Unemployed and Uninsured

On Friday, the Bureau of Labor Statistics reported that in March, the economy had a net loss of 663,000 jobs and unemployment rose from 8.1 to 8.5 percent. The number of unemployed persons swelled from 12.5 million in February to 13.2 million in March 2009, that’s more than the combined population of New York, Los Angeles, and San Francisco.

By contrast, at the beginning of the recession in December of 2007, the unemployment rate was at 5 percent representing a somewhat tolerable 7.7 million people out of work.

Of course, while its true that almost everyone is feeling the crunch, the unemployment situation has not affected everyone equally.

• African Americans had the highest rate of unemployment in March 2009 with 13.3 percent, which is not much different from the 13.4 percent in February 2009, but still representing a sharp increase from the 9 percent in December of 2007.
• Latinos had the second highest unemployment rate in March 2009 with 11.4 percent up from the 10.9 percent in February. In December 2007, the unemployment rate for Latinos was 6.3 percent.
• White unemployment in March 2009 was 7.9 percent up from 7.3 percent the previous month and a sharp increase from the 4.4 percent in December 2007.
• Asians were the only racial group that saw an improvement in their unemployment numbers for March which was at 6.4 percent down from 6.9 percent in February, but still higher than the 3.7 percent (not seasonally adjusted) in December 2007

Given the prevalence of job-based health care, more unemployed people almost certainly means more uninsured people. The Kaiser Commission on Medicaid and the Uninsured found that nationally, a 1 percentage point rise in unemployment results in 1.1 million more uninsured and 1 million more enrollees in Medicaid and SCHIP.

So, its likely that the number of uninsured people has climbed to 50 million, since a 2008 U.S. Census Bureau report found that number of uninsured people has grown from 45 million in 2005 to 47 million in 2006 with nearly 11 percent of all whites uninsured compared to more than 20 percent of all African Americans and 34 percent of all Hispanics.

Obama G-20 Presser

At his G-20 presser yesterday in London, President Obama deftly handled a question about the death of the Washington Consensus and the decline of American standing in the world. Jonthan Weismen of the Wall Street Journal asked ” is the declaration of the end of the Washington consensus evidence of the diminished authority that you feared was out there?”

After citing a few polls noting a favorable opinion of the U.S. and noting that American influence in the world still remains high, the president observed that the world has changed in ways that call for forging more  “partnerships as opposed to simply dictating solutions.”

He also cautioned against comparing the current G-20 summit to the Bretton Woods accords, which created the financial architecture of the post-World War II era.

“Oh, well, last time you saw the entire international architecture being remade.” Well, if there’s just Roosevelt and Churchill sitting in a room with a brandy, that’s a — that’s an easier negotiation. (Laughter.) But that’s not the world we live in, and it shouldn’t be the world that we live in.

Its so refreshing to hear a U.S. president talk like that instead of fumbling around and simply looking out of place like Bush did. That kind of humility will certainly go a long way in restoring American standing in the world. But so will recognizing the efforts of other countries that have made significant strides during the last few decades.

And so that’s not a loss for America; it’s an appreciation that Europe is now rebuilt and a powerhouse. Japan is rebuilt, is a powerhouse. China, India — these are all countries on the move. And that’s good. That means there are millions of people — billions of people — who are working their way out of poverty. And over time, that potentially makes this a much more peaceful world.

And that’s the kind of leadership we need to show — one that helps guide that process of orderly integration without taking our eyes off the fact that it’s only as good as the benefits of individual families, individual children: Is it giving them more opportunity; is it giving them a better life? If we judge ourselves by those standards, then I think America can continue to show leadership for a very long time.

Drop the needle at the 2:07 mark in the video below to see the exchange between Obama and Weismen.

Chatter about Bank Nationalization

California Governor Arnold Schwarzenegger joined a growing minority of Republicans in support of the prospect of more aggressive federal intervention of the nation’s the banking system, an idea that has inspired stern opposition from members of his own party and deep anxiety among Wall Street investors and many taxpayers.

The Austrian born Hollywood actor turned politician, who immigrated to the U.S. in part due to his “hatred of socialism, of the whole socialist system”, denied any  change in his views concerning the merits of a centrally planned economy and simply asserted that there was real difference between the kind of intervention currently debated in U.S. and what actually exists in Europe.

“Well, I — first of all, I think that we have a really good system here in America. You don’t have to talk about nationalization. All it basically says is that if a bank doesn’t have the money to — to give their customers, so if it, you know, defaults in some way,” said Gov. Schwarzenegger in an interview on “This Week with George Stephanopoulos.”

” So the federal government always had that right to take over. So it’s not nationalizing anything. I don’t see it as such. There’s a difference of the way it is in Europe, where the — where the federal government owns some of those banks, whereas here only if there is a problem financially that the federal government comes in and takes over and helps out, ” added the California governor.

