Stiglitz Expects 2 Million U.S. Foreclosures This Year

Bloomberg:

Nobel Prize-winning economist Joseph Stiglitz said another 2 million foreclosures are expected in the U.S. this year, adding to the 7 million that have occurred since the economic crisis of 2008.

"U.S. foreclosures are continuing apace," Stiglitz told a conference near Port Louis, the capital of Mauritius, today. "A quarter of U.S. homes are underwater."

Read the whole story: Bloomberg

Comments

[builderman55]

12:40 PM on 02/10/2011

And know that the $148 billion bonuses WS is about to distribute would fund every single underwater mortgage in America right now...

[builderman55]

12:39 PM on 02/10/2011

Nine million families lose their homes and Wall Street rewards itself with $148 billion in bonuses fueled by taxpayer bailouts. Is this a great country or what? We absolutely have the best government money can buy...

[kamact]

01:12 AM on 02/10/2011

These displaced millions of Americans should occupy the banksters offices and homes,...then let's see our taxpayer dollars hard at work

[sueinmn]

12:04 AM on 02/10/2011

Bush was assentially the beginning of the end for many. After Katrina, he wanted little section 8 housing and created the home affordable act. Everyone who could game the system, increase the prices from appraisers to realtors made sure they got their cuts. This was created not by those who bought homes but by those who got greedy.

[rtx47]

11:44 PM on 02/09/2011

"Out-of-the-box Thinking"

Solve the housing crises by increasing the demand for homes in win-win scenarios.

Increase demand in low-end housing market ($100K+ homes) by solving the undocument­ed worker issue and permitting them to come out of the shadow. They (20 million) would BUY homes, furniture, cars, dishwasher­, washers and dryers, etc..

Increase demand in mid-range housing market ($ 250K+), by permitting foreign physicians (50,000) to immigrate to America and meet the need of current doctor shortage.

In addition, each physician on average creates employment for five to six individual­s - Nurse Practition­ers / PA, nurses, secretarie­s billing staff, transcript­ions. These jobs will be scattered throughout the country, including inner cites and rural areas.

Many Americans are against immigratio­n as an emotional and intellectu­al response to our current economic difficulti­es. Yet most studies show immigrants greatly contribute to the economy. Immigrants and their immediate offspring are and have been a great source of innovation and economic engine to spur economic growth.

Being against immigratio­n or legalizing the undocument­ed is to 'cut our nose to spite our face'.
Those who like the suggestions, please feel free to forward them to your elected representatives and to the press.

[jstrate]

11:44 PM on 02/09/2011

Housing is a private good (rivalrous, excludable) and the market will supply it efficiently. Time to get government out of housing once and for all, except for Section 8 and other programs that provide subsidies to persons and families who cannot afford it. All of us need shelter. Dump the mortgage interest deduction. Dump the energy efficiency tax credits. Get rid of Fannie and Freddy. If there are people who cannot afford a house and do not have the earnings or the discipline to pay a mortgage and other housing expenses, let them rent. Prices works, if our public officials would ever let them work.

[sueinmn]

12:01 AM on 02/10/2011

Go research why they got into it so big. BUSH wanted to end section 8 housing after Katrina. He made home affordable a requirement to get them off the federal roles. We all blame but non one ever looks at the WHY< WHAT

[whitemale08]

09:02 PM on 02/09/2011

1/4 of million mortgages underwater?

...and this is what Wall Street calls a "recovery"?

Hahaa...don't make me laugh.

First the American taxpayer gets SUCKERED into bailing out Warren Bufftet @Goldman Sachs and now they SUCKER the American people into believing that we're in "recovery" and no need for Glass-Steagall to re-organize the banks.

You gotta love it.

[mcmutter]

08:45 PM on 02/09/2011

Wall St created 900,000 US jobs since the bottom ....

of course, they also created 2.7 million jobs in China and India ....

