That is, if the foreclosure is the only black mark on a person's credit rating, that credit card holder may be able to "rehabilitate their record and garner better loans and card rates in 24 months," Ulzheimer goes on, attempting to clear the air in a very cloudy, confusing and even toxic credit card dynamic.
The third consequence of foreclosure, according to Melia's narrative, is the struggle waiting for those wishing to buy another home. Fannie Mae, for example, relates the bleak realities for those who have foreclosed their homes and who hope to purchase another one. For those borrowers who "have made reckless debt decisions," they can't get a new mortgage for a new home until 5 years has passed. It was 4 years previously but in this time of economic recession, money is tight so if the investigation into a person's credit shows Fannie Mae that "reckless" financing decisions were made (that led to the foreclosure) that person must wait the extra year (www.bankrate.com). However, if the applicant can explain to the lender that he or she was foreclosed due to "situations beyond someone's control" -- "like a job loss" -- then only 3 years must pass prior to that foreclosed homeowner and new applicant prior qualifying for a new mortgage (www.bankrate.com).
Melia offers three more consequences of foreclosure: a) "owing an employer an explanation" (when applying for a new job, your foreclosure should not hinder your chances "unless you're applying for a job in which you handle money"); b) "getting hit with a tax bill" (how totally unfair to lose a job, then a home, and months later a bill from the IRS arrives "for taxes on the amount of mortgage that the lender was never able to recover from the sale of the property"; when debt is forgiven, Melia continues, "it's a potentially taxable event"); and c) "living through loss" (this applies not just to parents whose home has been foreclosed, but also to children; "some two million children are likely to be impacted by foreclosure…including the disruption of being place in a new school…") (www.bankrate.com).
Unemployment and unemployment insurance benefits -- a political minefield
The first thing -- or at least one of the first things -- a laid off worker does (when the required out-of-work window of time has passed -- is apply for unemployment benefits. But what happens when the weeks go by without work, the job market remains seriously depressed, and the benefits expire, leaving the unemployed worker with no money at all? And worse yet, when it's Christmas season and the Congress of the United States cannot agree on whether to extend unemployment benefits for those families -- what happens to families at that point?
An opinion piece in U.S. News & World Report -- written by journalist Susan Milligan -- explains the recent political logjam and its ramifications that send are sending ripples across working class America. In the political world of Washington D.C., if a political party wishes to block legislation -- no matter that it would offer vital sustaining resources to millions of people across the country -- it can do so. For example, the Republicans in Congress have been insisting that the Bush-era tax cuts, which the Obama Administration wanted to bring to a halt so that a middle class tax cut could be offered to Americans, be continued. It is well-known that the Bush tax cuts helped "millionaires, billionaires" and otherwise the wealthiest Americans, so Obama campaigned on the promise to let those tax cuts to the wealthiest Americans expire in December, 2010.
But the Republicans do not want the tax cuts to the wealthy to expire, so they have refused to support the Democrats' strong desire to extend unemployment benefits to that part of the working class labor force that is unable to find work. Milligan writes "Extending the tax cuts to the wealthiest, while keeping them for the middle class, would add $700 billion to the deficit" (Milligan, 2010, p. 1). So the way Milligan sees this political strategy is that "…the neediest are being held hostage." That having been said, at the time of this writing, a deal appears to be in the works between the White House (Obama and the Democrats) and the Republicans, to keep the tax cuts and also extend unemployment benefits as well, the deficit be damned.
Analysis of the unemployment insurance stalemate
In a two-party system there will always be differences, debates, even mean-spirited rhetoric between the parties. But when some of those differences lead from a simple argument -- diversions on social or economic policies -- to vicious public smears and entrenched ideological meanness, it demeans the institutions that govern America. The recent stalemate that negatively affected the lives of millions of unemployed people simply showed the nation once again how divided the country is, as reflected in the stubbornness of both sides to reach a compromise. But the onus is on the Republicans this time, because the tax cuts that the Bush Administration pushed through were wrongheaded in the first place. As Milligan points out, the country really could not afford those tax cuts to begin with.
It was an "historic anomaly" to institute a huge, multi-billion-dollar tax break in the middle of a war, Milligan explains. And further, many of the big-money folks who benefit from the tax breaks "were rightly excoriated a year ago for running the economy into the ground, playing virtual video games with folks' retirement funds" and gathering in unbelievably large bonuses in the process. In short, refusing to help the poorest people in the economy, and the people of middle class means who are out of work and struggling to put food on their tables, is unconscionable, tax break leverage notwithstanding, and politics notwithstanding. Think about it for just a moment: 9 million Americans are watching their unemployment benefits -- for the great majority of them their only lifeline saving them from homelessness -- run dry while high rollers, millionaires, Wall Street executives and other wealthy Americans have their hands out wanting a tax break on top of their affluence. There is something seriously wrong with this picture.
Obesity rates climb during a down-spiraling economy -- another negative spin-off
An article in the scholarly Atlantic Economic Journal explains that while the obesity rates in the U.S. "…are among the highest in the world" many Americans (already overweight) have responded to their "economic woes" by "showing less interest in eating healthier" and dropping their memberships in gyms (Fitzpatrick, 2010, p. 119). In other words, people who are in economic tight spots are getting fatter, and more weight put on means the potential for health issues including diabetes and heart problems, which in turn translates into higher healthcare costs.
Indeed, there is a distinct correlation between states with low unemployment rates and rates of obesity, Fitzpatrick explains. "Richer states tend to have much lower obesity rates," he asserts, backing up his assertions with data. It is interesting that states in the South "have significantly higher average obesity rates (28.1%) than do states in the West (23.6%), Midwest (26.4%) and Northeast (23.3%). And states in the South also have higher rates of unemployment than other regions of the country, Fitzpatrick continues (p. 120).
The economic downturn is turning into something worse
According to a scholarly article in the journal Business Perspectives, the extension of the Bush-era tax cuts for the wealthiest Americans will without doubt add to the national debt at the same time the "murky fog of high unemployment [and] ballooning federal deficits" is taking its toll on the nation's fiscal stability (Gnuschke, et al., 2010, p. 1). But there is another price to be paid when the dust settles on the current high rate of unemployment, Gnuschke writes. "To a large extent, the financial crisis…has simply morphed into a long-term government debt crisis with government bailouts and stimulus spending," Gnuschke continues. The FED has taken a "ultra-easy monetary policy" and those decisions have not led to jobs, lending, or more business successes, Gnuschke writes.
The pertinent question here in this scholarly article: "Has the FED subordinated inflation fighting, i.e., exploding the money supply, to helping the government bail out corporation and finance the federal deficit?" (Gnuschke, p. 1). Overall, the federal budget shortfall shows receipts declining 8.7% while expenditures have been rising by 5.8%; if this continues, according to the International Monetary Fund, the U.S. will be a "banana republic" by 2011, which of course is just around the corner. And while Gnuschke (director of the Bureau of Business and Economic Research and professor of economics at the University of Memphis) believes the terrible nightmare of a "massive collapse of the financial system" was averted by the stimulus legislation pushed through by Democrats (with not one Republican voting in favor) and the bailouts of banks, he asserts that any "sustainable recovery, or lack thereof, will squarely fall on the shoulders of the private sector" (p. 3).