How about some good news for a change about real estate, mortgages, credit, jobs, consumer confidence, Wall Street stability, the future of civilization as we know it?

Sorry, not gonna get it here.

Evidence is evidence and though some may like to engage in wishful thinking, the evidence is not good at all.

Goldman Sachs is actually forecasting that credit losses around the world caused by the current near panic in financial markets will hit some $1.2 TRILLION!!!!!

The same report predicts that U.S. banks, brokers,hedge funds, etc., stand to lose around $460 BILLION in credit losses.

SCARED CONSUMERS

Very scared, in fact. Consumer confidence has hit a five year low; people are nervous about their jobs, their homes, their credit, their lives.

But one example of why the worry: From January 2007 to January 2008, the price of existing single-family homes dropped some 11 percent.

And then, there’s

Bear Stearns

Yeah, JPMorgan Chase upped its bid increasing the value of Bear Stearns, but the new offer still remains some 88 percent below what the stock was worth only one month ago, according to a Reuters report.

Was all of this mess really caused by subprime mortgages?

Well, yes and mostly no.

Yes, in that the subprimes certaintly pulled the trigger on this now global credit crunch.
No, in that the ammunition was stocked by various lending institutions and brokerage firms, all motivated by nothing but pure greed. They rammed these mortgages down the throats of people who wanted to own homes but really couldn’t afford them, and now they are being vomitted back up.

The subprime mortgages were bundled into investments that no one really understood or understands to this day..including officials at the Federal Reserve.

As some have pointed out, in recent years, this country has developed a sort of shadow banking system, one immune from the post-Depression era restrictions slapped on commercial banking institutions to maintain some form of economic stabilty.

It is this shadow banking system that is what is behind this terrible mess. And, the trouble is, much of it remains in the shadows which is why people are running scared.

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Tags: bear stearns, consumer confidence, credit crisis, federal reserve, jpmorgan chase, subprime, subprime mortgages

It is amazing, by any standards, just how bad things have gotten on the economic front because of what was, at first, a crisis in the subprime mortgage market.

Of course, conditions had to be right (or wrong, in this case) for the subprime match to ignite such an enormous world-wide blaze, but, it has, and the figures out just this week prove that to be the case.

Yes, there are areas of the U.S.–mostly smaller metro areas–where the real estate market is not that bleak—-yet! But, if you look hard at the facts and figures to follow, you will have no option but to come to the conclusion that even these areas will soon feel the fury of a global, U.S. caused, economic meltdown.

Ready?

Here goes.

From bad to real bad

A national home price index just released shows a record collapse in home prices for the last quarter of 2007–down 8.9 percent. This is the largest drop in the entire 20 year history, says Reuters, of the S&P/Case -Shiller U.S. National Home Price Index.

“The composite index of 10 of the largest metropolitan areas fell 2.3 percent in December versus November and tumbled 9.8 percent year-over-year, which set a new record.”

17 of the largest 20 metro areas posted annual declines–while the remaining three showed either flat or moderate growth.

In case you are wondering, Miami is the worst—home prices there crashing at an annual rate of 17.5 percent!

We’re not through, yet!

No wonder that Consumer confidence has gone down the toilet, too. (Presumably a toilet in a home whose value has dropped!)

The Conference Board in New York reports consumer confidence has gone down “significantly,” says an Associated Press dispatch.

The Board found the lowest reading on its index since 2003 and tells how consumers are feeling about the state of the American economy. No surprise that they don’t feel all that good right about now.

Now, ready for some REALLY bad news? Of course you are.

Inflation is back! Big time, too.

Inflation at the wholesale level climbed last month…and that means the annual inflation rate took its fastest leap in some 25 years!

Rising food, energy and medical costs mostly to blame here.

Last month, the Labor Department says, wholesale prices went up a full percentage point–twice what apparently had been anticipated. For the year, that brought the inflation level to 7.5 percent.

We’re not done just yet. Hang in there.

I did mention the increase in medical costs, right? Well, the cost of keeping you and your family healthy is expected to double by 2017 with the federal government expecting that one in every $5 spent by then will be for medical care! Nice if you happen to own a hospital.

Oh, and one more thing. In January, the number of homes that faced foreclosure skyrocketed 57 percent from the previous year. Let’s say that again: 57 percent!

So far, all the talk of helping those who are about to be booted from their homes seems to be just that, talk. What is needed is real action.

Other pressures

Of course, all of this was not caused solely by the subprime mortgage mess . . . China and India are flexing their economic muscles as never before and that is exerting an enormous pull on the world’s economy, changing the landscape even as you read this.

But, make no mistake about it, the subprime crisis is largely responsible. It exposed the greed and, perhaps, criminal actions of banks and other lending institutions throughout the U.S., Asia and Europe.

And now, the piper MUST be paid…with inflated Euros and devalued U.S. dollars no doubt!

Tags: consumer confidence, Economy, Foreclosures, inflation, money, subprime, subprime mortgage crisis