The cost of this presidency, put in dollars and cents through today, is $32 trillion dollars. That’s a 150% increase in exposure ...

Obligations Ignored | BY Scott Horton | PUBLISHED December 18, 2007
...
So here it is, an obscure speech delivered by an obscure person, with a message that no one wants to hear:

For the 11th year in a row, the U.S. Government Accountability Office (GAO) was prevented from expressing an opinion on the consolidated financial statements of the U.S. government–other than the Statement of Social Insurance–because of serious material weaknesses affecting financial systems, fundamental recordkeeping, and financial reporting.
...
Overall, however, Walker was not satisfied. In a speech today at the National Press Club, he said, “If the federal government was a private corporation and the same report came out this morning, our stock would be dropping and there would be talk about whether the company’s management and directors needed a major shake-up.” Walker urged greater transparency and accountability over the federal government’s operations, financial condition, and fiscal outlook.

Despite improvements in financial management since the U.S. government began preparing consolidated financial statements more than a decade ago, three major impediments prevent the U.S. government from obtaining a clean opinion: (1) serious financial management problems at the Department of Defense, (2) the federal government’s inability to adequately account for and reconcile intragovernmental activity and balances between federal agencies, and (3) the federal government’s ineffective process for preparing the consolidated financial statements.

“Until the problems outlined in our audit report are adequately addressed, they will continue to have adverse implications for the federal government and American taxpayers,” Walker said in a letter to the President and Congress. “The federal government’s fiscal exposures totaled approximately $53 trillion as of September 30, 2007, up more than $2 trillion from September 30, 2006, and an increase of more than $32 trillion from about $20 trillion as of September 30, 2000,” Walker said. “This translates into a current burden of about $175,000 per American or approximately $455,000 per American household.”

Now the essence of the word “conservative” lies in the art of preservation. Holding on to that which is useful from the past. Recognizing an obligation to the next generation. Time was, when publications like the Wall Street Journal would lambaste the government for its fiscal irresponsibility, and broadcasters like Fox News would chime in. Of course, they kept this steady drone during the Clinton era. And the truth was that during the Clinton presidency, the American Government was a modern model of fiscal responsibility, actually producing a series of surplus years, and starting the process of taking down the national debt.

With the arrival of George W. Bush, all proper stewardship of the economy has been thrown to the winds in favor of a quick joy ride for a team of power-crazy leaders. The cost of this presidency, put in dollars and cents through today, is $32 trillion dollars. That’s a 150% increase in exposure since the reins of office were handed to George W. Bush. ...

supposedly independent watchdogs—this time government banking regulators, no less—are funded by those they regulate

Letting Sleeping Watchdogs Lie | The business press rediscovers regulators | By Dean Starkman Thu 20 Dec 2007 03:20 PM
...

“Paulson attacks ‘shameful’ lenders,” The Financial Times reported in October.

[Paulson] said the conduct of some mortgage market participants had been ‘shameful’ and called for consideration of a nationwide licensing and monitoring system for mortgage brokers.

...

The USA Today story also says that Sheila C. Bair was “frustrated” at the “slow pace” of loan restructuring for subprime borrowers.

‘Washington needs to push hard on this,’ she said. ‘Our message is, “Prioritize these folks, if they can convert” (to fixed-rate loans). That will free up more time to deal with some of the more challenging cases.

That’s fine, except Bair heads the Federal Deposit Insurance Corporation.

She is “Washington.”

...

One of its chief merits is that it reveals even more about Alan Greenspan’s failure to act on urgent private warnings. In one passage, he seems paralyzed by his own ideology as he explains why he had parried pleas as early as 2001, from the late Fed governor Edward Gramlich and the FDIC’s Bair, to use powers the Fed already had.

‘I got the impression that there were a lot of very questionable practices going on,’ he said. ‘The problem has always been, what basically does the law mean when it says deceptive and unfair practices? Deceptive and unfair practices may seem straightforward, except when you try to determine by what standard.’

