Economics

Batten Down the Hatches: Economic Forecast

The United States has ignored the natural economic process, mortgages default, bank fails, losses are absorbed by stocks, assets sold, and Federal Government takes the bank’s portfolio and sells it. Real estate is sold at distressed market value, creating affordable inventory to start the cycle again. This naturally completes the cycle, the market heals.

Now the US government buying up bad debt at full absorbing all of the loss that has been generated by fiscally irresponsible banks. There won’t be a decrease of value because these homes are being banked and not adding to inventory at a discounted price. Hopefully, the government turns them into rentals to generate income.

Housing will remain unaffordable. First time home buyers won’t be able to purchase homes and the cycle won’t start over again. If you want growth in the market, there will be a need for “long term “affordable loans. “Short term affordable loans” are what got us in to this mess in the first place.

If we continue to loose jobs, outsource jobs and import, the cost of housing will continue to rise only to damage the market further. The money supply will remain tight, there will be no more spending, bankruptcy will increase, business will fail and people will be forced to sell their homes on sites like this www.BuyMyHouseBeforeTh... only making a case for a better economic rescue plan.