March 19, 2009
Battered Housing Market Gets Booster Shot
CBS Evening News: Will Fed's Cash Influx And Record-Low Mortgage Rates Give Industry A Makeover?
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Play CBS Video Video The True Costs Of Recovery Based upon reports and studies from past recessions and major previous fiscal crises, financial experts have offered a bleak economic forecast for the next several years. Anthony Mason reports.
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(CBS/iStockphoto)
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Interactive Inside The Fed A history of the Federal Reserve, glossary of terms and a look at changing interest rates.
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In-Depth Meltdown Primer Questions and answers regarding various aspects of the current economic crisis.
"This is crazy," said Atlanta mortgage broker Laura Sosa-Rocha.
Sosa Rocha says falling mortgages rates have triggered a rush, reports CBS News correspondent Anthony Mason.
"By 8 a.m. I had about 29 emails by people who wanted to lock in," she said.
The 30-year fixed has dropped below 5 percent; the 15-year fixed has hit its lowest level in more than 5 years. The fall came after the Fed said it will pump another trillion dollars into the economy to try the pull it out of a nosedive.
"It's very hard to pull out of these things quickly," said Harvard University's Ken Rogoff.
Rogoff is coauthor of a new study on the impact of severe financial crises. Looking at 66 major crises, he found that on average:
"If we keep following in the tracks of past financial crises, having unemployment reach 11 or 12 percent by the end of 2011," Rogoff said.
But the scariest statistic in Rogoff's study is what happens to government debt, which rises on average 85 percent.
"So in the case of the United States that's $8.5 trillion within 3 years," Rogoff said. "i don't know about you but it seems to me we're on track for doing that."
The key to recovery is fixing the financial system. If we don't, Rogoff says, the economy could twist in the wind for a decade.
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- After reading the last three post I saw no reason to express my own opinion on the matter. I agree with all three of you whole heartedly. You're hitting nail square on the head.
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- You get good housing sales from real prosperity based on productivity. You do not get a sustainable version of it by lowering loan origination standards. With that you only get the illusion of prosperity, which is a bubble that bursts.
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- Many people want to hold on to a standard of living they can't afford. If they could have afforded it, it all wouldn't have been bought on plastic.....
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- Lower Mortgage Rates? It might help housing prices but not solve any problems. The primary reason for our current problems is too much debt not make it easier to create more. All this will do is to create greater problems in the future. What should be done is to try to do something that will help reduce debt. Note: the ratio of total public & private debt over GNP should be about 2-3 not 4-5. I hope the FED thinks that the influx of dollars will reduce this ratio somehow.
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Best-selling author Mitch Albom on his first nonfiction work since "Tuesdays with Morrie."
