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Stock Ideas Investors Daily Edge Annual family income went down from 1999 to 2007
Stock Ideas Investors Daily Edge Annual family income went down from 1999 to 2007 
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By Rick Pendergraft Dear Reader, When I arrived at the office and started reading the morning news on Tuesday, I had to laugh at one of the headlines. This is the headline as it appeared on Briefing.com: Baidu.com initiated with an Overweight at J.P. Morgan |
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| Annual family income went down from 1999 to 2007 |
| Friday, 25 April 2008 | ||||||||
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John is absolutely right to link growing unemployment with rising defaults. Here is what he says: From: John G Marson Subject: Mortgage defaults Have you thought of the possibility that many of the borrowers were gainfully employed at the time they took out their mortgage, and subsequently were laid off and had to default? The US government seems to be engaged in a war against the American worker... Of course, unemployment filters down. Jobless people can't buy cars or refrigerators. They can't afford to pay the kid next door to mow their lawn. They can't afford to eat in restaurants. They can't afford to pay for haircuts. And they can't afford their house payments. Thus you have millions more defaulting on their mortgages. The real blame lies with our President and his policies, and with the corporations that dictate those policies. You could argue that this is inescapable... the price we pay for the good times... and the inevitable letdown after several years of rapid growth. You could argue that what we’re experiencing now is worth the tens of millions of Americans who improved their economic standing. You could argue it... but you’d be wrong. Fact is, this last economic expansion had no coattails. It did a horrendous job in growing wages and jobs. Take a look at these two charts to see what I mean. 
 That’s right. Your eyes aren’t deceiving you. Annual family income went down from 1999 to 2007. And jobs increased at a much slower pace than any other post-WWII economic recovery.In other words, now that the crap is hitting the fan, we have no cushion to fall back on. The only reason it felt like we were getting richer was all the equity we had in our homes -some of which we took out. And this is the scary part. There is nothing that any of the presidential candidates are saying in either party which indicates they understand the extent of our economic problems or what we should do about it. Usually, unemployment is a lagging indicator. It deepens at the end of a recession and peters out at the beginning of the recovery. But this time the dynamic may be different. Growing unemployment will lead to more mortgage defaults. More mortgage defaults will lead to greater writedowns by banks. And greater writedowns will further crimp banks’ ability and willingness to lend – sinking the economy deeper and deeper into the hole. We can thank our punchless recovery following 2002 for the severity of our current crisis. We should be looking at a shallow trough. Instead, we’re staring into an abyss and our politicians don’t seem to realize it. Good Trading, Andrew Gordon P.S. To let me know what you thought of today's article, send an e-mail to: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
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