Up, Up, Up prices went, all the way until 2008 when the housing marketing fell. CRAAASHHH – a sound more excruciating than 1,000,000,000 pieces of shattering glass.
Why did the crash happen? Behold the leading housing market example: Inflated housing prices, fueled by the desire and appetite of home ownership, the excitement of owning the American dream, funded primarily through misleading and deceptive mortgages. Remember those 1% teaser rate mortgages? Yeah, the ones that lasted for a single month and then would fluctuate with the Libor-Yee-Haw market rates, resulting in unpredictable monthly mortgage payments, leading down to a sudden huge balloon payment after 10 or 15 or so years, well before the perceived 30 years that many were so persuaded to think? Oh yeah, the wonderful rent-free, garden-tending, home-made-dinners-in-granite-counter-kitchens American Dream. Renting isn’t always a bad idea!
How else can we pay for all of these nice things, houses, flashy cars, brand-name clothing? How about reducing our expenses by outsourcing work to lower-rate labor workers overseas? Let’s start with just the assembly factory type of work like shoe and clothing making, and then move on over to telephone customer service, and then gradually shift over to IT programming, heck, why not start whole new companies overseas to help us save money over here in the Motherland.
As we move our labor force overseas, we find a place to displace our native workers called the land of Unemployment, a stress-free, tranquil place where everyone “keeps quiet,” waiting for the next better thing before the next even better thing before the thing that should have been done in the first place. Hindsight is 20/20, now even better with Lasik! There, you can chill in “free” money for up to the newly legislated two years. Wow, 2 years of free money and all I have to do is prove that I have been unsuccessfully looking for work – a slight blow to my pride but who cares about that anyway – only those that need to keep up with the Jones despite costing them an arm and a leg and a house and a reliable credit rating, yeah, only a few million people.
Anyway, so now we have a situation on our hand, or rather, a housing crisis, quoted as the “the most severe in history” where all of these people have a mortgage with a house attached to it (complete with 3-car garages and foreclosure sign on the lawn) who can’t make payments because:
- these homeowners either don’t have the money to pay for these mortgages due to a decrease of income resulting from unemployment or a significant pay cut
- unexpected increased mortgage payments due to misunderstood terms and conditions that the homeowners cannot afford to pay
- the homeowners are unwilling to continue payment because their house values are so underwater
AND / OR
AND / OR
To try and rectify this, the government has set up some incentives to prevent foreclosure lately, which we shall have to wait to see results. Meanwhile, other indirect ways to save our nation’s plight are in motion, including limiting traditional lending options which makes way for alternative lending such as payday cash advances and changes in foreign trade policy and possible shifting values of international currency, including the Chinese Renminbi.