Lending Crisis Impersonates Housing Slump

Back in the days of Bush 41, the comedian Dana Carvey, as a cast member on "Saturday Night Live," did a pretty funny impression of the sayings Poppy Bush was famous for. Things like "Not gon' do it, wouldn't be prudent," "Read my lips, no new taxes," and "Scary, Scary."

Had we known then what we know now about how scary, scary the next generation of the Bush dynasty could be, Mr. Carvey's impressions might have been non-starters for his career. But thanks in part to ignorance being bliss, we were able back then to laugh at Carvey's send-ups of Papa Bush. The entertainment took our minds off the fact that Poppy gave us new taxes anyway and we couldn't find jobs.

Fast forward through the Clinton years, when anyone who wanted them had both job and home, and we now find ourselves blessedly nearing the end of a Bush 43 reign. Again we are struggling to keep jobs and homes, thus making the need to pay taxes, old or new, a moot point. Life in America under the second Bush administration has become the textbook example of what occurs when you feed a military-industrial beast a steady diet of middle-class, tax-paying citizens.

Among all the crises of wrong-headed government Americans have witnessed in the last six years, an unheeded crisis in the housing market has been looming large. This fact was ignored or largely unaired in any manner that would facilitate the ability of Joe and Jane Average to easily understand such a threat to their already strained financial health. And it isn't as though business education has been allowed to flourish in the public schools under this administration.

Only a handful of the staunchest independent housing market watchers have cared to assume the role of little boy who tells the crowd the emperor is naked. Like Dana Carvey morphing into Bush I, it has been to the benefit of Bush II for reports of an impending real estate crisis to morph into reports that claim all is well and the economy is booming.

The company line can be perceived as true, but only if one owns the company. The fact is, a lot of average people are in big trouble with real estate. The American Dream has morphed into an American nightmare.

When George Bush and Dick Cheney packed up their kits and mentally moved to Iraq, they left behind to act as nanny to the nation a Congress doing its impression of a wholly-owned subsidiary of corporate America. The lending of money, the previously well-monitored cookie jar of the finance industry, suddenly became fair game. Low interest rates, like a trail of sweet crumbs across a counter, were an incentive for all manner of mortgage brokers and lenders to get the stool, lift the lid, and declare, "Cookies for everyone!"

The result was rampant lending--lending without requiring substantiated proof of ability to repay, over-value lending, adjustable-rate lending. Combine these with job outsourcing, a healthcare crisis, inadequately insured natural disasters, a record high consumer debt rate, and a negative consumer savings rate. Is it any wonder that many Americans are now discovering the cookie jar in shards on the floor?

A recent article in the Los Angeles Times featured a real estate agency which has shifted its focus from the traditional home-selling process to locating clients by using public mortgage-delinquency information and then waylaying these hopelessly overextended individuals and convincing them to sell. The pitch? They are out of options. The article's title? "Benefitting from pain of others". You bet.

This business is lucrative for both lenders and real estate agencies, both of whom are currently having trouble maintaining fat incomes in a "housing slump." An agent interviewed for the article was quoted as saying he was "giddy" because he was going to be so busy. Cue the video image of Snidely Whiplash twirling his moustache as Mr. and Mrs. John Q. Public lie tied to the tracks.

Despite the denial of this fact by those who benefit from denying this fact, the middle-class has taken and continues to take a beating under Bush 43. Alter slightly Sinclair Lewis to read: The middle class, that prisoner of the barbarian 21st century.

Open any door or window, and a barbarian awaits. There's been no one in Washington driving them back. With abandon they slaughter innocent men, women, and children, all whose last image of the world before they drop is one of wide-eyed disbelief because they've played by the rules.

If the rules were askew to begin with, it's still fixable. A kindly real estate agent will show up at the door and do his impression of the answer to all your real estate problems.


*One independent watcher of the housing market, who goes by the identity Bonddad, deserves credit for having posted regularly on this subject on the DailyKos in an effort to warn average Joes and Janes of a coming housing market fiasco. His diaries were so successful at making this issue understandable that his readers pursuaded him to begin his own blog, which he did. He now resides at http://www.bonddad.blogspot.com/.