By Mike Colpitts
As America makes inroads to get out of this messy economic place whether it be a deepening economic recession or an economy in depression, Housing Predictor takes a new road offering all the insight we can to help steer us out of this mess.
Technically, whether we face another economic depression or a longer lasting recession is not of immediate concern. Analysts realize that we are at least in the worst economic downturn since the Great Depression. The signs are apparent.
The changing environment is producing a new sort of economy and as the first real estate research firm to forecast the foreclosure epidemic that brought the nation’s economy to economic peril, we want to offer all the expertise we can to help steer us out of this mess.
Whether your political leanings favor the economic bail-outs by the new administration in Washington passed with the help of Congress or you are one of the many who demonstrate against the efforts, we see both sides of the issue and see merit in both efforts.
However, it is more than difficult for us to see that even a $4-trillion or $5-trillion spending deficit will last for future generations to pay off. The U.S. Savings and Loan Crisis cost tax payers in the neighborhood of $2-trillion and with higher taxes, increased IRS audits on tax cheaters and cost cutting measures the deficit was paid off within less than six years.
This financial crisis is much larger in scale than the S&L crisis and its impact to the overall economy runs much deeper. Frankly, the crooks ran way too much of the inner-working of the economic forces of the country for way too long. Bankers offered and closed mortgages they never should have sold, and traders used instruments on Wall Street understood only at the highest levels of finance.
As we steer out of this mess, it’s certain to be a very long haul. The Obama Administration will have to push for more money to help the millions trapped in the peril of foreclosure. Banks will need to reduce more mortgages in order to keep homeowners in their homes.
The quiet painful nature of foreclosure is embarrassing and an emotionally scarring series of events that can last a person’s life time. Some victims lose it all together, triggering outbreaks of violence. Others even die over what they view as the ultimate failure. Most of course just lose their homes to foreclosure.
The paramount issue that triggered the foreclosure epidemic and the near destruction of our economic system lies with lobbyists, who paid more than $500-million in campaign contributions to Congressional leaders and other politicians swaying them to vote in their proposals to de-regulate securities and allow mortgage lending with few meaningful regulations.
Above all else, America’s economic crisis shows just why lobbyists with their special interests need to be eliminated from the nation’s political system.
The banks that wrote the very mortgages that are in default only made them to make gross profits that now many banking officials admit they knew would destroy the system. Bankers and Wall Street types recognized the government would have to bail the system out. We know. We hear from hundreds of them because they have tracked our forecasts for years.
As President Obama says, “The United States needs a new beginning.” The lyrics to a hit song by the Animals rock and roll legendary band set us straight:
“We gotta get out of this place
If it’s the last thing we ever do,
We gotta get out of this place,
There’s a better World
Don’t you know, don’t you know, don’t you know
I want to get you out of this place ”
See the Animals song in old black and white video by clicking here.