The_Mortgage_Crisis

The Mortgage Crisis Waldo J Williams III American Intercontinental University 16 September 2009 During the past few years, the housing market has suffered and put a major strain on the economy. With fellow citizens losing their jobs because businesses are closing, they are now unable to pay their mortgages for the homes that they were once able to afford. With the government trying to step in to help get the economy booming, the question becomes when and how will this help the housing industry' If the economy doesn’t become stronger, the housing industry is going to suffer drastically. With the fall of the U.S. economy it has been proven that if the economy is not strong, the housing industry will start to fail which will cause a domino effect on the rest of the economy to falter. “The root of the current crisis, as I see it, lies back in the aftermath of the Cold War, when the economic ruin of the Soviet Bloc was exposed with the fall of the Berlin Wall. Following these world-shaking events, market capitalism quietly, but rapidly, displaced much of the discredited central planning that was so prevalent in the Third World” (Greenspan, 2007).The faltering economy has been a work in progress for several years. The only difference is that the fall of the housing industry caused it instead of other industries. “The current credit crisis will come to an end when the overhang of inventories of newly built homes is largely liquidated, and home price deflation comes to an end” (Greenspan, 2007). Economists felt that if the government listened to them years ago they could have taken a step forward and try to keep this crisis from ever happening. “The continuing crisis in the housing market has had tremendous effects on the rest of the economy, causing a financial meltdown on Wall Street, freezing loans for businesses, and leading to massive layoffs and bouts of unemployment all across the country” (Chan, A., 2009). This has been an ongoing turn of events over the past few months. As the author stated, the housing industry started to effect industries. The main thing is that the housing crisis made the country go into a recession. “Economic activity over the past few months has been characterized by government bailouts and banks buying each other off and merging” (Chan, A., 2009). The government feels that the only way that the country will get out of this recession is if they keep throwing money to businesses to help keep them afloat until the businesses can carry on by themselves. “To protect yourself from losing income through a job loss and to provide a better spending cushion to hang on to your home, you might consider looking for part time work if you’re already employed” (Duermeyer, R., 2007). During the recession that is going on, we as a society need to help come up with solutions to help each other make it through this crisis. We need to have support groups so individuals will know that they are not the only one going through difficult times. We will not be able to stop everything that happens but with support from others we can help weaken the effect others will feel. “Its like anything else in this world- you can’t rely on others to take care of you- you need to look out for number 1 yourself and your family” (Duermeyer, R., 2007). “The United States economy has been dramatically and drastically affected by the financial crisis that foreclosures and the failure of the mortgage industry have created, and Congress has the difficult, yet immensely important, task of determining how to best assist homeowners, lenders, and bankers” (Chan, A., 2009). With the economy going downhill, we as a nation have the daunting task of waiting to see what the government is going to do to help save the economy along with the mortgage industry. As time has passed it seems as though that it will take a major effort to help us get out of this recession that we are in. Although the government has been doing what it can to help the citizens that are facing foreclosures with keeping their homes, we as a people need to learn that we must plan for the future as well as the present. We can’t always depend on the government to get us out of a jam that we caused on our own. Just think about it like this, you can’t have champagne taste with beer money. In other words don’t go out and buy something if you can’t afford it in the long run. If we follow this method we will stop causing ourselves headaches over something that could have been avoided. References Duermyer, Randy, Mortgage Crisis Looms Large Economy for US Economy, August 23, 2007, About.com Chan, Andrew, Housing and Mortgage Crisis Update, Harvard Model Congress Europe 2009