The Nation: The Coming Foreclosure Tsunami

[marmar]

article | posted November 13, 2007 (web only)
The Coming Foreclosure Tsunami
Christopher Hayes



Unlike most hearings on the Hill, last week's meeting of the Joint Economic Committee actually got more interesting the longer it went on. While the first half-hour featured Federal Reserve chairman Ben Bernanke offering his modest, softly downbeat but not panicked predictions about how the unfolding subprime mess would affect the broader economy, the last hour provided an opportunity to hear committee members give their own often eccentric diagnoses and predictions.

Kansas Republican Senator Sam Brownback opined that tax cuts, shockingly, were probably the best way to deal with the current crisis. New Hampshire Republican Senator John Sununu spent much of his allotted time pointing out that he'd done a better job of predicting future trends of housing inventories in March than the chairman. "I was right," he told Bernanke with a smirk, "and you were wrong." ("Well, Senator, you were right and I was wrong," Bernanke intoned back into the mic with a deadpan expression that basically said, "Satisfied, dick?") And Senator Robert Bennett, a Republican from Utah, offered a refreshingly honest articulation of the conservative view of the unfolding debacle: "Markets make better decisions than governments do, and the market will punish, the market will reward and the market will ultimately stabilize. For the market is a just and wrathful God!" (OK, I made up that last sentence.)

But amid the grandstanding, Maryland Congressman Elijah Cummings injected some welcome perspective. "Many members of Congress now, Chairman, are holding forums in their districts, as I will be doing very shortly, to help people who are coming to our doors literally with tears in their eyes and trying to figure out how they're going to manage a foreclosure that's right around the corner.... It seems like you have painted a very rosy picture, but if you came and walked through my district, I think people would be very...surprised that you seem so calm."

Bernanke was defensive: "Congressman, first, I don't know how you got the impression that I was unconcerned about foreclosures."

"I didn't say you were unconcerned," Cummings shot back. "I just said you seem to be pretty calm about it." Foreclosures in Maryland were up more than 400 percent in the third quarter, compared with the first. Minority homeowners, like those in Cummings's inner-city Baltimore district, are getting hit particularly hard. "I know that so often what happens is that when we're making decisions in the suites, we forget about the people who actually have to go through this," Cummings said. But "we're becoming a bit alarmed."

In past financial implosions, of S&Ls in the '80s or Long Term Capital Management in the '90s, it was easy to name the villains but far trickier to find the victims. Not so here. They're everywhere, not just in inner-city Baltimore. There are subdivisions in the exurbs that are beginning to resemble ghost towns. ......(more)

The complete piece is at: http://www.thenation.com/doc/20071126/hayes

[redqueen]

1. So is this the doom & gloom that was complained about yesterday?

Premature worry over a spillover that probably won't / might not occur?

I really don't see how that's possible. *sigh*

[Warpy]

2. "Subdivisions resembling ghost towns"

That's been happening around here for years because a third of all new construction was being bought by real estate speculators, a quarter of new construction snapped up by people from California. Big houses in new areas are being advertised, now 3-5 years out of style, never lived in, shown empty.

Houses in my own area, one of post WWII small houses centrally located, are selling quickly to people who are downsizing. I hope their jobs are safe or my neighborhood will start to resemble the McMansion districts, a magnet for vandalism, vagrants and vermin.

[Purveyor]

3. No worries. The stock market (DOW) is up almost 300 today!!!

/sarcasm on

[nashville_brook]

4. "the market is a just and wrathful God" -- that's exactly why we regulated it in the first place.

free market Republicans are just batshit crazy.