There are 75 million homeowners in the United States, and about 65 million have seen 100% gains in their homes from 2001 to 2005, & 40% of homeowners own their houses outright. Of the 60% of homeowners who have mortgages, 80% are prime mortgages, and 97% of those people are making their payments. Furthermore:
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About 14% of the 60% of mortgages in the United States are subprime or alt-A; one might assume that a lot of those will go bad.
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There are around $150 billion worth of mortgages at risk, so perhaps $50-75 billion of that gets foreclosed.
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There is a $10 trillion mortgage market to absorb that $50-75 billion. Plus, there is $18 trillion in stock market value, $30 trillion in bonds. The Internet bubble bursting wiped out $7 trillion in 18 months.
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98.2% of people over 30 and college-educated are working. There has not been a reduction in consumer spending in any year since 1959. The same US consumer that continued to spend after the bursting tech bubble wiped out $7 trillion of net worth.
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Finally, it’s surprising to note that in the US there have been 14 months in total when the economy has been technically in recession in the past 30 years. Any one might think it’s been 14 years in total, rather than 14 months, listening to the current gloom and doom…
No firm conclusions yet, just some perspective on what has been the centre of the typhoon which has changed the nature of the post 9/11 world, during which time nearly all boatsd have risen with the incoming tide of liquidity and accompanying diminished risk-aversion.
