Unemployment Numbers in Context and Understanding the Competing Mortgage Plans/Debate

There are two must read stories out there today in addition to the enormity of November's job loss numbers - the greatest single month decline since 1974. The first story puts the job loss numbers in better context than other stories, and the second will help you understand the competing visions for mortgage rates in order to stabilize housing prices.

Here's why you care: The New York Times' David Leonhardt's blog "Economix" makes an excellent point. He notes that as bad as the unemployment numbers are today, they are actually worse. Why? The Labor Department doesn't count those that are not looking for work. You care because it means the number is much higher. Take a moment and read his posting, he does a great job of adding context.

Here's why you care about the mortgage plans: Yesterday we highlighted solid reporting on the Treasury's trial balloon which essentially pushes banks to lend to prospective homebuyers at 4.5%, and in return purchasing the mortgages from the banks. The idea being that this would create new buyers, thus stabilize and even eventually raising home prices - and THAT the theory goes - would help existing homeowners who are underwater with their mortgages due to the drop in their home values. Rising tide lifts all boats. If you look closely this has the same goal, but much different execution than the FDIC model which aims to refinance EXISTING homeowners with mortgages underwater.

Lost in much of the coverage is this debate. CNNMoney.com's Tami Luhby has a great breakdown of what Treasury is up to, and the concerns that the plan doesn't do enough - ala not targeting existing homeowners. Read her piece, it will help. However, we'd like to take this one further step based on folks we are talking to up and down K Street, Capitol Hill, and real estate developers - they are concerned there's not a coherent plan. We've made the point often that the market seeks stability, but as long as the debate is going on, there will not be an implemented plan. Meanwhile the clock is ticking and things are not getting better... BUT, the good news is, understanding what's going on will help you understand the story as it develops next week.