[bruin]

From Danielle DiMartino:
[quote]Some irony is so strong, it knocks you off your feet. That's what happened Tuesday as I listened to the Mortgage Bankers Association First-Quarter National Delinquency Survey conference call.

Delinquency and foreclosure rates have been falling and remain tame. That's good news. The reason, said MBA chief economist Doug Duncan, is strong job creation. There's a bit more to it than that, of course, something he elaborated on later in the call.

But the irony hit me right then, as I recalled reading the same idea in a piece from Northern Trust Company: "The future of the housing market is tied to employment conditions in the economy," wrote economist Asha Bangalore. "The performance of the housing market has played a visible role in payroll growth."

So the crux of Ms. Bangalore's findings was that the housing market was a success thanks to the housing market. Huh?

To be precise, Ms. Bangalore noted that since the recovery started in November 2001, employment in housing and related industries has accounted for 43 percent of payroll growth. So she worries that since the Federal Reserve started raising interest rates last June, housing's contribution to job growth has shrunk to 13 percent.

The decline is understandable. The mortgage lending industry, for one, has hit its limit as far as job creation. The field is crowded and competitive. That means only the most inventive brokers, lenders and appraisers are surviving. Notice the recent introduction of 15-year interest-only loans. Creativity like that should continue to propel our housing bubble.

Creative loans --Creative loans let buyers purchase homes they couldn't otherwise afford, and that has helped fuel runaway prices. And that brings us back to the real reason why delinquencies and foreclosures are tame. When those buyers run into trouble with their unaffordable homes, they've so far been able to unload them at a profit.

In the Pacific region, where the bubble is biggest, the seriously delinquent rate is 0.58 percent. In the East-North-Central region, where price gains have been anemic, the delinquent rate is 3.2 percent. "There's no question there is a link between price appreciation being higher and delinquencies and foreclosures being lower," Mr. Duncan said.

The debate reminds us that falling prices not only will coincide with higher foreclosures, they also will be accompanied by millions of pink slips.

[I_Like_Plants]

Oh yeah I'm a big bubbler, we have a HUGE bubble on our hands, and the job growth, what there has been has been in jobs catering to the housing bubble, like carpenters, decorators, yard services, landscapers, etc. Then you have car sales held up by the bubble (buying a house, and esp. selling one and buying one, in the standard move-up process, is as mentally traumatic as a death in one's close family, generally people going through this trauma reward themselves with a new car). Nanny services and pizza delivery and all kinds of things are being held up by the housing bubble. Housing goes, about half the jobs in the nation go.

[jaws]

The big danger is the run-up in debt done during the period of equity extraction. The 'housing ATM' as it is called. While the housing prices are rising and homeowners are extracting equity (borrowing) by refinancing their mortgages, they increase their debt loads meaning they lower their future consumption in order to increase their present consumption. This is no problem if the number of people saving money balances out those borrowing, but in the US savings has all but disappeared. This implies that once the binge of borrowing is over demand for goods is going to plummet because of homeowners rationalizing their debt, creating an economic recession that will make it much harder to complete debt repayment.

[bruin]

$this->bbcode_second_pass_quote('jaws', 'T')he big danger is the run-up in debt done during the period of equity extraction. The 'housing ATM' as it is called. While the housing prices are rising and homeowners are extracting equity (borrowing) by refinancing their mortgages, they increase their debt loads meaning they lower their future consumption in order to increase their present consumption. This is no problem if the number of people saving money balances out those borrowing, but in the US savings has all but disappeared. This implies that once the binge of borrowing is over demand for goods is going to plummet because of homeowners rationalizing their debt, creating an economic recession that will make it much harder to complete debt repayment.

[smiley]

from: The Easter daily

The Governments latest report shows continuing growth of the economy driven by unprecedented growth in the statue industry. Statue ownership is up by 2% over the last quarter. Total employment in the statue erection industry is up by 12% over the year, fuelled by strong hiring by the stone carving and the logging companies, more that offsetting a decline in the food sector.

A poll among the islands leading economics suggests continuing strength for the statue industry for the coming quarters.

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