Where The Market Stands Now

Oct 10th, 2008 @ 4:25 PM by Alden Smith

By now, everyone is aware of the mess the economy is in. The NYSE took another hit today, dropping very low in mid-afternoon trading and making a slight recovery by the closing bell. Trading was suspended in Russia and Iceland, and markets all over the world are hemorrhaging. Consumer confidence is now at a level equal to the Great Depression. President Bush said today in a newscast this A.M. that “anxiety breeds anxiety” and calls for patience.

Tonight the NBC Nightly News warned of trouble with General Motors, and the rumors of bankruptcy. this industrial giant has been a stalwart of the market for a lot of years. Now, they are making trucks and cars that won’t sell for any price. Most of this is due to not only the tightening of the credit market, but also the price at the pump.

Right now, we cannot simply cry over spilt milk. What is done is done, and we must bear the economic troubles as best we can. There is just no way that there can be a “quick fix.” The government must sort through all the securities to find out what the issues are. I have heard of no formulated plan once they do that. It possibly could take several years for this to become a reality.

And then what will the Fed do with all this bad paper? That remains to be seen. I believe any relief from the Fed’s attempt to put things right will take a long time.

Research for this article took me to Seattle Real Estate News. They cited a report by the Center For Housing Policy. From what I read in the Seattle paper and on the CHP website, high mortgage payments are actually one a part of the mortgage fiasco. Rising utility costs in natural gas, electricity and even water are contributing heavily to these foreclosures. According to CHP, between 1996 and 2006, all the major categories of homeowner expenses increased faster than incomes.

It breaks out like this:

* Mortgage payments increased 46 percent
* Utilities increased 43 percent
* Property taxes increased 66 percent
* property insurance increased 83 percent

Looking at average incomes, the increase in wages was a mere increase of 36.3 percent. It doesn’t take an Einstein to see where this is going.

To straighten out the economy could take up to a decade and in that timeframe, a lot of people will be in the streets. I watched a video presented by Bob Barr, the Libertarian candidate for the presidency. He is not well know. His views hit home, however. In his vide Mr Barr alleges that the Fed knew this was happening 10 years ago. Nothing was done then, and hasn’t since. Now, the Fed is wanting what will certainly be a trillion or more dollars to clean up a mess that they were aware of, and that does the same thing as what caused this mess – buy bad paper. It will be interesting to see where this leads.

Posted in Mortgage Refinancing, Mortgages
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