I’ve decided to lie to you. At least, I’m being honest about it!

I have grown tired of reporting weekly, it seems, on the ever expanding, contracting global credit market and the resultant deep recession the U.S. currently finds itself on the cusp of.

Americans, perhaps more than people anywhere, love being in denial. We deny we are getting fatter and fatter by eating McDonald’s 15 pounders; we deny that our kids are getting dumber and dumber even if high school seniors often can’t point to the U.S. on a world map; and, we deny that we are in denial, even though we clearly are…about a lot of things.

So, why not be in denial about the alleged mortgage/credit crisis (note, I said, alleged!!).

Here Goes

Home prices are now actually at an all time high! I know, if you read “the news” you’ll be told that prices of existing single family homes fell another 2.6 percent in February for an annual decline of 12.7 percent.

Just deny it!

That’s right.Who is to say that “facts” have to screw up your day? Ignore “the news” and, take a page from George W.–just keep saying things are getting better and they will…for him.

What’s that? You say you read that consumer confidence has fallen to a five year low this month? Nonsense.

Just deny it!

It will go away. We don’t have to face any “fact” we think will make us loose sleep. Just keep telling yourself–and others–that consumer confidence is at a 175 year high!. There, doesn’t that feel better? Of course it does.

The cost of food, medical care and gas going up,up and away? No freaking way!!!

Just deny it!

In fact, convince youself food prices are lower now than anytime since the turn of the century–the 20th century; that everyone has health insurance that even pays for free liposuction; and, that Saudi Arabia has decided to donate a decade’s worth of free gas and oil to each and every American simply because they can!

Bet you REALLY feel better now!

Yes you do!!! Don’t deny it!

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Tags: credit crisis, ecoomy, food prices, housing, mortgage crisis, real estate

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.

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

Nothing like kicking off the new year on a positive note. And, I can assure you, what you are about to read is anything but “positive.”

In fact, when it comes to the ever expanding subprime mortgage fiasco,the fun, say some experts, is only about to begin.

Before 2008 slips into 2009, some 1.8 million homeowners are projected to go into foreclosure because their low interest rates, used to lure them into making a purchase they clearly are unable to afford, will morph overnight into much higher rate mortgages.

A counselor to President Bush is even saying, “There’s more to be done we think on the housing front to address the concerns people have about the housing markets,” Reuters quotes Ed Gillespie as saying aboard Air Force One.

Gillespie’s advocacy of more steps to be taken by Congress and the President comes at a time when just about all economic signs look bad.

The subprime mortgage crisis, remember, stopped being a subprime mortgage crisis a long time ago . . . We are now right in the middle of a credit crisis of global proportions causing more and more people to utter that word that dare not be spoken: recession.

Like all new years, 2008 gives us all an opportunity for self evaluation and motivation to take the bull by the horns and try and change things for the better.

This is an attitude that will come in handy, I predict, in the days,weeks and months ahead, as the nation and the world try to emerge from this credit debacle reasonable in one piece.

Good luck and Happy New Year!

Tags: Bush, congress mortgage crisis, credit crisis, homes, president, recession

This is a story–don’t worry, it will be a short story–about how the current subprime mortgage/credit crisis has actually shot down an entire airline and how this may just be the canary in the coal mine.

The all-business class airline, Maxjet Airways, based in Dulles, gave an extraordinary Christmas gift to its loyal customers: It filed for bankruptcy, ceased to fly and left its customers virtually stranded in London,New York,Las Vegas and Los Angeles. That’s the holiday spirit for you.

Maxjet, mind you, was no American or United Airlines–it actually served food!!–and has been struggling since its inception in 2005.

In my professional role as news reporter, I went out to LAX this afternoon to check things out only to find that Maxjet literally vanished into thin air…well, in L.A. I guess it’s more like thick air.

What was its ticket counter at the Bradley International Terminal was no more; not even a sign telling of its demise. Strangely, the departure sign overhead still listed its 4:50pm flight to England as being “on time.”

Now by this time, you may be thinking, What does all this have to do with the subprime mortgage crisis and why am I reading about an airline on a real estate investing website?

Here’s why:

The company blamed two things as the main reasons the airline folded its wings: the rising cost of jet fuel, and the inability to get more credit to keep its planes flying.

Bingo!

The “credit crunch” as Maxjet put it, is the direct result of the now global, U.S. caused subprime mortgage disaster. The ripple effects from the housing crisis are fast becoming large,crashing waves.

The world’s economy is so interconnected nowadays, that if you drop your ATM card by accident in Chicago, a bank customer in Laos will get hit with the bill for the replacement card.

The credit crisis–which is pretty much what the mortgage debacle has become–is now sapping the strength from businesses entirely unrelated to real estate.

It’s not money, in the 21st century, that makes the world go round, it’s credit. And, as credit stops flowing, the world’s economy –the ENTIRE economy suffers. That is what we are seeing here with the end of Maxjet Airways. A victim of our time and a victim of someone’s unpaid mortgage in Kansas City.

Tags: bankruptcy, christmas, credit crisis, kansas city, maxjet, subprime mortgage