Monday, July 11, 2005

The Housing Generator

Housing Markets Pricing Out Middle Class
Published: July 10, 2005

Real estate experts warn that housing prices in many markets are too quickly outpacing the incomes of most workers. The widening gap affects families across the country, from Washington D.C. and Rhode Island to Florida in the South and Nevada and California in the west.

Dangerous turf for the Economy considering Housing composes such a large percentage of Household wealth. A market of any type must have Buyers, or face a huge decline in the value of the Product. The situation could become analogous to Selling Short in the Stock Market except reversed: the Housing pricing will drop if there are no Buyers, and reevaluations will not alter mortgages other than flexible Rates, but will occasion the nonextension of Consumption and Production loans because of the loss of Property value.

What is the potential economic effect of such Property devaluation?

The Author has gathered no hard data on this area, but a probable half of Self-Employed utilize the value of their homes for collateral for Business loans. Many Households will lose premium Credit Card status where further purchases will be disallowed until their balances are reduced. Banks will find themselves with overextended mortgages with too much money lent on insufficient Property value--remember they must maintain Reserves on the total deposits, alongside the devolved inability to regain those funds. A loss of Property values will finally dictate Layoffs in the Construction industry, reductions in the Consumption patterns of affected Consumers entailing Retail Layoffs, and an overall drain of funds from Pension plans to pay off incurred debt. The dangers do not surface drastically, until Property values drop more than 10% overall, but they are existent!

Afghans Say Taliban Behead Six Police, 18 More Die
Published: July 10, 2005

At least 32 U.S. troops have been killed in action in Afghanistan so far this year, making it the bloodiest for U.S. forces in the country since they invaded and overthrew the Taliban in late 2001.

Why are We there?

Bomb Kills Baghdad Recruits, Memo Flags Troop Cuts
Published: July 10, 2005

Everyone knows Bush and Blair are trying 'to cut and run' because Iraq is turning unpopular. The pattern of Vietnam is being repeated. Insurgent incidents, in both Afghanistan and Iraq are increasing in number, with heightened Casualties for both Americans and native populations. The American-sponsored Governments lack support among the native populations, and American and British military presence simply guarantees guerilla activity. lgl

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