There is so much hype about the government’s effort to stem the tide of foreclosures through various rescue bills, plans and laws, yet they DO NOT seem to be working.
The latest effort, the takeover of Fannie Mae and Freddie Mac by the Government will also do little to stem the tide. This solution may be good for China’s interests as about 40% of their investments are in those two institutions. Yes, this move will guarantee them their money but at the expense of the stockholders. I also read recently that China will pull back its investments meaning that Fannie/Freddie will have less money to lend – another negative impact on our economy. While it does have some positive international ramifications, I see little benefit domestically. If we think those two companies were run badly before, just wait and see how they will operate under government rule.
It is no surprise to me, as I continually report, that these “feel good” efforts are meant only to comfort the public. We tend to get our news in snippets and on the run retaining only the main sound bites. When the headlines read, “Foreclosure Rescue……” we listen quickly and think, hey, things are getting better. They just said so. Then we tell our co workers, neighbors and friends that we just heard reports that help is on the way and an overall improvement of our economy is near. The comfort train is in motion.
CNBC.com in a report on line last month had the following to say about the state of the housing industry. It is a very good insight as to the state of the economy and the people of our country.
You can view the video at http://www.cnbc.com/id/15840232?video=823836941
The foreclosure rate went up 55% in July compared to a year ago.
- That relates to 1 in every 464 homes.
- There were 272,000 filings in July up 8% from June.
- Bank Repossessions are up 184% over a year ago July.
- Default notices are up 54% over a year ago July.
- Auction sales are up 11%.
- 750,000 foreclosed properties are for sale nationwide as reported by RealtyTrac.
- 17% of all existing home sales in June were foreclosures as reported by the National Association of Realtors (NAR).
- 40% of all sales are bank owned.
Just do the math. If there were 272,000 foreclosure filings in July, 8% more then in June then June filings had to be around 254,000. Adding June and July together, we have a total of 526,000 homes in foreclosure in just two months.
Averaging June and July foreclosures we get an average of 263,000 homes per month. On an annual basis that is (263,000 X 12) a total of 3,156,000 homes per year. Yes, over THREE MILLION homes for the year.
If that figure is not staggering enough let’s see how that relates to people and not so much to brick and mortar and the economy. If the average household in America contains 4 people then we now have (3,156,000 X 4) 12,624,000 people affected. People of all ages, sizes and shapes - older folks, middle age folks and children who are too young to do anything – traumatized, displaced and broken.
If we take the averages above and project them 4 years into the future and add in the same numbers for last year the foreclosure crisis will affect around 63,120,000 people. As I see it, almost 20% of our entire population.
Add to this the ever increasing unemployment rates, high food and fuel prices and we have an economic epidemic of unprecedented proportions.
Government has appropriated billions of dollars for various rescue plans and corporate bailouts. One needs to ask, who does all this money really benefit? Obviously not the people.
We have allowed our large corporations to rape and pillage and they continue to do so. Not only did they make billions of dollars making loans, they made more billions securitizing these loans to sophisticated investors world wide. Now, through foreclosure they will once again profit through fees and charges for their services - all at the unconscionable expense of the American people.
There is a fraud occurring here beyond any we have seen to date. The victims are not just those that suffered at the hands of fraudsters and scammers – the victims are our entire nation of people – a real economic epidemic.
The latest unemployment figures released said there were 9.4 million people unemployed with over 562,000 new unemployment filings in July. What we need to remember about the total figure reported is that it only includes those still receiving unemployment benefits and does not include commission workers, many domestic workers, self employed and others not eligible for unemployment benefits. So it could well be argued that those figures could potentially be twice as large at the very least.
But using the published figures let’s see how this really impacts us as a nation.
If the new filings average 562,000 (figures increase each month so this figure would be conservative) and we annualize this, then we can expect another 6,744,000. If we add that to the existing 9.4 million we have a total of 16,144,000 – an even greater economic epidemic.
If each of these unemployed spends an average of $3,000 per month and now is limited to $1,000 that would mean that there is over $32 Trillion ($32,000,000,000) not circulating in our economy.
With no real improvements in sight for the economy, with no real plan for improving the economy and the lack of available capital and credit, we as a nation are suffering.
Our leaders still fail to call this a Recession when in fact, it may be the “Greater, Great Depression”.
We as a people need to come together, not only to help each other, but to come together as a group, with a strong voice that says, "We're mad as hell and we're not going to take it anymore".
Those of us who grew up in the 60's and 70's did it then. Where are we now when the same voice we used then is needed even more now.
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