Still A Long Way To Go

A lot of attention has been paid to signs that the recession is abating and that the economy is in recovery mode. To folks convinced it's all over but the shouting, I say "not so fast".

U.S. home loans failed at a record pace in July despite ongoing federal and state programs to avoid foreclosures, which have severely strained housing and the economy.

Foreclosure activity jumped 7 percent in July from June and 32 percent from a year earlier as one in every 355 households with a loan got a foreclosure filing, RealtyTrac said on Thursday.

Filings — including notices of default, auction and bank repossession — have escalated with unemployment.

"July marks the third time in the last five months where we've seen a new record set for foreclosure activity," James J. Saccacio, RealtyTrac's chief executive, said in a statement.

"Despite continued efforts by the federal government and state governments to patch together a safety net for distressed homeowners, we're seeing significant growth in both the initial notices of default and in the bank repossessions."

More than 360,000 households with loans drew a foreclosure filing in July, a record dating back to January 2005, when RealtyTrac started tracking monthly activity.

Notices of default, auction or repossession have reached nearly 2.3 million in the first seven months of the year — with more than half a million bank repossessions, the Irvine, California-based company said.

Foreclosure activity is one key to any real recovery (the other being unemployment). We're still losing hundreds of thousands of jobs a month, foreclosures are still rising and that means there's not going to be any major consumer spending recovering anytime soon. It's a bad combination that will strictly limit, if not wipe out, any recovery in the economy.

But what about the stock markets, you say. Yeah, it has been a wild ride up from March. It won't continue for much longer. The bubble mentality is back with a vengeance. When this one pops, it's going to hurt for a long, long time.