The Ten Percent Solution

To go along with the worst lob losses since the year before I was born, we now have news that one in ten Americans are at least one month behind on their mortgage payments.

A record one in 10 American homeowners with a mortgage were either at least a month behind on their payments or in foreclosure at the end of September as the source of housing market pressure shifted to the crumbling U.S. economy.

The Mortgage Bankers Association said Friday the percentage of loans at least a month overdue or in foreclosure was up from 9.2 percent in the April-June quarter, and up from 7.3 percent a year earlier.

Distress in the home loan market started about two years ago as increasing numbers of adjustable-rate loans reset to higher interest rates. But the latest wave of delinquencies is coming from the surge in unemployment.

And things are only going to get worse. Even if the housing market hits bottom...who is going to have the down payment and the creditworthiness to get a mortgage, a car loan, or any other major bank loan?

Banks are sitting on hundreds of billions, and they aren't loaning it out. The real problem isn't even the housing collapse anymore, but the collapse of the American middle class economy. With no middle class conusmers to consume, and no manufacturing base to rebuild a middle class, America's economic woes could very well last for a very, very long time.