Monday, November 9, 2009

Mortgage Resets: We Are in The Eye of The Storm; Why This Recession is Much Worse Than Others

The jobless rate in the U.S is at record highs since the end of World War II. The situation is not much different in other countries:


The Pragmatist Capitalist has a couple of charts that are stunning. The first one shows the number of job losses over time for each recession. The horizontal axis shows the number of months after the pre-recession peaks. Here it is:

(please click to enlarge)

That is what makes this recession is so much worse than any of the others.

The 2nd chart is for the upcoming mortgage resets. It turns out we are in the "eye of the storm":

(please click to enlarge)

Quite stunning.

As we have discussed, commercial mortgages are the next shoe to drop as well, the pain there is only starting. Imagine the compound effect of both comercial and residential mortgage pain. The chart above may provide indication of why it would be difficult for interest rates to rise.

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