Thursday, April 8, 2010

It All Makes...Sense...

Greetings good citizen,

I urge you all to pay close attention to tonight’s offering more so for the negative implications it has regarding future ‘social stability’ rather than the ‘vindication’ it provides for us ‘doomers’.

Left to your imagination good citizen is the haunting question “How long can they keep this up?”

You know and I know things are bad and they (so far) haven’t lifted a finger to straighten things out…nor does it seem like they are going to. They’ve got theirs, what’s in it for them (by helping you?)

Not only does tonight’s piece open your eyes to the ‘inexplicable’ nature of the ‘economic recovery’ but it also reveals that ‘increased consumer spending’ isn’t necessarily a ‘good thing’.

Bottom line good citizen, if you’re still paying your mortgage…you are some kind of a chump!

It All Makes Sense

I've been somewhat perplexed by how well consumer spending has held up, at least on a relative basis, given that 1) "underemployment" is above 20 percent and the number of long-term employed is at a record; 2) income has not kept pace with consumption; and, 3) the housing industry is nowhere near a recovery (and the foreclosures just keep on coming.)

No doubt the government has played an important role in underpinning demand, especially through its emergency unemployment benefits programs and certain other stimulus efforts. But that didn't seem to explain matters fully.

Then I read the following post, "How Obama's 'Extend & Pretend' Mortgage Policy Explains The Apparent Disconnect Between Housing And The Consumer," at Business Insider's The Money Game (citing the excellent HousingWire blog) and, suddenly, it all made sense. The reason why no small number of Americans can afford to keep on spending is because they've got one less (big) bill to pay:

Our screens are filled with signals that the ‘economy’ is recovering, and yet one area where there's no discernable improvement is housing. At best the bleeding has stopped. At worst there's plenty of room to fall.

This should stand in sharp contravention with news that the consumer is coming back, especially given the conventional wisdom that the home is (or was, anyway) the ultimate ATM, and that it was the so-called housing wealth effect that fueled years and years of American spending. [Understand good citizen, this is what people do when they’ve got ‘nothing left to lose!’]

What gives?

Paul Jackson at HousingWire reckons that what we're seeing is the twisted result of Obama's mortgage schemes. Basically, scads of troubled Americans are living in their homes, waiting for some type of modification, not paying their mortgages, and thus freeing up an unusual amount to spend on stuff.

Jackson's logic:

* There are 7.4 million non-current loans in this country (a ton of folks living in a home but not paying at the moment for said home.)
* Most Americans behind on their mortgages have now gone a year without paying a single bill.
* As we know, Americans are discontinuing their mortgage payments before other payments.

And he writes:

Consider the following individual as a case study — an actual ‘HAMPlicant’ at one of the nation’s larger servicing shops, as highlighted in a guest post at the Calculated Risk blog. They had an $1,880 monthly payment on their mortgage they’d defaulted on, yet their bank statements for the past 30 days included the following expenses:

* visits to the tanning salon
* visits to the nail spa
* some kind of gourmet produce market
* various liquor stores
* A DirecTV bill that involved some serious premium programming or pay-per-view events
* Over $1,700 in retail purchases, including: Best Buy, Baby Gap, Brookstone, Old Navy, Bed, Bath & Beyond, Home Depot, Macy’s, Pac Sun, Urban Behavior, Sears, Staples, and Footlocker

His conclusion: If half the 7.4 million homeowners are skipping a $1,000 monthly mortgage payment, that provides a potential $3.7 billion boost to consumer spending. [This ‘estimate’ is low, real low.]

If Jackson's reasoning is correct, it suggests that critics of Obama's mortgage schemes are attacking them from a completely wrong angle.

It's not about, as the Santellis of the world might suggest, that it's some grave evil to be helping your neighbor who may or may not have gotten in over their head. It's more basic: the scheme is creating serious economic distortions, and are bound to unravel in ways that the market isn't properly anticipating. [Like some asshole might start calling people who pay their mortgages ‘chump’ and set off a chain reaction of defaults…]

For all the flaws of "crass Keynesianism" (see today's wankfest between The White House and over cash-for-clunkers) characterized by charges of pulling demand forward is just as silly. The real economic violence comes from messing with economic signals, which appears to be what's going on here.

Jackson's point also jibes with what we heard when we talked to a Phoenix mortgage pro, who noted the violence to his market that mods were creating.

Until these really filter through the system, these, mortgage mods not only make the housing market suspect, but obviously other areas of the economy as well.

Do you understand what you have just read? Are you capable of ‘digesting’ the implications?

We’ve all been scratching our heads, wondering how the hell can the economy be getting better when nothing has changed…but, it looks like something has changed, as the fucktards in the MSM are turning a blind eye to the real story, using the aberrant data to tell you lies!

Do you know someone who is ‘living free?’ I do and that’s all the ‘proof’ I need.

More disturbing is this article A Pox on Both Their Houses: A Failed Presidency and a Country Adrift

An alternative title for this might be, "Of Rats and Sinking Ships."

After digesting this particular bit of ‘bad news’ we can only wonder if the ‘torpedoing’ of our economy/government (by our own people) is finally over and the rats are deserting the shattered, broken corpse, after having picked it clean.

Ironically, these ‘end runs’ by the self-important investor class only make mashing down the reset button that much easier…not that our ‘creditors’ will be particularly ‘pleased’ with this out come…but I’m sure we’ll be able to work something out.

What remains to be seen is how long our civilization is capable of functioning after it has been torn free of its moorings?

Understand, everything we have been taught to cherish has been proven a lie…if you don’t think that’s ‘dangerous’, it boggles the mind to contemplate how much degradation you will endure just to maintain the ‘illusion’ of ‘normalcy’.

Think things are bad now, try doing nothing and watch how bad they get!

Thanks for letting me inside your head,


No comments:

Post a Comment