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The Home ATM Is Closing. The MEW Is Down!

The MEW is down! MEW stands for Mortgage Equity Withdrawal and the graph from the Calculated Risk blog tracks the trade deficit and the MEW.

Apparently we’ve been funding the trade deficit with withdrawals from the old homestead’s ATM.

In English now: The dotted line is MEW, the blue line is trade deficit, the red line is trade deficit with oil taken out.

The MEW is down-turning meaning we are not re-financing our houses as much as we did last year. We are not re-financing and taking money out of our house to buy stuff or travel.

The trade deficit appears to be tracking the MEW which could lead some one to believe the trade defict has been funded by our taking money out of our houses and buying stuff made elsewhere.

This could be the result of the housing bubble and the decline of housing values, giving us Americans less headroom in our houses to borrow against. It other words, we’ve reached our limit.

The MEW will probably continue to decline and the trade deficit will also.

It is perfectly correct to state that equity withdrawn from US homes went to China. China has the dollars we have the toasters and large screen TVs. We have fully stocked our houses with toasters and large screen TVs, (rhetorically speaking of course) besides that we are broke and can’t buy any more. The Chinese economy will slow down and quite possibly turn inwards to satisfy the pent up demand of it’s internal denied populace.

What does this mean? I mean what can I really do with this information right here and now?

Beats me, but it is interesting is it not?

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