Since the great recession began in December of 2007 home values have plummeted, millions of home foreclosed, hundreds of banks have failed, and millions of people became unemployed. The prosperous years after 2001 till late 2007s seem like a fantasy dream when money flowed freely and people thought they could buy everything and anything – as long as they can borrow the money.
Today, the banks have rescinded to their fundamental lending standards due to the fact they are no longer flushed with cash– making sure the borrower can afford to make the payments on new loans. They also need to trust that these borrowers will pay off the loan and that is why they are demanding higher near perfect credit scores. According to an Associated Press article on July 3, 2010 – “Mortgage rates scream buy, but who is listening?,” mortgage rates are even lower than 2009 yet there are very few people who can obtain these loans. There are very few people with good credit scores, with the steady income to obtain home refinance loans, or have the qualifications to meet the strict bank lending standards – thus slowing down the flow of cash that are much needed to fuel the growth of the economy...
Where did all the money go? In every transaction there is always a counter party. For example if someone makes a bet the loser will have to pay the winner. In business there is a buyer and a seller. When the economy took a nose dive and millions of people lost their wealth in home equity, retirement/pension funds, and their jobs – did billions of cash just disappear into thin air? Remember this one simple rule – there is always a counter party. The money went somewhere – and it is not that too hard to find them if you look carefully…
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