Thursday, May 28, 2009

This Problem's Going To Be With Us For a While

From the NY Times today:

About 12.07 percent of all mortgages were delinquent or in foreclosure, up from 11.93 percent at the end of 2008.

Housing specialists said the number of foreclosures would probably keep rising as more people lose their jobs or are forced to trade full-time work for part-time. Nearly six million jobs have been lost since the recession began a year and a half ago, and many economists expect the unemployment rate to rise to 10 percent from its current 8.9 percent.

“More than anything else, this points to the impact of the recession and drops in employment on mortgage defaults,” Jay Brinkmann, chief economist of the Mortgage Bankers Association, said in a statement. “It does not appear the level of mortgage defaults will begin to fall until after the employment situation begins to improve.”

We need a much stronger social safety net in this country to ease the pain of economic downturns so they don't become crises like this. If the price of such a safety net is a reduction in the height of economic booms then that is 1) a cost we should be willing to pay and (or) 2) probably a good thing.

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