The crisis has spread into conventional mortgages at an increasingly rapid pace. More than 50% of all residential properties in default nationwide are owned by investors, the majority of whom will allow their property to be foreclosed more easily filing bankruptcies in many cases to protect their primary residence. Those are comparatively minor consequences in this day and age. Many multi-millionaires have poor credit histories learning how to obtain financing later with little penalty. After all banks are in the business of lending money.
Investors on Wall Street and in other financial markets have watched their hard-earned savings go up in smoke as trillions of dollars are wiped out from the economic turmoil. Stock values around the world are falling.
The rescue plan offered by President George W. Bush announcing a $150-billion U.S. stimulus package will do little to help the ailing U.S. real estate market and millions of American home owners at the brink of foreclosure.
An old cliche in real estate is “Lenders are liars.” The loose lending guidelines, lack of government regulation, over-whelming fraud, consumer loan fraud, misrepresentations and historically low interest rates set by the Fed led to the economic crisis. Many Americans think investors should just suffer the consequences in financial losses and credit report destruction. But the credit crisis is much larger than just investors financial losses and credit being damaged.
The cause of every major depression has been land speculation. Economist Henry George discovered this fact 120 years ago. However, never before in U.S. economic history has been there as much land speculation than in the past decade. Land from Florida up the eastern seaboard in New York across the nation to California has been purchased by speculators at the highest rate in the nation’s history, much of it with little money down to protect investors interests.
The great American green back is not a political issue, and the American economy is no longer just at risk of a recession no matter what the political pundits might have you believe. It is already in a full blown recession. Government reports are always slow. Democrats, Republicans, Independents, and even highly touted special interests need to forget their differences. America is at War in Iraq and in political chaos at home.
Political differences need to be bridged to save the national economy with emergency legislation before the epidemic of foreclosures reaches 1 in 10 American home owners, which is more than probable. One in 28 home owners have already been affected in foreclosure in Stockton, California, one in 63 across the nation in Cleveland, Ohio and an estimated one in 24 in Detroit, Michigan. Local economies are feeling the pain in major ways.
If emergency legislation is not passed to halt the foreclosure crisis the nation is certain to see another depression not only caused by the subprime meltdown, and its resulting housing crisis, but by a nation that has lost confidence in itself as a powerhouse.