Foreclosures Governor Villaraigosa And Nero

May 5th, 2008

It may seem too far-fetched to bracket foreclosures, Los Angeles Governor Villaraigosa and Roman Emperor Nero in one bracket but in reality the parallel is not hard to find. Nero played the lyre while he burnt Rome.Villaraigosa presided over housing boom and zoom of downtown Los Angeles that has finally led to the ravages of the fire of foreclosures tearing down the city.

Foreclosures in Los Angeles are not the only cause for the economic downturn. In fact it may be argued that foreclosures resulted not only from the sub-prime mortgage fiasco but also because of thousands losing jobs in units connected with aerospace, manufacturing and business services. All the affected belonged to the middle class. Villaraigosa just watched and fiddled. For a year from February 2007 to February 2008, the county suffered the highest percentage of job loss amongst all the metropolitan regions in US. This is according to a current report released the Bureau of Labour Statistics of US.Los Angeles vies with Detroit for dubitable first position as the worst hit city in regard to unemployment and foreclosures.

There have been similar dark clouds hanging over other regions of Southern California but Villaraigosa exclusively focused on the speculative activities in the real estate market leading to the housing bubble. And the bursting of the bubble is largely held for the foreclosure crisis. He did not think about the long-term growth of the city. The short term thrust seems to have led to long-term foreclosure fires.

With the property values and employment related to construction and real estate having nose-dived there is nothing left but tourism to keep the city and county running. Today Villaraigosa is hunting for funds to balance the budget of the city. It seems the hunting will have to go on for some time as the foreclosure clouds are far from clearing.

Unemployment in the real estate sector is not something water tight – it spills over to other categories creating a snowballing negative effect on the entire employment scenario. Starting from 2006 employment figures in Los Angeles has dropped by 2% in various sectors including the all important entertainment industry. According to an April report, business expansion fell by 22.5% in the county. Villaraigosa did not have the foresight to see that dependence only on real estate boom revenues could spell disaster. Today he admits that he been cautious he would not have given the green signal for large hikes for city workers. The Governor is now swallowing the bitter pill of foreclosures.