Study showing impact of HELOC extractions on consuer spending.  For nine quarters during the three year period from 2003 through 2005, mortgage equity withdrawals exceeded $600 billion.  This was artificial consumption, based on the monetization of paper equity gains that no longer exist or is in the process of evaporating. 





Going forward these expenditures are gone leaving a giant whole in an economy which is predominantly consumer based.  Beyond the reduced consumption, the debt incurred still exists.  Homeowners borrowed from a hypothetical future for current consumption.  HELOC's must be serviced and repayed.  The vestiges of such irresponsible behavior will remain with us for years.  The savings rate must increase simply to service and repay debt that in many cases exceeds the value of the home to which it is attached.