I wonder how are we going to bring the economy back up though.

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There are also differences in financing…

I don’t know what the rules were in the 40s, but in the 60s, the rule was 20% down and a 20 year mortgage. I remember when I first heard about a _30_ year mortgage! Wow! that could really make a difference in your payments….but also Wow! did it ever increase what you ended up paying for your house! VA loans were a real bennie – no down, if you didn’t have any savings, but you paid points, and in the end, it was more costly. Still, a way for a family who hadn’t saved anything to get started. Now it seems, you need very little down, can get an interest only mortgage etc…it’s really no wonder that there’s so little equity. I think Greg’s explanation about using the equity for other purposes is only partly right – though it’s also a factor, no denying that.

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Beyond housing, things are generally cheap.

Housing and energy. Food is likely to follow energy in price as the rise in oil prices and the falling dollar (which leads to grain exports) work their way through the system. Manufactured goods should continue to be cheap for a long time.
Your point about jobs going unfilled is well taken though. Whatever problems we have, lack of jobs is not one of them. Any issues with unemployment can be effectively deferred until someone actually tries to defend the value of the currency. Of course, what’s effectively happening is that you’re taxing current holders of the currency in order to finance cheap lending (which leads to jobs).
I’m not going to say the current policy is indefensible (after all, the biggest single payer of the ‘inflation tax’ is the Chinese with their dollar reserves – maybe it’s not such a bad thing). But when someone starts down a path which has led so consistently to disaster in the past, I think a little skepticism and debate is in order.

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We remember in 2005 applying for a loan and being offered a no doc loan for 1 million on a 65k salary. Sure we had some savings and equity in our current home but we knew that was absolutely ridiculous. I’ve never forgotten the 2.5 rule but apparently we were in the minority.

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I would say that’s an average Suek. That’s also how they get the huge numbers for personnel debt. It’s based on multiple mortgages on the same property and mortages in the general population.

Let’s say you bought a $500,000 house and put $100,000 on that house. You have $100,000 in equity. If they house drops $100,000 to $400,000 you have $0 in equity. If it jumped to $600,000 you would have $200,000 in equity.

People use property to buy other property. That’s what rich people do. So a person has put down $100,000 on a $500,000 house then took that $100,000 in equity to buy another $500,000 house, then both houses dropped by $100,000 then the person has -$100,000 in equity. If people didn’t buy property more property, they were using their property as an ATM machine to buy boats, cars, fancy clothes, nice vacations etc. So even if they originally paid off their homes in full, they then turned around and tapped the equity.

This can get real bad for property since 75% of the households in the U.S. makes less than $57,000 while in the end most homes triple in price when adjusting for interest (then add any taxes, fees and upkeep). I believe in the 2 1/2 rule which was still taught in the 80s. It means the price of affordable property is 2 1/2 times ones gross income. That means that 75% of the households can afford less than a $142,500 home. Anything more is too expensive. The smart ones realized what was going on, flipped some property and got out before the bust.

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>>Today we learned that the net equity Americans held in their homes dipped below 50%. A level that has not been seen since the 1940’s.>>

That’s an interesting statement. In my area, homes have increased about 500% since we bought ours 25 years ago. Obviously our equity has increased in the sense that we have most of our mortage paid off, but if you go by the numbers, it would seem to me that even if my home is 100% paid off, my net equity would still be only one fifth of it’s market value. Is that wrong?
Maybe I don’t understand where they’re coming up with their numbers…perhaps you could explain it?

Wouldn’t the result be the same if people bought and sold more frequently than in the ’40s? We have a much more mobile population today than then – wouldn’t that also have an effect on the net equity?

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Beyond housing, things are generally cheap. My dad was making $30,000 a year as an electricin in the 1960s and owned two houses when he was in his 30s (the second costing less than $20,000 which he gained a profit of $600,000 30 years later). Now the average wage is around $48,000 and houses are $400,000+. On the other hand, he bough a brand new car for around $8,000 (not including taxes) at the time which I paid $14,500 (including taxes, loaded and extended warrenty) for a better car in 2000.

I found 80,000 good paying jobs right here.
http://www.railroadjobs.biz/index.htm

I got 2 million more fair paying jobs that need filling
http://www.nea.org/teachershortage/index.html

The army wants to add 100,000 more, the marines want 38,000 more.

The U.S. has a 85,000 shortage in firefighters and stortage of police that runs into the thousands
http://www.usatoday.com/news/nation/2004-11-28-police-shortages-cover_x.htm

There is now a shortage of 118,000 Registered Nurses which will rise to 340,000 by 2020.
http://www.aacn.nche.edu/Media/shortageresource.htm

Between 3,000-10,000 more doctors need to be trained per year.
http://www.usatoday.com/news/health/2005-03-02-doctor-shortage_x.htm

Generic worker boom news:
http://www.lukevision.com/jobboom.htm

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Of course. It’s all the Liberal’s fault. George W. Bush and the Republicans can’t be held accountable for anything, ever, no matter what.

Today we learned that the net equity Americans held in their homes dipped below 50%. A level that has not been seen since the 1940′s.

And the reason the unemployment rate is “only” 4.8 percent is that the Department of Labor “adjusts” who is “unemployed”. If you have been without a full-time job for more than six months, you are no longer “unemployed” or “underemployed”. You are a “discouraged worker” and you are no longer counted in the totals.

Given the level of politicization that the Bush Administration has imposed on every other agency of the US government, from the CDC, to the US Attorneys’ Office (“Loyal Bushies” all), to the true cost of the Prescription Drug Entitlement, to FEMA, we all know how much to trust the Bush Administration on this number as well.

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Curt,

I remember the 2000 election and Bush being attacked for ‘talking down the economy” while the MSN was doing their best not to cover it.

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You will have quite a bit of work to do if you want to try and convince people that the economy is doing well.

Who said anything about the economy doing well? I didn’t write that…but you chose to spin it as such. Shocker!

The economy is slowing down, but there is no need for all the shock and awe reporting done by the MSM doing their best to get everyone worried when we are NOT in a recession….I just wonder what the reporting of this would be like if a Dem was in office.

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