Tuesday, November 27, 2007

Freaky

From the WSJ:
The property value of U.S. homes will fall by $1.2 trillion, and "at least" 1.4 million homeowners will lose their properties to foreclosure in 2008, according to a study released Tuesday by the U.S. Conference of Mayors and the Council for the New American City.
That's $1.2 trillion that has just vanished from our working economy. *poof

And by working economy, I am referring to that part of our economy that is material to our citizenry... as opposed to the "glorious GDP growth" economy created by bankers and global industrialists, representing money we don't actually get to touch.

2 Comments:

Anonymous eagle eyed milton said...

Ouch I have mixed feelings about this one. You are correct regarding the 'GDP growth'. However, Homes (and cars) that people can't afford and the easy payment schemes they are 'forced' to sign...and then expect a bail out? Who really suffers? Me...holding the bag (again)when I go to sell my home, not the irresponsible people forced to foreclose. To all the whiners: Tear up the credit cards, stop buying lottery tickets and take care of your health. Perhaps this is the real reason for having porous borders....hard working Mexicans to fill in the gaps. Viva Mexico!

9:40 AM, November 27, 2007  
Blogger Logic101 said...

e.e.m.,
Actually... I was marveling at the near-instant evaporation of $1.2 trillion. Although -- to be fair -- that's a growth of $1.2 trillion that probably wasn't "real" to begin with (real estate being the tulip craze of US 00's).

I'm not sure I get where you YOU are holding the bag... is it because you bought your home at artificially high rates and now it isn't worth what you thought? You're as common a victim as everyone else then, in that regard.
You must accept the same blame you're trying to apportion out. One could argue that people have been warning for years that the market has been too hot, in a bubble, whatever. Most of us are going to have to just sit tight and ride it out.

The winners here are first time home buyers who are finally catching a break. They've been nearly priced out of the market in coastal areas and now, finally, they've got a virtual sea of housing available to them. No more speculators to drive up prices beyond their reach.

I agree that there should be no direct government bail out... I do not want to be a taxpayer picking up that tab on this one, no way. The only win-win here is for the banks to renegotiate with borrowers for more manageable terms. Splitting the losses at this point seems like a reasonable thing to do. The banking industry was every bit as irresponsible as their borrowers... and perhaps more so. I feel very strongly about this.

So, yeah, it's going to suck for a while around here... it's part of the cycle. It'll get worse, and then it will get better.

1:05 PM, November 27, 2007  

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