Friday, July 13, 2007

The Bottom Is Falling Out

The Bottom Is Falling Out

“July 12 (Bloomberg) -- Mortgage foreclosures in the U.S. jumped to a record in the first half as rising interest rates and falling home prices battered homeowners. Almost 926,000 foreclosure notices were filed, 56 percent more than a year earlier and the most since Irvine, California- based RealtyTrac started tracking the data in 2005. Foreclosures were the highest last month in California and Florida, where some home prices have fallen as much as 25 percent, and Ohio and Michigan, where the automotive industry fired more than 50,000 people in the past 10 years.The jump in 30-year mortgage rates by more than a half a percentage point since May is putting a crimp on borrowers with the best credit just as a crackdown in subprime lending standards limits the pool of qualified buyers. Foreclosures also are increasing as the supply of unsold homes hit a record 4.43 million in May, according to the National Association of Realtors.”

The Negro Press rarely if ever does any serious analysis on the current fiscal situation or current events other than the traditional "Civil Rights" pieces. Most of the space in the print media and time in the electronic media focuses on celebrities, athletes and superficial material as the AmeriKKKan Empire wobbles and collapses all around us. On the home front the housing market is about to tank. Mortgage foreclosures are a record highs, adjustable interest rate loans are set to increase in the next several months putting additional stress and strain on people whose incomes have remained stagnant for the past few years. This wage stagnation is forcing people to abandon their homes as it becomes more difficult to use their homes like an ATM machines or borrow money due to their flat lined incomes.
Black and Latinos have increasingly suffered from the Sub-prime mortgage fiasco. A report from the Center For Responsible Lending entitled, Unfair Lending: The Effect of Race and Ethnicity on the Price of Subprime Mortgages reveals that psychological pain and financial devastation the policies of the Fed and insider lenders has wrought working families of color, part of the racial class war on Black and Brown AmeriKKKans. “Last year, for the first time, lenders were required to report details on the costs of subprime home loans—mortgages intended to serve borrowers with blemished credit or other high-risk characteristics. Lenders disclosed pricing information related to the most expensive subprime loans (referred to here as “higher-rate” loans), while lower-rate loans in the subprime market and virtually all prime loans were exempt from this reporting requirement. Several analyses of this information, collected under the Home Mortgage Disclosure Act (HMDA), have shown that African-American and Latino borrowers received a disproportionate share of higher-rate home loans, even when controlling for factors such as borrower income and property location...Our study analyzed subprime home loan prices charged to different racial and ethnic groups while controlling for the effects of credit scores, loan-to-value ratios, and other underwriting factors. To our knowledge, this is the first full research report that examines 2004 HMDA data to assess the effects of race and ethnicity on pricing in the subprime market while controlling for the major risk factors used to determine loan prices. Our findings show that, for most types of subprime home loans, African-American and Latino borrowers are at greater risk of receiving higher-rate loans than white borrowers, even after controlling for legitimate risk factors. The disparities we find are large and statistically significant: For many types of loans, borrowers of color in our database were more than 30 percent more likely to receive a higher-rate loan than white borrowers, even after accounting for differences in risk. This analysis was possible because we supplemented the 2004 HMDA data with information from a large, proprietary subprime loan dataset. Individually, both databases lack certain pieces of data that would be helpful for an in-depth comparison of subprime loan pricing. By combining loan information from both sources, however, we obtain more complete information on a large set of loans. Using a combined dataset of over 177,000 subprime loans, we analyzed whether borrowers of color are at greater risk of receiving higher-rate subprime loans than similarly-situated white borrowers.”
Tell me something I don’t already know, Black and Brown people being charged more for loans than palefaces is not news in the Black community. What is news but has been suppressed by the corporate media is the fact whites are not exempt from predatory lending schemes and these schemes are causing the unraveling of the whole US economic system. “The housing slump has been placing some weight on the U.S. economy this past year. Last Friday, the federal government reported that overall economic growth slowed to a sluggish 1.3 percent rate in Q1 of 2007, marking the weakest performance in four years. And so, it seems like a fairly easy and obvious prediction to make: that the housing market slowdown in many parts of the country, coupled with variable-rate mortgages resetting to fully indexed rates for millions of homeowners, will have a negative impact on automobile sales. Late last month, General Motors Vice Chairman Bob Lutz became perhaps the first high-profile car industry executive to make that connection ‘official.’” Can Subprime Mortgage Problems Crash the Car Business?
