Serious insanity
Of course article like this are written as a story, rather than necessarily reality, but it works for me - scares me silly to think people are so desparate!
http://www.reuters.com/article/ousiv/idUSN1141892120070911 Consumers turn to plastic as home loans slow
Consumers are carrying a record $907 billion in credit card debt, and that looks likely to jump now that the housing slump has blunted another popular financing tool -- home equity loans.
Americans cashed out hundreds of billions of dollars in home equity as credit came cheap in a five-year housing boom that ended about 18 months ago.
Now, with the subprime mortgage mess triggering tighter financing terms and home prices falling in some regions, the home-as-ATM trend is slowing, threatening to curb the consumer spending that drives two-thirds of the U.S. economy.
"The home equity spigot has been really shut off over the last nine months or so. With (home price appreciation) stagnating, borrowers have not had the opportunity to refinance as much as they had, or cash out for spending needs," said Joe Astorina, securitization analyst at Barclays Capital.
That financial people actually SEE home equity as a source for consumer spending is insane to me. I mean they can perhaps be objective analysts, just looking at the facts - home appreciation and low mortgage rates and feelings of wealth encourage people to borrow and spend, but I can't understand it.
The closest I can come, when in 2005 I had a car accident, felt bad being out $5000 for not having collision insurance, and then realized my home equity increased by MORE than that in one year, as if a gain canceled my anger at my loss.
Of course the TRAP here I don't understand. I thought most of refinancing in the past was done to pay off high interest credit cards and lower their monthly payments. BUT you'd think such consumers would now realize there's no more good refinancing options, and this time their credit cards won't be paid down by new equity, so you'd think they'd stop.
But credit card companies are getting good interest returns, so they'll keep lending, especially now protected by more difficult bankruptsy requirements.
It just can't end good. I don't understand why people can believe spending money they don't have is an acceptable option - when will they have more to pay it back?
Of course the government does the same thing - it must raise the debt ceiling in October - what a gift to the American people!
http://www.concordcoalition.org/issues/feddebt/doc/070912-debt-limit.pdf
I don't even know how to respond to THAT insanity. If you hold the debt ceiling fixed, then you have to increase taxes or decrease spending. Democrats will fight the first (since social programs are the easiest to cut) and Republicans will fight the second.
As I said, this can't end good.
http://www.reuters.com/article/ousiv/idUSN1141892120070911 Consumers turn to plastic as home loans slow
Consumers are carrying a record $907 billion in credit card debt, and that looks likely to jump now that the housing slump has blunted another popular financing tool -- home equity loans.
Americans cashed out hundreds of billions of dollars in home equity as credit came cheap in a five-year housing boom that ended about 18 months ago.
Now, with the subprime mortgage mess triggering tighter financing terms and home prices falling in some regions, the home-as-ATM trend is slowing, threatening to curb the consumer spending that drives two-thirds of the U.S. economy.
"The home equity spigot has been really shut off over the last nine months or so. With (home price appreciation) stagnating, borrowers have not had the opportunity to refinance as much as they had, or cash out for spending needs," said Joe Astorina, securitization analyst at Barclays Capital.
That financial people actually SEE home equity as a source for consumer spending is insane to me. I mean they can perhaps be objective analysts, just looking at the facts - home appreciation and low mortgage rates and feelings of wealth encourage people to borrow and spend, but I can't understand it.
The closest I can come, when in 2005 I had a car accident, felt bad being out $5000 for not having collision insurance, and then realized my home equity increased by MORE than that in one year, as if a gain canceled my anger at my loss.
Of course the TRAP here I don't understand. I thought most of refinancing in the past was done to pay off high interest credit cards and lower their monthly payments. BUT you'd think such consumers would now realize there's no more good refinancing options, and this time their credit cards won't be paid down by new equity, so you'd think they'd stop.
But credit card companies are getting good interest returns, so they'll keep lending, especially now protected by more difficult bankruptsy requirements.
It just can't end good. I don't understand why people can believe spending money they don't have is an acceptable option - when will they have more to pay it back?
Of course the government does the same thing - it must raise the debt ceiling in October - what a gift to the American people!
http://www.concordcoalition.org/issues/feddebt/doc/070912-debt-limit.pdf
I don't even know how to respond to THAT insanity. If you hold the debt ceiling fixed, then you have to increase taxes or decrease spending. Democrats will fight the first (since social programs are the easiest to cut) and Republicans will fight the second.
As I said, this can't end good.
posted by Ares Olympus at 12:19 PM
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