The James Dicks Blog

Seems like this time last year all we heard about from our neighbors and the evening news was the problems associated with the U.S. housing market and how would we ever be able to cope. Well, the mortgage/housing talk seems to have died down but the situation still exists and the question of how we might cope with this problem is still very real.

Sure, foreclosures seemed to have relaxed a bit but there’s probably a very good reason for that – stalling tactics by homeowners. When the economy crumbed, people started losing their jobs, and the payments stopped on homes around the nation and the population had to think fast. Many decided the best way to temporarily weather the mortgage storm was to stall as long as possible. So, although they were unaccustomed to doing so, many Americans “lawyered up” and put their faith in legal stalling tactics. Up to now it’s worked like a charm. It’s helped people remain in their homes while they desperately search for employment to support their families. It’s also helped the government economic figures. But don’t let the fewer number of foreclosures around the nation fool you. They are not gone; they’ve just been postponed for a few months.

Unemployment continues to rise or remain at constant levels in many states and that just isn’t helping those in need of finding ways to start paying for their homes again. In Nevada, for instance, unemployment hit 14 percent. Those figures have put Nevada 4.3 percentage points above the national unemployment rate of 9.7 percent, and 0.4 point above Michigan’s 13.6 percent rate. By the way, Nevada also leads the country in foreclosures, bankruptcy filings and credit card delinquency. This is just one state’s economic situation; you can find basically the same kind of miserable numbers in Michigan, California and Florida.

There are tons of people out there grabbing up foreclosure deals like mad but the sales are rather slow for a number of reasons. Few people have the money, the credit rating or the desire to be purchasing their next dream home. Banks aren’t lending either and that’s a problem. There is an excess of worry and concern about where families will be in 6 months or a year. Empty homes are fostering vandalism and neighborhoods that were thriving a couple years ago are now quickly falling into ruin and even the homes that are occupied are losing value almost daily.

The government recently reported that new home sales in the United States plunged 33 percent in April to a seasonally adjusted annual rate of 300,000 units. And it was also released that more than half of all homeowners with modified mortgages fell at least two months behind in their payments just a year after the adjustment was made.

In recent months, the possibility of foreclosures continued to fester and that might be a good indication why the media hasn’t reported on it as effectively as they once did. Maybe they’re bored with this persistent problem. Glancing over the headlines on a major news reporting source this morning shows stories about a Sarah Palin public appearance, the problems with the new iPhone, a union that is apparently angry at the governor of Arizona, and the one year anniversary of the deaths of Michael Jackson and Farrah Fawcett. Not one story about the current problems with the banking industry and the housing sector.

So, it’s on to the daily accounts of the Gulf of Mexico BP oil spill (at least for now), but be advised that the housing predicament still exists and is about to grab the American economy by the throat (again). And I’m just referring to the residential side of the Real Estate market; I haven’t even addressed the commercial side yet.

So, where did the mortgage problem go? It didn’t go anywhere, my friend. As a matter of fact just look next door or across the street and I’m sure you’ll find it. Wonder if your representative in Washington sees the same thing in their neighborhood? Maybe it’s time to write them and find out.

Most of the global population is feeling the effects of the current economic malaise that has spread like a virus to the world’s economies.  We keep hearing statistics that we are currently facing the worst economic situation since the end of World War II but this has happened numerous times – even before 1945.  I did some investigating and found that our new country had one of its first economic failures in 1797 while even the “Founding Fathers” were still wet behind the ears. 

The list of recessionary periods erupted for a variety of reasons; weak economic base, greed, war, governmental regulation, and a lack of confidence due to a variety of issues.  This is by no means a comprehensive listing of the weak/recessionary economic periods that have been faced by our nation but let’s take a look at a few.  I think you’ll find this interesting.

Panic of 1797 –

The effects of deflation of the Bank of England crossed the Atlantic to the new United States and upset commercial and Real Estate markets as far south as the Caribbean.  Britain was affected greatly because they war fighting a war with France. 

Depression of 1807 –

The Embargo Act of 1807 was passed by the U.S. Congress during the term of President Thomas Jefferson.  It devastated the shipping industry.  But as a result, the Federalists fought back at the embargo and began smuggling into New England triggering an economic depression. 

Panic of 1819 –

This is the first major financial crisis in the U.S. and featured widespread foreclosures, bank failures, unemployment, and a slump in manufacturing and farming.  It also marked the conclusion of economic expansion following the War of 1812. 

Panic of 1837 –

A sharp downturn in the U.S. economy was caused by bank failures and a lack of confidence in paper currency.  Speculative markets were affected when U.S. banks stopped payment of specie (gold and silver coins). 

And It Continues

Between 1837 and the turn of the century; there were a number of economic maladies that included the Panic of 1857, Panic of 1873 and the Long Depression (yes, I said depression) between the years of 1873 to 1896.  By the way, the Long Depression was caused when the Vienna Stock Exchange collapsing which caused an economic depression that spread around the world.  It occurred during a time when the world’s industrial output had expanded fourfold. 

There was a Panic of 1907 that happened because of the failure of Reading Railroad and withdrawal of European investments led to a stock market and banking collapse.  The Post-World War I recession from 1918 to 1921; the Great Depression of 1929; Recession of 1953 and 1957; 1973 Oil Crisis, a recession in the early 1980’s, 1990’s, and 2000’s which brings us to today. 

This Too Shall Pass

As you can see, the effects of a negative economy on Americans (and the world) have happened many times before.  I counted 19 separate weak economic periods that we have endured since the inception of this nation and there’s probably a few I missed. The point is this is nothing new.  

The world’s economy is actually rather fragile and can be upset by the most innocent of motives.  No matter what the reason, one thing is certain – we have always recovered from these devastating periods over and over again to experience positive economic growth on the other side.  While there’s no time frame that can be guaranteed as to when we will exit from this current economic state of affairs, one thing is for sure, at some point, things will start to improve.  In the meantime, keep a positive attitude and work toward a positive and useful future.  What choice do you have?  It’s time to make lemonade out of these lemons.