Finding the Causes for the Foreclosure Crisis

Finding the causes for the foreclosure crisis is not easy as is evident from the slow response to the many measures undertaken by the government. So far no expert can boldly say that America has come out of the woods. Without finding out the causes no solution will be possible. Hence all the measures are just fumbling in the dark – hit and run tactics.

One view is that for decades the business group in the country had noted a fall in profits. This triggered them to take action to make up for the loss. One method to do so was to increase prices and cause inflation. It reduced the real wages and thus all the benefits from greater production went to feed higher profits. Cheap Homes in Colorado.

Recently majority of the firms in USA are reducing wages – this being done for the first time since the Great Depression. The workers are faced with the cruel option of either agreeing to less pay or to no pay at all.

Another strategy used widespread has been the cutting back on health insurance and retirement benefits. Workers are now being whipped into speed-up mood without any promise of a comfortable future. Workers are being placed competitively against each other to make them work faster and produce more. Workers are being laid off and the remaining ones with jobs are being forced to do the extra job.

A new strategy has been to use the bankruptcy clause as a weapon to snip wages and benefits. The companies after declaring Chapter 11 bankruptcy are allowed to continue with operations, negotiate debts and most significant of all – declare union contracts invalid. This was first used by the steel industry and then copied by the airline group very recently.

The cleverest move to reduce wage costs has been to remove productions to other parts of the world where wages are abysmally low. This has been the main thrust of the much hyped globalization. It has led to an international search for low wages so as to pump up profits for the business sector. This is the core of globalization. It has placed downward pressure on wages in USA.

Thus the drive for higher profits has led to unemployment, inflation, low living standards, insecurity, stress and exhaustion. So far the efforts of the business world have proved successful but the foreclosures pin pricked the bubble.

Finding the Causes for the Foreclosure Crisis

Finding the causes for the foreclosure crisis is not easy as is evident from the slow response to the many measures undertaken by the government. So far no expert can boldly say that America has come out of the woods. Without finding out the causes no solution will be possible. Hence all the measures are just fumbling in the dark – hit and run tactics.