Coach Jon just sent me this AP article to post. This article does a fantastic job explaining what has happened to all the money that has been lost from our economy…

NEW YORK - Trillions in stock market value — gone. Trillions in retirement savings — gone. A huge chunk of the money you paid for your house, the money you’re saving for college, the money your boss needs to make payroll — gone, gone, gone.

Whether you’re a stock broker or Joe Six-pack, if you have a 401(k), a mutual fund or a college savings plan, tumbling stock markets and sagging home prices mean you’ve lost a whole lot of the money that was right there on your account statements just a few months ago.

But if you no longer have that money, who does? The fat cats on Wall Street? Some oil baron in Saudi Arabia? The government of China?

Or is it just — gone?

If you’re looking to track down your missing money — figure out who has it now, maybe ask to have it back — you might be disappointed to learn that is was never really money in the first place.

Robert Shiller, an economist at Yale, puts it bluntly: The notion that you lose a pile of money whenever the stock market tanks is a “fallacy.” He says the price of a stock has never been the same thing as money — it’s simply the “best guess” of what the stock is worth.

“It’s in people’s minds,” Shiller explains. “We’re just recording a measure of what people think the stock market is worth. What the people who are willing to trade today — who are very, very few people — are actually trading at. So we’re just extrapolating that and thinking, well, maybe that’s what everyone thinks it’s worth.”

Shiller uses the example of an appraiser who values a house at $350,000, a week after saying it was worth $400,000.

“In a sense, $50,000 just disappeared when he said that,” he said. “But it’s all in the mind.”

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Though something, of course, is disappearing as markets and real estate values tumble. Even if a share of stock you own isn’t a wad of bills in your wallet, even if the value of your home isn’t something you can redeem at will, surely you can lose potential money — that is, the money that would be yours to spend if you sold your house or emptied out your mutual funds right now.

And if you’re a few months away from retirement, or hoping to sell your house and buy a smaller one to help pay for your kid’s college tuition, this “potential money” is something you’re counting on to get by. For people who need cash and need it now, this is as real as money gets, whether or not it meets the technical definition of the word.

Still, you run into trouble when you think of that potential money as being the same thing as the cash in your purse or your checking account.

“That’s a big mistake,” says Dale Jorgenson, an economics professor at Harvard.

There’s a key distinction here: While the money in your pocket is unlikely to just vanish into thin air, the money you could have had, if only you’d sold your house or drained your stock-heavy mutual funds a year ago, most certainly can.

“You can’t enjoy the benefits of your 401(k) if it’s disappeared,” Jorgenson explains. “If you had it all in financial stocks and they’ve all gone down by 80 percent — sorry! That is a permanent loss because those folks aren’t coming back. We’re gonna have a huge shrinkage in the financial sector.”

There was a time when nobody had to wonder what happened to the money they used to have. Until paper money was developed in China around the ninth century, money was something solid that had actual value — like a gold coin that was worth whatever that amount of gold was worth, according to Douglas Mudd, curator of the American Numismatic Association’s Money Museum in Denver.

Back then, if the money you once had was suddenly gone, there was a simple reason — you spent it, someone stole it, you dropped it in a field somewhere, or maybe a tornado or some other disaster struck wherever you last put it down.

But these days, a lot of things that have monetary value can’t be held in your hand.

If you choose, you can pour most of your money into stocks and track their value in real time on a computer screen, confident that you’ll get good money for them when you decide to sell. And you won’t be alone — staring at millions of computer screens are other investors who share your confidence that the value of their portfolios will hold up.

But that collective confidence, Jorgenson says, is gone. And when confidence is drained out of a financial system, a lot of investors will decide to sell at any price, and a big chunk of that money you thought your investments were worth simply goes away.

If you once thought your investment portfolio was as good as a suitcase full of twenties, you might suddenly suspect that it’s not.

In the process, of course, you’re losing wealth. But does that mean someone else must be gaining it? Does the world have some fixed amount of wealth that shifts between people, nations and institutions with the ebb and flow of the economy?

Jorgenson says no — the amount of wealth in the world “simply decreases in a situation like this.” And he cautions against assuming that your investment losses mean a gain for someone else — like wealthy stock speculators who try to make money by betting that the market will drop.

“Those folks in general have been losing their shirts at a prodigious rate,” he said. “They took a big risk and now they’re suffering from the consequences.”

“Of course, they had a great life, as long as it lasted.”

One of the best opportunites to help people and make money in this real estate market is knowing how to do shortsales. Over the coming economic recession Realtors who know how to do shortsales are going to be in huge demand. Start here, download your free 7 Part Agent Short Sale Secrets crash course. Instant Free Download Now.

LISTEN TO REPLAY NOW….LISTEN TO REPLAY NOW…LINK BELOW..

Hello,

Quick reminder…..

Join Tim and Julie Harris tomorrow for the HREU

F-R-E-E Realtor Superstar Interview.

This weeks interview is going to be something special…

Many of you have requested that we interview current students
who are experiencing huge levels of success DESPITE the market.

