[TropicCat]

First American CoreLogic just reported that the rate of foreclosures among outstanding mortgage loans was 8.74 percent in January, an increase from 4.46 percent in January 2009. It was 8.25 percent in December. Folks .. That's 8.74% of every outstanding mortgage in America.

The average delinquency is 9 months.

These two bits of data when combined = a WTF moment.

Let's do some quick math. If nearly 10% of people in this country aren't making their mortgage payments and those payments eat up over 30% of their disposable income, doesn't it stand to reason they are spending the money? I mean the savings rate hasn't gone up that much. And.... if they are spending the money, doesn't it stand to reason that it's entering our economy and is measured by consumer spending? This means that although Consumer spending has been relatively steady, when we 'look under the hood' we see that people are in fact buying things with their delinquent mortgage payments!! There isn't enough income to do both.

The bottom line is that when the banks and courts actually get around to removing these people from their homes, consumer spending falls off a cliff.

Wait...there's more ... Real estate hasn't found a bottom yet as mortgage delinquencies have almost doubled year over year. The end of this month the Fed stops their quantitative easing. Translation, no more buying of nasty MBSs from banks.

Bottom line ... Real estate is still sinking and it's about to fall off a cliff again.

This recession hasn't hit bottom, hell, it's just hitting it's stride. The one and only positive number is the stock market which is skewing GDP numbers for the entire economy.

If these two points aren't another WTF moment, I don't know what is.

Buy a gun and plant a garden