patrick.net

It likely has not much effect, because housing is going to continue to fall for a while, regardless of what happens in Washington.
There are millions of houses that are 90+ days delinquent on their mortgage.
For the 12th week in a row, 400,000+ Americans filed for unemployment insurance.
What do you think these facts mean house prices?

Well, more specifically, I'm wondering how detrimental it would be if we decided not to raise the debt ceiling.

No effect.

StoutFiles says

Well, more specifically, I’m wondering how detrimental it would be if we decided not to raise the debt ceiling.

Housing prices would be the least of your worries.

StoutFiles says

I’m wondering how the upcoming debt ceiling decision will change the housing market, for good or for worse. Anyone with knowledge?

none but the lowering of Jumbos will..lowering prices to purchase.

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/06/10/prweb8560737.DTL

thomas.wong1986 says

lowering of Jumbos

Assuming Congress lets it happen. Even dropping to $625K is an abomination. It should be dropped back to $417K or lower.

as soon as the markets so much as burp in the wrong direction the Reps will drop their issues and turn 180. nothing to see here.

The sky is not yet falling. Interest payments on the debt can be met without raising the debt ceiling.
Asking whether this has an effect on housing is like asking whether or not putting your convertible top up or down matters when you are flying down the road and lose your brakes. Either way, you're going to have a bad experience.
I think the debt ceiling will be raised but the nonsense of railing about miniscule issues like 5 v 7 year depreciation of jets shows that a little more chicken playing is in order.
Obama forgets that the election last November changed things in Washington. The new people are unafraid of nonsense. Geithner said back in March that doom was imminent and he was lying, so now no one cares, he cried wolf.

"No one knows for sure what will happen because this has never happened before."

So we didn't default when Bretton Woods ended?

When Nixon got us off the gold standard it's because we ran out of it. But that also caused OPEC to be angered that what was gold was now power..which came to no surprise that the embargo occured

We also defaulted during the civil war and don't forget nearly every treaty we made with native amerians and of course the bonus march for ww 1 vets.

We have defaulted a number of times

If we don’t raise the debt ceiling, the United States will default on debt tied to nearly every single financial transaction made across the globe.

Nope.

The Treasury will just have to make choices. Pay interest on the debt or pay for small business loans that small businesses aren't even applying for.

If we default, we will get downgraded by the rating agencies, borrowing costs will go up as a result. Mortgage rates will follow suit, further depressing housing sales, and house valuations.

Increasing repos and banks sales as more people tire of making payments on houses whose mortgages are under water.

A default would push us back to another 2008 type crisis, but this time the government couldn't step in to bail out the entire BREIM (banking real estate insurance mortgage) industry.

Add to that Geitners statement that we would need to cut government spending by 40% immediately, and we can see that the troubles of 2008 would pale.

We would be looking at something more akin to the great depression. Which, given stock market and unemployment curves of that crisis, over 10-15 years, may just be history repeating itself.

1929 to 1932 saw a small recovery before the real crash occurred, which took the massive deficit spending of WWII to resolve.

We have seen a lot of improvement since the depths of the 2008 crash, but I don't think that pig has worked its way through the snake yet.

If we attempt to solve our problems by going cold turkey on debt, the current unemployment numbers and housing values will look like the good old days.

yup, last time around we needed a war to bail us out... and in a srange coincidence Europe having similar problems has, along with the good ole us ofa, decided to destabilize the middle east by attacking (with propoganda and with actual force) sovergn nations in that area.

Lets just bomb Libya while the Saudi's stone women, lets just decry the oppressive regimes of Egypt and other countries in favor of revolution & democracy.

I would definitely say a war is next

darrellsimon says

I would definitely say a war is next

It's not like that would help. A war wouldn't send many people overseas and give many people a job to fund the war effort like it did in the 40's. It'd just be really expensive and make things worse.

bob2356 says

That’s odd, I seem to remember a Republican president being in office in 20 of the last 30 years that the debt has been run up. Is my memory faulty?

Why do people argue about this stuff? If everyone would stop picking sides they'd realize that both parties are awful, and we shouldn't even have them.

StoutFiles says

If everyone would stop picking sides they’d realize that both parties are awful, and we shouldn’t even have them.

the parties represent the emotional and intellectual make-up of their mainstream supporters.

It is not the parties that are fucked, it is us.

Troy says

it is us.

