The American Dream is a nightmare.  If you own your own home, you’ve probably noticed this recession in more ways than just the rising food costs, and the soaring gas prices.  Home values have decreased.  Drastically.  In over twenty cities across this country, home values have dropped thirteen percent, and foreclosures are at an all-time high.  One out of every 194 homeowners in this country got a foreclosure notice in just the first quart.  That’s double the amount from 2007, for the whole year!

On the bright side, if you’ve got a shiny credit record, go buy something.  You’ll get it cheap, and the banks will throw money at you. 

On the other hand, the gas prices are killing you too, and you’re not sure if anyone will EVER move in next door, since the number of vacant homes is also at an all-time high, which means that your property value will go down, and you won’t be able to remodel the kitchen on a home equity loan, gasp.  Never mind.  You’re right.  Even the few people in this country with good credit aren’t going to give this economy a speedy turn around.  Check, please!

So, Bank of America bails out/buys Countrywide for making terrible lending decisions.  Actually, about $893 million (that they lost at the beginning of the year) in bad lending choices.   Smooth move.  Now my landlord works at Countrywide, and if I’m even a day late on my rent, she’s calling with the unmistakable sound of panic in her voice.  Once bitten…

So what now?  How do we deal with a crashing housing market, and the recession all at the same time?   I’ve got an idea: the government should throw money at the problem till it goes away!  You know, like throwing steak at shark till it gets scared and swims away. Right?

The US rescue plan does just that. 

Passed on Tuesday, June 24th 2008, the foreclosure rescue bill proposes that the Federal Housing Administration will subsidize $300 billion is home loans for roughly 400,000 borrowers that are either in or in danger of foreclosure.  

Huh.  That seems… pointless. 

Do you know how many people own or have a mortgage on their own home in this country?  Either do I, but what I do know is that 68.9% of Americans in 2005 lived in the home that they owned.  That’s a lot more than 400,000. 

Also – the “limit” on these government bail outs?  Hasn’t been decided yet, but right now, it looks like it will be between $625,000 - $730,000.  Whoa.  The average “home” (condo, duplex, house, etc) in the US is only $189,000.  Who are we bailing… Oh.  I get it.  California.  Where the houses are ‘spensive.

In addition, the bill proposes tighter controls on Freddie Mac and Fannie Mae, the kind king and queen of big lending who supplied most of the cash for the home loan market ‘cuz they buy loans right and left from other banks.   So it’s their fault?  Nah.

Tighter controls aside, the bill sends bags of cash to the lending giants.  Apparently, they need to be rescued as well.  Even though the Freddie Mac CEO, Richard Syron, got $19.8 million last year as “compensation,” the US needs to send a few more million over, to deal with the companies dropping stock values. 

So where’s this money coming from?  With the magic money that we all just got as “stimulus” checks, and Bush’s big tax breaks, and the week dollar overseas, I just can’t see how it’s possible.  Let’s just add to the deficit.  That’s fine.

Meanwhile – we couldn’t possibly use that money to rescue, I don’t know, the homeless?  Or rehabilitate the public housing that failing in Chicago, New York and LA?  Silly me.  I mean, I’m a renter without health insurance.  What do I know?  Clearly the middle-class-suburban-wanna-be’s-that-can’t-make-their-mortgage-payments-because-they-had-to-have-that-55-inch-plasma-screen-TV need the help more.  Hate to see them lose their dream. 

Meanwhile –

Public housing

Homelessness

Cost of Living - $27.7% (I spend 25%)