The Times makes a point that has appeared elsewhere but is one that nonetheless bears re-emphasizing: supposedly independent watchdogs—this time government banking regulators, no less—are funded by those they regulate.

...

As The New York Times reported in December of that year:

State officials and consumer groups have opposed the [OCC’s -- [part of Treasury Department]] move to override state laws aimed at protecting consumers, including those to curb ‘predatory’ lending practices.

These lending abuses include exorbitant fees and interest rates and
payments for undisclosed insurance products.

But the comptroller has the power to override state banking laws.
‘Federal pre-emption is not unprecedented,’ a spokesman, Bob Garsson, said.

And remember, the OCC wasn’t just fighting Spitzer. Actually, it was Michigan that challenged OCC preemption in a case that went to the U.S. Supreme Court, and attorneys general from all fifty states filed amicus briefs in support.

Business-news organizations covered the dispute between federal and state officials as a power struggle, a tit-for-tat fight. But something must have seemed odd even at the time. For one thing, The Wall Street Journal editorial page threw its federalist principles overboard and became a champion of federal regulation—seriously. In retrospect, the editorials are howlers.

The OCC has a large staff of economists whose only job is to perform the sort of sophisticated statistical modeling needed to discover relevant disparities between loan approvals and denials or in pricing. Any red flags are followed up with in-depth examinations of loan files. The agency also has staff members on-site at large banks to monitor lending practices.

And get this:

If the OCC hasn’t had a huge number of enforcement actions, one reason is because it has a chance to monitor behavior before it becomes a problem.

And the punch line:

It’s a shame more federal agencies haven’t taken their responsibilities as seriously as the OCC. (3)

That’s an embarrassment.

current account deficit: 5.4% of GDP: $2000 per worker per year to finance: 3.3M manufacturing jobs lost ...

December 18, 2007 | While the Bush Administration Dallies, the Crisis Deepens | The Consequences the Trade Deficit | By PETER MORICI

Yesterday, the Commerce Department reported the third quarter current account deficit was $178.5 billion, down from $188.9 billion in the second quarter. The deficit exceeded 5.4 percent of GDP.
...
In the third quarter, the United States had a $26.5 surplus on trade in services and a $20.5 billion surplus on income payments. This was hardly enough to offset the massive $199.7 billion deficit on trade in goods, and net unilateral transfers to foreigners equal to $25.8 billion.
...
To finance the current account deficit, Americans are borrowing and selling assets at a pace of $700 billion a year. U.S. foreign debt exceeds $6 trillion, and the debt service comes to about $2000 a year for every working American.
...
Manufacturers are particularly hard hit by this subsidized competition. Through recession and recovery, the manufacturing sector has lost 3.3 million jobs since 2000. Following the pattern of past economic recoveries, the manufacturing sector should have regained about 2 million of those jobs, especially given the very strong productivity growth accomplished in durable goods and throughout manufacturing.
...
Peter Morici is a professor at the University of Maryland School of Business and former Chief Economist at the U.S. International Trade Commission

Credit crisis worsens as Alan Greenspan says the Fed is powerless

From The Times | December 13, 2007 | Credit crisis worsens as Alan Greenspan says the Fed is powerless | Tom Bawden

Fallout from the sub-prime mortgage crisis wreaked further havoc yesterday as Bank of America, Wachovia and PNC all said that investment write-downs would be worse than forecast as the credit crunch worsened.

Bank of America, which said last month that it may need to write down the value of its mortgage bond portfolio by about $3 billion (£1.4 billion) this quarter, conceded that the losses would probably be considerably higher. Wachovia, separately, doubled its provision for fourth-quarter loan losses to about $1 billion, while PNC, in Pennsylvania, said that it would take a $110 million fourth-quarter charge, most of it relating to residential mortgages. Meanwhile, shares in Sallie Mae fell by 13 per cent, the most in 14 years, after America’s largest student lender cut its profit forecast for 2008 by 17 per cent. ...

