Ballparks and Figures
A couple days ago I recall reading an article about how the 4th of July would affect the United States economy. Especially this year since it fell on a Tuesday. I don't have any exact numbers but I'm assuming that a lot of people took monday off as well so they could get a 4 day weekend. Having all these people off work will mean that many companies will not be as productive as normal. Even people that do work on those days won't be able to be as productive as normal. Since most companies are constantly communicating and working with other companies there will be less people there to work with and hence less will be accomplished. I don't know what the exact dollar amount affect this will have on the economy but you would think it would be worth mentioning. It normally isnt to bad if holidays are just on a monday or something but since it fell on a tuesday this year it effectivley created a 4 day weekend for most people.
On the flip side of the coin...Since all of these people are not working they are probably out at picnics and BBQ's. Maybe buying that new patio set they wanted or whatever it is that is popular these days. So maybe in that respect the extra day off will cause more consumer spending and hence will help the economy. But knowing most people they just use credit cards and overburden themselves with debt. Which brings me to my next topic.
As we all know, the housing market is cooling off. A lot of people are in homes right now that they should not be able to afford. Thanks to the wonderful "invention" of interest only loans, ballon payments, variable rate loans etc...people could/can "afford" bigger houses. They see that if they do an interest only loan they can buy a $250,000 house. Man, what a deal. Not only are they accruing no equity with each payment; the interest rate is probably a variable one. So when the rates were low it was all fine and dandy (thats how they could make/afford the payments). But do they really think that the rates are going to stay low for the entire duration of their mortgage? Now with rates going up their payments are going through the roof and they can no longer afford this house they are in. This will lead to increasing forclosures/bankruptcies and will create a situation where people with a lot of cash on hand will have great deals on these houses. I know that I will be getting a 30 year fixed rate loan (most likely) when I buy my first house. The reason I get upset about it all is because people act like they didn't know it was going to happen to them. I work at a bank and I had a customer that was furious that her payment had gone up so much latley and how she wanted to close all her accounts and everything because she was so upset. Well what did you think was going to happen when you signed that piece of paper that said that it was a variable rate loan. Oh sure, the rate for a fixed loan was a bit higher at the time but look what you could of avoided.
On the flip side of the coin...Since all of these people are not working they are probably out at picnics and BBQ's. Maybe buying that new patio set they wanted or whatever it is that is popular these days. So maybe in that respect the extra day off will cause more consumer spending and hence will help the economy. But knowing most people they just use credit cards and overburden themselves with debt. Which brings me to my next topic.
As we all know, the housing market is cooling off. A lot of people are in homes right now that they should not be able to afford. Thanks to the wonderful "invention" of interest only loans, ballon payments, variable rate loans etc...people could/can "afford" bigger houses. They see that if they do an interest only loan they can buy a $250,000 house. Man, what a deal. Not only are they accruing no equity with each payment; the interest rate is probably a variable one. So when the rates were low it was all fine and dandy (thats how they could make/afford the payments). But do they really think that the rates are going to stay low for the entire duration of their mortgage? Now with rates going up their payments are going through the roof and they can no longer afford this house they are in. This will lead to increasing forclosures/bankruptcies and will create a situation where people with a lot of cash on hand will have great deals on these houses. I know that I will be getting a 30 year fixed rate loan (most likely) when I buy my first house. The reason I get upset about it all is because people act like they didn't know it was going to happen to them. I work at a bank and I had a customer that was furious that her payment had gone up so much latley and how she wanted to close all her accounts and everything because she was so upset. Well what did you think was going to happen when you signed that piece of paper that said that it was a variable rate loan. Oh sure, the rate for a fixed loan was a bit higher at the time but look what you could of avoided.
posted by Vitamin Funk @ 10:59 PM
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