[Kai-HK]

08:39 PM on 02/09/2011

Awesome! let's get the economic healing in high gear. Stop propping up failed home buyers. Lets foreclose and get these squatters and deadbeats out of houses owned by the banks. The housing market needs to reset at a natural supply-demand & price equilibrium. It is the only way for us to get our economy back on track.

Kai

[Trepasky]

08:59 AM on 02/10/2011

Really sad to call some of the unemployed "squatters and deadbeats"
Oh well, everyone has their perspective and karma to manage

[Kai-HK]

10:18 PM on 02/10/2011

That is what people are called when they live in houses owned by other people. They do not won those houses, the banks do. Time for them to move.

Totally agree about their Karma, hopefully they will get on the right side of it once they stop stealing from the banks that lent them the money. Perhaps if they also send a note to the banks apologizing for their fiscal imprudence and thanking them for the money that they borrowed and lost, this would also go a long way toward making them whole in the eyes of karma.

[KLovesFreedom]

02:21 PM on 02/10/2011

Wow, Kai! What a judgmental and linear point of view. It is indeed funny how you identify hardworking Americans that were the victims of shoddy, misrepresented mortgages as "deadbeats and squatters" and never find fault with these bailed out banks. How can you view a bank, a entity that only cares about profits and willing to get those monies from the disenfranchised and ill informed to banking practices, as being somehow morally superior and justified in making homeowners feel guilty about not paying their mortgage and foreclosing on them, when they, in fact, don't adhere to any legal or appropriate policies themselves?

Moreover, your position that it is better for the bailed out banks to kick all of the families out onto the street than to negotiate/modify the bad mortgages is mind boggling. What is supposed to happen to the million of foreclosed homes now owned by the banks? Oh yes! The "free market" will work its magic and fix all this. Or better yet, anyone that is facing a hardship and unable to meet their obligations should just get the middle finger and deal with whatever the creditor throws their way. Sorry, Kai, but a truly healthy economy requires a honest, equitable course of dealings between all individuals, and yes, that includes banks too.

[Kai-HK]

10:28 PM on 02/10/2011

KLovesFreedom:

Regardless of the reason, if they have not been paying their mortgage and are in default and are still in the house, they are a squatter. They are not victims. They were complicit in their in their own failure and they need to own that.

I am equally hard on the commercial banks and the mortgage lenders that lent money to these credit-impaired squatters. I am heartened that every time they foreclose, the lose additional money since the house is not enough to pay off the outstanding loan. They are getting punished also for giving money to people with low financial literacy. It is the circle of life.

I am not advocating that kicking them out on the street is better. I am advocating that it is up for the banks and ultimate owners of the mortgages to decide that. Not the mortgagee, not the government, and certainly not you. It is NOT your money. If it was, I would argue that you could keep them in the house if you so desired.

The free markets will fix this. House prices will continue to drop until they become great deals at low prices, people will them either live in them, with low mortgages, or rent them out at lower rates. Free markets shall set you free…

Agreed, honesty and equitable dealings are at the heart of this issue and people that cannot uphold their moral and financial obligations on their loans, should be kicked out.

Kai

[ThePeacemakers]

07:14 PM on 02/09/2011

The booming economies of Asia are “too small to be the engine of recovery for the U.S. and Europe,” Stiglitz said. “They cannot make up for the deficiency.”

Gee, could that because those "booming" economies have the same problem?
It's only "booming" for a few a them.

[ThePeacemakers]

07:16 PM on 02/09/2011

could that "BE" because...

[costellowriter]

06:42 PM on 02/09/2011

So what if homes are underwater??? It's irrelevant to anyone who is buying a home for the right reasons. It's only a problem if you are trying to use it as an ATM to borrow, so you can spend more than you earn.
http://bizcovering.com/investing/understanding-the-economic-mess/

[StJames]

07:28 PM on 02/09/2011

Not exactly...if you want or need to relocate for a better job, you have a real problem when your home is worth less than the amount of the mortgage.  What happens when your insurance company wants to insure for less than you owe?  Not everyone who went into foreclosure had used their home as an ATM...Not everyone who is underwater now did either.  If you're a first time buyer, it's a great opportunity...other than that...it sucks.

