The home equity cash machine has still been a big prop for the economy this year. That won't last

Based on the charts found in the Greenspan/Kennedy report (which I would link to if it didn't put me in moderation purgatory!) I think this chart somewhat exaggerates the impact that the mortgage crisis will have, because it seems to include refinancing to take advantage of lower rates, and debt consolidation, and increased debt taken on through the sale of an existing home, and purchase of another.

I think a better measure of economic impact would be the "cash out" numbers, which went from 100 billion to about 300 billion per quarter between 2000 and 2005 -- and one suspects that the mortgage squeeze and lower housing prices are going to result in that number dropping precipitously...

I believe the American economy is overdue for a structural adjustment. The days of easy credit for everyone including American customers , American banks and the Fed government are over as the financial system has failed to exercise restraint.The world will buy T bills at a slower rate if the dollar decreases further,treating the Govt the same way as the banks are treating the American customers.The resulting adjustment would be good for everyone including homeowners who need to save more, and govt's that need to spend less.and vice versa!

The more I follow the stock markets, the more I think we got a bear market.

One of the problems with all of these numbers being thrown around is the lack of prospective given on each. As an example, the percentage of mortgages in the foreclosure process was 1.69 percent of all mortgages outstanding at the end of the third quarter. While that number is up from the same time last year, it is not the end of the world. The other thing is that the "news makers" are putting the emphasis on sub prime Arms as being the major culprit. The majority of the subprime loans now in forclosure aren't Arms, they're fixed rate, 56% fixed rate, 44% ARMS. The other fact that is being left out is that there are anywhere between a low of 16% to a high of 35% investors in these sub prime foreclosures. Do you have sympathy for these scoundrels who bought 5 or more properties using (probably) inaccurate income numbers and never intended to occupy the property, even though they said they were going to, and expected to flip the home to some poor sap for $100,000 more than they paid for it with the help of slimy mortgage brokers and appraisers who were being paid-off to drastically inflate the appraised value?

If you look at subprime mortgages now in forclosure as compared to all outstanding mortgage, they represent less than 1% of all mortgages, .93% to be exact.

Another thing is this, there are millions and millions of homeowners that got into a home ONLY BECAUSE they could get a sub prime mortgage. The vast majority of these people either already refinanced into a fixed rate mortgage or have a fixed rate sub prime mortgage, or have a sub prime mortgage that they can and will be able to pay; they will not let their home go in to forclosure, they will pay their mortgage. Historically as well as currently most foreclosures happen because of changing financial circumstances in the family; a lost job, a huge medical bill, medical problems that cause missed work, a death in the family, or a family break-up. These issues are still the primary factors. The difference now is that property values have gone down and these people are unable to sell their property and pay-off the mortgage. Therefore, their strategy is to stay in the property without making mortgage payments for as long as possible, right up to the time of forclosure. I feel sorry for these people, I would have felt sorry for them 10 or 15 years ago if this happened too. Forclosue is not a fun thing for anybody.

I'm surprised I haven't seen this data in the newspapers, and disappointed in my local urban newspaper as a result.

This is an incredibly important story for the new year. The housing bubble is now bursting, which is good news for some and not for others, but there is no denying that an economy cannot sustain itself on bubble income like this.

The chart shows the bubble perfectly, and it also shows that a return towards a more normal 2% will take $150 billion of spending per quarter out of the economy from the bubble highs. That would represent $600 billion less spending annually off the highs, and is likely to contribute to the coming recession.

With the reduction in hiring or layoffs that are likely to come in 2008, it is time to do what you can as an individual to protect your income stream by innovating yourself. Read more