44,000 pre-foreclosure "notices of default" were initiated in California last month. Assuming that the average monthly payment of these 44,000 mortgages are $2,000 and assuming that it takes at least six months for a foreclosure to hit, the "economic stimulus" of these foreclosures are 44,000 x $2,000 x6 months=$528 million that was earmarked for mortgages can now be spent elsewhere. In Palm Beach FL, the courts are so jammed, the lenders will be lucky if the process can be done in nine months.
To call this misfortune a "stimulus" would seem to be hedonic adjusting; something more akin to what the BLS (Bureau of Labor Statistics) would do. They are the only person on the planet who said that gasoline prices at the pump went "down" 2% last month even though they went up 5.6%. When the BLS "adjusts" gasoline prices for the normal prices increase that happen in April, the gasoline price increase is less than zero! And that is what they report!
So I'm going to hedonically adjust every foreclosure as a new stimulus as homeowners live rent free for six to nine months.
Somehow we'll forget about the equity they lost. We'll just write it off to the bank, and let some sovereign wealth fund offset the bank's loss in capital by lending more to bank from the money that they made off of the homeowners who are paying the costs of the higher price of oil!
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