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  • From: Clansgian AT wmconnect.com
  • To: homestead AT lists.ibiblio.org
  • Subject: Re: [Homestead] The real toll of forclosures
  • Date: Wed, 1 Oct 2008 15:44:17 EDT


> >The combination of escalating resets, ever higher fuel prices, and
> unsophisticated buyers using some of the most complex financial instruments.
>

The Calculated Risk entry underscores a stark reality being, says I, ignored
in the present bail out debate.

What got us here was the old saw being chanted like a mantra that 'ho hum,
this talk of bubbles is so boring, we've seen housing prices rise and fall,
this
is just another cycle, nothing more'. After all, everyone knows in the long
run housing prices only go up.

They didn't. The bubble burst. The economic world is turned on its ear, and
the primary perps of the debacle are those who collecitvely chanted, 'Bubble?
Don't make me laugh!"

Now the whole premise on why the bailout is supposed to work is that armed
with a ghastly amount of credit, the Fed will buy up the bad paper that
represents all those houses described in the Calcualted Risk blurb, hold the
paper
until housing prices go up, and then sell them at a tremendous profit and pay
back the public coffers.

But as in the SoCal area described in the article, those houses are
deteriorating. This financial situation is expected to last ten to twenty
years. By
then people will no longer expect (nor expect to pay for) houses with three
car
garages, granite counter tops, etc. There will be nothing of worth to sell
by then with the houses being an anachronism and a falling down anachronism
at
that, </HTML>




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