ArnoldCountry

Housing Crisis Is Key to Economic Recovery

Great article! Best I have seen in some time. Thanks for the reality check!

The Deflation/Inflation/Stagnation Debate

I agree with the article but think that the Fed could have done things differently that would have made for a softer landing. For example, on housing, they could have provided a homebuyer tax credit if anyone buys a home in the next two years of $10,000 to $15,000.00. This would have brought out buyers. While home prices would continue to decline, the rate would slow with the increased demand. Energy prices could get under better control with an inverted windfall profit tax... the higher the price for fuel, the greater the tax on the oil companies. That would create incentives to try and keep prices down. Oil should also be removed as a comodity in the open market and the Federal government should be the direct purchaser of oil from the suppliers and then reselling it the oil companies for refining and distributing. Now, we have so many middlemen speculating, that is more driving the price then true supply and demand. Finally, we should impose a food/fuel supplement. Food export cost has a percent to percent increase in relation to oil. If oil increases by 25%, all food exports increase by 25%. If the government is the purveyor of oil, the supplement can be be used to offset the rising cost of oil.

Alt-A Mortgage Delinquencies Are also Rising

Wait until the serious litigation starts with these products. Lawyers are just down getting their arms around the smoke and mirrors of these arms! It was completely unreasonable to expect that people would be ok the payment shock of taking their payment from $1,500.00 per month to $3,000.00 per month in one month when the loans hit their cap. The securities will continue to perform poorly and the litigation will continue to rise from the back end by investors and on the front end from borrowers.

Foreclosures Prove Loan Modification Isn't Working

As much as it paints a gloomy picture, this article is right on. The Option ARM modifications give a 2% reduction in margin for a while and the borrower still has to make the higher payment with loan amounts exceeding 100% LTV. Makes no sense. Couple that with a very painful process as described above, and people just give up. Its just about showing regulators and legislators statistics that they are providing modifications to "help". Meanwhile... the housing market continues it spiral freefall to the ground. Corrections are always painful, this one will incur many dead patients.