Report Says That the Rich Are Getting Richer Faster, Much Faster

Report Says That the Rich Are Getting Richer Faster, Much Faster | By DAVID CAY JOHNSTON | Published: December 15, 2007

The increase in incomes of the top 1 percent of Americans from 2003 to 2005 exceeded the total income of the poorest 20 percent of Americans, data in a new report by the Congressional Budget Office shows.

The poorest fifth of households had total income of $383.4 billion in 2005, while just the increase in income for the top 1 percent came to $524.8 billion, a figure 37 percent higher.
...
“A lot of people justifiably feel they are working harder and smarter, they are baking a bigger and better pie, and yet their slice is not growing much at all,” Mr. Bernstein said. “It is meaningless to middle- and low-income families to say we have a great economy because their economy looks so much different than folks at the top of the scale because this is an economy that is working, but not working for everyone.” ..

the [Bush extra] interest we are paying, year after year ... $200B -- two Iraq wars a years forever ...

The Economic Consequences of Mr. Bush | by Joseph E. Stiglitz December 2007

The next president will have to deal with yet another crippling legacy of George W. Bush: the economy. A Nobel laureate, Joseph E. Stiglitz, sees a generation-long struggle to recoup.

When we look back someday at the catastrophe that was the Bush administration, ... The damage done to the American economy does not make front-page headlines every day, but the repercussions will be felt beyond the lifetime of anyone reading this page.

... Unemployment stands at a respectable 4.6 percent. Well, fine. But the other side of the ledger groans with distress: a tax code that has become hideously biased in favor of the rich; a national debt that will probably have grown 70 percent by the time this president leaves Washington; a swelling cascade of mortgage defaults; a record near-$850 billion trade deficit; oil prices that are higher than they have ever been; and a dollar so weak that for an American to buy a cup of coffee in London or Paris—or even the Yukon—becomes a venture in high finance.

And it gets worse. After almost seven years of this president, the United States is less prepared than ever to face the future. We have not been educating enough engineers and scientists, people with the skills we will need to compete with China and India. We have not been investing in the kinds of basic research that made us the technological powerhouse of the late 20th century. And although the president now understands—or so he says—that we must begin to wean ourselves from oil and coal, we have on his watch become more deeply dependent on both.
...
But the Bush administration had its own ideas. The first major economic initiative pursued by the president was a massive tax cut for the rich, ... Together these tax cuts, when fully implemented and if made permanent, mean that in 2012 the average reduction for an American in the bottom 20 percent will be a scant $45, while those with incomes of more than $1 million will see their tax bills reduced by an average of $162,000.
..
... Inequality is now widening in America, and at a rate not seen in three-quarters of a century. A young male in his 30s today has an income, adjusted for inflation, that is 12 percent less than what his father was making 30 years ago. Some 5.3 million more Americans are living in poverty now than were living in poverty when Bush became president. America’s class structure may not have arrived there yet, but it’s heading in the direction of Brazil’s and Mexico’s. ...
...
The Bankruptcy Boom
...
Agricultural subsidies were doubled between 2002 and 2005. Tax expenditures—the vast system of subsidies and preferences hidden in the tax code—increased more than a quarter. Tax breaks for the president’s friends in the oil-and-gas industry increased by billions and billions of dollars. ...
...
All of this spending made the economy look better for a while; the president could (and did) boast about the economic statistics. But the consequences for many families would become apparent within a few years, when interest rates rose and mortgages proved impossible to repay. The president undoubtedly hoped the reckoning would come sometime after 2008. It arrived 18 months early. As many as 1.7 million Americans are expected to lose their homes in the months ahead. For many, this will mean the beginning of a downward spiral into poverty.

