The Recession Has Ended They Say Part 1

Fact: US foreclosures jumped to an all-time high of 937,840 in the third quarter. According to RealtyTrac that's a 23% rise from the same time last year.

Fact: According to the Mortgage Brokers Association, 58% of the foreclosure starts are now in Prime Loans, not subprime loans.

Fact: 46% of Option Arms are currently 30 days past due. An Option Arm is A monthly adjusting adjustable-rate mortgage (ARM) which allows the borrower to choose between several monthly payment options.

The bottom line is that far too many Americas, not simply those with low credit scores, have borrowed more money then they are realistically capable of repaying. The credit boom was created by initially low adjustable rate mortgages, interest only, or negative amortization loans, and an appreciating real estate market that allowed homeowners to extract equity to help make mortgage payments. Now that real estate prices have stopped rising, and mortgage payments are resetting higher, borrowers can no longer “afford” to make these payments.

According to the Financial Times, JP Morgan's U.S. credit card division lost $700 million in the quarter, it wrote off $7 billion in noncollectable consumer loans. So how is it that they are making profits? JP Morgan took bailout money, paid bonuses, then played the stock market before paying some of the bailout money back which was the profits it made in the market. They also got some multi-billion worth of mortgages for a song and then wrote down some $31 billion of that which means that their profit was a sure thing from the get-go. Yet despite the bailout, JP Morgan is not lending much of anything to spur the U.S. economy. It made more profits recently trading the stock market instead.