We often heard of the 'American Dream'. Today this dream has become 'American Nightmare'. Millions of Americans are losing their homes with foreclosure rate hitting historical proportion. I see this coming long ago. When politicians bullshit to the American public about the good American life, misled them year in year out of the ever bright future they have. And American naively believes the rhetoric and spends beyond their mean. Individual becomes highly leveraged by taking excessive loan through mortgages. The ever greedy banks readily and happily lend with no regards for credit worthiness. Then the mortgages are packaged into financial instrument that no investors really understood or bother to understand the risk of such investment. The outcome is now history.
President Obama unveiled his much-anticipated bailout plan to sort out this ‘make in America’ housing crisis. He pledges 275Bn dollars to help stem the wave of foreclosure sweeping the country. Accordingly to various new sources, up to 10 million homeowners may face foreclosures by 2012 if nothing is done. The president reckons that if they do nothing now, the cost will even be higher later. In my opinion, that may be true. The bursting of the housing bubble was the root cause of this economic crisis. Unless and until the prices of properties stabilised, the banking crisis will continued to be stress and will not recover. Only when both the housing and the banking recover, then America can expect to be out of this recession.
This is a smart move by Obama both politically and economically. But the outcome and repercussion is still questionable and debatable. President Obama next move is likely to fix the auto industry. Then next he should move on to fix the banking system. Here is where the core problem of the present economic crisis lies.
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