The Foreclosure Crisis is the Primary Challenge Before President Elect Obama

November 10th, 2008 | Tags: Foreclosure Crisis

The inheritance of the new 44th President of America is overwhelming. The foreclosure crisis is the primary challenge before President elect Obama. There is no doubt that recession has set and tackling the foreclosure-triggered problem will be the topmost priority at least for the first six months.

There is an even more serious problem that was kicked off by the foreclosure game played by avaricious lenders and gullible borrowers. It is the dependence for a long term on foreign investors. They are financing and if this continues for long they will buy up USA! Thus Obama faces a two-pronged economic problem – warding off the foreign menace and tackling the foreclosure related economic slump. Saying that economic downturns come in cycle cannot sidetrack the problem. That may be so but what about structural changes? These are in the hands of administrators.

Admitting the inevitability of cycles it cannot be denied that this particular foreclosure related trouble is far worse then yesterday’s woes. Till September it seemed that America was facing the downturn cycle better than Europe. But today it has come up against a wall. Real estate market continues to fall, foreclosures continue to increase while consumers are not buying. Companies are finding it extremely difficult to borrow. Unemployment is rampant. The government deficit is swelling and swelling.

The overnight cutting of interest rate to 1% by the Federal Reserve has had little impact. There are no other tools left in the hands of the government. If 1% cannot help there is no logic in thinking that a cut of ½% or zero will produce results.

In this Foreclosure Age, cowering under dark economic gloom, the ordinary American is not only frightened but also angry. The extreme greed followed by stupidity of the Wall Street giants has caused the disease to cross financial boundaries to maul the real economy. There has been a massive loss of consumer confidence as the man in the streets has been directly hit by the foreclosure triggered tsunami.

The month of October saw a slump in car sales by 31% from the previous year. Since 1991 this is the worst year. By balancing this with increase in population it may be said that this is the worst year since 1950.

So the first task before President elect Obama will be instill confidence in the traumatized American and inject optimism into the mood of the nation.