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  1. #1
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    Strap on your Helmets kids, this is your last Xmas

    The huge, huge, huge parasite financial system of living on credit, not saving, and buy, buy, buy is about to come crashing down.

    You better hope you have the fortitude like your grandparents to live through another Great Depression.

    Because we're farked.
    Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come.
    MSNBC-AP

    Millions homeless, and living on catsup sandwiches.

    Is now in play.

  2. #2
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    it's called living within your means boys and girls, look into it.

  3. #3
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    Quote Originally Posted by Persephone66
    it's called living within your means boys and girls, look into it.
    it's too late

    if all this linked and overly complex financial system starts locking up, because nobody is going to move good money to cover bad debt, and that freezes the system, we are in deep shyte; and if the bad debt is very extensive, and keeps growing at this rate, then widespread insolvency is happening

    Now, we are still "detecting" the roots and size of the roots of the bad housing debt. Now take the rapidly expanding CC debt and tack that on.

    I mean, the Fed has now offered about 4 strategies to "handle" the lack of liquidity ... but now we're talking about liquidity and a growing insolvency.

    This is extremely serious crap.

    This is the RePukes vision of just killing all regulation, coming home to roost.

    You might not see another RePuke elected for fifty years, if we don't starve to death.

  4. #4
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    Funny, I know a lot of people living within their means and paying off their debts. Heck, I like being CC debt free and the only things I have out there credit wise is a couple of student loans and a cheap car. Even those debts are vanishing fast and the Mrs. doesn't need to work outside the home.

    Even in today's materialistic world, there are a few of us who know how not to shoot ourselves in the foot in the name of "I want it now." Would be nice if some of the western governments would learn that lesson too.
    As if four times wasn't enough-> Psycho Mike's 2013 Ride to Conquer Cancer Page

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  5. #5
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    if 80% of the population are living within their means and doing the right thing and 20% of the population are trying to game the system and losing, that means 20% of the consumer economy which amounts to some 14% of gdp is fubar. gdp growth after inflation is like zero percent. a 14% hit to gdp from the lousy 20% of worthless douchebags is going to affect us all. your job might be in limbo because of your worthless neighbors that ran their household on credit. your job might be in limbo because this worthless government had its head in the sand.

    and no, it's not a republican vs democrat thing, chris dodd, dem pres candidate is on the banking oversight committee what oversaw the biggest credit bubble in history. although, bush is a turd, no question about it.

  6. #6
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    The sky is falling, the sky is falling..............

  7. #7
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    It's times like this I enjoy having a NZ passport, some cash, and no ties to amerikkka....

    A one way ticket and I'm outta here...

    Peace out stupid americans....enjoy your empire collapsing...

    Shot through the heart
    And you're to blame
    You give love a bad name...

  8. #8
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    Quote Originally Posted by Mystery Shopper
    This is extremely serious crap.

    This is the RePukes vision of just killing all regulation, coming home to roost.

    You might not see another RePuke elected for fifty years, if we don't starve to death.
    no kidding...we're doomed

    http://www.torontosun.com/News/Colum...738088-sun.php

    Blame begins with the Bush administration. Faced with hugely expensive foreign wars and the dot com bubble, the White House got the Federal Reserve to lower interest rates to nearly nothing. This produced the monster property bubble that is now bursting. Cheap credit became a dangerous drug, financial "speed" arousing false economic euphoria that helped keep Republicans in power and fueled swarms of unregulated, parasitic hedge funds.

    Rock-bottom U.S. interest rates made bankers and investors search out higher paying investments. sub prime mortgages were Wall Street's answer. In a giant Ponzi scheme, new investor money was used to pay off old investors, building a giant pyramid that collapsed this past fall.

    The U.S. Federal Reserve, which is supposed to regulate mortgages, failed in its duty. So did other U.S. financial regulators, such as Treasury and the SEC. They, and auditing firms, allowed banks to egregiously misvalue their mortgage holdings and create "conduits" and "off balance sheet" vehicles that were new forms of accounting fraud....

