>Interesting perspective in the LA Times.
>But a bigger problem may turn out to be the millions of Americans who are still faithfully paying their mortgages, but on houses >worth far less than before the bubble burst. It's not that these homeowners will stop making their payments. It's just the opposite > that they will keep doing it. I thought about this, and I think the article misses the real problem....that the rise in home values fueled the '00-'08 economy. There is ample reason to argue that folks didn't save, because they saw their net worth going up every year, as their home appreciated. Folks who sold their homes for bubble prices spent the money; it's gone. Some people took out second mortgages on their houses and spent the money...with their house value rising, they spent the value. I understand it might be better for the national economy if we took the big hit now, and lots of folks would start over with no credit rating, and banks took big hits on their books now, and the government spent what it had to now instead of later so we didn't have the slow drip drip drip of expected foreclosures putting deflationary pressures on the economy. In an unrelated note on the economy, we're now in an age where the economy has to grow 5%/year to put a dent in unemployment. If we forget the last decade, when GDP grew sub-par and jobs barely grew, and focused on the '80s and '90s, we'd find that the average GDP growth in that period would be enough to lower the jobless rate to 7.5% in about 20 years or so. The numbers are rough because real 3%/year GDP growth is what's required to keep employment growth matching worker growth, and I'm calculating a 0.1% variation above this, so your numbers might be a bit different. But, that's a scary thought. Dan M. _______________________________________________ http://box535.bluehost.com/mailman/listinfo/brin-l_mccmedia.com