Of the people,by the people,for the people. :)

The debt ceiling has been raised about 90 times in US history. I don't think raising or failing to raise the debt ceiling is going to affect housing or much of anything. By the way, I think it is going to be raised without doubt.

To me the debt ceiling issue is a distraction from the real issue of too much theft by people in government.

regarding stout files:

War reduces the surface population, it gets rid of debts as well.

corntrollio says

Assuming Congress lets it happen. Even dropping to $625K is an abomination. It should be dropped back to $417K or lower.

Your so right about that... even lower! Inflating home prices helps no one!

Troy says

StoutFiles says

If everyone would stop picking sides they’d realize that both parties are awful, and we shouldn’t even have them.

the parties represent the emotional and intellectual make-up of their mainstream supporters.
It is not the parties that are fucked, it is us.
“Nessuna soluzione . . . nessun problema!„

noone supports fraud and stealing. That is pure influence of special interest money to buy legislative graces.

"Geithner said back in March that doom was imminent and he was lying, so now no one cares, he cried wolf."

You clearly do not understand how the debt ceiling works. The US has already hit its debt ceiling and has only avoided defauly through the use of accounting gimmicks, like not making contributions to employee pensions and not holding certain auctions. However these measure sare TEMPORARY and can't go on forever. Geithner was also able to push the date back a few months due to higher than expected tax revenue. You see, tax revenue is very unpredictabel and before April 15th, few peopel know what it will be.

I don't think it will be a disaster. For sure, treasuries will fall thru the floor and all bonds as well. Stock market will go down. Interest rates - sharply up.

Credit will become nearly unavailable. In short, it means Deflation.

We, the U.S., DO make enough to pay our debts, about 2.4 TRILLION a year. PLenty enough to pay our bonds. What we don't have enough for is all the programs that favor this group and that group. Both parties have them. Power needs to and will be, devolved from Washington. That is ELIMINATE most of the programs and we will SAVE OUR COUNTRY. The private sector charities will fill-in where need is critical, they always have throughout history and only in the last 70 years do we believe the preposterous notion that government should take care of all our needs.
DON'T ELIMINATE them, hold out for the bitter end, go WAY further into debt, and we probably don't survive as a country. We likely break into a smaller nation much like the Soviet Union did, or at least be beholden to numerous foreign interests who are stronger.
So I say to the Patriotic Republicans STAND YOUR GROUND. Pay our debts with the tax money you ALREADY take in and roll back the spending. It's our ONLY chance.

Why is everyone blaming Republicans? Democrats are TRYING to pin this on Repubs so they can spend at foolish, lavish and spendthrift ways. If we raise the debt ceiling, when the bond markets DO wake up they will raise the yie
ld so high, we the U.S., will not be able to pay the debt and the economy will be so tight, making money( to pay taxes,live life, etc.) will be difficult.

This is like GM before it went bankrupt. At first there was "NO WAY" we could let them go bankrupt. After a another month or two(and after a corrupt payoff to the unions) it suddenly became OK, and they went through bankruptcy.

"That is ELIMINATE most of the programs and we will SAVE OUR COUNTRY. The private sector charities will fill-in where need is critical,"

So you want to replace Social Security and Medicare with charity? Ok, yet another crazy idea.

The odd thing is that much of the debt comes from the wars. So when the democrats had control of congress under bush they continued them..and for a whole year under obama they continued it as well.

The left could have removed funding the wars but they didn't..why not? Political suicide maybe...but they could have at least said they would stick to things.

Obama won the primary because he could say iraq was a mistake and won against hillary..then we watched as palin and mccain tripped over their own feet.

Even if we let the bush tax cuts expire, ended the exemption on social security and let obama care sit we would STILL have significant debt.

We've never cut government on the federal scale that much. We have to mortgage the future on the basis of what we borrow.

darrellsimon says

yup, last time around we needed a war to bail us out…

The war of 1979? I must have missed that.

and in a srange coincidence Europe having similar problems has, along with the good ole us ofa, decided to destabilize the middle east by attacking (with propoganda and with actual force) sovergn nations in that area.

Did the U.S. start the Arab protests? That's what the dictators there would like you to believe. More pro-U.S. Arab regimes are threatened by popular uprising than are anti-U.S. regimes. I doubt from the tone of your comments you really give a shit about the people's suffering there right now.

I would definitely say a war is next

War would not help our situation. It is part of what drove us to this point. History, economics, it's all inconvenient when trying to keep one's conspiracy theories afloat.