Fantasy is so much better

It has been noted that equity is a fantasy and debt is real, and MEW is the process of living the fantasy with the addition of very real debt.

This great quote comes to us via Irvine Renter from the Irvine Housing Blog. He is the inspiration for me starting this blog and a recommended everyday read. Irvine's excellent analysis and ability to take pretty complex financial issues and explain them in layman's terms is wonderful. That is one reason for the inspiration and regular referrals. Today's post is no different. It is a great analysis of the MEW or Mortgage Equity Withdrawal.

While in my case he is preaching to the converted - about people using home equity for everyday expenses and paying off credit cards - only to run them up again. This turned into a viscous circle for many. A system was set-up to perpetuate this cycle. Whether the system was an accidental, careless or based on nefarious reasons is a debate for another time. It existed none-the-less and people, some innocent, got caught up in it. It became the center of our economy as the following chart illustrates -Since 2001 - mortgage equity withdrawal has been propping up the U.S. GDP.