Wednesday, August 13, 2008

A quickie while I have a minute.

The Real Estate Devaluation problem not is going away anytime soon.

Bloomberg.com
Updated: New York, Aug 13 14:09
One Third of New Owners Owe More Than House Is Worth (Update1)
By Bob Ivry

Aug. 12 (Bloomberg) -- Almost one-third of U.S. homeowners who bought in the last five years now owe more on their mortgages than their properties are worth, according to Zillow.com, an Internet provider of home valuations.

Second-quarter home prices fell 9.9 percent from a year earlier, giving 29 percent of owners negative equity, said Zillow, the Seattle-based service that offers values for more than 80 million homes. For those who bought at the 2006 peak of the housing market, 45 percent are now underwater, Zillow said.

Negative equity and declining prices are making it difficult for homeowners to sell property for a profit. Almost one-quarter of U.S. homes sold in the past year were for a loss, Zillow said. That contributes to the foreclosure rate because some homeowners can't absorb the loss and end up surrendering their homes to the bank that holds the mortgage, said Stan Humphries, Zillow's vice president of data and analytics.

``For homeowners who need to sell, this is a gravely serious situation,'' Humphries said in an interview. ``It can also be harmful to communities where the number of unsold homes adds more to inventory and puts downward pressure on prices...''

Prices fell on a year-over-year basis in 140 out of 165 markets, Zillow said.


But wait! There's more!

Alternet
Credit Card Debt: This Popping Bubble Is Really Going to Hurt
By Danny Schechter, AlterNet. Posted August 12, 2008.
While everyone's watching the housing meltdown, few are paying attention to the next bubble expected to burst: credit cards.

...Combined with the subprime losses, such a credit card nightmare has the potential, experts say, of bringing down the entire financial system and global economy.

You and your credit card have become key players in the highly unstable financial crunch. Mortgage lender cupidity and bank credit card greed wedded to financial institution deregulation supported by both political parties, have been made manifestly worse by Bush administration support-the-rich policies. It has brought us to a brink not seen since just before the Great Depression.

...The coupling of home equity debt and credit card debt has gone hand in glove for years. The homeowners at risk can no longer use their homes as ATM machines, thanks to their prior re-financings and equity loans, often used in the past to pay off their credit cards. Indeed, homeowners cashed out $1.2 trillion from their home equity from 2002 to 2007 to pay down credit card debts and to cover other costs of living, according to the public policy research organization Demos.

To compound the problem, fewer people are paying their credit card bills on time. And, to flip the old paradigm, more are using high-interest credit card cash to pay at least part of their mortgages instead of the other way around.

Younger people are being crushed by this debt burden as college students and new consumers. Emma Johnson of MSN Money reports that "Generation Y" is broke.


Generation X isn't doing so hot, either, let me tell you. But cheer up, maybe we won't have to pay all those robber barons back, after all.

The Moscow News
24/01/2008 | Moscow News,№03 2008
Top Brass Defends Russia's Right to Preemptive Strike

...Russia underlined its right to a "preventive" nuclear strike this week in what military analysts interpreted as a move to introduce more clarity into the nation's defense doctrine.

Clarity....right.

Crystal clear, I'd say.

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