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By Sherwood Ross
Global Research, November 8, 2011
http://globalresearch.ca/index.php?context=va&aid=27530
Of the 55-million families with mortgages, 10.4-million of them “are sliding toward failure and foreclosure”---a tragedy that will depress the U.S. housing market for years to come, a result of too many houses for sale and too few buyers.
That’s the blunt conclusion of distinguished economics journalist William Greider, to be published in an article in the November 14th issue of The Nation magazine.
America’s “Economic recovery will have to wait until that surplus (excess houses) is gone, because the housing sector has always led the way out of recession,” Greider says. “The more housing supply exceeds demand, the more prices fall. The more prices fall, the more families get sucked into the deep muddy. The vicious cycle is known in the industry as the death spiral. So far, there’s no end in sight.”
Greider says the solution is to forgive the debtors: “Write down the principal they owe on their mortgage to match the current market value of their home, so they will no longer be underwater. Refinance the loan with a reduced interest rate, so the monthly payment is at a level that the struggling homeowner can handle.”
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