Tuesday, August 21, 2007

Cleveland foreclosures hit post-Depression high

How can you not think this will likely lead to a recession that Fed chief Bernanke won’t be able to stop, when you read about this:

In the first seven months of this year, there were 13,600 foreclosures in Cleveland and Cuyahoga County alone, compared to just 7,000 for the whole of 2006, and 3,400 in 1995, said county treasurer Jim Rokakis.

To date, at least 30 percent of the subprime mortgages in Cleveland have gone bad, Rokakis said, while nationally, some estimates place the current foreclosure rate at one out of every 130 homes.

In this area, there have not been so many sheriff's sales since America's Great Depression in the 1930s.

Rokakis said there are projections the crisis will surpass one trillion dollars, dwarfing the 300 billion dollars losses in the Saving and Loan crises of the last decade.

Those of us old enough to remember the S&L crisis know this is a pretty dire situation, if it’s going to be worse than that.

What’s next will not be a clamor for Bernanke to cut the Fed’s funds rate, but for Treasury Secretary Henry Paulson to arrange a bailout of Countrywide and other mortgage brokers. Amazing how capitalism can be a one-way street, isn’t it?