Between March 2006 and March 2007 personal-bankruptcy rates soared more than 60 percent. As families went into bankruptcy, more and more of them came to understand who had won and who had lost as a result of the president’s 2005 bankruptcy bill, which made it harder for individuals to discharge their debts in a reasonable way. ...
Reckoning

It is natural to wonder, What would this money have bought if we had spent it on other things? U.S. aid to all of Africa has been hovering around $5 billion a year, the equivalent of less than two weeks of direct Iraq-war expenditures. ...

The soaring price of oil is clearly related to the Iraq war. The issue is not whether to blame the war for this but simply how much to blame it. ...
...
The Way Forward
...
Some portion of the damage done by the Bush administration could be rectified quickly. A large portion will take decades to fix—and that’s assuming the political will to do so exists both in the White House and in Congress. Think of the interest we are paying, year after year, on the almost $4 trillion of increased debt burden—even at 5 percent, that’s an annual payment of $200 billion, two Iraq wars a year forever. ...

Greenspan: Give Homeowners Financial Aid

Greenspan: Give Homeowners Financial Aid | KEVIN FREKING | December 16, 2007 05:30 PM EST | AP

WASHINGTON — Alan Greenspan, former chairman of the Federal Reserve, suggested Sunday that a tax break or other government financial help for homeowners facing the mortgage crunch would be the best political fix for the economy.

He cautioned against meddling with home prices or interest rates to address the housing problem.

Greenspan did not specifically call for a tax cut. Instead, he called for the government to apply money to the severe housing market slump. Such a cash infusion would typically come through a tax break or a new government spending program.

"Cash is available and we should use that in larger amounts, as is necessary, to solve the problems of the stress of this," Greenspan said during an appearance on ABC's "This Week." ...

Health coverage? Schools? New Orleans? flushing whole generations worth of cash into the bottomless pit of a failed and endless war ...

Now and Forever | By BOB HERBERT | Published: December 4, 2007

Most of the time we pretend it’s not there: The staggering financial cost of the war in Iraq, which continues to soar, unchecked, like a rocket headed toward the moon and beyond.

Early last year, the Nobel-Prize-winning economist Joseph Stiglitz estimated that the “true” cost of the war would ultimately exceed $1 trillion, and maybe even $2 trillion.

Incredibly, that estimate may have been low.

A report prepared for the Democratic majority on the Joint Economic Committee of the House and Senate warns that without a significant change of course in Iraq, the long-term cost of the wars in Iraq and Afghanistan could head into the vicinity of $3.5 trillion. The vast majority of those expenses would be for Iraq.

Priorities don’t get much more twisted. A country that can’t find the money to provide health coverage for its children, or to rebuild the city of New Orleans, or to create a first-class public school system, is flushing whole generations worth of cash into the bottomless pit of a failed and endless war. ...

... there are not enough American engineers and scientists. For mysterious reasons Americans prefer to be waitresses and bartenders ... [NOT !]

The Shortage Myth | The Lies at the End of the American Dream | By Paul Craig Roberts

12/04/07 "ICH" -- -- Last June a revealing marketing video from the law firm, Cohen & Grigsby appeared on the Internet. The video demonstrated the law firm's techniques for getting around US law governing work visas in order to enable corporate clients to replace their American employees with foreigners who work for less. The law firm's marketing manager, Lawrence Lebowitz, is upfront with interested clients: "our goal is clearly not to find a qualified and interested US worker."

If an American somehow survives the weeding out process, "have the manager of that specific position step in and go through the whole process to find a legal basis to disqualify them for this position--in most cases there doesn't seem to be a problem."
...
University of California computer science professor Norm Matloff, who watches this issue closely, said that Cohen & Grigsby's practices are the standard ones used by hordes of attorneys, who are cleaning up by putting Americans out of work.

The Cohen & Grigsby video was a short-term sensation as it undermined the business propaganda that no American employee was being displaced by foreigners on H-1b or L-1 work visas. Soon, however, business organizations and their shills were back in gear lying to Congress and the public about the amazing shortage of qualified Americans for literally every technical and professional occupation, especially IT and software engineering.

