Sep 10, 2007
The impact of the housing crisis is growing. The Mortgage Bankers Association says that more than 600,000 homeowners were unable to make their mortgage payments during this past quarter (April, May and June). They now face the prospect of eviction. And this was before the housing credit crunch hit in July. Mortgage delinquencies are expected to grow dramatically during the next year or two as interest rates on millions of adjustable rate mortgages re-set much higher.
Millions of people could be thrown out of their homes – more people than at any time since the Great Depression of the 1930s. Entire suburban tracts that look comfortable today may be turned into wastelands with large numbers of abandoned vacant houses, and all the social disorders which then follow.
The slowdown in housing seems to be triggering a vast range of layoffs. The government just announced that overall there were 4,000 fewer jobs in the country in August than in July, the first drop in four years. Then Countrywide Financial, the largest home mortgage company, announced it will lay off 10,000 to 12,000 workers. Other mortgage companies, real estate companies, banks and other financial institutions are now also cutting back hundreds of thousands of jobs.
Hundreds of thousands of construction workers are also out of work, with more soon to follow. Overall, there are probably half a million fewer construction jobs, many not reported because they were in companies that hire large numbers of immigrants without papers.
All these cutbacks can only lead to more layoffs in the building materials, home appliance and construction equipment industries. It’s not clear where the vicious cycle will stop.
Millions of people needed homes, but were forced into impossible mortgages because speculators drove home prices to ridiculous levels.
People need jobs, but are losing them because the collapse of this latest speculative bubble makes the bankers and financiers hoard their money.
If there ever was a degenerate system, it’s this one.