pasadenaDC
Dryer sheet aficionado
- Joined
- Sep 22, 2008
- Messages
- 40
Its been pretty commonplace to call a bottom to the economy and recession the past few months and the pundits are telling us its slow/steady growth from here. While I don't necessarily disagree with any of the analysis, its tough to ignore some of the personal stories from close friends which tell me that we're still a long ways from a normal steady growth economy.
Last night a few of my buddies were hanging out for the Pacquaio-Cotto fight. Typical food, drinks, cigars, BS'ing from the 28-35 y/o crowd. But then the subject of the economy comes up, it gets a bit serious, and here's what we find out.
Friend A - closed his franchise food store, just last week. The store remained profitable through about mid-2008 but it had been bleeding money ever since. 15 blue-collar employees and franchisee are w/o work right now. Friend A is out about 50K liquid for startup fees, 30K negative from neg cash flow months, and is burning through legal fees to end his building lease.
Friend B - is selling her house to downsize because her loan REFI hasn't been approved as she's been getting the run around for several months from different lenders. She had originally purchased on a 5/1 ARM in 2004. The catch is, she has over 125K equity on her place in the OC, gainful employment, an 830 FICO, 6-months cash reserve. So because her bank isn't willing to play ball, she will be downsizing to either a rental (and keep the equity $$$ in the bank) or purchasing a condo. The former is more likely.
Friend C - works for the state of CA and has had his wages cut 15% or the equivalent of 3 furlough days per month. Couple this with a recent divorce and the (highly unfavorable) marriage laws in CA, and he's in a bind right now. The judge ruled that he was on the hook for over 30K of his ex-wife's CC debt due to the fact that she wasn't working at the time of the divorce. Friend C is meeting with a lawyer to file Chapter 7.
From where I sit, its clear to me that 1) the economy is still shedding jobs and the supposed recovery will be a jobless one and 2) credit is still tight for prime borrowers as banks seem more concerned with balance sheets than extending credit. I know I'm stating the obvious here, but color me skeptical with some of the sanguine economic chatter these days. The bad news is hitting close to home.
Last night a few of my buddies were hanging out for the Pacquaio-Cotto fight. Typical food, drinks, cigars, BS'ing from the 28-35 y/o crowd. But then the subject of the economy comes up, it gets a bit serious, and here's what we find out.
Friend A - closed his franchise food store, just last week. The store remained profitable through about mid-2008 but it had been bleeding money ever since. 15 blue-collar employees and franchisee are w/o work right now. Friend A is out about 50K liquid for startup fees, 30K negative from neg cash flow months, and is burning through legal fees to end his building lease.
Friend B - is selling her house to downsize because her loan REFI hasn't been approved as she's been getting the run around for several months from different lenders. She had originally purchased on a 5/1 ARM in 2004. The catch is, she has over 125K equity on her place in the OC, gainful employment, an 830 FICO, 6-months cash reserve. So because her bank isn't willing to play ball, she will be downsizing to either a rental (and keep the equity $$$ in the bank) or purchasing a condo. The former is more likely.
Friend C - works for the state of CA and has had his wages cut 15% or the equivalent of 3 furlough days per month. Couple this with a recent divorce and the (highly unfavorable) marriage laws in CA, and he's in a bind right now. The judge ruled that he was on the hook for over 30K of his ex-wife's CC debt due to the fact that she wasn't working at the time of the divorce. Friend C is meeting with a lawyer to file Chapter 7.
From where I sit, its clear to me that 1) the economy is still shedding jobs and the supposed recovery will be a jobless one and 2) credit is still tight for prime borrowers as banks seem more concerned with balance sheets than extending credit. I know I'm stating the obvious here, but color me skeptical with some of the sanguine economic chatter these days. The bad news is hitting close to home.