Hotspur’s post on “Bank Bunk” triggered my memory so I hunted this down.

From 12/07,  one could see this wreck coming over the corpulent carpet of elevated asses produced by Congress planting their heads in the sand. Now they undulate ineffectually in the halototic exhaust of the George Soros sock puppet pushing dead economic theory.

“House of Credit Cards”

[snip]
When (not if) housing prices drop, many who bought and still make payments will face houses not worth the mortgage, aka being upside down. Do they walk away or continue to overpay? What would you do?

Ask any homeowner what their house’s value is; you’ll get answers like $200,000, perhaps $400,000 or some other number. The correct answer is “Whatever someone else is willing to pay for it.” Will that be what you owe?

Town clerks become inundated with reappraisal requests to lower property taxes; what’s that going to do to the school budget, road maintenance and fire/police protection? From where does the money come for all the liberal programs so dearly loved? Lost tax revenue curtails borrowing for essential projects. The impact on the local, state and federal level leaves bad choices. Raise taxes and kill the goose. Print money and produce inflation rivaling Zimbabwe. Cut spending and kill the socialist programs. (Well, that’s not a bad choice)

On the corporate side, somehow the money lost through credit cards needs correction. Do companies go bankrupt, downsizing or closing altogether? Either way, people are let go which contributes to more delinquencies in mortgages and unsecured debt. Then the stocks take a hit wiping out investments unless you are ahead of the curve and sold.

Since the Federal Government is the worst offender, would someone enlighten me as to how the Feds can solve the problem?

The only comment to this post thought credit card interest would go to 22%. Mortgage rate would climb.

Try getting a mortgage if your score isn’t 750 or higher, you can’t put down at least 20% (better have 25%) and the house is no more than 30% of monthly income. (try to find one of those)

Credit card rates are at 36%, limits are dropping. When Congress passes that cap on rates (it will), banks will cut off cards to all but the most affluent.

History says Cassandra was reviled. Well, tough darts!
Smarten up and pay attention to economists, not Barney Frank and Chris Dodd. Or the large O, Obama!

We have to look up to see down now, and we’re still falling!

Archived in: Banking, Credit, Economy, National Debt