The progressive recession
I'm starting to think that the warning cries about how this financial mess will bring doom to the average American are unfounded. I also can't muster any sympathy for the majority of the foreclosure cases.
If you put 0% down, finance closing costs, then pay interest only for years, what have you really lost during foreclosure? You probably weren't paying much more than you would have been renting, except you got the home mortgage tax break. People moved into ownership with little more up front cash than a security deposit. Their cost of foreclosure is the U-Haul truck to haul their junk to a rental.
I'll agree that a tight credit market is going to slow job creation and make new ventures harder, but let's talk about those who already have jobs. What's a credit crunch going to do to a wage earner making $45k a year? He can't qualify for a loan on a big new car, so he buys used, or he buys smaller. He's already seeing fewer credit card offers (down as of this month), or his limits may be reduced. Why would he care that it costs 2 points more to get a Jumbo ARM now? Because of this "crisis", the temptations for him to live beyond his means will be reduced, he'll have to save more to make large purchases (what a concept!).
I can't make any comments on the global ramifications of this mess, but I wish politicians would stop trying to convince me that this is going to directly hurt middle/low income folks, or that foreclosure is some form of victimization.
If you put 0% down, finance closing costs, then pay interest only for years, what have you really lost during foreclosure? You probably weren't paying much more than you would have been renting, except you got the home mortgage tax break. People moved into ownership with little more up front cash than a security deposit. Their cost of foreclosure is the U-Haul truck to haul their junk to a rental.
I'll agree that a tight credit market is going to slow job creation and make new ventures harder, but let's talk about those who already have jobs. What's a credit crunch going to do to a wage earner making $45k a year? He can't qualify for a loan on a big new car, so he buys used, or he buys smaller. He's already seeing fewer credit card offers (down as of this month), or his limits may be reduced. Why would he care that it costs 2 points more to get a Jumbo ARM now? Because of this "crisis", the temptations for him to live beyond his means will be reduced, he'll have to save more to make large purchases (what a concept!).
I can't make any comments on the global ramifications of this mess, but I wish politicians would stop trying to convince me that this is going to directly hurt middle/low income folks, or that foreclosure is some form of victimization.