Dead beat borrowers – homeowners and states

For some reason, WordPress isn’t letting me add links this morning so here is a quote taken from Business Insider about David Rosenberg

The great thing about writing a daily is the insightful responses it elicits.  Yes, it seems that everyone has the cash to spend on an iPad — the latest must- have consumer gadget.  All you need to do is stop paying your mortgage, as the NYT wrote about yesterday.  But if you are waiting for State governments to pay you for services rendered, wait in line.  Dave from New York sent the following:

“Hi Dave

At a Memorial Day event in upstate NY today I spoke with a friend who
works in a medium sized construction company, about 45 people total.
His firm does a lot of work for New York State, as do most of the
construction companies.

New York stopped paying all of them. They have been asked by the
State to keep working on their ongoing projects and the state will pay
them at some point in the future, they don’t know when.
Many of these firms have walked out of the projects, they just can’t
afford to keep working without being paid. One firm is owed over $8
million on one job alone and has been told that if they quit, the State
will sue them for breach of contract, even though the State will not pay
them in the near future.

It appears that the State wants all of the construction companies to
carry the State through these tough times.
New York State probably won’t pass a budget this year at all. The
politicians are afraid that the cuts will be so severe that the
government workers’ unions will make sure they are all defeated in the
elections in November.

So now we have a State government that is acting exactly like the
ostrich, sticking their heads in the sands when danger is at hand.
Who’s  covering the rear?”

Read more: http://www.businessinsider.com/rosenberg-deadbeat-homeowners-are-just-the-tip-of-the-pay-me-later-economy-2010-6#ixzz0piJtYtEx

2 Comments

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2 responses to “Dead beat borrowers – homeowners and states

  1. Anonymous

    So many industries…government, unions, tourism, entertainment, retailing, housing, healthcare, junk food, education, charities, etc….are arguably Ponzi schemes of various sorts
    Hard to figure out what’s the net bill to society for these scams and what social unrest taxpayers and consumers would face if these unemployable, low-skill, low work ethic folks lacked “make-work” jobs or welfare payoffs of some sort

  2. HBilly

    BofA’s credit loss mitigation executive, Jack Schakett, said the amount of strategic defaulters (those who can pay their loans but opt not to) are “more than we have ever experienced before.” He went on to say, “there is a huge incentive for customers to walk away because getting free rent and waiting out foreclosure can be very appealing to customers.”

    http://www.cnbc.com/id/37471499

    If you aren’t paying your mortgage it leaves a lot of discretionary income to buy a new car, iPad, clothes etc. Probably a big component of the GDP growth figures.