California, the 13% of U.S. GDP and they will impact the entire nation

There are the resets facing us that will mean that many, like the following lady, will have less to spend.

A 73 year old widow has a $315,000 equity loan on her home. She took a loan that offered 3/8 of one percent as a payment or about $98 a month. The rest was added to the principle each month and the loan resets at 150% which will be soon. At that point, her $90 payment jumps to about $3500.

For others the situation is probably nowhere near as bad but, every $100 increase in the mortgage payment is $100 less to spend on the other things we need sold to get this economy going.

There are millions that will lose a ton of buying power in the Alt-A and ARM resets. Many won’t be able to hang on to their homes. The impact of those resets will filter out to the rest of the economy. Tax revenues for California that has 58% of the resets will fall even further. By the way, in Financial Armageddon they say that immigrants that were mailing money home are now asking family to send some back to them due to the downturn in the economy that is hitting the jobs of so many of them.

We still have California that will begin issuing IOU’s. They are 13% of U.S. GDP and they will impact the entire nation because they buy from the entire nation.

Jan.

Related Posts:

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• More smoke and mirrors to create the illusion of growth.
• The cause of the depression in the 30’s vs. 2008-2009
• The market is calling for a rough 2nd half to 2010.
• The unemployment rate could hit 10.3% in Friday’s report.

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