Oct 22, 2007
More than two million homes will be foreclosed in 2007, with even more expected next year. It is the worst housing crisis since the Great Depression.
Home prices have become so high and mortgage payments so outrageously expensive, people could work 24 hours every day, seven days a week and still not make their mortgage payments.
More people are being forced from their homes than were forced out of New Orleans by Hurricane Katrina. But this time, nature has nothing to do with it. Every bit of the housing crisis was caused by the actions of mortgage companies, banks, savings and loans, real estate companies and construction companies. Their actions created the housing bubble that is now bursting.
Big financial companies funded the construction of new housing tracts which were sold at outrageously high prices. Speculators profited by buying and selling homes and apartments over and over again, raising the prices each time. As housing prices skyrocketed upward, Wall Street and the banks turned around and made even more money by selling these mortgages to investors.
So what is the U.S. government doing in the face of this disaster for ordinary people? It’s like what happened after Katrina, when government aid helped bail out the tourist hotels and casinos in New Orleans, the owners of luxury homes along the Gulf Coast and all the politically-connected companies and contractors.
In the same way, when the mortgage crisis threatened to engulf the biggest banks, the Federal Reserve Bank stepped in. It flooded the financial markets with tens of billions of dollars in cheap loans. The big commercial banks lend that money out at high interest rates and collect large profits.
This cheap money did not come from thin air, but directly from the U.S. Treasury. In other words, the taxpayers and the workers are paying for this bail-out.
That’s only the beginning. Just last week, the U.S. Treasury Department announced it was working with the biggest commercial banks, Citigroup, Bank of America and J.P. Morgan Chase, to set up a special fund that would allow them to dump some of their bad debts.
The government is bailing out and rewarding the very companies and wealthy individuals who created the housing crisis in the first place and made countless billions of dollars in the process.
If their bubble is collapsing, let them be the ones who pay the price. If some multi-billionaires and speculators lose their fortunes in the process – so be it.
What would it take to keep people from losing their homes? What would it take to create affordable housing for everyone who needs it?
It would take a big fight, a broad mobilization of the population to fight for decent housing, and everything else we need – such as a decent job, health care, education. The only rights working people have are those that they are ready to fight to take and defend.