The Foreclosing of America (4): vicious and virtuous circles

from TomPaine.com:


The Foreclosing of America (4): vicious and virtuous circles


Submitted by Rick Perlstein on July 19, 2007 - 12:38pm.

I've written about now-dead GOP dreams of creating a nation of conservatives by goosing the percentage of Americans who own their homes - because, as the American Enterprise Institute once fantasized, people who own real estate "have a deeper commitment to their community, a more profound sense of family obligation and personal responsibility, a stronger identification with the national fortunes, and a personal interest in our capitalist economy. (They also have a greater propensity to vote Republican.)"

I've written about the victims, ordinary, cash-strapped Americans who made the mistake of presuming that the people selling them their "NINJA" - No Income, No Job, No Assets - mortgages wouldn't be cutting these deals had they not believed in their' ability to honor the obligations - even in the face of a (anti-) regulatory environment that let mortgage brokers make a killing whether the loans succeeded or not.

I've written about how this has turned middle class Americans into mendicants, filling neighborhoods with literal haunted houses: "big empty houses near the...border, and people start worrying about letting their kids out to play," houses "filled with smelly trash and mattresses used by vagrants."

And I've written, too, about the toll all this state-santioned bottom-feeding many fear with visit upon the national economy itself: that financial markets artificially propped up by securities made up of bundles of crappy NINJA mortgages, in turn artificially propped up, in a vicious circle, by an unsustainable bubble in housing prices enabled by these bottom-feeding lending practices, may just pop right alongside the housing bubble.

And I've written about how the very financial engineers who helped make it happen say "we're just starting to see the tip of the iceberg."

I've also described the politics - the circumstantial links that some day, if historians are ever allowed to un-bury the Bush administration's records, lay the whole thing at the doorstep of the Oval Office. It smells to high heaven, this whole setup. George Bush and his every ideological acolyte can't open their mouths without saying their grandest dream is to see every American owning their own home. And yet their only actual homeownership program of any substance whatsoever is providing $200 million in down payment assistance—about $100 bucks for every new homeowner.

Read on to the end of this post. You'll find out how the' foreclosure crisis spun of short-sighted Republicans' political greed can spur a new (old) progressive politics of homeownership that could someday save the world. .......(more)

The complete piece is at: http://commonsense.ourfuture.org/foreeclosing_america_4_vicious_and_virtuous_circles?tx=3

Even in Portland Oregon which has seen property values go up, up, up.

Now we see empty houses, with grass growing in the front yard that's 3 feet high. That's a BIG clue that nobody's home. We're starting to see it more & more.

Welcome to BUSHWORLD>

In my day job, I am a bankruptcy lawyer. We are seeing a lot of foreclosures in Iowa and Minnesota too. The fees that the sub-prime lenders tack on are amazing. I had one couple refinance their $55,000.00 mortgage which was in default that totaled $79,000.00 when all of the closing costs and fees were tacked on. The people did not object because they were desperate to hang on to their house. The new scam is for sharks to buy the house from the mortgage company and rent it back to the owners until they can't pay the rent (which is the old mortgage payments which they couldn't keep up with + a profit for the shark). The Minnesota Attorney General has had over 1200 of these cases in the Twin Cities metro area.

What would a new progressive politics of homeownership do for them? One that deployed collective resources to keep people in their homes, keep neighborhood home values up, deployed a federal rainy day fun for municipalities to keep up school funding in the event of a property-tax drought, one that (if this is truly what Americans decided they wanted) could keep the homeownership rate at 69 percent or higher by offering a NINJA loan's inexpensive and accessible terms without NINJAs' lottery-like risks, which eliminated vulture-lenders with extreme prejudice and perhaps even put some of the worst offenders in jail (or, at least, not in charge of banking regulatory agencies)?

It would rescue millions of Americans from everyday anxiety in a way not seen since the passage of Medicare in 1965.

But it would do much more. It would spur a virtuous circle that would succor not merely millions of Americans, but three hundred million Americans—every American. Spur consumption without expanding consumer debt. Preserve home values in every neighborhood. Make taking a flier on a first house or a bigger house or a nicer house a safe thing to do and not a reckless thing to do. Dis-incentivize corporate fleecing. Save the capital markets from volatility. Dissolve some of the inequality that comes of structurally more volatile capital markets. Save the middle class. Expand the tax base. Use that expanded tax base to vouchsafe programs—universal healthcare, affordable college—that expand the middle class, spur entrepreneurship, and take us back to the top: spurring consumption without expanding consumer debt, preserving home values, etc., etc., etc.

Virtuous circle.

That's the way liberal government used to do it. It seized upon crises to produce solutions that closed down the possibility of future crises. Insurance. Some wise person once remarked that a government is an insurance firm with an army. Well, our insurance firm sucks. The foreclosing of America proves it. Fix it, and—listen closely, ambitious politicians—you remind people that government is there to help them. The stock of the party that people traditionally associate with government skyrockets. They stop voting for the party that affects to despise government.

That's how you end the Big Con. When the social situation throws up thorns, liberals traditionally grasp the nettle. That's how, from the 1930s for almost the next half-century, for liberalism, everything came up roses.

Junior an company came to power.
Then they systematically destroyed the livelihoods of everyone they could.
they did so with full foreknowledge of the inevitable results.
The only use junior and his cronies have for houses is as another system to deliver more debt to workers.
What these curs actually want is a nation of renters one check from the street.