Belfast Telegraph

We must heed home truths of US recession

By Lindy McDowell

The saying goes — America sneezes (we’re talking economically) and the rest of the world catches a cold.

With latest reports warning that the US could be in for a double dip recession does this mean that we are in for another bad dose back here too?

The signs aren’t heartening.

On Labor Day this week President Obama called for a dramatic $50bn building programme aimed at jumpstarting the American economy. The money would be spent on roads, rail, airports and would provide jobs for the growing army of unemployed.

But even if the plan is approved will it give Obama (or O as the headline writers of the New York Post snappily call him) what he really needs right now?

The united states of a miracle

America’s housing market continues to languish in the doldrums and nowhere is this more apparent than in Southern Florida where the statistics are truly gob-smacking.

Houses, good houses with three rooms, a couple of bathrooms and a pool are selling for as little as £30,000. I have no idea what the neighbourhood is like. But at those prices you’d make the effort to fit in.

The number of homeowners facing foreclosure (losing their houses through bank repossession) now amounts to 20% in the state as a whole.

One firm alone filed over 70,000 foreclosure cases last year.

The very rich man who heads up this firm is reported to have considered calling his yacht (he denies this story) Su Casa es Mi Casa. It’s a cruel twist on an old Spanish saying — my house is your house. In this case — your house is my house.

It sums up what many perceive as the grasping, cynical role of the banks in all this.

For if, through the sub-prime madness, the banks and other lending institutions killed off the golden goose of a healthy housing market, they’re now quite contentedly feeding off the carcass.

The working man may be suffering. But pickings are still good for the big boys.

As foreclosure cases pile up and special courts are set up to deal with the mess (The Foreclosure Express is how the New York Times describes it) borrowers feel that decisions are weighted in favour of the large institutions.

And what they are losing of course, are not just houses. But homes. Drive down residential streets and the forlorn For Sale signs tinkle in the breeze like this season’s must-have garden decoration.

The billboards advise of lawyers who will help avoid foreclosure. But the newspaper property columns heave with the latest listings of your chance to grab a bargain from someone else’s misery

As is the case in Northern Ireland, the rental market at least is flourishing. People, families, have to live somewhere.

But for many working men and women the dream of owning even a small place of their own has now been snatched from their reach.

To keep the blue collar vote on board, O truly needs to pull something out of the hat.

Over here meantime, we should be trying to learn (another) lesson from over there.

For while America sniffles a renewed recessionary warning it may give government here time to demand a more sympathetic response from banks bailed out by the taxpayer.

Surely it is not beyond them all to inject some impetus into the housing market — especially at the lower end — by helping first time buyers get a grip on what is currently an out-of-reach property ladder.

Otherwise that Foreclosure Express may also be thundering our way too, some time soon.

Belfast Telegraph


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