05 September 2008

The Middle Class Is on the Edge of an Abyss

Keep the mortgage foreclosures data and the climbing unemployment rate in mind when people tell you about their doubts of a recession, and the bottom of the housing market, and an improving economy. It will be getting much worse.

And from what we can see the middle class still has not figured out that they are in serious trouble. A harder economic blow has not been dealt to the general public since the time of Herbert Hoover, exceeding even the stagflation of the 1970's. We have only just begun to see the effects.

The average Joe will sit back and smugly talk about preserving his 'wealth' from the socialists, and of the unfortunate but probably deserved troubles of those who have been hit by hard times. That is, until their own turn to hit the wall comes.

Then they will sit back in shock. And the politicians and pundits that they faithfully believed in will tell them to stop whining, and check into the nearest refugee camp. And then they will know they have been played for fools, and have been had.

"If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie.. for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State."
Joseph Goebbels

U.S. Mortgage Foreclosures, Delinquencies Reach Highs
By Kathleen M. Howley
September 5, 2008 10:59 EDT
Bloomberg News

Sept. 5 -- Foreclosures accelerated to the fastest pace in almost three decades during the second quarter as interest rates increased and home values fell, prompting more Americans to walk away from homes they couldn't refinance or sell.

New foreclosures increased to 1.19 percent, rising above 1 percent for the first time in the survey's 29 years, the Mortgage Bankers Association said in a report today. The total inventory of homes in foreclosure reached 2.75 percent, almost tripling since the five-year housing boom ended in 2005. The share of loans with one or more payments overdue rose to a seasonally adjusted 6.41 percent of all mortgages, an all-time high, from 6.35 percent in the first quarter.

Tumbling home prices are making it difficult for even the most creditworthy owners with adjustable-rate mortgages to sell or get a new loan as their financing costs rise, said Jay Brinkmann, MBA's chief economist. Prime ARMs accounted for 23 percent of new foreclosures and subprime ARMs were 36 percent, he said....