The Mortgage Equity Trainwreck

Want to understand how important borrowing against the value of homes became to the U.S. economy in the 2000s? Look at these two charts.

This one shows U.S. GDP growth with and without mortgage equity withdrawals (MEWs). Notice the recession that didn’t happen in 2001 and 2002. Thanks, Alan Greenspan.

This one shows the declining rate of MEWs (can’t borrow if you owe more than it’s worth) now.

Just another indication of how badly our economy is addicted to debt and why this recession is going to long and tough.

(h/t: John Mauldin)

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One Response to The Mortgage Equity Trainwreck

  1. Jesse says:

    yeah, and the solutions being proposed on the national and federal level are no solution either….ouch.

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