on Mar 3rd, 2008Mortgage short sales - how much impact do they have on the economy?
The Wall Street Journal writes that mortgage losses will cause as much as two trillion in losses.
The resulting withdrawal of credit could knock one to 1.5 percentage points off economic growth, compounding the impact of collapsing home construction and softer consumer spending due to lower home wealth, the study said. It was presented Friday at a forum in New York on the Federal Reserve organized by the Brandeis International Business School and the University of Chicago Graduate School of Business.
I think it will be far worse than that. Even this article points out:
For each dollar of loss not made up for by new capital, these institutions will have to shrink their balance sheets by $10 to $25 by reducing lending or selling securities. They would do that not just in order to keep their capital ratios steady, but also to raise those ratios to align with risk-management practices.
Gold is at all-time highs, silver near all time highs, oil is $103 per barrel. Inflation is taking off on things like corn, wheat, energy, and metals.
Yet the cost of living has been skyrocketing, while wages are stagnant.
Mortgage short sales - how much impact do they have on the economy?
You tell me.
And please watch my acclaimed video on mortgage short sales to learn how to do a short sale, how to preserve your good credit, how to avoid personal liablity, and how to sell your house in nine days.