| What is the culprit? Well in large part it is the fact that there are so many existing homes on the market. As the banks gear up to try to sell off the million or so homes they will foreclosed on in 2010 there is just a glut on the market. Which is bad all the way around.
Right now 25% of all mortgages are in a negative equity situation, meaning that the owners owe more on the mortgage than the houses would bring on the market. Add that to an already existing glut of houses for sale or owned by banks and you can see how this is set up to be vicious cycle where people can't sell a house, even a short sale, then get it foreclosed on and the amount of existing housing inventory goes up and reduces the price and stifles new home sales.
There are a couple of ways out of this; one that we have been talking about for the entirety of this financial mess, mortgage cram down. This would mean allowing bankruptcy judges to reduce the principal owed on people's primary homes so they could afford to stay in these homes. This is actually allowed for vacation homes and other high end stuff like boats, but not if all you own is one home.
Banks and the loan service companies hate this idea. It would cause them huge headaches and loses if it happens. Again the problem is the securitized mortgage packages they sold. If they reduce the principal the amount expected to be realized by the package goes down. On many of these funky instruments there is even a provision that if there is not enough return the banks have to buy them back, at the original price.
Sine those prices where based on the inflated market of 2006 -2008 that is going to be a real bad deal for the banks (my heart weeps for these assholes).
The other solution is to get the nation back to work. To do that we have to increase demand across the economy. Which leads me to ask, Republicans where fuck are the jobs?
In the nearly 90 days that Congress has been in session the House has taken two weeks off completely. They have not introduced a singles jobs bill. Instead they have passed bill after bill trying to prevent abortions. They have tried to defund NPR and PBS. They have tried to take apart the ACA, but not one single action on jobs.
At a time when business is sitting on 1.6 trillion (1,600 billion) in cash because they don't see demand from consumers, these morons are talking about spending less money and cutting money to things like Food Stamps and Head Start.
If the new house sales numbers really are a leading indicator we many be reaching the end of another window where we can take action to keep the economy from slipping into another recession. Given that we have not dug our way out of the affects of the last one, this should be a great big flashing sign that something must be done.
Sadly politics is likely to prevent it from happening. Republicans had managed to purge their moderates and just when they got homogeneous, a new more radical wing appeared in the guise of the Teahadists and hijacked them into an even harder right turn.
When Orin Hatch can be considered too liberal, there is nothing reasonable about the Republican Party. Bill Maher got it exactly right, trying to govern with Republicans is like trying to live with a roommate who is a meth addict.
All that we can hope (and I don't have a lot of hope for this really) is that the President stands firm against their insane plans for cutting budgets. He is right we must invest but the fact is that even his plan does not look like it is big enough to really get people back to work.
What makes me the most crazed about this whole thing is we have trillions in infrastructure projects that have been deferred for long periods of time to keep taxes low. If we need to put people back to work, lets invest in making the country a place where we don't have to worry about failing bridges or dams. Let's spruce the place up and get some money flowing through the economy.
To bad that is common sense and Teahadist Republicans have none. I often say that things rarely turn out as good as we hoped or as bad as we feared. I guess I will have to keep my fingers crossed that this is a true statement.
The floor is yours. |
