Hard Times Ahead For 'Mortgage Slaves'?

"This week's data on the sagging real estate market leaves no doubt that the housing bubble is quickly crashing to earth and that hard times are on the way. The Commerce Dept announced that the construction of new homes fell in January by a whopping 14.3%. Prices fell in half of the nation's major markets and 'existing home sales declined in 40 states'. Arizona, Florida, California, and Virginia have seen precipitous drops in sales. The Commerce Department also reported that 'the number of vacant homes increased by 34% in 2006 to 2.1 million at the end of the year, nearly double the long-term vacancy rate.' (Marketwatch)

"The ripple effects of the housing crash will be felt throughout the overall economy; shrinking GDP, slowing consumer spending and putting more workers in the growing unemployment lines."

"December's figures indicate that foreign investment is drying up and the world is no longer eager to purchase America's lavish debt. The only thing the Federal Reserve can do is raise interest rates to attract foreign capital or let the dollar fall in value. The problem, of course, is that if the Fed raises rates, the real estate market will collapse even faster which will strangle consumer spending and shrivel GDP. In other words, we are at the brink of two separate but related crises; an economic crisis and a currency crisis. That means that the unsuspecting American people are likely to be ground between the two mill-wheels of hyperinflation and shrinking growth."

"This will inevitably create deeper societal divisions and, very likely, a permanent underclass of mortgage-slaves."