Housing+Crisis

The Current Housing and Finacial Crisis Analyzing the Cause and Effects

On March 30, 2009, while the world is struck by the economic crisis, the head of the United Nations agency tasked with ensuring adequate shelter for all. The economic crisis we all face today, has its origins from the housing credit. Anna Tibaijuka, Executive Director of the UN agency for human settlements (UN-HABITAT), said this as she opened the agency’s yearly Governing Council in Nairobi, Kenya. “The origins of the crisis lies with a housing finance system gone wrong. Lessons learned from this experience must inform our housing policies and strategies.” The housing crisis is one of the reasons that caused today's economic crisis. People who investigate on housings and land usually lends money from the bank to buy the properties, and predicts that the price of the properties will grow. But when they prediction is wrong, and the price of the property that they brought dropped, the bank will have to withdraw their part by selling the property in order not to lose their money. But, since today's computing and modern communication technology had greatly sped up, the bank and the workers on Wall Street will use the “money” that they lent before they even reclaimed it. Also, the banks are trying to push their profit to the highest, so they will lend money to people before even knowing that the person cannot return the money. These actions had already buried the fuse for the economic crisis. Once the price had dropped, when the bankers will try to get their money back in order not to lose money, they will finally notice that the people that owe them money cannot repay the debt. Then, the bank will not be able to pay the actual money that they used on other things, and will lose a lot of profit. After the bank's actual profit will drop, the stocks will drop, and they will stop lending money to companies, and causing the companies to stop running. After my analyzes of what caused the economic crisis and why-all-this-happened, I had came to a conclusion that Solving the Housing crisis, will be the best way to solve today's economic crisis. Since many people lend money from the bank to buy houses that they cannot afford, we could either lower the prices of the housing, or educate the people on how the use their money correctly (especially the Americans). One of the possible ways is to provide more affordable housings, targeted tot eh middle and lower income class of the society. Establish a agency that investigates can a person payback the money, and a better investigating ways. The agencies should also keep an eye on the banks for lending money to the right people, and educating the people on the way they should spend money. Mass media, brochures, and books could be used to emphasize the current issue, and explaining the new standards for borrowing money from the bank. Only by using slow but stable economic development is the best way to avoid further economic crisis.

Who's Responsible for Today's Crisis

On my last journal, I had analyzed all the cause and effects of the housing crisis. But for causing this housing crisis, every one in the society will have a certain amount of responsibility. First, the Real Estate is going to take a lot of blame. They showed properties, put buyers in touch with lenders and earned commissions. They dealt with appraisers and title officers, who also wanted to see deals close so they could generate fees. Also, since the end of the year 2001, housing-related industries have produced a whopping 43% of the nation's total net private sector employment growth. Obviously, therefore, any slackening of real estate activity would slow employment growth in the industry. Indeed, this massive job-creator could become a job-destroyer. The next people to blame, is the lenders. Mortgage brokers, banks and other lenders provided the funds so that unqualified applicants could buy homes. Brokers don't lend their own money but serve as middlemen, collecting commissions but sometimes without much regard to whether borrowers can make payments. Many banks weren't much better, selling loans to third-party investors while collecting fees. Plus, many brokers and lenders never verified a borrower's job status, income or assets because they were passing the risk along. These people are one of the reasons why that the people in America loves to use credit card to purchase things, since it was so easy to lend money from the bank. They had buried the seeds of leading to an economic crisis, since people found lending money is very easy, so the people started to buy things that they cannot afford. The borrowers were the main cause and victims of this economic crisis. Before the crisis hit America, getting a homeownership was very easy. Because many of the newest home buyers had borderline credit, they could qualify only for risky loans. Also, many borrowers did not understand their loan terms, and many of them weren't honest. Studies had shown that most sub prime loaners had lied to get the loan. Many of them soon found themselves in a situation that the money they owe is more than their homes worth. The investors were also the wire-pullers of this crisis. What happened is the lenders packaged the sub prime mortgages and other loans they generated for resale to investors on Wall Street, thus transferring risk down the line. Because of some of the investors does not know, or just does not care about who were the people that was getting the loan, and how risky it was, so once the loaners could not get their money back, the investors on Wall Street will also have to give the costumers of their products an explanation and payback, and a whole chain of people will fall for that. The Bear Stearns collapsed for those risky funds. The banks and the Federal reserves were also one of the key things that caused this crisis. The banks kept the interest rate low, so the people would save less, and invest more. Also, by boosting the nation's money supply too much, created an environment of easy credit, and encouraged a lot of unqualified loaners to loan and buy houses that they can't afford. The regulators, rating agencies all have blames also. The regulators did not do what they were supposed to do, and they had allowed too much investigations on risky loans, and did not regulate it just because they want to keep the big economic bubble up. The rating agencies had also let the unqualified people to get loans, and did not make the investments less risky and more secure. After listing all these that has responsibility in this crisis, we must stop the foolish acts of making a big pretty economy bubble, and focus more on the balance, and the stable development of a country's economies.

