Economic OutlookOctober 22, 2012 Posted by: Joe Morgan
While much ink has been spilled on the current liquiditycrisis and the government's countless efforts to get the markets"functioning" once again, very little has been applied to thecurrent economy. Simply put, the economy is sinking fast.
To date, our economic woes have been driven by the housing market -more accurately, the mortgage market. The inability of funds toflow from those who have capital to those who want to borrow it,particularly to purchase or refinance a home, is driving alleconomic and market-related problems today.
Until we can get the mortgage market functioning, we are onlytreating symptoms rather than causes. The first step in thisprocess will be the reformation of Fannie and Freddie in(hopefully) some other construct. Look for debate to begin inCongress in the first quarter and to continue interminably.
Over the last ten years, these organizations have consistently beenin the top 20 in terms of lobbying dollars according to the Centerfor Responsive Politics. With over $100 million at stake in theform of these past lobbying efforts, no solution will be determinedsoon.
In the meantime, future mounting job losses will place morehomeowners in the position of "sell or walk" providing another dipdownward in this already broken sector. A long cold winter to come,indeed.Read More