Everywhere we hear the same droning lie from business interests that there are not enough American engineers and scientists. For mysterious reasons Americans prefer to be waitresses and bartenders, hospital orderlies, and retail clerks.
...
I also receive numerous responses from American engineers and IT workers who have managed to hold on to jobs or to find new ones after long intervals when they have been displaced by foreign hires. Their descriptions of their work environments are fascinating.

For example, Dayton, Ohio, was once home to numerous American engineers. Today, writes one surviving American, "I feel like an alien in my own country--as if Dayton had been colonized by India. NCR and other local employers have either offshored most of their IT work or rely heavily on Indian guest workers. The IT department of National City Bank across the street from LexisNexis is entirely Indian. The nearby apartment complexes house large numbers of Indian guest workers filling the engineering needs of many area businesses."

I have learned that Reed Elsevier, which owns LexisNexis, has hired a new Indian vice president for offshoring and that now the jobs of the Indian guest workers may be on the verge of being offshored to another country. The relentless drive for cheap labor now threatens the foreign guest workers who displaced America's own engineers.

One software engineer wrote to me protesting the ignorance of Thomas Friedman for creating a false picture of American engineers being outdated and for "denouncing American engineers and other workers as 'xenophobes' for opposing their displacement by foreign guest workers." The engineer also took exception to the "willful ignorance or cynicism of Bruce Bartlett and George Will" who he described as "bootlicks for pro-outsourcing lobbies."
...
Among the interest groups that benefit from the false portrait are universities, which gain graduate student enrollments and inexpensive postdocs to conduct funded lab research. Employers gain larger profits from lower paid scientists and engineers, and immigration lawyers gain fees by leading employers around the work visa rules.

Using the biomedical research sector as an example, Teitelbaum explained to the congressmen how research funding creates an oversupply of scientists that requires ever larger funding to keep employed. Teitelbaum made it clear that it is nonsensical to simultaneously increase the supply of American scientists while forestalling their employment with a shortage myth that is used to import foreigners on work visas.

Teitelbaum recommends that American students considering majors in science and engineering first investigate the career prospects of recent graduates.

Integrity is so lacking in America that the shortage myth serves the interests of universities, funding agencies, employers, and immigration attorneys at the expense of American students who naively pursue professions in which their prospects are dim. Initially it was blue-collar factory workers who were abandoned by US corporations and politicians. Now it is white-collar employees and Americans trained in science and technology. Princeton University economist Alan Blinder estimates that there are 30 to 40 million American high end service jobs that ultimately face offshoring. ...

Bush regularly leaves out is his own role in exacerbating the problem, using the AMT to hide the real cost of his reckless tax cuts,

How Bush Helped Create the AMT Problem | Submitted by Bill Scher on December 4, 2007 - 6:32pm.

President Bush is continuing to attack Congress for not yet passing legislation to prevent the Alternative Minimum Tax from making millions of Americans unfairly pay a greater than necessary share in taxes. He raised the issue three times in the last four days.

What Bush regularly leaves out is his own role in exacerbating the problem, using the AMT to hide the real cost of his reckless tax cuts, and expanding those affected in 2007 from 10 million taxpayers to more than 20 million.

On Friday, the Center for Budget and Policy Priorities reminded folks of recent history: (emphasis original)

... To the contrary, lawmakers not only anticipated the AMT’s explosive growth, they counted on it to mask the cost of the 2001 tax cuts. The Administration and congressional tax writers were well aware that the legislation they pushed in 2001 would force millions more taxpayers to pay the AMT, which would take back part or all of their tax cuts and thereby reduce the 2001 tax bill’s apparent cost. More than two thirds of the cost of this year’s AMT patch is due to actions taken by Congress and the Administration in designing the 2001 (and 2003) tax cuts.

