Millions owe way more than their houses are worth ...thousands and thousands of commercial property owners are underwater too. This has never happened other than during the Great Depression and NEVER to these levels! All thanks to Greenspan and greed. He deliberately created the housing bubble and home ATM mentality. Short term gain-long term pain...sound familiar? Job losses will continue, and those that find jobs will find low paying ones that will never be enough to pay all their debts.
How is this all okay now? How is everything going to get better with Benny the Banker keeping rates at zero? Does he pray every day that he can re-inflate the Fed bubbles? Who the f*** will refi a loan when they owe TWICE what the property is worth? Why would ANY bank do a refi unless Uncle Sugar was going to bail them out of the massive losses. It is going to take many YEARS before all the exceses are liquidated. People only want to hear happy talk...tell them about a decade of pain coming and they can't handle it. These are many of the same people who bought bubble-priced McMansions with option ARMs and have two SUVs parked in the driveway with payments on both. "Whaaa..we need the gubernment to bail us out.."
Folks, until there is widespread recognition that two decades of reckless spending has gotten us here, and that overbuilt malls need to close, thousands of retail stores must go away, board up empty hotels, tear down subdivisions, etc, etc..there will be NO recovery...ever. They are just postponing the inevitable day of reckoning with stimulus and cash for cars, etc. More and more debt piles up while the fools worship Cramer and hear how they will all get their losses back.
A painful realty is coming soon...patience bears, Keynesian mega-debt rescues won't work. Dow 6,000 this year.
Someone forgot to provide much help for the hard-pressed consumer.
(…) Indeed, we can't help thinking that, perversely, the roaring stock market and the increasing volume of assurances by Wall Street, Washington and other suspect sources that you can kiss the recession goodbye and happy days will soon be here again only rub it in for Jane and John Q., who are in a real sweat over the prospect -- or, worse yet, the reality -- of losing their livelihoods, their homes or both.
And, although you'd never know it if you listened to the chirping Street choir of professional market kibitzers (best known for their proficiency in rendering loony tunes), Jane and John have more than ample reason for their high anxiety. The employment picture remains grim. Job openings are conspicuous by their absence, corporations are still wielding the scalpel wherever they can and no immediate turn is in sight.
Moreover, how many of the millions of jobs that were swept away by the howling winds of recession will return is by no means clear. The last expansion, after the brief and shallow downturn in the wake of the dot-com bust, was notable as a jobless recovery, suggestive, to lapse into the economic lingo, of a structural rather than a cyclical woe.
On this score, in his latest High-Tech Strategist newsletter, Fred Hickey points out that information-technology jobs have scarcely proved immune to this brutal recession (the unemployment rate in Silicon Valley is something like 11.8%), extending a decade-long trend. In that stretch, around 500,000 high-tech jobs joined the five million manufacturing slots that have migrated overseas, lured in no small part by cheap labor. By way of illustration, more than 70% of IBM 's workforce is now offshore.
In like melancholy vein, despite all the faux sightings of a bottom in housing, delinquencies on home loans continue to spiral upward, especially of the Alt-A, subprime and jumbo variety, soon to be joined by the rest of the spectrum. A recent report by Deutsche Bank, tellingly entitled "Drowning in Debt," estimates that within two years, home loans that are underwater, now 26% of the roughly 51.6 million residential mortgages, will rise to an astonishing 48%.
Not exactly surprising, then, except to the growing crowd of incorrigible cheerleaders, that foreclosures in July, reports RealtyTrac, shot up nearly 7% from June and were 32% greater than in July '08, setting a record high for the third time in the past five months. What this boils down to is that last month one in every 355 housing units in this fair land of ours got a most unwelcome notice of foreclosure.
No accident, obviously, with jobs at risk and the house he so deftly used as an ATM no longer available for that purpose and, in fact, possibly not his all that much longer, Joe Consumer isn't feeling very buoyant, as the latest U. of Michigan survey reveals. Or, as the American Bankruptcy Institute relates glumly, consumer bankruptcies are up so far this year and are on track to hit 1.4 million before 2009 calls it quits (a sizable jump from just over one million last year).
But not to worry. The consumer accounts for only 68%-70% of the economy, and there's no doubt that any shortfall by him will be made up...by...? You're welcome to fill in the blank, but we'll save you the trouble: The answer is no sentient entity. Which leaves only government.(…)