Americans’ home debt greater than equity for first time since 1945; home prices plunging 8.9% in the final quarter of 2007 compared with a year ago, steepest decline in the 20-year history of the Case-Shiller index.

Excerpt of article published at Tampa Bay’s 10 dot com (click to read whole article): WASHINGTON (AP) — “In a troubling report, the Federal Reserve said Americans’ equity in their homes has fallen below 50% for the first time since 1945.

Home equity is the percentage of a home’s market value minus mortgage-related debt.

The Fed’s flow of funds report shows home equity slipped to a revised 49.6% in the second quarter 2007 and fell further, to 47.9%, in the fourth quarter. It marks the first time homeowners’ debt on their houses exceeds their equity since the Fed started tracking the data in 1945.

The total value of equity also fell for a third straight quarter to $9.65 trillion from a downwardly revised $9.93 trillion in the third quarter.

Home equity has steadily declined even as home prices jumped earlier this decade due to a surge in cash-out refinances, home equity loans, lines of credit and an increase in 100% or more home financing.

Economists expect equity to drop even further as declining home prices eat into the value of most Americans’ largest asset.

Moody’s Economy.com estimates that 8.8 million homeowners, or about 10.3% of homes, will have zero or negative equity by the end of the month. Even more disturbing, about 13.8 million households, or 15.9%, will be “upside down” if prices fall 20% from their peak. That is, they will owe more than the home’s current market value.

The latest Standard & Poor’s/Case-Shiller index showed U.S. home prices plunging 8.9% in the final quarter of 2007 compared with a year ago, steepest decline in the 20-year history of the index.”

“Let it not be said that no one cared, that no one objected once it’s realized that our liberties and wealth are in jeopardy. -U.S. Congressman from Texas, Ron Paul, M.D.

“The greatest threat facing America today is not terrorism, or foreign

economic competition, or illegal immigration. The greatest threat

facing America today is the disastrous fiscal policies of our own

government, marked by shameless deficit spending and Federal Reserve

currency devaluation. It is this one-two punch -Congress spending

more than it can tax or borrow, and the Fed printing money to make up

the difference -that threatens to impoverish us by further destroying

the value of our dollars.”

“Unfortunately no one in Washington, especially those who defend the

poor and the middle class, cares about this subject. Instead, all we

hear is that tax cuts for the rich are the source of every economic

ill in the country. Anyone truly concerned about the middle class

suffering from falling real wages, under-employment, a rising cost of

living, and a decreasing standard of living should pay a lot more

attention to monetary policy.”

-Texas Congressman Ron Paul, M.D., April 10, 2007

People have hope:

“The official national debt figure, now approaching $9 trillion,

reflects only what the federal government owes in current debts on

money already borrowed…It does not reflect what the federal

government has promised to pay millions of Americans in entitlement

benefits down the road…Those future obligations put our real debt

figure at roughly fifty trillion dollars -a staggering sum that is

about as large as the total household net worth of the entire United

States…Your share of this fifty trillion amounts to about $175,000.”

-Texas Congressman Ron Paul, M.D. March 6, 2007

CNNMoney (See original article here.) By Brian O’Keefe, senior editor, quoting Jim Rogers on the US economy right now:

“Conceivably we could have just had recession, hard times, sliding dollar, inflation, etc., but I’m afraid it’s going to be much worse,” he says. “Bernanke is printing huge amounts of money. He’s out of control and the Fed is out of control. We are probably going to have one of the worst recessions we’ve had since the Second World War. It’s not a good scene.”

(The central bank’s second interest rate cut in a week raises the risk of inflation and bails out the banks.)

(Interest rate cut=increased money supply=inflation=hard times for poor and working families)

Rogers looks at the Fed’s willingness to add liquidity to an already inflationary environment and sees the history of the 1970s repeating itself. Does that mean stagflation? “It is a real danger and, in fact, a probability.”

The dollar headed for the biggest weekly loss against the euro since December after Federal Reserve Chairman Ben S. Bernanke signaled the bank may cut interest rates further to avert a recession.

(click play on video below to see more…)

the following is an excerpt of Feb. 15 (Bloomberg) article by By Stanley White and Kosuke Goto– “The dollar headed for the biggest weekly loss against the euro since December after Federal Reserve Chairman Ben S. Bernanke signaled the bank may cut interest rates further to avert a recession.

The currency traded near a one-week low versus the euro as Bernanke said the Fed “will act in a timely manner as needed to support growth.” The allure of U.S. assets diminished as the yield premium of European government bonds over Treasuries widened to the most in more than a week.

“The dollar will remain weak today after Bernanke’s speech,” said Motonari Ogawa, vice president of interest-rate products and foreign exchange in Tokyo at Morgan Stanley, the second-largest U.S. securities firm. “The U.S. yield disadvantage is increasing. I was about to turn into a dollar- bull, but I’m now rethinking it.”

CNNMoney (See original article here.) By Brian O’Keefe, senior editor, quoting Jim Rogers on the US economy right now:

“Conceivably we could have just had recession, hard times, sliding dollar, inflation, etc., but I’m afraid it’s going to be much worse,” he says. “Bernanke is printing huge amounts of money. He’s out of control and the Fed is out of control. We are probably going to have one of the worst recessions we’ve had since the Second World War. It’s not a good scene.”

(The central bank’s second interest rate cut in a week raises the risk of inflation and bails out the banks.)

(Interest rate cut=increased money supply=inflation=hard times for poor and working families)

Rogers looks at the Fed’s willingness to add liquidity to an already inflationary environment and sees the history of the 1970s repeating itself. Does that mean stagflation? “It is a real danger and, in fact, a probability.”

Great explanation of what is going wrong with our economy and why we should be upset on behalf of the people and the founding fathers: