Schiller Analyses Foreclosure Crisis

Robert Schiller has analyzed the foreclosure crisis in a brilliant understandable way. It makes excellent reading on the raging foreclosure drama being played out.

April 2008 had noted 243,353 foreclosure postings – it being treble the number of April 2006 according to the findings of RealtyTrac. The writing is on the wall and points to the inevitable that without the intervention of the government many millions of Americans will be soon losing more houses.

As such it needs to be considered, opined Schiller, that the blame for this foreclosure mess cannot be squarely be placed only on the house owners – that is the borrowers. The mortgage brokers, originators, appraisers, regulatory bodies, security rating bodies, the chairperson of the Federal Reserve as well as the President of America – et all had a prominent role to play in the unfolding of this foreclosure drama.

The President never rang out any warnings but rather continued to extol the positive side of house ownership. His ownership theme had laced his 2004 re-election campaign. People generally connect house ownership with good feelings about a warm home and hearth. There is a feeling of belonging to a society. It is important not only economically but in the mental make up and happiness of the people who make up the nation.

But today everybody is witnessing how the Ownership Society operations of the President are working in reverse gear. The ownership rate has slumped to 67.8% in the first quarter of 2008 from 69.1% noted in the first quarter of 2005. There are clear indications that this trend will continue to pick up speed in the forthcoming months. It has scarred the nation.

Either directly or indirectly the foreclosure crisis is impacting on all. It is rippling across the country from coast to coast. There are many responsible for the current crisis but it is the individual borrower who is the worst suffer and most clearly visible as the bubble is bursting. Overnight businesses have downed shutters causing jobs to vanish.

Caroline Bird authored “Invisible Scar” in 1969 motivated by the thought of keeping alive the memory of the Great Depression. She wanted a new generation to remember it. She wanted to preserve the lessons learnt from it for a future generation. Perhaps three decades forward from today somebody with an impartial view will take up the pen to document the great Foreclosure Crisis for posterity to take note of and be forewarned.