Economic Statistics for 19 Sep 11
Today’s economic statistical releases..well, "release", actually…is the Housing Market Index, which fell one point to 14. It’s been stuck around this level since the Home Buyer Tax Credit expired last June. Even the decline in mortgage rates over the last year hasn’t helped at all. This is also an index where the break-even point is 50, i.e, anything above that is an expansion, while below it is contraction. So, 14 is…bad.
Of course, part of the problem is that, not matter how low mortgage rates are, that doesn’t really help if the bank is demanding to see $200k in cash as security before they give you a $200k loan. Being unable to get a loan, unless you’re so credit-worthy that you don’t need a loan kind of defeats the purpose of mortgage lending. Foreclosures are still high, so banks are still scared to loan money.
Welcome to the world of bad debt overhang.
Note to progressives: Taxing The Rich™ won’t solve this problem. In case you were wondering.