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Month: March 2009 (Page 2 of 2)

For those personally worrying about foreclosure, Please read this post

March 6, 2009 / / 2 Comments

This is a cross-post from a forum, reposted here with the author’s permission. I thought it might be of value to some of my readers:

A post in another forum served as a reminder of the economic fragility that many solidly middle class families are facing these days. My day job is in the affordable housing non-profit field, and my agency is among many on the front lines in saving homes and saving families from foreclosure.

So I will repeat what I said in the other thread:

For anyone who is getting behind in their mortgages and worrying about foreclosure, please get help from a non-profit housing organization sooner rather than later. There are new programs and new funds available to help, and banks are much more agreeable to loan modifications and deferrals than they were just a little while ago.

When you’re starting to get behind get some help – call the local HUD-certified housing counselling agency. A list can be found here, or call the HOPE hotline at 888-985=HOPE (4673).

There are a lot of pseudo counsellors and “debt relief specialists” out there preying upon people who are financially and mentally exhausted by economic turmoil. Stay away from them and get help from the non-profits who are the front line of defense in the current housing troubles. My agency has rescued dozens from foreclosure and saved more than 70 rental units that were abandoned by their owners, during the past year alone. There are many more like us.

Please get the name of the people near you from the HOPE line or website, and please be patient with them, they’re among the most overwhelmed workers in our country right now.

If anyone has questions on the availability of resources or anything else to do with these housing rescue programs please feel free to PM me. I will, of course, keep any information private.

Don’t go it alone – individual cases may differ tremendously, but many people can actually be helped if they get help early and find people who can intervene with lenders.

Andy

This is a Switch, and a Good One

March 6, 2009 / / 0 Comments

The U.S. Commerce Department recently reported that the savings rate in the U.S. has risen to its highest level in 14 years. This is a sea change, possibly with big consequences, since a large part of the global economy has long depended on uncontrollable consumption of Americans.

The loss in value of homes and the collapse of investments and retirement plans has caused a dramatic change in U.S. consumer behavior and the consequences are being felt from Taipei to Berlin. This last January, Americans in the United States saved 5 percent of their income, the highest percentage since 1995. As recently as April of last year, the savings rate was zero. If the savings rate of 5 percent per year continues, then spending by Americans will drop by $545 billion. Many analysts predict that the savings rate will continue to rise. Some believe it will return to the 9 percent level that was seen in 1980.

Consumer spending in the U.S. has undergone a “gigantic” drop according to Rebeca Grynspan, director of the Latin American and Caribbean Program of the United Nations Development Program (UNDP). The World Bank says that for the first time in 25 years, worldwide economic activity has dropped. It fell by 2.1 percent, mainly due to decreased consumption by the United States.

Carlo Cottarelli, head of the fiscal affairs department of the IMF believes that “it is necessary that consumers put their accounts in order” in the United States. For years they lived beyond their means, thanks to abundant credit, whose ultimate origin was Asian, which were happy to extend credit to the United States. They got into debt to buy more powerful cars, bigger houses, travel to the Caribbean, relying on “incredible” stock market gains and real estate capital gains, said Barry Bosworth, an expert at Brookings Institution. The fall of these assets has now destroyed $8 trillion, leaving the poorest families struggling to pay debts.

“I do not expect a return to the mentality of crazy spending in the U.S. in the medium term,” said Gary Hufbauer, an expert of the Institute for International Economics. Eswar Prasad, a professor at Cornell University, said that the export-based economies “will be forced to think about rebalancing their growth and generating domestic demand in order to end the crisis.” That’s just what they are doing in China and Germany, they are employing fiscal stimulus packages. Asian governments have announced a fiscal expansion of nearly $700 billion, comparable to the U.S..

In the United States, the sudden restraint causes immediate pain, however, it is beneficial in the long term by ending behaviors that were unsustainable.

Future U.S. Growth in Danger?

March 5, 2009 / / 0 Comments

As the debate over immigrants goes on, we are losing sight of one important fact: The U.S. is no longer the only land of opportunity. If we don’t want the immigrants who fueled our innovation and economic growth, they now have options elsewhere. Immigrants are returning home in greater numbers. And new research shows they are returning to enjoy a better quality of life, better career prospects, and the comfort of being close to family and friends.

Research indicates that a crisis was brewing because of the ever-growing immigration backlog. At the end of 2006, more than 1 million skilled professionals (engineers, scientists, doctors, researchers) and their families were in line for a yearly allotment of only 120,000 permanent resident visas. The wait time for some people ran longer than 10 years. In the meantime, these workers are trapped in “immigration limbo.” If they change jobs or even take a promotion, they risk being pushed to the back of the waiting line. It was predicted that skilled foreign workers would increasingly get fed up and return to countries like India and China where the economies are booming, and it’s now happening.

Contrary to the anti-immigration noises that came from the previous president’s administration, immigrants are critical to the United States’ long-term economic health. Despite the fact that they constitute only 12% of the U.S. population, immigrants have started 52% of Silicon Valley’s technology companies and contributed more than 25% of our global patents. They make up 24% of the U.S. science and engineering workforce holding bachelor degrees and 47% of science and engineering workers who have PhDs. Imagine that — 47% of the PhDs in science and engineering in the U.S. are immigrants. Immigrants founded or co-founded firms that you’ve heard of such as Google, Intel, eBay, and Yahoo!.

No government agency tracks the numbers on immigrants who gave up or returned but human resources directors in India and China say that what was a trickle of returnees a decade ago had become a flood. Job applications from the U.S. have increased tenfold over the last few years. And it’s not just new immigrants who are returning. 30% are immigrants who have permanent residency or are U.S. citizens.

Besides the visa problems and now the economic crisis, returnees are saying that their reasons for returning include better opportunities back home, better conditions for entrepreneurs and for launching businesses, and better family values in places like India and China.

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