I don’t want to come across as a crepe hanger but it seems to me those of us who are in the foreclosure trenches have at least a semblance of a handle on the what Mr. and Mrs. America are actually facing. Even if you aren’t in the foreclosure trenches you know the number one worry people have is the economy.
When the average Joe says economy, he almost always means the stability of his job. Translate that into everyday English and it boils down to paycheck security. I’d be worried about it too given what is happening in the world of big business.
Because I believe information coming from those in the credit business happens to be as close to accurate as can be at any period in time I believe a credit card CEO when he is quoted as saying:
“Business conditions continue to weaken in the U.S. and so far this month we have seen credit indicators deteriorate beyond our expectations,” said AmEx Chief Executive Kenneth Chenault. The “this” month he refers to is June 2008.
This statement was made as AMEX was accepting $1.5 billion dollars from MasterCard in a lawsuit settlement. Mr. Chenault also readily admitted AMEX did not have a grasp on how quickly AMEX cardholders are falling behind on their debt.
Read those sentences again and if you can tell me the picture has gotten any better than it was even a year ago, I’ll buy you a beer or three. For starters, cardholders are falling behind on their debt faster than AMEX predicted, thought or knew.
Wow, that is quite an admission. Also, if I was to dig around, I bet I’d find statements by Visa, MasterCard and Discover executives admitting their cardholders are falling behind at about the same clip.
Why? Because all offer the same programs to business people and all have about the same delinquency rate.
If those of us buying foreclosures or REOs can’t sell the properties, how soon will it be before they become foreclosures again? What will this do to the economy? Will we be reduced to accepting government quick fixes and bailouts? How many times can Congress pass a foreclosure bailout program anyway? Where does the money come from to pay for the bailouts?
As a small business owner in small town America, I can only generalize on what I see in my business sphere. If you know anything at all about insurance agents you know we are always prospecting. Prospecting business owners is one of the best means of selling several policies at once thereby increasing income and reducing sales time.
That’s not a secret, is it? It also isn’t a secret that small business people, whether in my town or yours, are cutting back. They aren’t just not offering insurance packages to their employees. They are also cutting payrolls, reducing overtime and benefits in conjunction with other personalized cost cutting efforts.
Every once in awhile you read an article that says home sales have picked up. That pronouncement was made by our county RE board president in an article in the online version of our paper this morning.
However, when I read the comments that follow the articles (our paper allows the readers to comment on each article), it seems the local RE board prez was fudging the facts a little bit.
The number of new home sales they quoted were from builders who loaded the homes with so many extras, they were actually taking a loss. How many people can stay in business with that kind of sales technique?
The number of new condo sales was also a fudged figure. It seems an investment group had bought 30 new condos at a sweet price to hold them for the inevitable upturn. My bet is this group will soon be renting them if only for the return OF investment.
Since those with supposedly the straight market skinny have to speak in adjusted fact speak, Mr. Chenault’s comments become even more important. They become more important because they are not fact adjusted statements.
If the guy employing 2 to 50 employees drowns in a sea of debt, how many foreclosures does that add to the landscape?
I don’t know if this is a solution for this scenario but it is being employed by one of our clients. She rents her properties at her mortgage payment amount. Her mortgage payments are below market rates.
It seems to be working for her up to now. Fortunately none of her tenants face layoffs or job closings. And, yes, I do know it is a technique preached by the gurus. However, it seems to have taken on new import today. You’d agree right?
Anyone with a pencil and two brain cells can see her only profit center is the tax benefits she gets on her properties. But maybe tough times demand tough solutions. Maybe if we assume the underbelly of today’s scenario is larger than the exposed belly we can still find a way to make a profit.
I write what I see and what I read and let you correlate it for your area. If it helps, wonderful. If not, well, I tried.