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So house prices are dropping what do you think the likelyhood will be that people decide to trash their houses rather than let people have them for half the price they paid for them? Or will they go meekly out the door no damage done?
Now all this housing talk is all fun and games, lets not go losing our heads over it.
tinyurl.com/gorow
What's discretionary/conspicuous consumption and what's sustainance can start looking awfully similar if a person just lost a hard to replace job and has a big mortgage, a asthmatic middle schooler, a dyslexic high schooler, and a college student to support. What appears permanent and inelastic expenditures can certainly change with a little time, if the times become hard enough. I'm worried that due to high credit card debt, expensive mortgages, high fuel prices and high inflation in "essentials" like healthcare, a longish recession will force a lot of people out of the middle class permanently.
(I'm also not a fan of consumption driven economies. I think it's in humanity's long term interest to reduce our numbers and our consumption of natural resources. I'm all for the continual creation of more entertainment, more useful gadgets and more cheap fuel efficient trips to Bhutan, but I don't want more consumption as it is usually defined in the US. Quantitatively more stuff doesn't make people happier or healthier in rich countries, and there's much to be done on the qualitative side like greater job security, universal healthcare, and shorter work commutes.)
Claire.
If the banks were smart, they'd start making examples of people who trash their homes by going after them into bankruptcy court and make them suffer and going easier on people who left their homes in a neat condition.
Speaking of housing fun and games, did anyone else catch this bizarre bubble-related story on KGO (Channel 7, BA)?
http://abclocal.go.com/kgo/story?section=state&id=4536326
A SD reporter gets attacked by a couple allegedly running a real estate
astrid,
I think you are arbitrarily segmenting "good consumption" from "bad consumption". Entertainment is as much consumption as plastic Walmart dohickies. I'd be interested to hear which societies of greater than 1M people are not "consumption based". Even centrally planned economies of yesteryear were consumption based, just the state decided what you got to consume.
As to the depth and severity of economic strife triggered by a falling housing market, I read today in the FT that on average Americans have 63% equity in their homes inclusively of all debts secured against housing assets. That number tells me that there won't be anything north of a few percent foreclosures, in the worst likely case.
If you weren’t invited you were supposed to fuck off. That’s what surfer x said.
Huh? Only Trolls need to fornicate with themselves.
Hydro-geologist? I thought that went out with the cowboys.
I was checking our credit scores the other day to see how they were doing and making sure no one had been up to anything with our credit and decided to pay extra to see how we compared to others, Equifax reckons the average mortgage and credit card/car loan was $154,000 or so for California, this seems way out of wack, shouldn't it be much more?
How accurate do you think this credit score malarky is?
Sorry, it's $136,000 total debt for CA and $154,000 for zip code 94040
Robert,
I agree that banks have been way too loose with loans lately and they're going to have to beef up their collections department (with ex-mortgage brokers?). But even the best designed lending system will have some defaults and foreclosures, and banks cushion themselfs by charging extra points to cover the risk.
Besides, those loans are already given out and there's no point crying over spilt milk. Even bank legal departments of medium intelligence ought to now focus on maximizing collections.
Randy,
Sorry, I was doing a bit of late night wishful thinking last night. I know moving away from free market brings up a whole different set of problems. But I'm still troubled by stories of seemingly intelligent and able people going tens of thousands of dollars into credit card debt, whether the debt was from an eBay Beanie Baby buying spree or because they lost their job and lived on credit cards. I also don't like America's wasteful Madison Avenue driven consumption habits. It's a bit of personal snobbishness. (My boyfriend would say hypocrisy, since I buy a lot of kitchenware for him and his cooking never goes beyond cooking spagetti and using the microwave).
As for C driven economies. I agree in the short run, consumption plays a part. But in the long run, those consumption habits are constrained by production, determined by natural resources and S & I. While short term consumption habits are relatively inelastic, people are capable of consuming much more or much less if they are forced to do so.
As for the FT numbers. Most people still had jobs during the Great Depression. All we need is 20% of houses underwater in places like CA and DC, and for the owners to default, and we'll be in a world of hurt.
BTW I've gone back and read the Japan stickiness article more close. You're right, that would be a scary prospect. I think the US would be more volatile and faster moving.
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Well, another successful blog party hosted at Mr. X's sad pathetic rental has come and gone. We all had fun, exchanged FB stories and got to know each other a little better. I got really well "acquainted" with Mrs. X’s sangria (which had some repercussions later on), but overall it was good food, good friends and hanging out. Hopefully, we will continue to have more in the future.
Oh, and the custom Patrick.net T-shirts were courtesy yours truly.
El HARM-o
PS. Am I the only one who's noticed that Patrick.net women are really hot? Need further evidence? Take a gander at LILLL from our last blog party.