Friday, May 25, 2007

Basic economy or Dude, where’s my gas money?

I was watching the news this morning and there was a story about the rapidly rising cost of food in the U.S. This caught my attention because life for many average families is becoming more difficult as jobs shrink and housing for some remains unaffordable.

Gas Prices have risen sharply putting more strain on the family budget and mortgage rates have just jumped, which is bound to have a bad effect on all of those A.R.M. loans many are struggling to keep up with. Not to mention the numbers who are failing to do just that every day across the country.

Let’s see, we have price increases in -
*Food
*Shelter
*Transportation.

Thank god the price of flat screen TVs has come down. The only question now is when the bank takes the house because you can no longer make the payments due to the increased mortgage payment, where to put the TV?

But seriously, it’s a fundamental problem. For instance if a new home owner can’t make the mortgage this month, they miss the payment causing the lender to have to cover the amount to the bank they borrow from. That bank will eventually have to book the loss or pass it on etc…
It doesn’t go away. Eventually the amount ends up on someone’s books, effecting their bottom line, and in turn their stock value, (in a normal environment) and finally the share holders portfolios. The ripple effect.

It’s easy to see a struggling family from a distance and think, that’s too bad, but it doesn’t affect me. If it happens on a wide enough scale it could. And that might end with us all saying Dude, where’s my gas money?
Vern

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