The "danger years" for homeowners

http://money.cnn.com/2006/03/28/real_estate/mortgage_danger_years/index.htm

28 Mar 2006

Millions of mortgage borrowers are entering their "danger years," when delinquencies peak and owners risk losing their homes. Although borrowers are often told that the first year is the hardest, delinquencies have historically reached their highest points during the third and fourth years of mortgages, according to Doug Duncan, chief economist for the Mortgage Bankers Association (MBA). There are a few forces at play: After years of strained budgets, borrowers may have little in savings to draw on to handle a crisis; this is also the period when major repairs begin to crop up; finally, many home buyers go through life changes, including starting a family.

The number of Americans affected by the coming danger years could be huge. Half of all mortgage loans are three years old or less, according to the MBA. Nearly $3 trillion in mortgages originated in 2002, $4 trillion in 2003 and $3 trillion again in 2004. Many were refis, but there were also record totals of new purchases as well.

In addition, many of these transactions involved risky loans, such as interest-only ARMs and no-down payment loans. A recent report from the National Association of Realtors found that the median new home buyer put down just 2 percent in 2005. Forty-three percent put down no money at all. And according to SMR Research, some 25 percent of loans were interest-only, do nothing to reduce the debt on the house. "Lenders used to offer interest-only loans to only the best credit-quality prospects. That's no longer true," said Stuart Feldstein, founder of SMR Research.

'Asia must prepare for dollar collapse'

http://english.aljazeera.net/NR/exeres/50B0028B-B417-4FDE-866C-842CB3280A4F.htm

East Asian economies need to prepare for a possible collapse of the US dollar, the Asian Development Bank says. The warning comes as the US trade deficit reaches a record high and global interest rates continue to rise. Masahiro Kawai, the ADB's head of regional economic integration, said on Tuesday: "Any shock hitting the US economy or the global market may change investors' perceptions given the existing global current account imbalance. "Our suggestion to Asian countries is: Don't take this continuous financing of the US current account deficit as given. If something happens then East Asian economies have to be prepared."

http://money.guardian.co.uk/news_/story/0,,1738739,00.html 

24 Mar 2006

An estimated 2 million people have lost their sex drive as a result of worrying about money, a survey showed today. One in five people who said financial problems had affected their relationship said the issue had hit their sex life, according to insurance giant AXA. Women are twice as likely to suffer from the problem as men, accounting for two-thirds of people who say money has ruined their sex life.

Married or cohabiting couples are also more likely to find that financial problems affect their libido, with more than half of the people who say this has happened currently living with their partner, while 23% are widowed or divorced and 22% are single. A further 37% of people said their money problems had caused them to spend less quality time with their partner, while 50% said they had more arguments and a shorter temper when they were stressed about their finances. Some 26% said they spent less time with their children as a result of their problems.

Around two-thirds of people said they always avoided discussing their finances with their partner, family or friends because it caused them anxiety. "Our study has revealed that this sensitive problem is quite widespread and a person with a financial problem is likely to lean on his or her partner for support and advice," said Darrin Nightingale, of AXA. "When the original money problem breeds a second, more personal, problem with their relationship, it can make things much harder to deal with."

21 Mar 2006

Amy Goodman, of Democracy Now, interviews Kevin Phillips, author of American Theocracy : The Peril and Politics of Radical Religion, Oil, and Borrowed Money in the 21stCentury.

AMY GOODMAN: You quote the Times, talking about the borrower industrial complex.

KEVIN PHILLIPS: It really is. And the example I like to use is the rise of the credit card industry, which is now really a major industry. And in the course of the 1990s and the first couple of years in this decade, they succeeded in getting legislation and decisions from the federal courts, basically, that allowed them to charge any interest rate and charge any fee. And as a result now, somebody whose perceived credit risks seems to change, can all of a sudden wind up paying 28% interest on credit cards. The credit cards charge you fees for everything you can imagine. The low-income people get victimized the most. It’s a giant industry in the United States. After Enron went under, MBNA, which was a big credit card company, took its place as George W. Bush's number one political patron in terms of contributions. So it’s rotten. It’s rotten. This is out of control. We are a money culture now.

AMY GOODMAN: If China, Japan called in the debt, what would happen?

KEVIN PHILLIPS: Well, they can't call in the debt. But what would have to happen would be they would sell their U.S. securities basically, treasuries or – and so would some of the semipublic institutions in China, companies that are really government companies and so forth. You would have a massive crisis in the global financial markets. The assumption is they can't do it, because they would lose so much of the value of what they hold. But they could do it slowly, and they could shift to the euro and possibly to the Japanese yen, a basket of currencies to gold. There are all kinds of things they can do. People who know a lot about this just sit and worry: when is something like this going to happen?

AMY GOODMAN: Alan Greenspan gave a surprisingly frank warning about the state of the country's finances. He said the prospective increase in the budget deficit will place at risk future living standards of our country. Can you talk about this?

KEVIN PHILLIPS: Oh, they’re already massively at risk, and they’re already declining. And he knows it. For the last five years, you haven't had a net after-inflation growth in real family income, because of the slow growth pattern. The slow growth pattern in the country comes because so much of the money is going to people who don't need to buy certain things, and because there's so much debt that it clogs the responsiveness of the economy to stimulus. And he knows it’s a total mess. Paul Volcker, his predecessor as fed chairman, has basically said there’s 75% chance of a financial crisis. Now, again, the major media don't like to discuss this, but I think they are beginning to verge on a readiness to discuss it. And if there’s one thing you can be sure of, George Bush couldn’t describe all this intelligently if you spent 48 hours briefing him.

AMY GOODMAN: You don't think he's smart?

KEVIN PHILLIPS: No. He's got a certain smart sort of fraternity boy, towel-snapping, would make a good second vice president of the First National Bank of Amarillo, but, you know, nothing particularly for heavy lifting.

http://www.cnn.com/2006/WORLD/meast/03/05/zawahiri.tape/index.html

Muslims urged to make West 'bleed for years'

A taped message attributed to Osama bin Laden's deputy calls on Muslims to attack the "economic infrastructure" of the West and stop Western countries from "stealing" Mideast oil, according to recordings posted on Islamist Web sites Sunday.

http://www.formofmoney.com/ximperialhubris.html

Imperial Hubris

Just under the noise, death, and rhetoric yielded by the foregoing episodes of war lies a largely ignored factor that may constitute al Qaeda’s main war effort – the steady bleeding of the U.S. economy. The immediate impact is massive expenditures – at all levels of American government – that will add permanently to the size and cost of government. In addition to the cost of hiring thousands of federal employees for homeland security purposes; acquiring buildings, equipment, and training to make them effective; and requiring proportionate upgrading at state, municipal, and local levels; there lie what must be substantial amounts of unpredictable expenditures for overtime wages – in government and business alike – whenever Washington raises the threat level, or when high levels of security are provided at public places or functions heretofore not seen as serious security risks.

The September 11 attacks were not apocalyptic onslaughts on Western civilization. They were country-specific attacks meant to inflict substantial, visible, and quantifiable human and economic destruction on America.