Biggest Job Losses in 5 Years – Not Good.

The sub prime meltdown is somewhat of a cover to distract attention from job loss, wage reduction or housing declines. More people have lost their homes because of price loss or job loss than ARM resets. Also, I do think we need to redefine recession. It's not just two bad quarters. It's more complicated than that, as you have pointed out with job reduction.

Looks like we're going into a full recession. I was waiting for this shoe to drop.

This news reinforces what I've been saying for awhile: The mortgage crisis is just one color in a much bigger picture. The big picture is the economy in general. Why are people not able to make their mortgage payments? Because some ARM's reset? Maybe, but some, based on the LIBOR index have gone down. Yes, some with options ARMS that didn't either understand it or simply were greedy and was using it to buy more home than they could afford are in trouble, as is some sub-prime borrowers who can't still after two or three years qualify for a better loan. But the real issue is why can't they afford the higher payment? We know that those behind on their mortgage payment are also behind on credit card payments and auto loans and other consumer debt. They obviously can't pay for anything much less their mortgage.

The problems? Inflation and flat to negative job growth. For instance, take just the price of gasoline. For my two car household, filling each car up just one a week, the cost to fuel our cars to get us to work and back has increased $303 a month over the past 18 months. Then take into account the other items we buy that have gone up in price, like groceries.

Has our income increased in pace with this inflation?  Not even close.

The American consumer/homeowner is being squeezed to death by the economy. However it's really easy for politicians to divert America's attention from a problem they created to one someone else created that really is just a symptom of a much larger problem.

Elaine Chao(sec DOL) is doing a good job keeping our nation 10 yards away from panic with employment reports filled with half-truths.

But until when?


We all are affected when the economy stumbles but if we continue to shove the 'dirt' under the rug and turn our backs towards the truth, naturally a day of reckoning will happen, and it will be worst than any of us are thinking.

We might be experiencing the same thing in Reno:
http://renomarketblog.typepad.com//reno/2008/03/i-dont-know-a-g.html

I am really tired of people saying that "the government should not help the homeowners, they go into those bad loans" I work with people who are loosing there homes, and about 50% are loosing them because of job lose of the primary wage earner. Last fall, most were because of adjusting rate. Now that the indexs are down that is not the main reason I am see defaults.

Didnt seem to bother the stock market which is gaining after hearing this news.

The market these days is no longer built on fundamentals. Bad economic news sparks a rally because they know the FED will cheat even more, to bail out more people.