The National Association or REALTORS® (NAR) today published in their daily email blast, called "The Daily Real Estate News" a short article with the headline "Defaults Could End UP Being a Boon".
The sources of this information comes straight from The Wall Street Journal and Mark Whitehouse on 12/10/2009 which he called, The American Dream 2: Default, Then Rent.
The NAR brief rambles with a few statistics that seem to be overused these days, but concludes with an interesting quote from Christopher Thornberg of Beacon Economics which is a consulting firm that specializes in Real Estate. Mr. Thornberg says, "It's a stealth stimulus, the quicker these people (those losing their homes) shed their debts, the faster the economy is going to heal and move forward again."
OK, I can see that - but what got me interested in commenting on this article was the paragraph before Mr. Thornbergs quote. NAR says, "While these losses are definitely bad for the banks, relief from paying a mortgage makes more money available - an estimated $5 billion a month - for consumers to purchase other things."
OK, I agree, there are a lot of nice presents under the tree this year, because mom and dad haven't made a mortgage, rent or property tax payment in a year or more at this point. Can we really go out on a limb and say this is good economic stimulus for the overall economy?
Maybe I'm a simpleton, but I don't get it...
Here is a thread to another blog/website where there are some interesting comments on this topic already...
Merry Christmas and Happy Shopping!
| | | | | | | U P D A T E | | | | | |
Red my new blog post follow up to this one where I explain how this can stimulate the economy - very tounge in cheek...
Obamnomics 101: How to Stimulate the Economy by Not Paying Your Bills
| | | | | | T H A N K Y O U | | | | | | | |
Independent (68)
Yes - Yes and a Big Fat YES - MONEY FOR BUSINESS tto stimulate the grass roots main street economy - not the automakers and not the banks or wall street - Main Street.
Merry Christmas,
John
Jane, (69)
Yes, unfortunately severing membership with the National organization severs membership at the local level. I have a small board of only about 330 agents and I am involved - hopefully making a differance in my market - I would not want to give that up - but come on NAR has to wake up!
Merry Christmas,
John
Russ, (70)
In this case I believe the NAR Spinmeister went too far and missed his target.
Merry Christmas,
John
Jamie, (71)
Welcome to my world - society is actually embracing the sence of entitlement that seems to be a plauge across the land. Welcome to the Socialist States of America!
Merry Christmas,
John
Lane (72),
I wrote a 2nd sister post that I added as an update of the origanl post above - Obamnomics 101: How to Stimulate the Economy by Not Paying Your Bills
Please read this and see how this LOGIC plays out
Merry Christmas,
John
Christa (73)
If we don't get more "Stuff"...then how can we compete with our neighbors and relatives...most importantly the relatives...don't we have to give our spouses and children better Christmas gifts than the inlaws got? I mean come on, how can you say such things...?
;)
Merry Christmas,
John
Chris (74)
I even wonder if the leadership knows what gets released on a daily basis - or is there some clown with a $70,000 salary responsible for sending out real estate related news and they thought this would be a good one?
Hard to imagine anyone in a leadership role repeating this nonsense... especially a leadership role with over a million paying members who all have their dues do in just a couple of short weeks...
Merry Christmas,
John
Stimulating the economy from the perspective of an increase in demand. Moving money from capital obligation (Long-term debt), will mean that people have more disposable income. And do you remember when President Bush asked us to do after 9-11? Go out and spend. Well, when we spend we are buying the goods produced by companies, that will have to increase production, and this cycle goes on and on. The problem with the position held by NAR is that they incorrectly assume that the people who are losing their houses have jobs or other source of income. Have you seen the unemployment numbers lately? In most cases I do not believe people are walking away because they have a lot of disposable income. They are walking away because they just can't afford it.
Sybil,
I guess you too slept in the Obamnomics class - so please take a refresher and it will be as clear as the nose on your face (unless you had the same surgery as Michael Jackson - but we wopn't go there now)
Obamnomics 101: How to Stimulate the Economy by Not Paying Your Bills
Merry Christmas,
John
Larry, (76)
To be honest, I have no idea how NAR is run - I thought like all significant Associations that there is a professional CEO? Am I missing something?
Write a blog on this and let me know, please... there is a cause I can get behind
Merry Christmas,
John
Nathan, (78)
Too much informaition if you ask me - but since you brought it up - you should show us a picture of your wife now... :)
Who knows, Maybe Santa will bring you your Hummer...then again, maybe not...
Merry Christmas,
John
Lloyd, (90)
Sorry, but I know that a large percentage of those who are losing thier homes are indeed making strategic decisions to do so -so yes, there is a lot of cash availalbe to stimulate the economy and production - unfortunatley so many of the goods being purchased today are made in China... not stimulating anything
Merry Christmas,
John
# 7 and #10. What makes anyone believe that it will take 3-5 years for the consumer who has forfeited his home to the bank to take 3-5 years to be back in debt??
Seems to me that they start out under water with a deficiency.
Now that they don't have a home, they will be forced to rent. With a foreclosure on their credit report, they'll have to pay a huge up-front rent security deposit.
Where is the money to spend at the mall going to come from. Just because they don't have a mortgage payment doesn't give them immediate disposable income. They still have rent to pay. Since they'll be moving from residential to rental communities, they may have school transfers.
The devistation of the American family through these mass foreclosures cannot be underestimated. The NAR, by publishing a flippant statement like, "Defaults could end up being a boom" demean the American family, all Realtors and the American way of life, which for a couple of centuries has begun with the American HOME.
John- I think your analysis of the policies of the Obama administration is incorrect. No matter how misguided and ineffective their programs have been, they have tried to encourage borrowers to stay in their homes and not walk away. They have tried to use incentives and money to facilitate loan modifications to keep borrowers in their homes. Why this has not worked is another topic unto itself.
Say it isn't so. Why does NAR continue to make us all look like idiots? WTF were they thinking, or were they? Sorry to be so crass, but did anybody at NAR take Economics 101??
Lenn (96)
Thanks for coming back...
I believe we are referring to those who stratigically decide notto pay thier mortgage and thereby allow themselves to build up a warchest - or so they should - I doubt if many do.
And with the laws passed this year, it doesn't look like many deficiencies will be pursued.
But I do agree 1000% - The American way of Life has started in the HOME.
Merry Christmas,
John
Paul (98)
As you sid the whole topic you bring up is a completely different topic for another blog. In the meantime we can agree we disagree.
Merry Christmas,
John
Debbi (99)
I never took economics 101 - but I get it...
Merry Christmas,
John
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