Foreclosures?

The economic impact of the global financial meltdown (unmitigated by the US government's slow, simplistic, and meager response) will soon be felt at the community level through a rapid increase in foreclosures on homes. Already, nearly ~10 percent of all US mortgages are either in foreclosure or in serious risk of default. Housing prices continue to fall and the rate of foreclosure will continue to increase. Based on normal conditions (measures of historical mortgage affordability equated to current incomes), we are only half way through the decline in housing prices. However, the scale of this crisis and its potential radical negative impact on incomes/employment implies that we are only in the early phases of the decline. As this progresses, the result will be:

• Financial distress at the community level. From a rapid decrease in tax revenues to higher costs for maintaining abandoned homes.
  
• Paralleled by a rapid rise in crime and community decay. Empty homes and gutted neighborhoods catalyze crime (initially, the relationship is linear, but there is a likely a tipping point in the 20-30% range that creates self-reinforcing dynamics) and depress wealth.
  
• And finalized as ghost towns and slums. Communities that have lost the people, wealth, and motivation for continued existence. Bankrupt local governments will fall into receivership. Homeless/refugee populations will grow. Those that have the means leave, and those that don't hoard and barricade.

INTERVENTION

One potential strategy is for communities is to stop the dynamic early, before it has the chance to reduce flexibility (an ability to create community resilience in the future). This is achieved through creating a firewall between the failure of the global/national financial system and the community. Although this may sound radical today, it will likely be vindicated by events (and potentially even by national governmental support for bankruptcy/foreclosure reform a year or two from now, which will be too late to save those communities that didn't act early):

• Force reconciliation and mediation to eliminate or substantially delay foreclosures. Philadelphia's program is an example of early success on that front.
  
• Provide legal representation to homeowners that face foreclosure. Tie up the legal process in the courts. Unfortunately, the trend is going in the opposite direction (for example: funds for free or low cost legal aid are down 50% in New Jersey).
  
• Failing the above, starve police resources used for evictions.
  

Comments

[James Bowery]

Although I have been trying to get people to use local agriculture futures as the basis for local currency, the county governments can also issue currency redeemable in payment for property taxes while shifting the compensation of their employoees, including sheriffs' departments, to compensation in the local currency. The same can be done at the city level for police resources. At the same time, exempt from property tax the median price of a home plus the median price of a self-employment property (office/subsistence acreage).

That would quickly expose the absentee land owners as the parasites they are while removing from them their local enforcement powers.

[James Bowery]

I should probably include this article from the day after the closed session of Congress (March 14) where Congress was informed that there would be a September collapse of the US economy and probable civil war:

http://www.freerepublic.com/focus/f-chat/1994684/posts?page=33

[TM Lutas]

Subsidiary governments to the states are restricted the same way states are restricted from issuing currency. Check your US Constitution.

You really ought to read the comments to that last thread. Tin foil stuff that's been hanging around for years does not gain you credibility.