably as much about fueling terrorism than fighting it. But McCain would still represent (but less) what can be seen as America's arrogance, something that makes USA so unpopular around the world. A black man with Hussein as a middle name would send a clear message in Middle East that America is about freedom, an important contrast with some form of imperialism. Combined with Obama intelligence about understanding dialogging with enemies, I humbly think this would affect directly terrorism recruiting. I may sound over-optimistic, but I think his image alone as a president could do more for democracy in Middle East than any war.
This Economy common sense!! yet many Americans have difficulties to understand the basic of their existence in first place.Check out the fate of Sodom and Gomorrah (Genesis 18 and 19). Take a look at Romans 1:22-32. Pretty sobering reading - if you are not too self-important and arrogant to think you've already got it all figured out and don't need the input of the Ancient of Days. Don't guess they teach Proverbs 1:7 at those Ivy League school.
Comment: The commodities markets need to be reformed so that a prospective commoties buyer cannot buy unless they can certify that they have the capacity to TAKE DELIVERY of the comodities they contract for. Want to buy oil? Then show us your oil tanker ships or tank farms. Want to buy food comodities? Then show us your warehouse or food distribution network including refrigeration and preservation facilities, where appropriate. Speculators should be squeezed out.
Comment: As long as speculators don't have to ante up and pay for the commodities they are raising the price on at the time they bid them up, we will have run-away prices and out of control inflation. We need a market system that is run on fact and events instead of speculatioin, panic, and emotionalism. There are no checks and balances to control this madness and it is destroying the whole economic system.
Comment: I have recently have received a multitude of requests for home business information from my site at www.40dollardream.com. I"ve received these requests from teachers and secretaries as well as nurses and other professionals. Everyone is scrambling to create a cushion! Many of these people have lost their jobs recently and have mortgage payments to keep up on. It's truly a sad time when we feel our government has more concern for big business than the backs of the working American.
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