    ...Many bankers and managers simply failed to understand the mind-numbing complexity of financial derivatives. President George Bush lauded "the new finance" as the model of Republican economic policy. It turned out to be the financial equivalent of Iraq. Worryingly, no one knows how much the world's rickety financial structure now depends on these arcane financial alchemies. We enter 2008 threatened by the prospect of new financial earthquakes and recession.

  9. #9
    Who are the brain police?
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    Quote Originally Posted by ICanDigIt
    Peace out stupid americans....enjoy your empire collapsing...
    If things really get bad for America we could always take NZ. That can't be too hard.
    The Who - Glittering Girl
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    all your base are belong to us

  10. #10
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    Quote Originally Posted by ICanDigIt
    It's times like this I enjoy having a NZ passport, some cash, and no ties to amerikkka....

    A one way ticket and I'm outta here...

    Peace out stupid americans....enjoy your empire collapsing...
    We will. Good luck to you in NZ, homeboy!

    Back to those pesky credit card statements now....new Santa Cruz Blur XC, new anniversary ring for my wife, more sheeit for the kids,...life is good!

  11. #11
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    Quote Originally Posted by JM01
    no kidding...we're doomed

    http://www.torontosun.com/News/Colum...738088-sun.php

    Blame begins with the Bush administration. Faced with hugely expensive foreign wars and the dot com bubble, the White House got the Federal Reserve to lower interest rates to nearly nothing. This produced the monster property bubble that is now bursting. Cheap credit became a dangerous drug, financial "speed" arousing false economic euphoria that helped keep Republicans in power and fueled swarms of unregulated, parasitic hedge funds.

    Rock-bottom U.S. interest rates made bankers and investors search out higher paying investments. sub prime mortgages were Wall Street's answer. In a giant Ponzi scheme, new investor money was used to pay off old investors, building a giant pyramid that collapsed this past fall.

    The U.S. Federal Reserve, which is supposed to regulate mortgages, failed in its duty. So did other U.S. financial regulators, such as Treasury and the SEC. They, and auditing firms, allowed banks to egregiously misvalue their mortgage holdings and create "conduits" and "off balance sheet" vehicles that were new forms of accounting fraud....

    ...Many bankers and managers simply failed to understand the mind-numbing complexity of financial derivatives. President George Bush lauded "the new finance" as the model of Republican economic policy. It turned out to be the financial equivalent of Iraq. Worryingly, no one knows how much the world's rickety financial structure now depends on these arcane financial alchemies. We enter 2008 threatened by the prospect of new financial earthquakes and recession.
    JM,

    How do you speculate this will play out over the next year?

    Just your ideas?

    Where does one "hide"?

  12. #12
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    Quote Originally Posted by Mystery Shopper
    JM,

    How do you speculate this will play out over the next year?

    Just your ideas?

    Where does one "hide"?
    Things are a little different up here...the banks have agreed to support the $33 billion of the bonds that are up here and will convert them to new long term bonds, so they think that most investors will get most of their money back...they'll just have to wait.

    But you ask a good question...credit will be harder to get, inflation will be a problem, interest rates will have to rise next year...and bits of your financial institutions will have to be sold off to off-shore interests to stay liquid (already happening).

    Most of the new money being injected into he global financial system are loans and will have to be paid back...some of the brokerages are selling parts of themselves to the Arabs and Chinese...sadly, no long term solution is at hand.

    Just a long way of saying that unemployment will grow, interest rates will rise, America will import less, export more...the rich will get richer, the poor, poorer...the middle class will continue to shrink. You can't make trillions disappear without an impact across the board.

    Where to hide?...wish I knew. I'm mostly in cash..."A" Charter Canadian bank cashable GIC's, government bonds, a few dividend paying equities (very few), some balanced mutual funds...we're looking at moving and will be selling a couple of houses shortly...but real estate is still strong up here.

    But what will happen down there if people stop spending?...one of the major causes of the 1929 depression was increased American isolationism...something that more Americans are now advocating...that in itself would trigger a global financial catastrophe.

