re: As the economies recover
I know they always have (recover), but I have to wonder how long this one will take. So many things are wrong now I don’t see how we can get back on an even keel, or even close to it.
Most of the prosperity the world has enjoyed in this recent growth spurt, as long as it was, was paid for by credit. Until we find a way to get over the huge pile up of debt there’s no way any of world’s economies can begin to recover.
The next big hit will come as all the second mortgages begin to fall into default. Lots of people used the increase in the value of their homes to finance a lifestyle well beyond what their income could provide. Many of them find the value of their homes has gone down, in some cases way down, and the credit ride is over.
One possible solution short term would be a one year hiatus on the federal government. Five years would be better, but one year for starters. No money, no government, and that works both ways. I don’t expect any, and I don’t cough any up.
One month in, seniors would be screaming, but many of them should be able to exist on savings for a year. Only the homeless, bums, non working disabled, single moms, and a few others would be desperate and it would then be up to the states, churches and charities to care for them if needed.
The only problems I see long term, oh never mind, the list of people with their hands in the federal pocket is so big we would never make it. Speaking from experience, as a military retiree on social security.
It now appears that the only solution is to allow those who brought this upon us to continue business as usual, which if I am not mistaken is the definition of insanity.
I think the next big hit will come as the commercial mortgages begin to fall into default which will cause many local, smaller banks to fail.
“The next big hit will come as all the second mortgages begin to fall into default. Lots of people used the increase in the value of their homes to finance a lifestyle well beyond what their income could provide. Many of them find the value of their homes has gone down, in some cases way down, and the credit ride is over.”
On the other hand, there are going to be many re-financed mortgages to take advantage of the historically low rates.
I know we’ll probably start the process once the holidays are over.
We don’t have an upside-down problem, but I wonder how many people will be able to refinance if they are severely upside-down?