GMAC Financial Services got a huge Christmas present this week when the Federal Reserve approved its application to become a bank holding company, thereby enabling it to tap into $700 billion of TARP rescue funds.  Not only will GMAC be able to tap into the bank stabilizing funds, it will also be able to borrow from the Fed's discount window for virtually no interest. 

Did you see these pretty cool amazon.com holiday facts they released:

*   Amazon.com sold enough "Breaking Dawn" books that stacked end to end they would reach the summit of Mt. Everest eight times.

*   During the period from Nov. 15 - Dec. 10, Amazon sold one copy of Microsoft Office Home and Student 2007 every 2.5 minutes.

*   The weight of all GPS devices sold from Black Friday through December equals the combined weight of 151 Mini Coopers.

*   Amazon sold enough high-performance headphones that everyone attending the last three Super Bowls could grab a set and rock out.

*   Amazon Grocery sold enough coffee to give each resident of the highly caffeinated city of Seattle a cup per day for two months.

*   Amazon sold enough Casio G-Shock watches to outfit every Kanye West fan attending the 2008 Glow in the Dark Tour concert at Madison Square Garden, N.Y.

*   Amazon sold enough Coldplay CDs that laid side by side they'd stretch from Seattle to Violet Hill (a street in London and the album's first single) and more than halfway back.

*   Amazon sold enough Munchkin Mozart Magic Cubes to fill every seat in the Sydney Opera House five times over.

*   Amazon sold enough Wild Planet Hyper Dash games that the total weight of sets sold is over 81,000 pounds -- almost the size of two 747 aircrafts.

*   Amazon sold enough Spalding basketballs to fill three C-130 cargo planes.

The Misery Index and Short Sales Negotiations

The Misery index is derived from taking the unemployment rate and adding it to the rate of inflation to gauge the economic and social climate of the nation. The higher the misery index, the more negative and desperate the average consumer tends to become. The low was 2.9 percent in July of 1954 with the high reaching 21.9 in June of 1980. Today the misery index stands at 7.77 and rising as of the end of November 2008.

So, how should short sale investors use this information? Well, in a couple of ways. First of all, watch the macro trend.  As the index increases so does the uncertainty of the average American consumer (and by proxy, business owners). Their spending habits tend to decrease and they often start to save for a rainy day.  People, business owners and even banks in this stage tend to think it is short-term and less inclined to negotiate more than a minimal reduction.

Next, watch for a shift. The second stage takes place as momentum builds and the rate of change increases at a faster and faster pace. Uncertainty gives rise to outright fear as people begin to worry about their own job or financial future. Banks and business owners begin to think this could last longer than expected and begin to pad their own balance sheets for the long run. There is a decidedly motivated response to downsize unnecessary assets, overhead or other non-performing holdings. 

 Short sale investors will find these individuals and banks much more motivated especially if approaching with fast closing and minimal escape clauses. The emphasis of 90 percent (or more) of people will be a flight to "safety" during this  stage as evidenced by the purchase of government bonds or other items that provide little to no real return.

 The third and final stage is recuperation. Banks, investors and others realize the properties or other holdings were now over-sold and represent financially desirable long term investments.

 There is a renewed interest in actual earnings due to the erosion of real earning power. Every short sale investor will do well to remember that earned income represents only a relatively modest allocation of most income over the long term few people can actually live entirely on their own earned income. At this point, the money tends to flood into tangible assets and commodities including oil, real estate, farm and agricultural lands or products, oil, minerals, natural gas and other related holdings resulting in rapidly rising prices...and profits for those with the foresight to buy during stage two.

 Where are we today?  Most experts agree we are now transitioning from stage one into stage two making this the perfect time to begin buying foreclosures and short sales in earnest.  To keep track of where the misery index is heading, visit http://www.miseryindex.us/default-pda.asp at least quarterly. If you want to keep up with other trends in short sales and the economy sign up for our daily information at http://www.shortsaleriches.com    

 See you on the other side!

 Charles Gardner

http://humble-homz.com

http://humblehomz-re-solutions.com/shortsale.aspx