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Thread: The sky has finally fallen...
05-11-2010, 09:31 AM #273
sad to see the world going thro such cases... to bad. Some just doesn't change and learn. Greed is the order or priority now. Those politician will not last 3 years anyway, I guess they wouldn't bother and just take the money and run....
05-11-2010, 10:31 AM #274
Candidates who offer the "mostest" will get elected. The fun comes after a few years.
05-11-2010, 06:02 PM #275
Squeeze Peter to pay Paul
Mortgages: Strategic Defaults Are On the Rise
By Jody Shenn Jody Shenn Tue May 11, 8:08 am ET
The first wave of U.S. mortgage defaults was spurred by lenders who made bad loans and borrowers who wound up with larger monthly payments than they could ever hope to manage. Lately, something altogether different has been making an increasing contribution to soured debt: Americans choosing to stop making mortgage payments they actually can afford.
"Strategic" defaults accounted for at least 12 percent of all defaults in February, up from about 4 percent in mid-2007, according to a recent Morgan Stanley (NYSE:MS - News) report. Analysts led by Vishwanath Tirupattur classified a default as strategic when a homeowner who hadn't previously been delinquent made an on-time mortgage payment one month; skipped payments for the next three months; and stayed current on other consumer debt of $10,000 or more.
Housing analysts say strategic defaults mainly occur when a home's value has dropped below the balance remaining on the mortgage. A homeowner in that position may decide that continuing to make payments is throwing money away, or may default to get the lender to modify the loan. An estimated one in five U.S. homes with a mortgage has "negative" home equity, according to Zillow.com.
In March the Obama Administration announced it was coming up with a plan to encourage cuts to the principal on mortgages exceeding the worth of properties. Previous government efforts did not emphasize principal reduction but focused on lowering monthly payments.
Whatever you think of strategic defaults from an ethical point of view, they appear to be aiding the economy, temporarily, at least, by boosting consumer spending and allowing homeowners to stay current on their other bills. Consumer spending, which accounts for about 70 percent of economic activity in the U.S., rose at a 3.6 percent pace last quarter, more than economists forecast. The increase, the biggest since 2007, was somewhat puzzling considering that the underemployment rate was at 16.9 percent in March, near the highest level in at least 16 years. (The rate includes people without jobs, part-time workers who would prefer a full-time position, and people who want work but have given up looking.)
All told, borrowers who aren't making mortgage payments are probably skipping roughly $100 billion annually, an amount equal to 1 percent of consumer spending, according to Mark Zandi, chief economist at Moody's Economy.com. Zandi likens the money to "a form of stimulus, a little tax cut."
Not all of that "tax cut" is being spent on iPads, vacations, and lattes. "Presumably these homeowners know they're going to have to start paying again" to live somewhere, says Zandi. He suggests that falling delinquencies on credit cards and auto loans may be a sign that homeowners are using mortgage money to pay down other debt.
The bottom line: By not making mortgage payments on "underwater" homes, borrowers may be paradoxically helping to boost the economy
05-12-2010, 10:34 AM #276
sad case really. The rule of economy has gone berserk...
05-14-2010, 10:07 AM #277
Strategic defaults on mortgages are not new. Most purchasers of homes with outstanding mortgages who find themselves in a negative equity position on their homes simply stopped any mortgage payment, for the simple reason of cutting their losses.
Depending on each case, some defaults may end up in lenders, failing to get any redress, seizing the properties and auctioning them off. Some 12 years ago in Hong Kong in a property slump cycle one could pick up large apartments at very low prices at such auctions.
In the early 1980s my neighbour had his large Carolina Garden apartment at the Peak auctioned off for a song (US$350,000) because of mortgage default. That property is worth at least US$15 million today.
This is very normal market economy, behaving rationally.
However, what is disturbing is that the Euro, a halfbaked currency used by many EU countries, has been rudderless. Germany says it is now facing its "existential" test but will it pass? Judge for yourself www.reuters.com/article/idUSLDE64C12R20100513. In my opinion, and as I have said earlier, it is a pipe dream.
The funny side of this was that the Euro was at one time touted as a new reserve currency to replace the US dollar. How different it has now turned out.
05-14-2010, 10:23 AM #278
Ordinary Germans have begun to reject euro bank notes with serial numbers from Italy, Spain, Greece and Portugal, thinking that public support for monetary union may be waning in the eurozone's anchor country.
This is what happened in the US in the Jackson era of the 1840s when dollar notes from different regions traded at different values.
I heard some clerks working for german banks have taken delivery of newly printed DM and coins.
05-14-2010, 08:17 PM #279
wow..... keep it coming...
05-14-2010, 09:11 PM #280
05-16-2010, 02:49 PM #281
05-16-2010, 03:11 PM #282
good find. Exactly to the point. It is the low interest rate by Greenspen(d) started the seed of the current econ problem. Yet again, central bank still try to use the same trick to spend out of this trouble. Einstein said "Insanity: doing the same thing over and over again and expecting different results." what do you expect to happen when little timmy and benny hill doing the same thing like last time?
God help us. We are beyond screwed.
05-17-2010, 11:07 AM #283
Going down. Hang on!!!
05-18-2010, 10:24 AM #284
All these financial thunderbolts that have roiled the world, threatening to bring the sky down, could be precursors to a changing of a new world order.
This looks like what is going to happen :http://www.smh.com.au/opinion/politi...0518-vc1q.html.
05-18-2010, 01:04 PM #285
05-19-2010, 08:18 AM #286
will there be another chance for the market to rise again?
05-20-2010, 07:52 PM #287
05-21-2010, 07:38 AM #288
I hope it goes below 10K.... have been waiting long time... get over it dear market...
05-23-2010, 01:15 AM #289
Italian Prime Minister Silvio Berlusconi has now admitted that Europe has been living beyond its means. With so many EU countries living beyond their means they are all suddenly starting to trim their unwanted fat by cutting their budgets to try to save the EU and the Euro from tanking. This solution tries to solve the debt problem but whether this can be done is questionable. If you cut your spending you also reduce your GDP and that means the EU will shrink as an economic engine. Already China is seriously concerned about this as Europe is China's biggest export market, and with the Euro depreciating 20% against the Chinese Yuan, thus making Chinese goods 20% more expensive, and its reduced spending power because of the budget cuts, this will reduce Chinese exports to the EU. This in turn will hit other countries that export raw materials to China, thus having a contagion effect.
Australia's raw material exports to China and other commodities prices will be affected. We are now truly living in one world.
Suddenly all those voices, to "demand" that China appreciate its currency, comiing from the US, even Singapore, and the EU, are now silent. This is because if China were to appreciate its currency against the current plight of the EU and the US the only remaining economic engine will slow down, which in turn may mean the permanent end of the US and EU economies. This will mean the end the world because China and India alone will take ages to remake a new world order.