Confidence Crisis? WRONG, MORONS!

USA is saying that the current mortage problem is a confidence crisis.

They are saying that it's just fear.

They are also refusing to put 2 and 2 together, and realise that maybe, just MAYBE toxic troubled debts, and mortages, and foreclosures, are all connected?

It's is NOT a confidence crisis that is causing the mortage market to collapse.

It is the simple simple unescapable fact that a very large number of people bought houses that they cannot afford! And that number is in fact INCREASING every day. Mortage rates are going up. Credit card rates are going up. Employment is going down. How are people with no income supposed to pay a rising mortage?

The stupid American government is choosing to pretend that this group of people does not exist.
MADNESS.

Instead, they are trying to revive the mortage market by saying "look, there are plenty of people who are not in trouble, why don't we give mortages to these guys?"

Er... yes. You can give them mortages. This is a good idea.

But...

It's not going to solve the problem of the other section of the population who ARE in trouble!

These idiots are only trying to look at aggregate figures, instead of segmenting the mortage market.

They think that all they need to do is look at total mortages, total good mortages, and total bad mortages. At the moment, the ratio of good:bad is too low. So their theory is, to fix this problem, just raise the number of good mortages.

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Yeah, I know that it seems to make some sort of sense, but you can tell that theres some big flapping holes in this logic.

Unfortunatly, these morons haven't realised that.

Sooner or later, you HAVE TO restore the ratio of good:bad mortages by reducing bad mortages. You can't shuffle them around. You HAVE TO foreclose. Just like bankruptcy.

Also.

The fact of the matter is:

The mortage market is saturated.

The mortage market simply grew too fast, furious, and recklessly in the past few years.

The mortage market NEEDS to correct itself.

There are simply too many mortages in existance, with too high amounts attached to each mortage, compared to the earning power required to pay them back.


If America doesn't realize this, the depression is going to last for the next 20 years... basically, it will last until someone realizes that you in fact have to STOP giving out so much easy credit.

The analysts are saying that this problem was caused by too much easy credit...
And now the world banks are trying to solve this by giving out trying to make it EASIER to borrow and lend?


Are they STUPID?

Why, yes of course. Obviously. In fact I have pretty much confirmed that fact some time ago in this blog.

It's like a surgeon who bought a $7.5billion house and property. Obviously, he can't afford something like THAT. But he goes to the bank and says, "hey, you know... i'm a world famous surgeon. My fundamentals are still strong. I am one of the best paid doctors in the world... I earn $15million a year, you should have faith in me. Invest in me!" So... the bank doesn't want to take the pain of foreclosing so they try and help him refinance and refinance and take more loans and...

Well, obviously, what is not going to work cause due to being too expensive... simply cannot work because it is too expensive! NO AMOUNT of refinancing and juggling of debt will solve this problem. Because at the end of the day, you simply cannot run away from the simple fact that:

His income might be freaking high, but his debts are even higher. So, he just has to reduce his debts. Which means moving into a smaller house. Everything else is just delaying the inevitable.


The fact of the matter is, the market is and should be a self-correcting mechanism.
Too much borrowing and financing occured in the last decade. It MUST be wiped out. The market must correct itself. Basically, for the system to return to normal, this cancer must be purged through chemotherapy. Trying to avoid the pain and agony that would occur is only making things worse.