Rising Foreclosures are actually BULLISH for the economy - let me convince you in this thread

I can kinda see where your coming from..

Except usually those in foreclosure lost a source of Income. The forclosure crisis moved from "Subprime" to "Unemployed" meaning different factors are not forcing the rise of foreclosures. Mainly unemployment, people then use savings supplemented by cuts in spending and unemployment checks. Once the checks stop coming, savings is gone, they get foreclosed.

The vast majority of individual wealth, on average is the family Home. If the Home has no wealth, the family has no wealth.

Especially if you also add in the huge, mega spending power of Home Equity Lines of Credit, which was a major driving force in the economy during the housing boom.

In short, in a few isolated incidents, I believe you will be right. For the vast majority of foreclosed, i believe you are dead wrong.

I still see a 2-3% drop in spending this year. Hope I'm wrong, because it will mean all kinds of hell if I'm right.

reply to post by Rockpuck


I dont view foreclosure that way.

I view it in the sense that

a) bank will not redo terms

b) foreclosure

c) people saying f' it.. not paying the bank, so might as well spend it..

I know where you are coming from though, and you know where I am coming from. This of course plays into my bullish consumer play as well. But I think I will be right, and hope that you are wrong.. haha

reply to post by Rockpuck


But if you keep thinking about it some more..

Where do you think the "avg. american" will put this other money once they are not paying the mtg. every month? Thank bank?.. don't laugh too hard RP

I think it goes straight into the economy (using my 75% formula) that is.

Hopefully retail sales will start to prove me right - or else you may be correct, but I think (hope) that I will be proven correct in this instance.

BicMan, you are so correct with your analysis of the common, every day, mundane, mental midgets.

They will spend all they have. They live for the moment. They don't understand capital. They only understand wages. They are pets. They are stuck with a slave mentality instead of an owner mentality.

The stock market doesn't move to them, though. It moves to its own drum. Lots of fools buy when the market is falling. Every two weeks the fools buy.

reply to post by Cabaret Voltaire


exactly, another that agrees, excellent

stockmarket moves to the beat of big money - and you know I love to sniff out big money.. cough cough.. wmt

Ohhhhhhh. You're on the West side, aren't you? It is only 2AM there in the land of the dead. The East Coast is the dealznik, yo. We got it strictly locked down over here. You haven't even dragged yourself out of bed while we done absorbed terrorist attacks and #likethat! You wake up to see what we've done. You'll have to account for that in your calculations.

no im in FLO-RIDA brother haha

Would you agree that the positive GDP last quarter was only because of the bailouts and when that money dries up we will be back in the negative? If not, why not?

Thanks.

I dont think bailouts had anything to do with GDP honestly, and IMO it was really due to the weak dollar = high corp profits

GDP will continue to reamin positive in this "soft/easy money" environment my friend

reply to post by GreenBicMan


irrational consumers do not make a healthy economy.

second line

[edit on 30-11-2009 by aravoth]

reply to post by aravoth


they have for the past 100 years

2nd

reply to post by GreenBicMan


Yes... obviously it was really healthy, which is why things are booming right now...

Second line.

reply to post by aravoth


the market is cyclical

what goes up must come down = mkt equilibruim theory

3rd (jk)

reply to post by GreenBicMan


The Market is not cyclical. When Keynesian's run the world, the market is rigged.

And production is the engine of an economy, consumers are the caboose.

reply to post by aravoth


Here we go.. what I wanted to avoid.. its not rigged and markets are totally cyclical historically

do you agree or disagree that the rise in foreclosures in bullish for the economy after what I have presented previously?

Let me give you an over all assessment on your theory of "Bullish".

It may be correct in part, but it is really just people BS'ing themselves again.

People got themselves into debt or trouble by way of ignorance, overspending, greed, envy, poor money management.

Now these same people if not aware of what happened the first time, will repeat the same fate.

The money lost on homes has to be absorb by the responsible working people and people that actually save, so this devalues their hard earned income.

Now you couple this with all the millions and millions of now empty commercial real estate that companies are now defaulting on, plus the fact that banks have to maintain, pay taxes, insurance, utilities and take a huge loss if they can even sell the commercial properties, we are in trouble as a whole.

It's time to stop BS'ing ourselves.

We are a country of consumers and produce nothing. Our US government is a prime example, they produce nothing yet they have the biggest workforce in the USA.

Everything will be ok, but a logical no BS plan needs to be implemented financially and that is not happening overall.



[edit on 30-11-2009 by Realtruth]

reply to post by Realtruth


Of course its people BSing themselves over and over

This is my point - this is the AMERICAN CONSUMER, you are correct, and now I am giving you another reason to be bullish, bc people dont pay BAC 1200 a month, they pay the 900 rent and the rest to costco/wmt/tgt/etc..

man i just love the way ppl come up with these ideas .
well you say your in florida so am i .I also have been in az and a few other states .
Do this get up from your pc drive to the nearest city over 250k from you and turn off the main drags and just drive around.
wonder what youl see? ill tell you .If you accutly look long enough to find were they hid in this city you will find 6k pluse homeless ppl.
in this city you will also find another 30k that are now living with friends or family . In this city you will find an umemployment rate of right at 3o%
with another 3 to 6 k more in the works to becoming unemployed.
OO they mustb all be drugaddicts .
youl see no hope no tommrow you see ppl going to get bags of food from the churches . OOo butn they all get foodstamps you say .Nope not nearly but even thous that do gointo the grocers youl see chicken at 189 a pound wich was 89 last year a lofe of bread for 2$ and thats the cheep kind.
you say all these ppl who have been forclosed on are living high on the hog just you wate till jan and see what happens when the few who have bought all that xmass junk TAKE IT BACK.
man this is like some sureal dream . OOO ppl who are forclosed on now have tons of money. MAN they were forclosed on because they were BROKE. taking there homes dident make money magicly apper in there [pockets . THEY LOST THERE JOBS what part of 11% (gov admites to) of UNemployed dont you get?
ps the city i just described is tallahassee. think im making it up ?
come on over ill SHOW you were people arnt spending money they dont have.
come jan youl see just what your theroy brings as even the MALLS here are BANKROPT

reply to post by xxcalbier


you are missing the point my friend

these consumers have more DISPOSABLE INCOME NOW

these people will spend this in a RETAIL MARKET

this equals CONTINUATION OF BULL RALLY

do you agree?

I agree to a certian point. Foreclosures do help the individuals that are burdened with debt. However, these folks have already stopped paying there debts long ago, so the reality is there is little additional spending coming from foreclosures.

Every foreclosure means realized losses for investors and banks. Since investors and banks are what really primes the economy, eventually their losses will mean less investment and less money in the economy. This will mean a very long period of slow growth, if we get growth at all. This is not good for the economy or the job situation.

To sum it up i disagree with your theorem. While certian individuals may benefit slightly, in terms of the overall economy the foreclosures are not good.