John understands the impact of the recession better than a LOT of economists. His ability to discuss all the different aspects of it gives me hope that not ALL Americans are willing to repeat the same old mantra, blaming each other (individual virtue) ...we need to face certain realities...take the necessary steps..with the help of our government (hopefully) and rebuild. Americans are not afraid...but we don't like to be "USED." Government is the ONLY way out of this...
Thanks John for your courage to tell the truth!
As Treasury copes with mounting foreclosures and the ineffectiveness of its modifications programs, many attempt to ignore how declining home prices impact all of us. Some assume or hope the problem will “self cure” over time. It won’t.
The current foreclosure crisis demands our attention; to ignore it is to deny the potential impact that millions of foreclosures would have upon both the housing market and the overall economy. While it’s impossible to know the precise number, some experts have predicted that we’ll suffer more than 15 million foreclosures over the next five years; and only half that number would pose a serious problem.
While some are busy placing blame upon irresponsible home owners, others point to Realtors® or bankers as the villains; but what most seem to overlook is that regardless of who may be at fault—in reality there is shared responsibility—pointing fingers only distracts from the problem at hand. And that problem is the undeniable fact that continued foreclosures pull down home prices for everyone, shrink the values of lenders’ portfolios, and keep an economic recovery out of reach.
It has been estimated that homeowners have lost as much as $5 trillion in equity in just the past two years; and when values decline below their mortgage amount, responsible homeowners lose a critical economic tool. Unable to borrow against their home, they have no equity “cushion” that might have pulled them through problems with medical expenses, job loss, or other unforeseen financial disasters. And, with their home worth less than they owe, they are unable to sell and rid themselves of a burdensome mortgage.
With about 4 million either in default or foreclosure at the end of 2009, and with unemployment expected to remain high for several years, the number of foreclosures seems likely to rise as both borrowers and lenders exhaust their options. Experts now predict a record 3 million foreclosures for 2010 alone; and as they occur, more will become aware of how declining home prices impact all of us. Unless the administration can develop a realistic and workable plan to help struggling homeowners—a Band-Aid will do little against this gushing wound—the housing crisis and accompanying economic doldrums is likely to persist well into this decade.
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