As Charles Grassley, [R-Iowa,] then Chairman of the Senate Finance Committee, said in 2001, “President Bush’s plan [will] bring millions more Americans into the AMT process; the Joint Tax Committee estimates that the Bush tax plan will nearly double the number of American taxpayers affected by the AMT.”

All of Bush's current spin is to block the House bill, which dares to responsibly offset the cost of temporarily fixing the AMT by closing the ridiculous loophole that basically says hedge fund managers should pay less taxes than folks in every other occupation. ...

The home mortgage meltdown ... beginning to hammer wealthy and middle class Chicago neighborhoods

Middle class and out of a home in Chicago | Poorer neighborhoods hit hardest, but wealthy, middle class also squeezed | December 4, 2007 | BY ART GOLAB Staff Reporter/agolab@suntimes.com

The home mortgage meltdown isn’t just gutting the poorer parts of town.

It’s beginning to hammer wealthy and middle class Chicago neighborhoods like Lincoln Park, Lincoln Square, Irving Park, Portage Park and Mt. Greenwood — all areas where home mortgage foreclosures have shot up by 100 percent or more from 2006 to 2007.
...
Poverty stricken West Englewood, for example, had 348 foreclosures, or 111 per square mile — yet that was just a 58 percent increase over the previous year. ...

what has really undermined trust is the fact that nobody knows where the financial toxic waste is buried

Innovating Our Way to Financial Crisis | By PAUL KRUGMAN | Published: December 3, 2007
...
How bad is it? Well, I’ve never seen financial insiders this spooked — not even during the Asian crisis of 1997-98, when economic dominoes seemed to be falling all around the world.

This time, market players seem truly horrified — because they’ve suddenly realized that they don’t understand the complex financial system they created.
...
But liquidity has been drying up. Some credit markets have effectively closed up shop. Interest rates in other markets — like the London market, in which banks lend to each other — have risen even as interest rates on U.S. government debt, which is still considered safe, have plunged.
...
Behind the disappearance of liquidity lies a collapse of trust: market players don’t want to lend to each other, because they’re not sure they’ll be repaid.
...
But what has really undermined trust is the fact that nobody knows where the financial toxic waste is buried. Citigroup wasn’t supposed to have tens of billions of dollars in subprime exposure; it did. Florida’s Local Government Investment Pool, which acts as a bank for the state’s school districts, was supposed to be risk-free; it wasn’t (and now schools don’t have the money to pay teachers). ...
...
The bottom line is that policy makers left the financial industry free to innovate — and what it did was to innovate itself, and the rest of us, into a big, nasty mess.

Toxic loan packages: bankers argue, buyers of such securities are sophisticated and understand the risks ...[ but clearly didn't !]

Wary of Risk, Bankers Sold Shaky Mortgage Debt | By JENNY ANDERSON and VIKAS BAJAJ | Published: December 6, 2007

As the subprime loan crisis deepens, Wall Street firms are increasingly coming under scrutiny for their role in selling risky mortgage-related securities to investors.

Many of the home loans tied to these investments quickly defaulted, resulting in billions of dollars of losses for investors. At the same time, many of the companies that sold these securities, concerned about a looming meltdown in the housing market, protected themselves from losses.

One big bank that saw the trouble coming, Goldman Sachs, began reducing its inventory of mortgages and mortgage securities late last year. Even so, Goldman went on to package and sell more than $6 billion of new securities backed by subprime mortgages during the first nine months of this year. ...
...
The Wall Street banks that foresaw problems say they hedged their mortgage positions as part of their fiduciary duty to shareholders. Indeed, some other companies, particularly Citigroup, Merrill Lynch and UBS, apparently did not foresee the housing market collapse and lost billions of dollars, leading to forced resignations of their chief executives.

In any case, the bankers argue, buyers of such securities — institutional investors like pension funds, banks and hedge funds — are sophisticated and understand the risks.

Wall Street officials maintain that the system worked as it was supposed to. Underwriters, they say, did not pressure colleagues on trading desks or in research departments to promote securities blindly.

