To just about no one’s surprise, the U.S. Congress failed to act on a foreclosure prevention measure before closing down for the long July 4th weekend. And, some think the Congress won’t do all that much once the weekend is over, either.
A New York Times estimate is some 55,000 more homes will be in foreclosure by next Monday! Amazing.
Mind you, the bill being considered by the Senate is far from a cure-all: It is voluntary, for one thing, and it would ask lenders to issue new mortgages at a reduced rate of 85 percent of the current price of the home.
By many accounts, then, even passage of this measure would be a drop in the bucket. But a drop is better than a drought anytime.
Could it get much worse? What are you kidding!
Yeah, it could get worse. In fact, it already has.
Since January 1st, stocks have lost $2.1 TRILLION. I don’t even know how many zeros that is?
Last month, the market suffered its biggest June loss since the Depression.
U.S. auto sales are now officially at a 15 year low and dropping.
Even Starbucks is buckling–announcing it will layoff up to 12,000 employees and close down 600 stores.
And, as amazing it may now seem, these are but a few of the latest ramifications of the the subprime mortgage crisis that ignited this global fire.
While there are more vacant homes on the market, credit is so damn tight that fewer and fewer people can afford them, even at such “bargin” prices. In fact, the interest rate on a 30 year fixed mortgage is actually up, making it that much more difficult for a buyer to — well, buy!
In the months ahead, economists fear that credit card debt will strangle more and more people who will then miss payments to the bank or not pay at all.
For some, the answer to this entire problem is a simple one: Fix the housing mess and everything else will fall into place.
But I am not convinced it will be as easy as that.
After all, while we like to talk about this crisis as having been sparked by the mortgage debacle, the truth is far more complex than that. Bank and lender greed, lax government oversight, suspect credit evaluations, dubious exotic investment vehicles–all these and more interacted to bring us to where we are today. No single fix, then, of any single component of this puzzle will solve it.
But you have to start somewhere, so it might as well be with the foreclosure mess. And that is why Congress must come back after the 4th with the pedal to the metal or else witness the further destruction of the global economy as we know—knew?—it.