So, that is exactly what we are going to do for you…..

When you attend this weeks call you will learn directly from
3-4 fellow Realtors a few things they are doing to:

1)    Make money NOW.
2)    3-4 things they are doing that is working (and what isn’t)
3)    How to have the mindset of service and gratitude.
4)    Have pure and powerful mindsets even in this market.

Here is the information for tomorrows call…..

EVENT:  SUPER STAR INTERVIEW
DATE & TIME: Friday, October 10th at 9:30am Pacific
FORMAT: Simulcast! (Attend via Phone or Webcast — it’s your choice)

LISTEN TO REPLAY NOW…CLICK THIS LINK:
http://instantTeleseminar.com/?eventid=4447326

Speak with you soon!

Tim and Julie Harris
Harris Real Estate University

P.S. Have you visited the blog lately? You will want to do this now…new information just posted about this market www.TimandJulieHarris.com

The NAR released new data that shows an unexpected increase in existing home sales for August…Up 8.8% compared to August of 2007.

Its safe to say that the existing homes sales increased due to a couple important elements:

1) Short sales are closing (faster)

2) Banks are dumping their REOs.

Have you seen this CNBC chart comparing Existing Home Sales and Pending Home sales from a June article titled: NAR’s Pending Home Sales: Something’s Amiss

Source: CNBC Reality Check

But here is a longer term graph from the WSJ.

Source: WSJ Real Time Economics

This shows that existing home sales do track Pending Home Sales pretty well over a longer period.

Note: The WSJ advanced pending home sales one month.

And here is a third graph from Northern Trust:

Source: Northern Trust

Note that Northern Trust uses a 2 month lag.

This shows that the choice of scale and time period can impact these types of comparisons. I think the first graph is misleading, and that Existing Homes Sales do track Pending Home Sales pretty well.

Realtors, learn how to easily list and sell short sales. Start now by downloading the free Agent Short Sale Secrets crash course. Free Instant Download Now.

If you are in Southern California you must read the Orange County Register. Their real estate section is fantastic. This is part of an article from the Register…

This graph shows how the Sub-prime loans spread like locusts across the US. Keep in mind the sheer numbers this graph represents. Many people have sub-prime or Alt-A loans and don’t even know it

Since 2004 the Fed has required lenders in their HMDA reports to break out loans carrying interest rates at least 3 percentage points higher than the comparable Treasury bill. The Fed believes these high-priced loans are equivalent to subprime and Alt-A loans, though the industry defines those loan categories by credit scores, not interest rates.

Here are maps showing subprime volume as a percentage of all home loan volume by county and by year.

The scale is the same for every map: yellow where subprime is 20 percent or less of total volume, green for 20 percent to 30 percent, light blue for 30 percent to 40 percent and dark blue where the subprime volume exceeds 40 percent.

The patterns are striking. In 2004 subprime was big in only a few areas of the country, most notably Texas and the Deep South. By 2005 it had built strongholds in Riverside and San Bernardino counties and especially in the San Joaquin Valley. By 2006 subprime was everywhere. But in 2007, when big players like Irvine-based New Century abruptly collapsed, the subprime wave rolled back.

Fridays Superstar interview was one of our best.

Here are a few of the comments we had after the call:

Audrey Syphoe-Atlanta, GA
Thank you for inviting me to this webinar. It was extremey informative and most of all, motivating.

Ronald-Fairfax
Excellent information! Great ideas! I just joined and the support is great! thanks for the service!

Jim Kelder-Scottsdale
Fantastic call. Listen to Tim. Price is everything I listed 8 properties correctly and had multiple offers on each many above list.

Fred Magnuson-Denver
Great Session. I am going to enroll in your classes. You are so over the top and current on what you are teaching. Thanks you for all the free stuff.

Anand Agarwala-New Jersey
Awsome!! Great call to clear off the confusion coming out of the Bail Out Plan
Great call your information has been very instructive

Sandy K. Minitello-Los Angeles
Thank you! Great Call!

Dot Hensley-OKC, OK
This was everything we need to know to stay focused!! I coach with John Alexandrov and just this week he gave us the same “Stay focused” that you gave the last section today. Thanks. THANK YOU!!

BRENDA-SAN JOSE
THIS WAS AN EXCELLENT CALL………THANK YOU VERY MUCH!!

Anthony Crecco-new york
tim and julie thanks for your time and motivation Awesome!!!! job!!!!!!!!!!

Dot Hensley-Oklahoma City
Thanks for the great 4th qtr plan!!!

Listen to the replay of Fridays call now. (Free). Download the “Realtor Bail Out 4th Quarter Business Plan” Now.

Borrowers who took out a mortgage on or before Jan. 1 can apply if they have made at least six payments on their existing loan and they do not own a second home. If their lender goes along with the deal, they can refinance into a 30-year, fixed-rate loan.

They will need to verify that they cannot pay their existing loan without help and that their monthly payments were more than 31 percent of their gross monthly income as of March.

