Jul 23, 2007
The U.S. housing crisis is getting worse.
Millions of working people find themselves in homes with monthly notes that have jumped beyond what they can afford. Many have taken out second and even third mortgages on their homes, in order to pay off a credit card debt mushrooming out of control as wages fell. Mortgage companies and banks claimed to have ways to make the payments easier on the pocket book.
Now it turns out that the banks and lenders roped people in with deceptively low starter payments, which, after a couple of years, automatically doubled or tripled.
No wonder mortgage delinquencies are up and spreading to most areas of the country.
The financial pages calmly report that there could be several million foreclosures in the next couple of years – as if it were nothing. But in fact, this means that millions of families risk losing everything, their house and all their hard-earned savings. Many may find themselves on the street, or doubling up, moving in with other families.
And why? Because the biggest financial companies, banks and even big industrial companies, like GM, decided that they could make a killing in the housing market. Mortgage companies bundled the mortgages together and sold them to investors. They did that over and over, making money coming and going. It was easy money. They didn’t even have to do anything or produce anything.
This flood of Wall Street money is what pushed housing prices up. But it was just a matter of time before the bottom would drop out. Now, everything is starting to go in reverse. Houses are not selling. Prices are dropping. Already homebuilders are saying that it is the worst crisis in 16 years.
And investment funds that specialized in these mortgage bonds are starting to go under. Two funds run by Bear Stearns, an investment company, are already said to be bankrupt. As the New York Times reported, “in round figures, their investment losses total 100%.” And no one knows how many pension funds loaded up on these kinds of risky investments that paid high interest rates in order to make up for the lack of funding from government and business.
Given the huge build-up of debt and loans, this crisis could be just starting.
Wall Street and big companies started this whole mess because they found an easy way to make big, big profits. But you better believe that they do not intend to suffer from it. They will try to make working people – whose only desire was to have a decent place to live – pay for it.
As with everything else in this crazy capitalist society spinning out of control, we are being squeezed by the capitalists’ greed for money. It’s long since been time to say “Enough!”