Essay about Solving The Foreclosure Crisis

Essay about Solving The Foreclosure Crisis

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On its surface, the current foreclosure crisis appears to have erupted from a volatile mix of debt, deregulation, risk, and over-leveraging within the economy. This; however, is a merely symptomatic approach to the recession, and does not address its underlying causes. In order to truly solve the crisis of foreclosures, one must address the systemic deficiencies which allowed the crisis to originally form.

In the housing sector, the foreclosure crisis can be viewed as the bursting of the housing bubble. Indeed, the economy as a whole around the turn of the millennium can be characterized by its bubbles, and any solution to the housing bubble must necessarily take into account the complex web of interconnections between each and every economic sector. The common denominator, connecting the housing, credit, and financial markets with both the people and government is the dollar. Being a fiat currency, the dollar is backed only by faith in the United States government. Because it is not pegged to any standard, the Treasury has free reign to create as many dollars as it wants. This, in combination with the commercial banks' intrinsic ability to create money through the interest generated on their loans and investments, serves to thoroughly destabilize the money supply, which is now capable of huge increases in short periods of time. New money introduced by the manipulation of the money supply and circulated largely through a "shadow" banking system of corporate entities specializing in over-leveraged, high-risk securities is largely responsible for fueling economic bubbles. Illusory wealth created by financial acrobatics and not tied to any real growth in GDP yields convenient booms; however its busts are reoccurring crises. Alt...


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... more substantial. This void has been in the making for quite sometime--perhaps it began with the Nixon shock, but it definitely accelerated with the loss of manufacturing and increased outsourcing during the Reagan years, and hit a feverish pace with the Clinton's NAFTA and modern globalization. During these past forty years, an economic drama has unfolded, one in which the middle class has found itself to be the main loser, and the foreclosure crises is the latest in this series of events which have chipped away at the security of the middle class. Now we must alter the course of this historical pattern, and in doing so alleviate the current crisis. The development of a Graduated Energy Standard will both purge the market of its worst practices, those which caused the current crisis, and the put the market on track to avoid similar developments in the future.


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