  13. #13
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    Quote Originally Posted by JM01
    But what will happen down there if people stop spending?...one of the major causes of the 1929 depression was increased American isolationism...something that more Americans are now advocating...that in itself would trigger a global financial catastrophe.
    When you say isolationism in 1929, do you mean financial isolation? Or xenophobic culture?

    Do you think fundamental insolvency of key players is possible, and if yes, will that lock up the system to a huge degree?

    I mean, if default rates on CC grow and grow and grow, what are the depths of the "system" that will be plumbed by that? We still don't know how big the housing crisis will spread. The coupling of bad housing debt, with bad CC debt, on massive scales, seems to me to have the potential to be large enough to shut down the financial institutions themselves.

    I mean, if I asked you, how big does bad debt have to be before it shuts down the flow of money, what would you say, and how close are we too that?

    I would also like to mention, that while Clinton was paying down debt, Bush completely reversed that, and now the US Govt is really competing for these dollars to borrow, right? Won't that radically inflate the price of money to the US and radically drive up the National Debt?

  14. #14
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    Quote Originally Posted by Mystery Shopper
    When you say isolationism in 1929, do you mean financial isolation? Or xenophobic culture?

    Do you think fundamental insolvency of key players is possible, and if yes, will that lock up the system to a huge degree?

    I mean, if default rates on CC grow and grow and grow, what are the depths of the "system" that will be plumbed by that? We still don't know how big the housing crisis will spread. The coupling of bad housing debt, with bad CC debt, on massive scales, seems to me to have the potential to be large enough to shut down the financial institutions themselves.

    I mean, if I asked you, how big does bad debt have to be before it shuts down the flow of money, what would you say, and how close are we too that?

    I would also like to mention, that while Clinton was paying down debt, Bush completely reversed that, and now the US Govt is really competing for these dollars to borrow, right? Won't that radically inflate the price of money to the US and radically drive up the National Debt?
    2 things:

    1. But Clinton...

    2. We haven't been attacked on 'Merican soil since 9/11.

    These two things alone are all we need. As long as we have these to combat any argument and/or attack, we are invincible and no price is too high to pay (money, body count - our own, reputation, environmental, etc.). WW, you need to get that wrapped around and threw your thick skull (and bones).
    Last edited by Chief; 12-24-2007 at 04:03 PM.

  15. #15
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    Quote Originally Posted by Chief
    2 things:

    1. But Clinton...

    2. We haven't been attacked on 'Merican soil since 9/11.

    These two things alone are all we need. As long as we have these to combat any argument and/or attack, we are invincible and no price is too high to pay (money, body count - or own, reputation, enviromnmental, etc.). WW, you need to get that wrapped around and threw your thick skull (and bones).
    I think you've got em NAILED Chief!

  16. #16
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    Quote Originally Posted by Mystery Shopper
    JM,

    How do you speculate this will play out over the next year?

    Just your ideas?

    Where does one "hide"?
    It's not a coincidence that a new bankruptcy law was passed by Congress and signed by Bush 2 years ago. The CC industry saw this coming and wanted to be sure that all these overextended people could not just walk away from their CC debt.

  17. #17
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    Quote Originally Posted by Mystery Shopper
    When you say isolationism in 1929, do you mean financial isolation? Or xenophobic culture?

    Do you think fundamental insolvency of key players is possible, and if yes, will that lock up the system to a huge degree?

    I mean, if default rates on CC grow and grow and grow, what are the depths of the "system" that will be plumbed by that? We still don't know how big the housing crisis will spread. The coupling of bad housing debt, with bad CC debt, on massive scales, seems to me to have the potential to be large enough to shut down the financial institutions themselves.

    I mean, if I asked you, how big does bad debt have to be before it shuts down the flow of money, what would you say, and how close are we too that?

    I would also like to mention, that while Clinton was paying down debt, Bush completely reversed that, and now the US Govt is really competing for these dollars to borrow, right? Won't that radically inflate the price of money to the US and radically drive up the National Debt?
    Perhaps a poor choice of words...rather than isolationism, protectionism would be the operative concept after 1900...America's foreign policy was much different than today, diplomacy rather than "winning through intimidation"

    America was dragged into WWI through false information, and it finally took the sinking of the Lusitania to get public opinion onside with a President who desperately wanted to go to war. Imagine, packing a passenger liner full of explosives and sending into an area where you've been warned is a "free-fire zone".

