Oil has Crushed the Suburban Homeowner Dream – How $75 a Barrel Oil no longer Supports New Home Construction in Distant Areas. Case study of Riverside and San Bernardino Foreclosures and Housing.
The peak of $147 for a barrel of oil seems to be a long gone memory. Yet oil per barrel is still up over $75, a long cry from the $20 barrel many became accustomed to. I have been mulling this issue over for a few months because few people are even considering oil prices in relation to the value of housing. With the current economic crisis, there has been nearly an obsessive view that if we only manage to solve housing prices, then all will be well in the economy. Clearly this is not the case given that unemployment is still at peak levels. Home prices have fallen drastically in many areas across the country. But if we look at areas that are less economically diverse and merely serve as suburb hubs, these areas are getting a dual correction.
Credit Card Companies Pulling Back Credit Offers to American Households: Those Zero Percent Offers have now Turned into 30% Offers with Annual Fees. Banks have over $2 Trillion in Excess Reserves yet are unable to Offer a Decent Credit Card Rate.
Credit cards are ubiquitous like air in the American economy. Virtually every American that can qualify for a credit card has one (or many) in their wallet. Credit card companies have flooded the market with millions of plastic rectangles that have now come back to bite many American consumers. If we rewind back to the early days of this crisis, (so much has happened since that time) we will remember that the banking bailout involved some necessity of keeping credit alive. At least this is how it was presented to the American public. No bailout equaled no access to credit. Yet since that time we have seen consumer credit simply collapse on a record pace. Part of this is due to the extinguishing of debt via bankruptcy but also the fact that credit card companies (aka big banks) are not making loans accessible to the public.
How the Average American household making $52,000 a Year is Coping while the Ultra Rich Pull Away. Examining the new Numbers on Income Distribution in the United States.
Now that tax season is rolling around average Americans are examining the implications of a difficult 2009 economy. Yet the data on typical families shows that many Americans are falling further and further behind in this current economy. It is sobering to realize that over 14 million American households live on $15,000 or less per year. These statistics usually get lost in the noise of protecting the wealthy class with their generous tax breaks. But when we examine the data even further we realize that even those with solid incomes of $100,000 to $200,000 per year are feeling the tax burden pinch with changes in the alternative minimum tax (AMT). What we can gather from the data is the small elite, the top 1 percent have managed to setup a structure that manages to use the rest of the population to finance their adventure. First, let us breakdown the numbers:
Commercial Real Estate Surpassed Residential Real Estate as Worst Performing Property Class in 2009: The $3.5 Trillion Financial Time Bomb is hitting the Economy.
Some of you are probably not aware that the commercial real estate market has crossed a dreaded line in the sand. Commercial real estate (CRE) that includes apartments, industrial, office, and retail space is now performing worse than residential real estate. Not just by a little but by a good amount. While the CRE bust took about a year longer than the residential housing bust, once problems started hitting in this market prices have been steadily collapsing. At the peak, it was estimated that CRE values hit $6.5 trillion in the country. With $3.5 trillion in CRE debt outstanding, this seemed to provide a nice equity buffer. That buffer is now erased.