What the UN is Going to do

The United Nations had held a seminar on December 16 on the real-estate origins of the current financial crisis. The seminar plans to identify areas where real estate-related action is particularly needed and to review the ways the United Nations has been involved so far. Seminar participants will also discuss the roles the UN could play in addressing future real estate and financial issues and whether there's any way to stabilize the traditional boom and bust cycles of the real estate sector. Since then, the UN had weighed on the Housing Crisis, and the UN's real estate market advisory group will prepare guidelines for potential UN action on the housing crisis, to be presented at a meeting in March. “The participants in the seminar had agreed on the fact that attracting foreign investors into the country, and getting mortgages flowing again are the key priorities solving the issue.” This was quoted from Williams, the past president of RICS Americas, the U.S. division of the Royal Institution of Chartered Surveyors. The UN had also started to focus on stamping out corruption and putting in place the basic things that attract foreign capital into their economics and agencies like the UN can then overlay or can encourage putting some money in. The UN will also encourage regulations on the loaning to the sublime loaners, and a better rating and regulation standards and rules. When America was in the days of Elsenhower, Kennedy, and Johnson, the US banks would lend to the purpose of investigating in plant and equipment. But today, the banks would even lend to homeowners for the purpose of buying garden plants or even a stereo. Since loaning became easier, and the banks created a easy-credit environment. And, the easy-buying, easy credit, and easy loans habit, had gone into the cultures of America. The nations should also provide more affordable houses for the poor people so they will not need to loan a lot from the bank. We also encourage the governments departments to try to foresee economic disasters, and work harder on how to prevent the future disasters. Our goal is to establish a stable and steady economic growth for all nations, and solve the housing crisis from the source.

The Future Goals

The United Nations had held a seminar on December 16 on the real-estate origins of the current financial crisis. The seminar plans to identify areas where real estate-related action is particularly needed and to review the ways the United Nations has been involved so far. Seminar participants will also discuss the roles the UN could play in addressing future real estate and financial issues and whether there's any way to stabilize the traditional boom and bust cycles of the real estate sector. Since then, the UN had weighed on the Housing Crisis, and the UN's real estate market advisory group will prepare guidelines for potential UN action on the housing crisis, to be presented at a meeting in March. “The participants in the seminar had agreed on the fact that attracting foreign investors into the country, and getting mortgages flowing again are the key priorities solving the issue.” This was quoted from Williams, the past president of RICS Americas, the U.S. division of the Royal Institution of Chartered Surveyors. The UN had also started to focus on stamping out corruption and putting in place the basic things that attract foreign capital into their economics and agencies like the UN can then overlay or can encourage putting some money in. The UN will also encourage regulations on the loaning to the sublime loaners, and a better rating and regulation standards and rules. When America was in the days of Elsenhower, Kennedy, and Johnson, the US banks would lend to the purpose of investigating in plant and equipment. But today, the banks would even lend to homeowners for the purpose of buying garden plants or even a stereo. Since loaning became easier, and the banks created a easy-credit environment. And, the easy-buying, easy credit, and easy loans habit, had gone into the cultures of America. The nations should also provide more affordable houses for the poor people so they will not need to loan a lot from the bank. We also encourage the governments departments to try to foresee economic disasters, and work harder on how to prevent the future disasters. Our goal is to establish a stable and steady economic growth for all nations, and solve the housing crisis from the source.