Semi-Daily Journal Archive

The Blogspot archive of the weblog of J. Bradford DeLong, Professor of Economics and Chair of the PEIS major at U.C. Berkeley, a Research Associate of the National Bureau of Economic Research, and former Deputy Assistant Secretary of the U.S. Treasury.

Tuesday, November 07, 2006

Bloggers vs NYT: Mortgage Equity Withdrawal

Felix Salmon looks forward to a better world than this--one in which people get their information from bathrobe-clad webloggers in their basements with time on their hands rather than from establishment media outlets like the New York Times:

RGE - Bloggers vs NYT: Mortgage equity withdrawal: Here's the difference between the Economonitor and the anonymous blogger known to the world as Calculated Risk: the Economonitor stopped reading this New York Times article when he got to a rather ridiculous quotation from a California mortgage broker.

"People have literally picked up their house at the foundations and shook it upside down like a piggy bank," said Ed Smith, chief executive of the Plaza Financial Group, a mortgage brokerage firm in La Mesa, Calif., near San Diego.

Somehow I couldn't keep reading after that quote. The image of people literally picking up their houses and shaking them upside down was so Seussian that I immediately had to lie down with an attack of the vapors.

Calculated Risk, however, is made of sterner stuff, and actually started looking at numbers, specifically these ones:

As rates have gone up, the extraction has continued. In the first six months of this year, even with interest rates rising, more than $511 billion was extracted from homes through cash-out refinancing and home equity loans, and that was more than the amount taken out for all of 2005, a record year for mortgage equity extraction.

Bull----, says CR. According to his own calculations, which are backed up by links to actual Fed data, mortgage equity withdrawal was just $156 billion in the first half of 2006, down from $540 billion in all of 2005.

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