Over a week ago, I was able to make it to the Ted Jones 2009 Economic Forecast. Ted is the Cheif Economist for Stewart Title. There are many great points he made, and in this Blog, I want to just touch one that made the most since to me as I have been thinking similarly throughout the past year. If you would like to read more about Ted’s forecasting and thoughts, you can go to Ted’s Blog.
The title of the portion I wanted to share is, “Loan Modifications Do Not Work”.
In the forecast Ted revealed the statistics, “Data from banks show that more than half of loans modified during the first three months of the year were delinquent by 30 days just six months after the terms of the loans were changed, John C. Dugan, the comptroller of the currency, said at a conference in Washington. After eight months, 58 percent were delinquent again.”
Ted went on to explain that our country spent money in an area of the economy that has a proven track record of failure and lack of responsibility. The sub prime break down and alternative lending catagories made loans available to people that had less than perfect credit history. Drug abusers are fare game in this illustration. Yeah, spending money above your means is not quite like sticking a needle in your arm and going to rehab for months to just come out and begin sticking needles in your arm again. On the other hand, these comparisons are congruent with the fact that history proves that humans are creatures of habit, and a person’s character develops life’s habits. In the end, changing one’s own character is a very hefty goal to take on and few are able to take on such a challenge. Changing is hard.
Now, Ted didn’t use the above to illustrate his points…they are all mine and I own these thoughts myself. In conclusion, is it right to put the major focus and control of getting our country out of this holewe are in into the hands of the same people who got us here in the first place? They have a track record of not planning and budgeting, and making rash emotional decisions when making purchases that eventually bring their lives and families into bankruptcy and foreclosure. Within the list of failed families and foreclosures, there is a large number that had little to no roll in the doom that they encountered because their jobs were lost and the income they had went away. I know that all families within this foreclosure group weren’t led by an undisciplined person and some were a product of the economic environment. Lets not on the other hand, focus our efforts and put the control in the hands of the folks who previously failed. The above statistics show that this is exactly what has begun to happen. The failed mortgages that were modified are failing again.
What should we have done? Sometimes the experts and leaders of our country have to make decisions that don’t necessarily feel right to the masses like a father does to his child. I’m not an economist, so I can’t very well reflect on this subject in a concluding statement and offer the answer to our economic wows. It just doesn’t sound right though to continue “putting the ball in the quarterback’s hands that has a history of fumbling the ball”.