    Same with WWII...Americans needed to be won over by a president who was being swayed by false information...Churchill desperately needed help...but it took the American provocation of Japan to get the U.S. into the Pacific war...many think that you knew well in advance of the attack on Pearl Harbour.

    The mistake that Germany made was to declare war on America, finally getting you into the European war....

    But you ask about debt...your federal debt is now at $10 trillion, half of which has been accumulated by Bush ( ). It can never be repaid, there isn't enough money, you'll have to either borrow more to pay the interest, or print more thereby causing hyperinflation. There is less than $1 trillion currently in print...imagine increasing the monetary supply by tenfold.

    No one knows who holds all of that bad debt...but it appears that the ramifications of the subprime mortgage fiasco are huge reduction in the money supply...in the last few weeks 4 brokerages needed a $20 billion infusion, 2 insurance companies $20 billion, the global financial sector $500 billion, little Canada $40 billion...all of which will have to be paid back.

    CC debt appears to be the tipping point for some, but with preset credit limits, it shouldn't be a serious threat.

    So Happy New Year...2008 will see slower sales, inflation, no economic growth, fewer jobs...something we used to call stagflation...then a major economic upheaval.

    So back to your OP...Your were right on to advise everyone to strap on those helmets...this may be Bush's true legacy, the destruction of the global financial system, with only Russia, China, and the Arab countries having the ability to step in as the new world financial leaders.

  18. #18
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    Quote Originally Posted by JM01

    But you ask about debt...your federal debt is now at $10 trillion, half of which has been accumulated by Bush ( ). It can never be repaid, there isn't enough money, you'll have to either borrow more to pay the interest, or print more thereby causing hyperinflation. There is less than $1 trillion currently in print...imagine increasing the monetary supply by tenfold.

    No one knows who holds all of that bad debt...but it appears that the ramifications of the subprime mortgage fiasco are huge reduction in the money supply...in the last few weeks 4 brokerages needed a $20 billion infusion, 2 insurance companies $20 billion, the global financial sector $500 billion, little Canada $40 billion...all of which will have to be paid back.
    The RePuke argument is that debt is a low proportion of GDP (see plot higher in thread), and so it's not very important.

    What do you say to that?

    I think the "infusions" of cash may need to go on for sometime.

    I wonder what RePukes are going to say to the fact that China and Arabs now are buying control of the key financial businesses that in turn, control America?

    Repukes?

    RePukes?

    aren't *unfettered* markets, just the best thing ever?

    RePukes?

    RePuke Sandan? Oil Arabs now control the money that controls Israel. RePuke Sandan?

  19. #19
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    Quote Originally Posted by Mystery Shopper
    The RePuke argument is that debt is a low proportion of GDP (see plot higher in thread), and so it's not very important.

    What do you say to that?

    I think the "infusions" of cash may need to go on for sometime.

    I wonder what RePukes are going to say to the fact that China and Arabs now are buying control of the key financial businesses that in turn, control America?

    RePuke Sandan? Oil Arabs now control the money that controls Israel. RePuke Sandan?
    Political philosophies aside, the fact that the debt is a "low" percentage of the GDP is meaningless unless you're paying it down. But a gov't debt of $10 trillion and a total U.S. debt of $50 trillion, not counting unfunded liabilities like Social Security and pension plans is impossible to pay off in 100 lifetimes...there simply isn't enough money to cover the interest, let alone the principal.

    So the borrowing continues.

    The core of the problem is the nature of the U.S. economy. As I've said before, you've gone from a wealth creating, manufacturing economy to an addiction fueled, wealth consuming economy. You are not creating enough wealth to pay off the debt.

    The best analogy is that of a village whose population earns their living by doing each other's laundry, with a few pennies being sent to another village with each load to buy soap.

    This economy grows when a new family moves into the village and shares in the work, creating another "job". But it's the same dollar making the rounds...no "real" growth results.

