US Not Only Troubled Housing Market

It turns out the UK is also facing rising foreclosure rates. Housing repossession orders in Q3 2008 were up a hefty 24% from a year ago, and actual repossessions (what we call foreclosures) shot up an amazing 92%. It also definitely appears that the courts over there are doing things a bit heavy-handedly. Either that, or they may be too overwhelmed with the 9% increase in claims – or maybe not – it’s only 9%, after all, how hard could it be? Either way, it seems kind of odd at first glance that claims were up only 9%, but orders granted overall up 24%. My uneducated guess is that they may not be taking as close a look at individual claims on a case-by-case basis as they did before.

Here’s what really gets me though: Tenant evictions were up 4%, and the article says this “shows that it’s not just UK homeowners struggling with finances.” Well sure, everyone is struggling, we know that. But how much of that increase is a result of the generally poor economy, and how much is it due to renters getting in over their heads in a lease they could never afford, like so many mortgages? My vote is the former, particularly with how modest the increase is.

My question now, is: How much of this was caused by the general ripple effect of the US economy tanking, and how much of this would have happened regardless? If it was merely a matter of loss of investments from the economy, then these figures would indicate that a pretty large portion of Brits are investors – something that doesn’t seem a likely scenario to me. However, if UK mortgage companies were selling mortgages using the same crazy antics as they were here in the US, and people were likewise using the same crazy income statements (or lack thereof) to buy the dream house they could never afford, then it becomes a sooner or later situation, where we might as well not be here. We may have sped up the process a bit, though.

And so what if we did? This entire crisis is based on horrible decisions and, well, rampant stupidity. And as always, the free market has a way with weeding out moronics. If it weren’t for the ridiculously wasteful, unconstitutional government intervention (a la TARP, which did just that – work as a swell tarp to cover up mistakes), people might actually learn from their mistakes in the long term. Or, in the case of banks in particular, go out of business as they rightfully ought to, as failure shall always be an important aspect of a healthy economy. Think about it – when your body is sick, does it coddle the disease and keep it around longer than it should? Actually, overdrinking might be a better metaphor – purge purge purge!

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