Debt moratorium or massive homelessness in the US?

allenwrench · Intermediate Crude Joined: Apr 23, 2008 Posts: 883

When TEOTWAK arrives and most are out of work and business shut down will the government put a moratorium on all debt, rents, taxes, etc.? Or will they let the landlords and note holders throw everyone in the street?

Cloud9 · Light Sweet Crude Joined: Jul 26, 2006 Posts: 1043

What needs to happen is to let the business cycle cycle. Federal intervention will reward banks and borrowers for bad behavior. Let the forclosures happen. When hundreds of thousands of houses go up on the aution block, housing will become affordable again.

Check out the penny auctions of the 1930's.

RdSnt

jlw61

Cloud9 · Light Sweet Crude Joined: Jul 26, 2006 Posts: 1043

The federal government leans far more to the left than it did in the 1930's. Hoover could not wrap his mind around the idea that it was the government's job to sustain the unemployed. Today that idea is a given.

There is still enough fuel to run agriculture, rail and government. I hope that the government will step in and create workfare instead of the doll.

vision-master

wisconsin_cur · Moderator Joined: May 10, 2007 Posts: 2999

Kingcoal

I don't think the government can do very much. After all, mortgages are private contracts and the government is bound by the Constitution to respect peoples private property. The government can change regulations or they can provide a benefit program for people who are affected, but that's about it.

Being a private security worker might be a great job in the future. It puts you on the nice side of the fence.
_________________
"That's the problem with mercy, kid... It just ain't professional" - Fast Eddie, The Color of Money

NeoPeasant

Homelessness? Mr. Potter will be happy to rent your house back to you after he buys it for pennies on the dollar.
_________________
The battle to preserve our lifestyle has already been lost. The battle to preserve our lives is just beginning.

truecougarblue · Heavy Crude Joined: Dec 21, 2005 Posts: 471

Re: Homelessness?

It's tiresome to see all the sob-stories in the press about people in foreclosure who will now be, "homeless".

The reality is that most of them will either move in with family, or, (gasp) RENT.

They were renters to begin with and have proven that they can't actually hack it as owners. (debtors)

If a moratorium is called on debt we can all say hello to a barter society because the banks won't be lending enough to buy a cup of joe.

virgincrude

Back in May this report caught my eye:

Squatters Move In

Dreamtwister · Fission Joined: Feb 06, 2006 Posts: 2220

Captain_Meh · Heavy Crude Joined: Jun 09, 2008 Posts: 109

"Debt moratorium or massive homelessness in the US?"

IMO, neither. I predict another bailout, moral hazard be damned.

nocar · Intermediate Crude Joined: Nov 05, 2004 Posts: 682

If I were a bank, and the government did not help in this situation, I might evict delinquent lenders to begin with. But then I would discover that being stuck with a lot of empty houses is no good. Such houses quickly get ruined. So I have the choice of trying to sell the houses in a market where noone is buyer, or getting a little bit of money back by letting people rent it. The renters would likely be people who were evicted from a house down the street. Then I might discover that the delinquent people who already live in a house and should be evicted might be willing to rent it at a higher rate then their neighbors in similar circumstances who had been evicted. In the first place, they save the cost and trouble of moving, and in the second place they do not have to tell anyone that they actually 'have lost their home'.

This scenario of course rests on the assumption that there are lots of people not being about to afford their mortgages.

nocar

Serial_Worrier · Heavy Crude Joined: Jun 05, 2008 Posts: 233

The banks built a model based on the hope that evicted FBers wouldn't trash the home. I wouldn't count on that hope. Also are the banks going to pay for extra round-the-clock security to make sure the homes don't get trashed?