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.
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.
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!