The Congressional Budget Office estimates that the new Hope for Homeowners program could help 400,000 people during its three-year life span.

“But compare that to the fact that we had 300,000 foreclosure filings in the last month alone,” said John Taylor, chief executive of the National Community Reinvestment Coalition, a housing advocacy group. “Have no illusions, this is going to help some homeowners, but it’s not going to solve the foreclosure crisis by any stretch.”

The final participation numbers will depend largely on lenders. The FHA doesn’t make loans directly; it insures loans by private lenders.

In this program, the FHA will insure a loan for only 90 percent of the home’s current value. With home prices plunging, borrowers who have little or no equity left in their homes need the lender to forgive the rest of the debt in order to qualify for the refinancing

Some lenders have resisted doing that in the recent past, preferring instead to lower interest rates or rearrange payment schedules on troubled loans. “Lenders are looking at this as a last resort,” said Guy Cecala, publisher of Inside Mortgage Finance. Of the 369,000 people who refinanced in the past year using a previous version of this program, only 1 percent of them were delinquent, according to the FHA.

Complicating matters is that borrowers who financed their homes using two loans must get both lenders to agree to refinance, even though the second-mortgage lender most likely will not get paid off under this arrangement.

Yesterday, Preston acknowledged that for lenders, the new program “may not be the preferred route in many situations.”

The FHA has received $29.5 million so far to upgrade its technology and hire new staff to handle this program, housing officials said.

Notice: Urgent, Breaking News About Bank Bail Out. Effects On Real Estate. Short Sales.

REPLAY…DOWNLOAD AND LISTEN NOW…REPLAY…DOWNLOAD AND LISTEN NOW…REPLAY..DOWNLOAD NOW

Over the past week we have received 100s of emails from Harris Real Estate Students………….

HUNDREDS OF EMAILS all about the the Proposed “Bank Bail Out” bill (now waiting on Congress to sign off on.)

In some cases fellow Realtors were down right scared…

They were fearful that this bail-out plan (assuming it passes) will:

1) End Short Sales.

2) Kill The Housing Market.

3) Cause A Great Depression.

4) Nationalize Real Estate Sales..ending the Real Estate Industry as we know it.

We understand why so many of you are feeling this way. All the information out there is very confusing and its hard to know who to listen to.

…………..But, you have NOTHING TO FEAR. Attend the call tomorrow and you will learn exactly what you must be doing now to be ready for what is coming next…

So, tomorrow we are going to clear the air.

Friday Oct 3rd 2008 at 9:30 am pst/ 12:30 EST Julie and I will provide a FREE 90 minute teleconference (or webinar).

Go here now to get all the info on tomorrows urgent free Teleconference/ Webinar.

We are going to take a hot knife and cut through all of the bad information, mis-information and…….

…….Fear.

When you attend tomorrows call you will learn exactly what you must do now to:

* Help Troubled Homeowners In Your Community.

* Position Your Real Estate Business Now To Make Boat Loads Of Cash. (Heck, we may be in a recession but you don’t have to participate…there is nothing wrong with helping people and making money!)

On this call we will also give you our new 2008 4th Quarter Business Plan.

We named this plan:

“ The Realtor Bail Out Plan” <——-DOWNLOAD THE PLAN NOW. (Click Here for PDF.)

Granted, not everyone needs a ‘bail out’ but having a written down 4th quarter plan is a must for every Realtor.

Go here now for all the event information. <————–Important Link, Click Now.

This is NOT a sales call.

Our only goal for this call is to help YOU understand exactly how to make money now in this market.

Get ready for an amazing call.

Go to this link now for all the call-in info.

Speak with you tomorrow morning,

Tim and Julie Harris

P.S. YES! Do send this information to all of your Realtor Friends. They too need to know exactly what they should be doing now.

P.P.S. Don’t forget to download the 4th quarter plan.

What does it mean when the “American Dream” of home ownership becomes the “American Nightmare”?

What effect will the bank bail out have on Short Sales? This graph estimates that by the end of the year, 15,000,000 Americans will be upside down/ have negative equity in their homes. It also estimates that a very real potential 23,500,000 Americans will eventually become upside down in their homes if the true peak to trough decline reaches 35%. This is a very realistic probability.

Not every homeowner with negative equity will default, in fact many of these homeowners will only be underwater by a few percent. But if we estimate one half of homeowners with negative equity will eventually default, use a 50% loss severity, and a 35% price decline (23.6 million households with negative equity), and use the median house price from the Census Bureau of $216 thousand, we get $1.3 trillion in mortgage losses for lenders.

We have been predicting that real estate short sales would become faster and more streamlined as the housing crisis because a full fledged housing crash. Now that the global economy is under attact we expect to see our prediction coming to reality over the next 90 days. Fellow agents, get ready….take as many short sale listings as you can. The only way to slow the tsunami of foreclosures is short sales and…the goverment knows this.

Fellow agents, learn the exact step by step process to build your short sale business. Instant free download of our 7 part Agent Short Sale Secrets crash course.

(Source of graph: Calculated Risk)