With the money supply increasing, interest rates rising and wages stagnant, homeowners have less flexibility and fewer options for ways to make ends meets as the ends get farther and farther apart. “Housing has accounted, directly and indirectly, for about 30% of employment growth during this expansion, including employment in retail and in manufacturing producing consumer goods, he said. In the past year, consumers spent about $200 billion of the money they pulled out of their home equity, he estimated. Already, sales of consumer durables such as cars and furniture have weakened. ‘As the housing sector slumps, the job and income and wage losses in housing will percolate throughout the economy,’ Roubini said. Consumers also face high energy prices, higher interest rates, stagnant wages, negative savings and high debt levels, he noted. ‘This is the tipping point for the U.S. consumer and the effects will be ugly,’ he said. ‘Expect the great recession of 2007 to be much nastier, deeper and more protracted than the 2001 recession.’”
Recession will be nasty and deep, economist says Housing is in free fall, pulling the economy down with it, Roubini argues
The corporate mind control talking heads rarely speak about the ripple effect of the housing/mortgage meltdown on the broader economy. They never tell us the Fed is printing billions and billions of worthless dollars thereby causing the inflation which we see as our dollars buy less and less and costs keep rising. This is merely the tip of the proverbial iceberg. In the US the mortgage, interest rate and money supply climate are set by the Fed and insider private banks. They have to know what the consequences of their schemes would be/bring. The interest/mortgage/money supply fiasco is sending resonant waves throughout the economy and is impacting other areas of the financial house of cards. Joe and Jane Sixpack have no clue what is about to rain down on them. The government, in addition to obfuscating the real deal about the deficit and the seriousness of the mortgage meltdown is juicing the stats on the Consumer Price Index, Unemployment and a host of other issues. “Regarding ‘Juiced Numbers,’ John Williams has created an excellent Newsletter ‘Shadow Government Statistics’ at which is a welcome antidote to Federal Reserve and government data manipulation. In late November, 2006, Shadowstats issued its report of the "real" numbers as opposed to the government ones. Williams found that annual money supply growth, calculated as if M3 had been continued (the Federal Reserve discontinued the calculation and release of M3 figures earlier this year), indicates that the annual money supply growth as of 3/4 of the way through 2006 was approaching 10%. A 10% increase in the money supply signals massive monetary inflation! Coupled with the massive credit inflation of recent years, we are truly in a massively inflating economy. Of course, the Fed-led Cartel's manipulation of a variety of markets has temporarily masked this hyperinflationary reality and has, coupled with the juiced CPI numbers, created an illusion of deflation. Late in this year of 2006, the United States government's CPI number was just under 2% but (which calculates it the old fashioned way) indicated a 9% CPI rate of inflation. As well, real numbers show the U.S. GDP contracting by nearly 2% a year rather than the government number of plus 2% per year- .Conclusion: while the Fed-led Cartel has created the illusion of deflation, in fact what we have is stagflation. A declining GDP and massive increases in credit and money supply and OTC derivatives are facts. It is only the ‘juiced numbers’ and manipulated markets which disguise this stagflationary reality, albeit only temporarily.”
A bit of advice, formulate a personal and family plan to get out of debt. Avoid getting into deep credit card debt, save and invest even if it’s just a few dollars a month. Don’t believe the hype. Things are not going great, especially for Black folks. For us it’s just the opposite! The ruling oligarchy’s plan is to gut the AmeriKKKan working class, facilitate massive and wholesale redistribution of wealth so the rich get richer and they reduce us to wage slaves and debt peons. To do it they must treat us like mushrooms, keep us in the dark and fed us a steady diet of cow and bull manure. The bottom is falling out economically and politically, the only way to save ourselves is to become informed, united and organized. An ignorant, disarrayed and disorganized populous is weak and easy to oppress.



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