The Wile E. Coyote Moment Hovering Over The Cliff

August 7, 2009 at 11:07 pm (Banking Crisis, War)

As readers of this blog know, I have maintained in previous posts such as this the position that all the bailouts, which were sold to the US under the guise of buying up bad mortgages and then immediately switched out to saving big banks, credit card companies, insurance companies, etc, will fail until the underlying problem of overpriced mortgages is addressed.  There will be no economic recovery until either peoples’ mortgages are reduced to reflect the worth of their house, or their housing values recover, because the mortgage is the single biggest expense/investment a family in this country makes.  No talk of recovery is meaningful absent this.

Lo and behold this article comes out.  Wow.  Half of US homes will be worth less than is owed on the mortgage by 2011.  If this prediction is accurate, that is when the bottom of this depression will occur.  Who will continue to faithfully pay their mortage year after year knowing all that money is going down the drain and they could be renting for half as much?  How will the banks, absent another series of taxpayer handouts, be able to pretend their mortgage “assets” are worth anything?

Despite all the news about the bottom possibly being in we have horrific facts like the fact income tax revenue is down by almost a fifth, the total bailouts could cost $23 trillion, Fanny Mae needs a (third?  fourth?) bailout to the tune of another $10 billion, and the market is saying California is seen as having a higher risk of default than Russia, which actually did default 11 years ago.

Green shoots!  Hahaha!

Today’s article of doom: The Iraq and Afghanistan wars, originally estimated at a cost of $50 billion, are hovering around the $3 trillion mark.

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