Anyone who doesn't know the economy is taking a turn for the worse either has his head in the sand or only watches Fox News.
"Home ownership is up" only because of the massive number of subprime mortgages issued in the last few years. More importantly, actual ownership in financial terms (i.e., real equity) is down sharply. Mortgage debt has doubled since 2001. The subprime loans lead to the housing bubble that inflated home prices, which existing homeowners borrowed against. Now home prices are falling, meaning personal equity is falling also.
Now the subprimes are just starting to fail and already it's having a huge effect on financial markets. Credit is tightening across the board and the effects can already be seen in stock prices recently. As the economy gets worse, more loans will fail. Where the bottom will be is anybody's guess.
Unlike the 2000 recession where there was a surplus, the Borrow and Spend government is still running up debt at high speed. The consumer savings rate went NEGATIVE for the first time ever in 2005. For an economy that is stretched to its limit on credit, the panic tightening of credit markets should be an alarming sign.
This recession is going to be hard on a lot of people.
Re: warning signs
Member #: 4750
Registered: 1996-2001
Posted:
529
Name:
Keith
Occupation:
Retired
Location:
NY
Personal:
late 70s
Experience:
~52 years
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