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i do understand the economic cycle and i also understand human nature. if people default on their debts the creditworthy are not willing to lend to them again, with good reason. for example, i have rental properties. i am no longer willing to rent to people with marginal credit as i would have in the past to give them a chance. credit markets are now tightening further, not loosening. (you know the saying "once burnt twice shy"). i suppose that is why i am an advocate of the austrian school of economics because they factor in human nature, which keynesians economics do not.
our system is clearly not a capitalist system anymore as proven by the bank bailouts. it is still not a capitalist system as proven by TALF. i don't know where we will be 2 years from now so i am unwilling to speculate. i personally think that government intervention has delayed any economic recovery that we might have.
I don't know where you're getting your info but the credit markets are not tightening. Yield spreads have come in a great deal and are back to pre-Lehman days. The truth is there is simply a lack of demand for credit, especially on the consumer level, not a lack of willingness to lend.
As for your apartments I'm sorry but that means nothing. Just because you won't rent to someone with bad credit doesn't mean others won't. Go on Craigslist for Florida and you'll find house after house for rent willing to accept someone with bad credit so long as they have a job. So perhaps you don't understand human nature as well as you think. If someone has a place to rent at a time when the market is saturated with rentals then many will lower their standards. Thats how markets work, supply and demand. And right now there is a massive supply of rentals and not enough people with good credit to fill all those vacancies.
As for your unwillingness to speculate, it seems to me you do an awful lot of speculating. You speculate the FDIC will go broke for example. You speculate the economy will continue spiraling down forever. You speculate people without good credit won't be able to borrow money or find a place to live or make good tenants. Actually you seem to enjoy speculating about anything negative.
But, I understand why you're that way. It's human ntaure to follow the herd. And right now everyone is a financial genius and see's everything thats wrong. And as humans are so prone to do they extrapolate what they see today into the future. Thats why people stay poor.
That said, things are bad and they are likely to get even worse, but the storm has passed.
You brought up your rentals, let me give you an example. Last year our family business had a bad year. The first part of this year we got killed and for the first time in 40 years laid people off. However, just in the past 30 days we've picked up contracts that equal what we would normally get in a good year. Now we have so much work that we're going to have to hire people who make $30-$60/hr. I may even have to go to work to help out until we can digest everything and figure out where we are. Seems everyone put off projects and now can't put them off anymore and they're all in a rush to get them done now. But, hey, that's human nature isn't it?
i don't post speculation, just facts, and people can interpret the facts any way they want to. if they see a play to be made with those facts they can make them. here is another fact for you:
U.S. Foreclosure Activity Up 11 Percent in Q2 to Highest Quarterly Total on Record
June Marks Fourth Straight Month with More Than 300,000 Properties with Filings
IRVINE, Calif. – July 16, 2009 – RealtyTrac® (realtytrac.com), the leading online marketplace for foreclosure properties, today released its Midyear 2009 U.S. Foreclosure Market Report, which shows a total of 1,905,723 foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 1,528,364 U.S. properties in the first six months of 2009, a 9 percent increase in total properties from the previous six months and a nearly 15 percent increase in total properties from the first six months of 2008. The report also shows that 1.19 percent of all U.S. housing units (one in 84) received at least one foreclosure filing in the first half of the year.
of course the country will eventually turn around, but i just don't see a turnaround as early as you do and i think the country would have been better off without government intervention.
Well not to get pissy but posting that credit markets are tightening isn't a fact nor is posting that people with bad credit won't be able to get loans or that the FDIC is going broke.
As for the economy turning around I'm certainly not agruing that things are going back to where they where in 2 years. Hopefully that never happens. But what you see as evidence of problems are really evidence of the flushing out that must occur before we can start to rebuild. Thats why all these foreclosures are good. Clean 'em out and move on. Do you think next year this time there will be another 15% increase. And 15% more the year after? See, the truth is 98.8% of all homes are not facing foreclosure, just lower values.
No doubt without intervention we'd be better off because we'd be further along in that cleansing process than we are now. All the intervention is doing is prolonging the pain though it's also rounding the sharp edges too.
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