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Rick Price corrections in general are good for those locked out as bursting bubbles usually have positive, but painful, effects. However, most corrections are localized to parts of a system. The correction in housing market is multiplied by the how deeply it effects other parts of the economic system. Not only are the delinquent participants affected but homeowners who have a number of foreclosures in their neighborhoods are affected. The local govts and school districts are affected. The banks with the bad loans are affected and other banks that would count on the affected banks to do inter-bank loans are affected since lending is restricted because of solvency requirements -- as we have seen. This is a systemic danger. So the people who are waiting for an opportunity now have it but they aren't taking it because of fear for their jobs and they expect that the future price of the housing stock will continue falling. This, as I said earlier, is the crux of the problem that needs to be addressed. Not to be mean, but do you think that another 20% fall in the housing prices would be a good thing? If it incents more people to walk away, what would stop the cycle?
Toggle Commented Feb 22, 2009 on Rick Santelli Rant at Coordination Problem
Ryan and Desiree, What about the people that have lost their jobs, had a catastophic medical expense or a drop off in business such that his/her salary doesn't cover the mortgage which by the way is upside down? The circumstances are beyond their control and if their savings are wiped out, should these hard-working people be grouped with those who were living beyound their means? No. Period. The safe-guards will be in place to only help deserving people. Undoubtedly a few will squeak through the filtering process but should represent an insignificant minority. Santelli had it wrong and if any one looked at his explanation the following day, you'd have seen how he tried to explain his rant and dispel the self-sanctification that many are espousing.
Toggle Commented Feb 22, 2009 on Rick Santelli Rant at Coordination Problem