    Just a long way of saying that unless you actually pay down the debt, numbers are meaningless.

    American companies will continue to be sold to off-shore interests as this is the only way they'll survive...a trend that will continue into the stock markets as aging Americans retire and need to convert their investments into income...there simply won't be enough Americans who can afford to buy them, endangering the liquidity of the equity and debt markets.

  20. #20
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    I don't think the situation is completely screwed. But the US is going to have to re-establish some fiscal discipline and drastically cut spending. Especially military spending which accounts for a third of their total federal budget.

    Taxes will need to be raised along with interest rates. Regulations for the financial sector will need to be tightened up. Above all the US government is going to have to get off the treadmill of borrowing.

    The problem is, the political will to do these things just isn't there. That's what's so worrying.
    "Peace hath her victories, no less renowned than war."
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  21. #21
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    Quote Originally Posted by Enduro Man
    I don't think the situation is completely screwed. But the US is going to have to re-establish some fiscal discipline and drastically cut spending. Especially military spending which accounts for a third of their total federal budget.

    Taxes will need to be raised along with interest rates. Regulations for the financial sector will need to be tightened up. Above all the US government is going to have to get off the treadmill of borrowing.

    The problem is, the political will to do these things just isn't there. That's what's so worrying.
    Sadly, I think you've reached your tipping point. The bulk of gov't spending is out of it's control...servicing your debt, payroll, federally mandated social spending (health, education, housing, defense, etc.)...there is no wiggle room for significant spending cuts without a huge impact on your quality of life...Imagine if your ferderal government stopped spending for 4 years...not one penny for 4 years. This is what it would take to reset the federal $10 trillion debt clock...and that's not addressing the other >$40 trillion that Americans owe.

  22. #22
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    Not an exclusive republican problem

    Quote Originally Posted by Mystery Shopper
    it's too late

    if all this linked and overly complex financial system starts locking up, because nobody is going to move good money to cover bad debt, and that freezes the system, we are in deep shyte; and if the bad debt is very extensive, and keeps growing at this rate, then widespread insolvency is happening

    Now, we are still "detecting" the roots and size of the roots of the bad housing debt. Now take the rapidly expanding CC debt and tack that on.

    I mean, the Fed has now offered about 4 strategies to "handle" the lack of liquidity ... but now we're talking about liquidity and a growing insolvency.

    This is extremely serious crap.

    This is the RePukes vision of just killing all regulation, coming home to roost.

    You might not see another RePuke elected for fifty years, if we don't starve to death.
    Plenty of conspicuous consumers living deep in the red on both side of the fence.
    The day of reckoning is coming sooner than I originally thought, interesting times ahead.
    Time to stock up on rice and Flintstone chew-ables.

  23. #23
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    Quote Originally Posted by ICanDigIt
    It's times like this I enjoy having a NZ passport, some cash, and no ties to amerikkka....

    A one way ticket and I'm outta here...

    Peace out stupid americans....enjoy your empire collapsing...
    Bye Bye then @$$ HOLE

  24. #24
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    Over the past six months, for working capital my wife and I have opened up and maxed out about every line of credit we could get our hands on. The stress is no joke, but I got hope.

    As for the Subprime mess, JM is right on about Financial Institutions chasing yield created much of the problem.

    Below is an interesting “Rose Colored Glasses” editorial I saw on Bloomberg today about the Subprime crisis. It doesn’t do much to answer the foreign bailout implications, but it does question the actual losses.

    One other thing to consider is that many of indexes (1 yr LIBOR, 1 yr CMT etc) for ARM’s have come down significantly, so the people who intend on making their mortgage payments could see some relief if their rate resets soon.

