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Originally Posted by The_Jazz
While I agree with you about the need for housing stock being an ever-hungry monster, I think that you're missing host's point. He's using mortgage lending as a barameter of the overall economy. I'm the one guilty on focusing solely on housing stock and pricing, which while relavent to the overall picture, resides outside his arguement.
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O.k., but my point is - if you take each argument one by one, the case for a failing economy falls apart
Here is a good one from Ms. Clinton.
Foreign ownership of our national debt is bad and can hold the US hostage.
Here is the fundemental flaw.
If you or a nation loans money with no security, I.e. buying US Treasury Notes/bonds, you want to get paid back. So the reciever of the loan - holds the giver, hostage, i.e. China wants the US to repay the debt in dollars with as much value as possible. China has an interest in a stable dollar, a stable US economy, and low inflation. Debt is not equity.
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Also, a rise in foreclosed properties is a major harbinger of economic problems, and it's rarely so simple that a family just "goes back to renting" since foreclosure usually means a rash of other monetary problems. The foreclosure is usually just the icing on the cake.
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I agree it is not simple, but in the end the forclosed owner going from owning to renting is the result. Also, don't discount the interests of the lenders. They have alot of smart people making decisions to give loans. They are not in the business of wanting to forclose at fire sale prices or in the business of wanting to own real-estate. Also rather than taking $.50 on the dollar, they may be willing to work with most homeowners through short-term hard times. We have alwasys had economic cycles, there is nothing is new with this slow-down.