Nevertheless, the loans that many banks packaged are proving to be increasingly toxic. ...

Despite "No Child Left Behind" law: U.S. fourth-graders have lost ground in reading ability compared with kids around the world

US 4th-graders losing ground on literacy | NANCY ZUCKERBROD | AP News | Nov 28, 2007 17:55 EST

US Students Post Flat Reading Scores, Outperformed by 10 Other Nations or Jurisdictions

U.S. fourth-graders have lost ground in reading ability compared with kids around the world, according to results of a global reading test.

Test results released Wednesday showed U.S. students, who took the test last year, scored about the same as they did in 2001, the last time the test was given — despite an increased emphasis on reading under the No Child Left Behind law.

Still, the U.S. average score on the Progress in International Reading Literacy test remained above the international average. Ten countries or jurisdictions, including Hong Kong and three Canadian provinces, were ahead of the United States this time. In 2001, only three countries were ahead of the United States.

The 2002 No Child Left Behind law requires schools to test students annually in reading and math, and imposes sanctions on schools that miss testing goals. ...

Like a ticking time bomb, the national debt ... expanding by about $1.4 billion a day _ or nearly $1 million a minute ...

National Debt Grows $1 Million a Minute | TOM RAUM | December 3, 2007 05:37 PM EST

WASHINGTON — Like a ticking time bomb, the national debt is an explosion waiting to happen. It's expanding by about $1.4 billion a day _ or nearly $1 million a minute.

What's that mean to you?

It means almost $30,000 in debt for each man, woman, child and infant in the United States.

Even if you've escaped the recent housing and credit crunches and are coping with rising fuel prices, you may still be headed for economic misery, along with the rest of the country. That's because the government is fast straining resources needed to meet interest payments on the national debt, which stands at a mind-numbing $9.13 trillion. ...
...
The national debt _ the total accumulation of annual budget deficits _ is up from $5.7 trillion when President Bush took office in January 2001 and it will top $10 trillion sometime right before or right after he leaves in January 2009. ...
...
For now, large U.S. trade deficits with much of the rest of the world work in favor of continued foreign investment in Treasuries and dollar-denominated securities. After all, the vast sums Americans pay _ in dollars _ for imported goods has to go somewhere. But that dynamic could change.

"The first day the Chinese or the Japanese or the Saudis say, `we've bought enough of your paper,' then the debt _ whatever level it is at that point _ becomes unmanageable," said Collender. ...

much of this crisis traced to lenders’ failure to vet borrowers and the government’s failure to regulate ... now increasing foreclosures, CRIME ...

Spreading the Misery | Article Tools Sponsored By | Published: November 29, 2007
...
In the third quarter, there were 635,000 foreclosure filings, a 30 percent increase from the previous quarter and nearly double from a year ago, according to RealtyTrac, a national real estate information service. That works out to one for every 196 households. Michigan and Ohio, which were hit early and hard by a combination of economic weakness and reckless lending, continue to reel. Foreclosures rose last year in Colorado, Georgia and Texas and are now surging in California, Nevada, Arizona and Florida. In those states unsustainable mortgages are at the root of the problem.
...
The Bush administration has been far too slow to respond, with some officials apparently worried that helping today’s troubled borrowers might encourage future borrowers to take on too much debt. That misses a critical point: much of this crisis can be traced to lenders’ failure to vet borrowers and the government’s failure to regulate the industry. And it misses an even bigger point: unless something is done quickly, whole communities, not just people who lose their homes, will suffer.

Foreclosed properties damage the value of nearby homes and the tax bases of municipalities. There is also a strong correlation between foreclosures and crime. For every one percentage point increase in a neighborhood’s foreclosure rate, violent crime rises 2.3 percent, according to a recent study by Dan Immergluck of the Georgia Institute of Technology and Geoff Smith of Woodstock Institute, a research and advocacy organization in Chicago. ...