Foreclosures continue to escalate.
A story published on CNBC on October 15, 2009 titled, “US Foreclosures Continued to Rise in the 3rd Quarter” stated the following (emphasis mine):
“The number of Americans receiving a foreclosure notice in the third quarter continued to grow, according to a new report, despite government programs intended to attack the problem.
Foreclosure notices were up 5 percent in the third quarter from the previous quarter, and up 23 percent from the same quarter a year ago, according to a report released by foreclosure tracking Web site RealtyTrac. Foreclosure notices are defined as a default notice, bank repossession or auction sale notice.
In all, 937,840 properties in the US received foreclosure fillings in the third quarter.
“Foreclosure rates are rising because of unemployment,” says Rick Sharga, senior vice president at RealtyTrac. Those who were struggling to pay back subprime loans are now at the same time dealing with unemployment, he said. The national unemployment rate was at 9.8 percent in September.
The data comes a week after the Treasury said it had reached a goal of modifying the loans of 500,000 troubled homeowners ahead of schedule.”
Imagine how these numbers might look if 500,000 loans had not been modified – as ugly as it is – it could be a lot uglier.
From where we sit, most of the good economic news is a direct result of the government’s intervention in the economy. And while many Americans may think government intervention is a good thing, we’d disagree.
The reality is our government doesn’t directly produce anything nor has it accumulated the surplus of cash needed to stimulate the economy. The money being spent by our government to stimulate the economy is “newly created”. It is nothing more than a
trade off, a loan taken out now against the future production of US citizens and taxpayers.
Ultimately, every economic decision being made has its price and the price of this bailout (and likely the ones that will follow next year in spite of what the politicians are saying) will have to be paid for.
Unfortunately, the day of reckoning will eventually come and when it does it may be painful.
This piece is an excerpt from my November “Moving Markets” newsletter. For a complimentary subscription click here: www.usawealthmanagement.com
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