"With home prices in danger of falling this year for the first time in at least four decades, Americans are turning wary about borrowing against their houses to pay for vacations, education or remodeling projects. In a reversal of the ``wealth effect,'' people who once viewed soaring home values as a rationalization for higher spending appear to be pulling back. "Really? But I thought this housing stuff wouldn't spread?
"The sharp decline of the subprime housing market offering high-cost mortgages hasn't yet hit bottom, the head of home mortgage buyer Freddie Mac said yesterday.The number of home buyers starting such loans peaked last year, and interest rates for those buyers are due to rise in the next few years, which could cause foreclosures to spike further, Richard F. Syron said in an interview with The Associated Press."And in the first public acknowledgement I've found that the real problem here is DTI, and that there's really no way to fix it other than for there to be a major credit contraction, we have this:
"They’ve over-obligated themselves. Of course, there are always the ones who have lost their job or have medical bills they can’t pay. But more of them are getting hung up with credit cards or house payments they just can’t afford,” said Vicki Hughes, program coordinator for Consumer Credit Counseling, a nonprofit counseling service managed by Family Resource Center."I'd say "I told you so", but that's getting old, isn't it?
"In turn, they filed a lawsuit March 30 against the bank; their real estate broker, D’Alessandro & Woodyard; their real estate agent, Samir Cabrera; and First Home Builders, accusing them of mortgage fraud, securities fraud and breach of contract."Next up is the fact that the Euro appears to be headed for even more record highs against the dollar, and that we have refinery capacity problems in the US - pushing gas prices higher, with a prediction that we may reach $4.00 this summer.
"China ordered banks to set aside more money as reserves for the seventh time in 11 months to try to prevent an accelerating economy from overheating.Now that, all on its own, is probably not enough to set off a major blowoff in the market.
Lenders must put aside 11 percent of deposits starting May 15, up from 10.5 percent, the central bank said on its Web site. "
Where We Are, Where We're Heading (2013) - The annual 2013 Ticker
The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions.
NO MATERIAL HERE CONSTITUTES "INVESTMENT ADVICE" NOR IS IT A RECOMMENDATION TO BUY OR SELL ANY FINANCIAL INSTRUMENT, INCLUDING BUT NOT LIMITED TO STOCKS, OPTIONS, BONDS OR FUTURES.
The author may have a position in any company or security mentioned herein. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.
Looking for "The Best of Market Ticker"? Check out Ticker Classics.
Market charts, when present, used with permission of TD Ameritrade/ThinkOrSwim Inc. Neither TD Ameritrade or ThinkOrSwim have reviewed, approved or disapproved any content herein.
Market Ticker content may be reproduced or excerpted online provided full attribution is given and the original article source is linked to. Please contact Karl Denninger for reprint permission in other media.
Submissions may be sent "over the transom" to The Editor at any time. To be considered for publication your submission must include full and correct contact information and be related to an economic or political matter of the day. All submissions become the property of The Market Ticker.
Leads on stories of current economic and political interest are always welcome. Our fax tip line is 850-897-9364; please include contact information with your transmission.