The next wave of problems will come from prime borrowers who bought too much house or borrowed too much against it," said Michael van Zalingen, director of home ownership services at Neighborhood Housing Services of Chicago. A "prime" borrower is one with good credit.
Real estate agents warn that some high-income borrowers have already been forced to sell or leave their homes and more will follow. Especially those who used their homes as ATMs, withdrawing cash via home equity loans.
"For those who utilized home equity loans for five to ten years to finance their lifestyle, the chickens are coming home to roost," said Chicago-based real estate agent Marki Lemons.
I beg to differ. These are not wealthy people as the title of this article states. These are upper middle class people, at best. Actually they really are middle class, living larger than they can.
When the Sub prime market bottomed out a few months ago, newspapers across the country, including our very own local paper, the AJC, were filled with reader comments saying that people who fall victim to these loans and lose their houses deserve what they get, many reasons were written but the basic idea was that they should not have spent money they didn't have or they didn't deserve a home if they had bad credit. The comments went even further with many people saying that the government should not do anything because so many people felt, as they sat back in their nice upper middle class swivel throne and wrote to the editors "I pay my bills on time, I have good credit, why should I bail them out?" "If you can't afford to pay, why buy a house?" or the best... "They should have known better." Typical republican thinking I thought, but I tried to see their POV. I tried. I couldn't.
Well now the market of those very people who sat in judgement of the Subprime loan victims are at the precipice. The middle class. No, these people are not wealthy. (Thom Hartmann has wonderful riffs on this issue a lot) They have extended credit lines that they now must repay... and they can't.
Top congressional Democrats are calling for tax rebates aimed at low- and middle-income workers, as well as more food stamps and home-heating aid for struggling families. They also want construction projects to create jobs and additional unemployment benefits, and transitional health care coverage for workers losing their jobs.
"For millions of families, the recession is already here," Kennedy said at the Joint Economic Committee hearing. "Our plan should be focused on average Americans facing tough times."
Bush's economic stimulus plan, expected to be unveiled in his State of the Union address on Jan. 28, likely will focus on making permanent his 2001 income tax cuts, which otherwise will expire by 2011.
Bush's desire to stimulate the economy is nothing more than 'Stay The Course'. At least he acknowledges there is a problem, only took him more than half his presidency to do so.
There comes a point when you can't borrow anymore hamburgers. America seems to be very nearing that point. We were told that the economy has been great, we were sold a bill of goods. We believed them when they said we were prosperous. When we saw the rising costs of energy and food, we were told that it was just our imagination. That everything was fine. So why was it so hard to pay the bills this month? Where did the money go? It is all connected, I guess. I pray that we elect a president who can get us thru this terrible version of a great economy the republicans seem to think we have.
Trickle down economics is nothing more than telling someone it's raining while they piss on the back of the poor and middle class. I think it is raining.