Friday, April 16, 2010

Oh, the wicked web We weave

Government policy often only introduces bureaucracy into real-time events; causing delays in performance which does not explicitly help in any manner. Federal policy slowed the rate of mortgage failures last year, but the repossessions rate is regaining previous levels. Here is the trouble with the government action. The mortgages issued were bad, with mortgage takers failing of Income performance, and mortgage holders engaged in extreme leverage. Everyone was saying they could make their obligations, and no one could. The Government taking up that Proclamation after the Participants grew tired of the pretentious claim only held back the onset of failures; it did nothing to alter the state of such failings. Everyone took the money which granted a breathing space, but then they went back to failure as the Income generation was still missing. Government policymakers spent a lot of Taxpayer money (which they did not even collect–simply borrowed) to buy what was about as valuable as the initial mortgages.

I will present the Reader with this delayed Post from James Hamilton; it all being a question of my inattention when it was written. I am not as confident about Oil Price as James, though he seems to have the graphs on his side. My concern is that the drop in Miles Driven should be a counterfactual pressure on Oil price, though I only witness an entrain process of maintaining routing service Profits. It seems to be a Private Sector response similar to the above Government policy, where poor enterprise business lines are maintained by overabundant support pricing. Higher Oil prices will have an impact on the economy, if this support pricing is not reduced in the face of the higher normal Profits–which in no way do I believe it will. The $12 billion additional siphoned from Consumer pockets which James mentions will grow to be about $14 billion per month without support price reductions, and this is a serious reduction in Consumption over sustained periods like a Quarter or Year.

Paul Jackson thinks that people are actually spending their mortgages, from which I cannot really demur. We have about 7.4 million mortgages in arrears, and most households are spending the absent payments on Consumption. I wish I had better information of the total amount value of the lost payments per month, but I can state rigidly that reinstatement of consistent mortgage payments will bring a major drop in personal Consumption by households. We have reached that point where return to sound financial management will again bring on recessionary decay. Vast introduction of Government funds can only further destabilize a shaky financial market. lgl

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