Wednesday, August 19, 2009
For the second day this week, big declines in China hampered stocks at the open Wednesday. However, that weakness was erased after the U.S. Department of Energy said U.S. crude-oil inventories plunged unexpectedly last week. This decline fueled a broad sector bounce for energy companies that lasted into the close.
Overall, the Dow Jones Industrial Average ended up 61.22 points, or 0.66%, to 9279.16, marking its second-straight day finishing higher. Pacing the index, Exxon Mobil gained 1.51, or 2.3%, to 68, and Chevron tacked on 1.22, or 1.8%, to 68.16. (more)
* Those who never had a home in the first place but are looking to buy.
* Those hopelessly underwater and willing to walk away and start over.
* Those looking to buy rental property down the road at attractive prices.
Who Loses With Falling Prices?
* Those unable or unwilling to walk away.
* Those with a substantial down payment and about even on their mortgage.
* Those trapped in their homes who want to sell but cannot because they are about even on their mortgage and do not have cash to bring to the table at closing. (more)
This is because in recent years struggling cities and counties have sold their delinquent tax bills to the highest bidder. It seemed a painless way to turn old debts into cash to finance schools or public services.But housing advocates say the private companies may be exacerbating the foreclosure crisis, pushing out homeowners faster than would governments, which are increasingly concerned about neighborhoods becoming wastelands of abandoned properties. (more)
Economists estimate that 1.8 million borrowers will lose their homes this year, up from 1.4 million last year, according to Moody's Economy.com. And the government, which has already committed billions of dollars to foreclosure-prevention efforts, has found it far more difficult to help people who have lost their paychecks than those whose mortgage payments became unaffordable because of an interest-rate increase. (more)
In the wake of the world crash populations are asking not only whether debts should be paid, but whether they can be paid! If they can’t be, then trying to pay will only shrink economics further, preventing them from becoming viable. This is what has led past structural adjustment programs to fail.
For the past decade Iceland has been a kind of controlled experiment, an extreme test case of neoliberal free-market ideology. What has been tested has been whether there is a limit to how far a population can be pushed into debt-dependency. Is there a limit, a point at which government will draw a line against by taking on public responsibility for private debts beyond any reasonable capacity to pay without drastically slashing public spending on education, health care and other basic services?
The problem for the post-Soviet economies such as Latvia is that independence in 1991 did not bring the hoped-for Western living standards. Like Iceland, these countries remain dependent on imports for their consumer goods and capital equipment. Their trade deficits have been financed by the global property bubble – borrowing in foreign currency against property that was free of debt at the time of independence. Now these assets are fully “loaned up,” the bubble has burst and payback time has arrived. No more credit is flowing to the Baltics from Swedish banks, to Hungary from Austrian banks, or to Iceland from Britain and the Netherlands. Unemployment is rising and governments are slashing healthcare and education budgets. The resulting economic shrinkage is leaving large swaths of real estate with negative equity.(more)