Bank of America will on Wednesday announce plans to start forgiving mortgage loan principal for troubled homeowners who owe more than 120 percent of their home's value or are battling ever-expanding "negative amortization" loans.Now why won't this help?
Seems pretty simple to me, it doesn't address the fundamental issue with what we are witnessing.
Now what is that.
The current financial system is based on exponential growth, no matter how many principle reductions you do someone has to take out an additional amounts of credit to service the present system which is $52.7T. What has to happen to get the system in a state to grow again is two things 1.) Destruction and 2.) Time. To get to that point after the credit peak of 2007 the system will need to liquidate the non-performing. Way too many non-performing assets being held up.
They don't call it a death spiral for nothing folks. Hilter and Germany got feed up with the slow process 70 years ago. This process will take many decades to work through until we hit the bottom, we have barely started the descent.
At the present time, consumers would have to instantly take on additional $5T of new credit annually over the rate they were in Q4 2009 to have the system have any effect on what is going on. The federal government is the last player at the table.