Mortgage Mess Perspective From January 2009

The residential and now commercial mortgage problem is still the biggest issue facing the U.S. Economy. A year ago, I presented this Powerpoint Slide show, "The Mortgage Mess" (see the attachment). It is very interesting to see what has happened in the past almost 12 months. * The situation has become worse, not better, in spite of throwing hundreds of billions of dollars at the problem. The TARP funds were not used as intended, and are being redirected for other purposes. * The problem hasn't gone away. There will be as many foreclosures in the next couple of years as have already occurred. One out of every seven houses in the country is underwater: the home values are less than the mortgages on the homes. * Although the GDP shows some slight improvement, that is mostly due to artificial stimulus, which cannot last. * We are still losing 200,000 jobs every month; better than the 700,000 per month we were losing in the Spring, but still increasing nonetheless. * Mark Zandi of Moody Economics has said within the last two days that unemployment can be expected to peak at 10.6%; when counting in those who have stopped looking and those who are underemployed (the engineer flipping burgers), it is closer to 18% - 20%. Such unemployment rates cannot sustain any solid economic recovery. * The credit card bust is well underway. Whereas there were 400 million credit cards issued a year, now there are only 300 million in circulation, and interest rates have increased significantly.Read less