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WTF !! LAST CONSUMER BING : MANY PPL ARE STOPPING THEIR MORTGAGE PAYMENTS .........TO BUY LUXURIES !!

 
THE ULTIMATE BUBBLE !!
User ID: 905800
Mexico
09/19/2010 11:23 AM
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WTF !! LAST CONSUMER BING : MANY PPL ARE STOPPING THEIR MORTGAGE PAYMENTS .........TO BUY LUXURIES !!
[link to www.nakedcapitalism.com]


American Businesses and Consumers are NOT Deleveraging … They Are Going On One Last Binge

Posted: 18 Sep 2010 11:24 PM PDT

→ Washington’s Blog

Everyone knows that the American consumer is deleveraging … living more frugally, and paying down debt.

Right?

Well, actually, as CNBC’s Diana Olick pointed out in April, many consumers are stopping their mortgage payments, and then blowing the money they would usually pay towards their mortgage on luxuries:

I opened up a big can of debate Monday, when I repeated some chatter around that consumer spending might be juiced by all those folks not paying their mortgages.

They have a little extra cash, so they’re spending it at the mall.

Some of you thought the premise had some validity, others, as is often the case, told me I was an idiot.

Well after the blog went up Erin Burnett put the question to Economist Robert Shiller, of the S&P/Case Shiller Home Price Index, during an interview on Street Signs.

He didn’t deny the possibility, and added:

“In some sense there might be a silver lining in that.”

Then I decided to ask Mark Zandi, of Moody’s Economy.com, who will often shoot down my more ridiculous theories.

I asked him if this was a crazy idea:

No, not crazy. With some 6 million homeowners not making mortgage payments (some loans are in trial mod programs and paying something but still in delinquency or default status) , this is probably freeing up roughly $8 billion in cash each month. Assuming this cash is spent (not too bad an assumption), it amounts to nearly one percent of consumer spending. The saving rate is also much lower as a result. The impact on spending growth is less significant as that is a function of the change in the number of homeowners not making payments.

I’m not sure I would say this is juicing up spending, but resulting in more spending than would be the case otherwise.

Many of these stressed homeowners (due to unemployment) are reducing their spending, just not as much as they would have if they were still making their mortgage payment.
Anonymous Coward
User ID: 980280
United States
09/19/2010 11:28 AM
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Re: WTF !! LAST CONSUMER BING : MANY PPL ARE STOPPING THEIR MORTGAGE PAYMENTS .........TO BUY LUXURIES !!
the latest craze is the baby boomers in their mid 50's

what you do is fix up your house- put it on the market - take out a second mortgage- buy a retirement home

if it does not sell- you walk away from it - declare bankruptcy- they can;t take away your new house

so you get a nice retirement home

lol
Anonymous Coward (OP)
User ID: 905800
Mexico
09/19/2010 11:32 AM
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Re: WTF !! LAST CONSUMER BING : MANY PPL ARE STOPPING THEIR MORTGAGE PAYMENTS .........TO BUY LUXURIES !!
BTW, debunkers , trollers ans shills are welcome here !!
I like contrary opinions !!
No ban risk or so in my threads !!
peace hf
Anonymous Coward (OP)
User ID: 905800
Mexico
09/19/2010 11:35 AM
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Re: WTF !! LAST CONSUMER BING : MANY PPL ARE STOPPING THEIR MORTGAGE PAYMENTS .........TO BUY LUXURIES !!
the latest craze is the baby boomers in their mid 50's

what you do is fix up your house- put it on the market - take out a second mortgage- buy a retirement home

if it does not sell- you walk away from it - declare bankruptcy- they can;t take away your new house

so you get a nice retirement home

lol
 Quoting: Anonymous Coward 980280


wtf

Free ride ...for a while !!
But Aren't Bankruptcy laws more restricted in many ways nowadays !!??
Anonymous Coward
User ID: 877408
Mexico
09/20/2010 02:29 PM
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Re: WTF !! LAST CONSUMER BING : MANY PPL ARE STOPPING THEIR MORTGAGE PAYMENTS .........TO BUY LUXURIES !!
[link to www.ritholtz.com]





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