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How Banks Are Worsening the Foreclosure Crisis

Friday, 13 February 2009 07:38 Author

By Brian Grow, Keith Epstein and Robert Berner Brian Grow, Keith Epstein And Robert Berner Fri Feb 13, 8:08 am ET

The bad mortgages that got the current financial crisis started have produced a terrifying wave of home foreclosures. Unless the foreclosure surge eases, even the most extravagant federal stimulus spending won't spur an economic recovery.

The Obama Administration is expected within the next few weeks to announce an initiative of $50 billion or more to help strapped homeowners. But with 1 million residences having fallen into foreclosure since 2006, and an additional 5.9 million expected over the next four years, the Obama plan -- whatever its details -- can't possibly do the job by itself. Lenders and investors will have to acknowledge huge losses and figure out how to keep recession-wracked borrowers making at least some monthly payments.

Hard-Hit Families Finally Start Saving, Aggravating Nation's Economic Woes

Tuesday, 06 January 2009 00:00 Zenwealth Admin

BOISE, Idaho -- Rick and Noreen Capp recently reduced their credit-card debt, opened a savings account and stopped taking their two children to restaurants. Jessica and Alan Muir have started buying children's clothes at steep markdowns, splitting bulk-food purchases with other families and gathering their firewood instead of buying it for $200 a cord.

As layoffs and store closures grip Boise, these two local families hope their newfound frugality will see them through the economic downturn. But this same thriftiness, embraced by families across the U.S., is also a major reason the downturn may not soon end. Americans, fresh off a decadeslong buying spree, are finally saving more and spending less -- just as the economy needs their dollars the most.

Usually, frugality is good for individuals and for the economy. Savings serve as a reservoir of capital that can be used to finance investment, which helps raise a nation's standard of living. But in a recession, increased saving -- or its flip side, decreased spending -- can exacerbate the economy's woes. It's what economists call the "paradox of thrift."

Last Updated on Saturday, 07 February 2009 13:00 Read more...

Buying Binge Slams to Halt

Wednesday, 12 November 2008 06:19 Author

Just as one crisis of confidence may be ending, another may be coming.

Justin Lane/European Pressphoto Agency

The holiday season is not quite here yet, but retailers are already bringing out deep discounts.

The panic on Wall Street has eased in the last few weeks, and banks have become somewhat more willing to make loans. But in those same few weeks, American households appear to have fallen into their own defensive crouch.

Suddenly, our consumer society is doing a lot less consuming. The numbers are pretty incredible. Sales of new vehicles have dropped 32 percent in the third quarter. Consumer spending appears likely to fall next year for the first time since 1980 and perhaps by the largest amount since 1942.

Zenwealth.com

How Banks Are Worsening the Foreclosure Crisis

Hard-Hit Families Finally Start Saving, Aggravating Nation's Economic Woes

Buying Binge Slams to Halt

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