[joroline]

06:32 PM on 02/09/2011

i would like to see the logic of the calculation leading to the '2 million new foreclosure number'. the estimates are all over the board depending on ARM resets (both in terms of people's ability to refi as well as whether it is worth it leading to strategic foreclosures), what banks do regarding increasing shadow inventory, unemployment rates, etc, etc, etc.

the debate over the number and the contribution of causes isnt trivial- it has major implications on what to do about in terms of educating and counseling homeowners as well as what policies can ameliorate the affect on families

[DismayedRepub]

06:43 PM on 02/09/2011

Check out: http://dailyreckoning.com/extending-the-housing-bust-predictions/

The chart near the end of the article is data from Credit Suisse.

[madeinusa]

06:31 PM on 02/09/2011

i only hope the banks are losing their ass's on these forclosures.they gave out loans to people who could not afford them.that's called incompetence.that's call bad judgement.any other businesses that would make such bad decisions would be out of business,not bailed out.back say 30 years ago,banks would not give you a home loan,and all your other debt included for more then 40% of your monthly income.it's called,living within thy means.we need to throw that title of "a land of consumers"away.this country needs to quit supporting these big banks and big corporations that send their jobs overseas.support small business.find a small bank,or better yet a credit union.alot of credit unions have their own credit cards and loan programs.some have insurance programs too.we need to quit rewarding banks and businesses that brought all but the top 1% down.and buy american-made products.just type in american-made products and there are links to all kinds of products that's all for now

[Jill1975]

08:39 PM on 02/09/2011

Unlike in previous times, banks today are profiting from foreclosing on your house because of the bailouts.
In many cases , the bank does not have to worry about foreclosure because it passed the risky loan on to someone else.

[dporterdvd]

06:26 PM on 02/09/2011

Good article. Most Americans are worse off than they were 10 to 12 years ago because wealth has been trickling up.

While the middle class is being destroyed, Repubs keep fighting for tax breaks for millionaires and billionaires. When are voters going to vote for tax policies which restore the middle class?

[schatsie]

09:21 PM on 02/09/2011

See FAIRSHARETAXES.ORG....time for real tax reform, before we go into the death spiral....

[dporterdvd]

10:08 PM on 02/09/2011

Faved. Thanks for the website.

[DismayedRepub]

06:24 PM on 02/09/2011

I’m afraid Mr. Stiglitz is being wildly optimistic in his estimate of only two million new foreclosures this year. There is a huge wave of Option ARM mortgages resetting this year peaking at over $13,000,000,000 (that’s billions) worth of them next September.

Very few, if any, of these mortgages are above water and no one will be able to refinance out of them. This won’t be quite as bad as the Subprime Disaster in 2008 but it will be pretty close. Batten down the hatches, here we go again.

[StJames]

07:35 PM on 02/09/2011

Re-sets are only bad when rates are UP...I'm sure one reason Bernancke is keeping the rates so low is the re-set problem. 

Stiglitz is brilliant.  I read FreeFall when it first came out and everything he said has proven correct.  Including the fact that the CRA loans outperformed other subprime loans in most of the country and even outperformed prime loan in many areas.  So much for the trouble being the caused by poor people.

[Jill1975]

08:41 PM on 02/09/2011

CRA loans were not subprime loans.

[DismayedRepub]

01:26 PM on 02/10/2011

I think Bernanke is keeping rates low to lower the borrowing costs for the government. Even with over $14 trillion public debt the annual interest payment is around $414 billion. If borrowing rates where to rise to say 6% the interest would increase to around $2 trillion per year. This would be really bad considering the government tax receipts are only slightly more than that. If the Chinese decide that they want more interest to offset the increased risk of loaning to us we’ll be in serious trouble. Bankruptcy looms.