An excerpt from Barrons:
…an interesting list of things that polite people don’t talk about over the dinner table, that still speak eloquently to the state of the economy. Here’s a sampling:
One in every 10 Americans missed a mortgage payment in the first quarter of this year — a new record. One in 10 Americans’ credit-card usage is being written off — also a new record.
One in six Americans are either unemployed or underemployed. Over four in 10 of those jobless Americans have been out of work for at least six months and there are five unemployed workers competing for every job opening.
One in four Americans with a mortgage have negative equity in their homes. Only one in 50 Americans plan to buy a home in the next six months.
One in eight Americans feel the current government policy is actually helping the economy.
Ask not, then, why so many people are so teed off.
“Mods are worse than subprime loans.” Thus spake (or, actually, wrote) Mark Hanson, a familiar name to Barron’s readers, we trust. Mark runs Hanson Advisors and his chosen professional turf is, fittingly enough, real estate. Mark was early and more importantly, right in forecasting the collapse of housing. The “mods” referred to in the chilling quote are not modules, but modifications, and what are being modified are residential mortgages courtesy of, for example, the government’s Home Affordable Modification Program, or HAMP for short. Mark’s beef is that even the worst of the mortgage brokers during the top of the housing boom never — knowingly anyway — made a loan that was 150% of the value of the house to a borrower whose debt represented 61.3% of income, as does HAMP. That suggests to him that the average modification loan will perform worse than the average subprime did. And he predicts the majority of these loans within 15 months will default once more. Hardly glad tidings for housing or the economy. Even worse news, obviously, for the home builders, the shares of which have enjoyed something of a revival in anticipation of a solid recovery.”
I don’t post this as analysis to make a trade. I post it as a reminder that when you hear a politician talking of recovery — think lie.