Tuesday, January 22, 2008

Laura's Soapbox: Housing

As a student of economics, and a general interested party, I have been predicting for over a month now that we are headed into a recession. Although failing economic conditions were much more visible during my winter break visit to the Midwest, the volatile stock market thus far and the instability of some of the countries largest financial institutions seems to indicate that we are headed to a downward spiral.

Stockbrokers are an interesting people. Charged with knowing a lot more about financial markets than I could ever hope to understand, they are generally optimistic because they want your business. Even as a college student, my "guys" over at Charles Schwab generally tell me it's a good thing to just leave them untouched. Talking to my economics advisor yesterday, he received a phone call from his "stock guy" who was a lot more optimistic than a few I've talked to lately (who encouraged me to sell, since the stock market would be rough in the first half of the year and since I may need to money in the next few months for an apartment, new car, or any number of post-graduation expenses).

I don't remain optimistic.

All it took for me was a visit home to Ohio, where it seems to me that people are stalled. Without naming names, I know of families who work constantly and don't blow money but who are now facing foreclosure. People working in the manufacturing arenas of the Midwest in danger of losing their job, forced to move into small apartments with family members. Members of my graduating class returning to our small town with a bachelors degree to work in... the grocery market.

The Detroit area had one new foreclosure filing for every 248 households in November, while the national foreclosure rate was one filing for every 961 households.

Of course, this small section of the country is but a piece of what I believe is a bigger problem in our country: in the transition to a service oriented economy, places like Indiana, Ohio, and Michigan and even Pennsylvania have a few remnants of factories used for making automobiles or steel. As these industries fail or move out of the country, we have an influx of people trained in these hands-on manufacturing jobs, many halfway or near retirement, with nowhere to go. They say "you can't teach an old dog new tricks". I don't believe that's entirely true, but I do believe it's a difficult transition from steel to working in a service industry. Even those in the general service industry manage to just squeak by at the end of the month.

Maybe politicians don't realize this because they live elsewhere, shadowed from the plethora of small towns where single mothers struggle or the bigger towns where teens turn to drug dealing to make a living. But- it happens.

And today, a few days after I originally started this post, the Fed cut the interest rate by 3/4 of a point, in response to dismal economic conditions. Over the weekend I heard from just about every candidate what their short-term fix would be: many involved a tax cut or sudden influx of money. A sudden influx of $800 to a middle class family wouldn't do much: those who don't need it desperately will save it. Those who need it will spend it on doctor's visits, overdue bills, and groceries.

Lack of decent housing is frequently blamed on poor decision making by the people involved. Having met many men and women through every age category that lacked one or both, I believe that when you're in dire straits, one poor choice can push you into poverty or homelessness. No matter how many people do make one or a few mistakes that limit your ability to ever pull yourself out, the problem is growing far too quickly. I think the Democrats made a big mistake not paying attention to Michigan at all. Of course, I understand their electoral reasoning: no delegates, no point.

But Michigan may as well represent the problems that cut across the country through every age, sex, and race: the housing market is weak. Subprime lenders have preyed on the Midwest especially for some time. Relief is nowhere to be seen. How can you convince a voter that your stance on homeland security is the strongest when that voter is likely to lose his home in foreclosure?

While a temporary stimulus package is great, the key word is temporary. This will not provide the dramatic long term push that our economy and housing market so desperately need. We need affordable, quality housing. We need tougher standards for "subprime" lenders. We need a lot of things. The Fed made their recent decision after an emergency video meeting. Let's trust the nations leading economic leaders: things are not good. If you're still not convinced, please look to Wall Street.

Domestically is where this presidential race needs to focus. I know that the end of terrorism is an important, if not nearly impossible, goal. But when you have average Americans one paycheck away from poverty and families losing their homes at an alarming rate, it's time to look back home.

I hope to see this years slew of presidential candidates present plausible, goal-oriented plans. America is the land of the free- if you can afford it, anyways. Let's offer access to safe affordable housing- there's a start. Isn't a roof over your head a basic necessity? Maybe government housing doesn't always have to be "the projects". Every American family has a right to shelter, and I think it's an easy change we need to make.

Remember, this is just my opinion, but it is a fine tuned opinion from three and a half years of grueling economics courses and an eye always turned to national and world news. I've got more opinion on many issues which I feel could easily dominate this upcoming election, and I'll cover them in time.

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