    Subprime Losses Are Big, Exaggerated by Some: John M. Berry


    Commentary by John M. Berry
    Dec. 27 (Bloomberg) -- As the U.S. savings and loan crisis
    worsened in the 1980s, analysts tried to top each other's
    estimates of the debacle's cost to the federal government.
    Much the same thing is happening now with losses linked to
    subprime mortgages, with figures of $300 billion to $400 billion
    being bandied about.
    A more realistic amount is probably half or less than those
    exaggerated projections -- say $150 billion. That's hardly
    chicken feed, though not nearly enough to sink the U.S. economy.
    A loss of $150 billion would be less than 12 percent of the
    approximately $1.3 trillion in subprime mortgages outstanding.
    About $800 billion of those are adjustable-rate mortgages, the
    remainder fixed rate.
    Subprime loans represent about an eighth of the value of
    all U.S. residential mortgages.
    In the S&L crisis, Charles A. Bowsher, director of the
    Government Accountability Office, topped everyone's estimate
    with $500 billion, though that dubiously included the cost of
    interest on money borrowed to cover actual losses of $160
    billion. That's about $260 billion in 2007 dollars.
    This time insured depositors aren't in the picture, so the
    federal government isn't directly on the hook. But the
    government will share in losses by private lenders through
    reduced tax bills on their lowered income.
    Now the primary threat to the economy isn't coming from the
    losses on the mortgages themselves. It's the capital squeeze on
    the many financial institutions that packaged so many subprime
    mortgages into so-called structured securities whose value is
    almost impossible to pin down. That's causing markets to value
    such securities as if the true losses on subprime mortgages were
    $300 billion to $400 billion.

    Limited Losses

    There are two reasons why the losses aren't likely to be so
    large.
    First, the mortgages are backed by collateral, a house or
    condominium, and in a foreclosure a home typically retains
    significant value. When it is sold, the lender often will get 50
    percent to 60 percent or more of the loan amount after
    foreclosure expenses.
    Second, most subprime borrowers aren't going to default.
    Suppose even one in four does and lenders recover somewhat more
    than half the mortgage amount. A fourth of $1.3 trillion in
    subprime mortgages is $325 billion, and a 55 percent recovery
    would mean a loss of about $145 billion.
    To reach a $300 billion loss would require foreclosures on
    about half of all subprime mortgages with a 55 percent recovery
    upon sale of the property. And a $400 billion loss would take
    about a 60 percent foreclosure rate with recovery of about half
    the value from the sale.

    What It Means

    According to the Mortgage Bankers Association, in the third
    quarter, more than 16 percent of all subprime mortgage payments
    were at least 30 days late, and less than 1 percent of all
    mortgages involved homes in foreclosure.
    What does that mean for the broader economy, particularly
    consumer spending?
    As Glenn Maguire, chief Asia economist for Societe Generale
    SA in Hong Kong, told an audience in Shanghai on Dec. 12, less
    than you might think.
    The economic repercussions of the housing bust and
    mortgage woes are limited to a great extent because less than
    half of American families own a home with a mortgage, he said.
    Almost a third of all families rent their house or apartment,
    almost a fourth own and have no mortgage and the vast majority
    with a mortgage are current in their payments.

    Consumer Spending

    Even with about a tenth of all subprime mortgages now in
    foreclosure, only a small share of all American families --
    about 0.3 percent -- own a home in foreclosure, he said.
    Maguire argued that, given the big increase in home values
    prior to 2006, the current decline in home prices isn't likely
    to be a major drag on consumer spending.
    It hasn't been much of one so far. The Commerce Department
    said on Dec. 21 that consumer spending rose a strong inflation-
    adjusted 0.5 percent in November, and some analysts now expect
    it to increase at a 2.5 percent annual rate for the quarter.
    Comparisons in dollars of constant value between likely
    subprime losses and those incurred during the S&L crisis
    indicate the 1980s hit was significantly greater, though the
    current episode still has a long way to run.
    One similarity between the two is that the real-estate
    problems are concentrated in a handful of states. Both times the
    two top trouble spots are California and Florida, states with
    long histories of real-estate speculation.
    Where there are concentrations of foreclosures, the amount
    of money lenders will recover from the sales will be limited. In
    many other areas, however, the recovery may be considerably
    larger.
    Many financial institutions dealing with securities backed
    by subprime mortgages have avoided fire sales at severely
    depressed values. Eventually, the true size of the underlying

    losses will show.

    (John M. Berry is a Bloomberg News columnist. The opinions
    expressed are his own.)

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