Marc's Mortgage Matter's

Whether it is a house, a bushel of wheat, or a share of stock, when a buyer and seller come together an item trades hands. A lower price will always benefit the buyer. Is that the case in the labor market, where buyers (employers) and sellers (employees) come together? Not necessarily, since the employee, given a low wage, will likely be less motivated to perform services. What will typically happen is that employers will pay more than the base wage for a given task, and employees will often work for less than the maximum that employers will pay. Therefore the labor market is not quite like other markets.

True story - one of many I am hearing often - Great client with super credit finds US Bank credit card (Visa) changed her billing to email statements. She never got this notice, and got a late on credit! Credit score lowered of course from 780 to 705. She calls - asks if they can remove that late or give her a letter explaining the error was not her fault.  Agent is totally clueless and uncaring and could not give a hoot. Manager equally evasive and played the same game. She closes account in anger and moves on. One of many such stupid moves by credit card companies and major banks throughout the country. From BOA and Chase to all in between they have it in for everyone - what a shame. Because they screwed up and gave the kitchen sink and the toilet away a few years running they are now alienating and penalizing everyone especially those with good credit and solid profiles. What a total waste of common sense.

I notice that gasoline prices are back up, usually attributed to demand by China and India. The price has been drifting around, not attracting too much attention, which is good because historically speaking any sharp spike in the price of oil leads to a sharp drop in consumer confidence. After all, gasoline prices are the most publicly visible prices in the economy - no other prices are displayed in bold, two-foot-tall numbers. But higher gasoline prices may not have the same impact as they did a year or two ago. To a great extent gas prices have already dropped the demand for SUV's, including the Hummer. This, in turn, impacted jobs, and to some extent housing since fewer people want or have a long commute to an overpriced suburb.

The all-important "spring housing season" is coming soon now that the official start of Spring is fast upon us. Although there are questions to how long rock-bottom interest rates will last, what with expiring Fed programs and a gradually improving economy, we will at least start out on a very positive note. Rates barely moved this past week - all eyes are on the March 31st MBS deadline.

The Federal Reserve held its regularly scheduled meeting on Tuesday and adjourned with no change to monetary policy, just as expected. In the statement issued at the close of the one-day affair, the Fed noted that "...economic activity has continued to strengthen and that the labor market is stabilizing." However, there were less-encouraging words to be seen as well, notably that consumer spending is being restrained by "high unemployment, modest income growth, lower housing wealth, and tight credit." The Fed also stated that "While bank lending continues to contract, financial market conditions remain supportive of economic growth." Business spending and inventory rebuilding continue to create a technical recovery, but consumers who have no cash to spend and cannot easily borrow will have a tough time joining any expansion. Because of this, "the pace of economic recovery is likely to be moderate for a time," the Fed noted.

An out-of-work Cajun oilfield hand answered a knock on the door one day, only to be confronted by a well-dressed young man carrying a vacuum cleaner.
“Good morning,” said the young man. “If I could take a couple of minutes of your time, I would like to demonstrate the very latest in high-powered vacuum cleaners.”

“Go away!” said the unemployed Cajun, “I'm broke and haven't got any money!” and he proceeded to close the door.

Quick as a flash, the young man wedged his foot in the door and pushed it wide open.
“Don't be too hasty!” he said. “Not until you have at least seen my demonstration.”

And with that, he emptied a bucket of horse manure onto his hallway carpet. “If this vacuum cleaner does not remove all traces of this horse manure from your carpet, Sir, I will personally eat the remainder.”

The unemployed Cajun stepped back and said, “Well let me get you a fork, 'cause they cut off my electricity this morning!”