Financial Crisis

Mortgage Credit Crisis: Homeowners Also Need to Look in the Mirror

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There is more than enough blame to go around for the sub-prime mortgage crisis, and the unraveling financial disaster. But I believe the fundamental blame lies in two places: A purely American NIMBY myth about homeowners being the only genuine contributors to their communities and a capitalistic axiom, presumably started and perpetuated by a troika among realtors, homebuilders, and mortgage lenders, that the only way for middle-income Americans to truly create wealth is through homeownership.  read more »

Bubble Opportunity: A New Life for Public Housing?

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The globalization of housing markets stood at the center of the vast, now unraveling, economic change of the past decade. The creation of new investment vehicles in the 90s diverted vast amounts of capital into housing markets around the world. The results were many and varied. Design features began to converge, with gated communities following shopping malls into cites in Latin America, China, Turkey and most other countries. Home prices began to rise, with The Economist even publishing a table of global house prices, indicating those with the most inflated costs  read more »

How Low Can House Prices Go?

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There is much speculation among economists and others about how close we are to the bottom of the collapse of housing prices. This is, of course, an important question, and goes to the heart of the wisdom or folly of the proposed $700 billion government bailout of financial markets, which is a consequence of their own profligate lending practices.  read more »

How to Protect Main Street While Saving Wall Street

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The current discussion in Washington can either lead to a rapid processing and recovery at the local level or a long drawn out destruction of local economies. This is particularly true of regions – Las Vegas, Phoenix, San Bernardino-Riverside, much of Florida – that have been hardest hit by the foreclosure crisis.  read more »

Back to Basics: The Financial Crisis Requires a Paradigm Shift

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It’s tempting to look at the current financial meltdown – and the proposed bailout – with a Bolshevik mentality. Let’s line up the investment bankers, hedge fund managers up against a wall and spray them with an odorous substance.
If it were only so easy. Rescuing Wall Street may not solve many problems but letting the investor class implode won’t help many people either.  read more »

The Smart Growth Bailout?

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One way to see the federal rescue of the home mortgage market is to call it “the smart growth bailout.” True, the proximate cause lay with profligate lending practices. The flood of mortgage money covered the entire country, irrespective of state, regional or local land use regulations. That’s where the similarity stopped.  read more »

What's the Biggest Flaw in the Administration Bailout Plan?

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The biggest flaw in the Administration bailout package: It could all happen again. The system doesn’t need just fixing, it needs decentralizing. Financial institutions should be big enough to fail—and never any bigger. We need compartmentalization, also known as federalism.  read more »

Rebuilding the Idea of the City: The Present Crisis in Perspective

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New York long was a product of the harbor economy. Before there was a Times Square or a Grand Central Station, Lower Manhattan, then ringed with docks, was oriented to the railroads and factories of the Jersey coast to its west and the merchants and manufacturers of Brooklyn across the East River. The decline of Lower Manhattan as an economic engine is in large measure a reflection of the fall of that harbor economy as first Manhattan and then its partners in Brooklyn and Jersey City de-industrialized.  read more »

A New Model for New York --- San Francisco Anyone?

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From the beginning of the mortgage crisis New York and other financial centers have acted as if they were immune to the suffering in the rest of country. As suburbs, exurbs and hard-scrabble out of the way urban neighborhoods suffered with foreclosures and endured predictions of their demise, the cognitive elites in places like Manhattan felt confident about their own prospects, property values and jobs. So what if the rubes in Phoenix, Las Vegas, Tampa and Riverside all teetered on the brink?  read more »

An Economic Recovery Program for the Post-Bubble Economy

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By Bernard L. Schwartz, Sherle R. Schwenninger, New America Foundation

The American economy is in trouble. Battered and bruised by the collapsing housing and credit bubbles, and by high oil and food prices, it is having trouble finding its footing. The stimulus medicine the Federal Reserve and Congress administered earlier this year is already wearing off, while home prices are still falling and unemployment continues to creep upward.  read more »