Housing Woes

The economy of the US is the basis on which the world economy rests. If this suffers the world economy suffers. The news item in The New York Times should be an eye opener.

The recession is taking its toll. The first ones to suffer are the houses and there are more to follow. Everywhere, every street has a few houses for sale. The brokers have so many houses in their hands that they find it impossible to remember the features of every house. The federal rate cut has not helped. There is a news item that reports about a lady in Detroit, watching on her money carefully since many of her friends have lost their jobs and every other house in the street has put up a sale board.

The raising interest rates make people lose their dream house. "We couldn't keep up with the payments," she explained one dreary, wet Sunday morning in late winter. "The payments went from $1,700 a month almost to $3,000 a month, so this being my first home, my dream home, I had to lose it."

This may seem remote to many. But what has started with banks and other lending institutions making good billions in loss will percolate to others. Even now the building industry is affected. With food costs going up, gas prices soaring to the sky, the spending capacity of the normal man will certainly get crippled. So from the big corporate retailers of day to day consumables to builders of boats, everyone is going to feel the pinch.

The real problem is because the lenders believed on the stability of raising values for houses. They made people get into mortgages for homes, making them believe in the fallacy of owning them without paying the minimum down payments. Then there is this spending culture. I don’t think that any of these big business-house owners live in mortgaged houses, drive mortgaged cars or use their personal credit cards for airline tickets, which they expect the common man do.

It is the common man who suffers. All the urban properties are actually the properties of the mortgage writers. The public have been encouraged indirectly by the government to go in for huge loans to help businesses of varied interests. On the other hand, if the public have been encouraged to possess the house they live in and own the personal transport, his car, this precarious situation might not have come.

Big business is big business. How can the ordinary man escape from it?