Comments on: Mortgage Securitization Hinders Subprime Relief http://www.nakedcapitalism.com/2007/04/mortgage-securitization-hinders.html Sun, 22 Nov 2009 15:18:28 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: unlawflcombatnt http://www.nakedcapitalism.com/2007/04/mortgage-securitization-hinders.html#comment-54 unlawflcombatnt Sat, 21 Apr 2007 20:39:00 +0000 http://www.nakedcapitalism.com/2007/04/mortgage-securitization-hinders-subprime-relief/#comment-54 Thanks again for crunching the numbers and providing the links, especially to Cagan's dubious assessment. I see still more problems with his assessment. Not only is his 1.1 million foreclosure guesstimate low, he projects it over <b>6 years</b>. According to RealtyTrac, as reported through efinance, <a HREF="http://efinancedirectory.com/articles/Foreclosures_in_the_U.S.-_March_Foreclosure_Report.html" REL="nofollow">March's total foreclosures were 149,150</a>. That's an annualized foreclosure rate of 1.8 million - in 1 year, not over 6 years. If we take Cagan's $112 billion-to-1.1 million foreclosure ratio, and expand it to 1.8 million foreclosures, the loss is $183 billion, and that's over <b>1 year</b> only. <br/><br/>A $183 billion loss certainly <b>is</b> a big loss. It amounts to 1.4% of our $13 trillion GDP. Such a loss is almost 50% of last years economic growth. And with any reasonable multiplier effect, this alone would push 2007 GDP growth down to almost 0.<br/><br/>I agree with you that Cagan has grossly underestimated the effect of the declining mortgage industry. <br/><br/><a HREF="http://www.unlawflcombatnt.proboards84.com" REL="nofollow">Economic Populist Forum</a> Thanks again for crunching the numbers and providing the links, especially to Cagan’s dubious assessment. I see still more problems with his assessment. Not only is his 1.1 million foreclosure guesstimate low, he projects it over 6 years. According to RealtyTrac, as reported through efinance, March’s total foreclosures were 149,150. That’s an annualized foreclosure rate of 1.8 million – in 1 year, not over 6 years. If we take Cagan’s $112 billion-to-1.1 million foreclosure ratio, and expand it to 1.8 million foreclosures, the loss is $183 billion, and that’s over 1 year only.

A $183 billion loss certainly is a big loss. It amounts to 1.4% of our $13 trillion GDP. Such a loss is almost 50% of last years economic growth. And with any reasonable multiplier effect, this alone would push 2007 GDP growth down to almost 0.

I agree with you that Cagan has grossly underestimated the effect of the declining mortgage industry.

Economic Populist Forum

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