The Perfect Storm Is Here!

by Ms Placed Democrat

Yesterday Glenn Beck talked about the “perfect storm” — that storm being a real crisis in Mexico. That crisis has arrived. Mexico is shutting down all non-essential government and private businesses in an attempt to fight the swine flu.

Mexico to shut down government in flu fight
Decision comes as the World Health Organization warns of pandemic

Mexico’s government is temporarily suspending all nonessential activity of the federal government and private business as the number of confirmed swine flu cases jumped.

The decision came as global health authorities warned Wednesday that swine flu was threatening to bloom into a pandemic, and the virus spread farther in Europe even as the outbreak appeared to stabilize at its epicenter. A toddler who succumbed in Texas became the first death outside Mexico.

Health Secretary José Angel Córdova Villalobos announced the move to shut down most of the country’s government and economy shortly after his department reported that confirmed cases of infection with the new strain of influenza had risen.

Why is this the perfect storm? It has serious ramifications for an already stressed economy in Mexico which will have dire effects on our economy. The United States owns the majority of Mexican debt. With private businesses shut down and most of government shut down, there is an excellent chance Mexico will not be able to make debt payments.

What will happen to the USA? There will be further economic stress on our own precarious economy. Forget the evil resident’s rhetoric. Our economy isn’t improving. even though there was more consumer spending in April and businesses refilled their inventories. As a matter of fact the economy shrank more than 6% for the third quarter in a row, which is the first time since the 1970s.

The housing market isn’t improving the way the experts claim. The FHA is now reporting that many of the mortgages they are writing are going to “immediate delinquency” with eventual foreclosure.

At the end of February, 7.46 percent of the Federal Housing Administration’s single-family insurance-in-force was “seriously delinquent” — either 90 days delinquent, in foreclosure or bankruptcy. February’s rate of serious delinquencies is up considerably from the 6.16 percent seen at the same time last year, the Wall Street Journal first reported Tuesday.

The agency paid claims on 3,951 foreclosures, or 0.08 percent of the FHA’s insurance-in-force, in February, according to data provided to HousingWire by an FHA spokesperson, who was quick to point out that some 60 percent of delinquencies cure through the agency’s loss mitigation program before reaching the foreclosure process.

But critics of the program have said that its comparatively lenient terms — requiring as little as 3.5 percent of the home’s value as a down payment, for example — in the wake of the subprime market collapse attracted many borrowers with less-than-ideal credit. The volume of FHA-insured loans as a portion of the total mortgage origination market has increased from 3 percent in Jan. 2007 to 37 percent in Dec. 08, according to a monthly mortgage monitor report released this month by Lender Processing Services Inc. (LPS: 30.10 +2.87%)

Many of the loans now going to default are jumbo loans. The other part of this is that FHA is about the only one writing mortgage loans.

The FHA’s share of the U.S. mortgage market soared to nearly a third of loans originated in last year’s fourth quarter from about 2% in 2006 as a whole, according to Inside Mortgage Finance, a trade publication. That is increasing the risk to taxpayers if the FHA’s reserves prove inadequate to cover default losses.

As of January, the cities with the highest FHA default rates in December were Punta Gorda, Fla., at 18%; Detroit, 15.6%; Flint, Mich., 15.1%; Fort Myers-Cape Coral, Fla., 15%, and Elkhart-Goshen, Ind., 12.1%, according to a HUD report.

Foreclosed FHA homes owned by HUD totaled 39,687 in January, up 22% from a year earlier.

As you can see ny the evidence here the housing market isn’t getting better it is getting worse because Congress has loosened the rules at the FHA, providing more subprime loans.

The stock may have gone up today but the stock market remains below 10,000 and not about to rise much higher. It is my opinion that the stock market has not bottomed out. It is still reeking havoc on 40ks.

Eventually we will see the lasting effects of the swine flu as it continues to spread globally. And it is spreading globally and likely to reach pandemic levels within the next few days. The swine flu will have a lasting effect on our economy and likely because of Mexico’s actions today.