The notion of temporary intervention has also found support among GOP free market champions like former Chairman of Federal Reserve Alan Greenspan. “It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring,” Greenspan told the Financial Times.

Citing the the proliferation of toxic assests rooted in the mortgage sector, South Carolina Republican Senator Lindsey Graham echoed the former chairman’s recommendation last Sunday. “To me, banking and housing are the root cause of this problem. I’m very much afraid any program to salvage the banks is going to require the government,” said on This Week.  “I would not take off the idea of nationalizing the banks.”

Even though there seems to be some sort of daylight between Gov. Schwarzenegger and some of his Republican brethren over the use of the word “nationalization” in substance they seem to be in agreement about the nature of the intervention, which would entail the federal government temporarily owning a majority of the the stake in at least a select number of banks to provide them enough capital to lend, invest and prevent more economic contraction. Other options include securing or outright buying a considerable amount of toxic assets tied to a dismally underperforming mortgage sector and coursing through the major arteries of our ailing credit system and leading to even greater bank undercapitalization.

We are All Eco-Pessmists Now

George Will penned another column today declaring global warming a product of liberal scientific group think imagination. To make his case, Will argues that since past assertions about climate change were wrong so too are the ones we are hearing now even though the science to do is far more exact that it was several years ago. In tone and substance, the column is a firehose blast of oil and gas industry lobby talking points designed to subdue the any impulse to vigorously regulate green house gas emissions.

Money quote:

As global levels of sea ice declined last year, many experts said this was evidence of man-made global warming. Since September, however, the increase in sea ice has been the fastest change, either up or down, since 1979, when satellite record-keeping began. According to the University of Illinois’ Arctic Climate Research Center, global sea ice levels now equal those of 1979.

An unstated premise of eco-pessimism is that environmental conditions are, or recently were, optimal. The proclaimed faith of eco-pessimists is weirdly optimistic: These optimal conditions must and can be preserved or restored if government will make us minimize our carbon footprints and if government will “remake” the economy.

Hours later one of the University of Illinois’ Arctic Climate Research Center – offered to correct the record on what Will erroneously claimed concerning their data on global sea ice levels.

In an opinion piece by George Will published on February 15, 2009 in the Washington Post, George Will states “According to the University of Illinois’ Arctic Climate Research Center, global sea ice levels now equal those of 1979.”

We do not know where George Will is getting his information, but our data shows that on February 15, 1979, global sea ice area was 16.79 million sq. km and on February 15, 2009, global sea ice area was 15.45 million sq. km. Therefore, global sea ice levels are 1.34 million sq. km less in February 2009 than in February 1979. This decrease in sea ice area is roughly equal to the area of Texas, California, and Oklahoma combined.

It is disturbing that the Washington Post would publish such information without first checking the facts.

I suppose the researchers at the University of Illinois’ Arctic Climate Research Center are apart the vast left wing conspiracy spearheaded by the ” eco-pessimists.”

Almost Triffling

This is so true:

Even trimmed to $789 billion, the recovery measure will be the most expansive unleashing of the government’s fiscal firepower to fight a recession in modern history. And yet it seemed almost trifling compared with the potential price tag of $2.5 trillion for the rescue plan for the financial system announced on Tuesday by Treasury Secretary Timothy F. Geithner.

Intuitive Yet Still Fascinating

The Center on Tax Policy provides the following assessment of the “Making Work Pay Tax Credit” provision in the House version of the stimulus plan.

This proposal gets high marks for timeliness, assuming it is implemented as an adjustment to tax withholding, and that mechanism would also maximize the chances that the credit would be spent rather than saved. As a refundable tax credit, the proposal would aid many low-income workers who are most likely to spend the money. However, the credit would also be available to many higher-income workers who are less likely to spend the additional income. Were the credit better targeted, it would have been graded an A.

CTP explains why:

Evidence from behavioral economics suggests that taxpayers view small increments to after-tax pay as income, to be spent, whereas they tend to view lump-sum payments as wealth, to be saved.

Well, its intuitive depending on where you fall on the political spectrum.

Prioritizing Human Rights

I know Human Rights Day was on Wednesday, but I thought I would cross-post an interesting piece on how to incorporate human rights law and principles into U.S. domestic policy making  that I saw on the Leadership Conference on Civil Rights website, entitled Making Human Rights a Domestic Priority.

In an effort to institutionalize the nation’s bipartisan commitment to human rights at home, the American Constitutional Society for Law and Policy (ACS) has released a report by human rights scholar and Fordham law professor Catherine Powell offering guidance to the next presidential administration on how to integrate human rights principles into U.S. domestic policy making.

In response to a widening gap between what the U.S. promotes abroad and what it practices at home, Powell laments how “human rights has come to be seen as a purely international concern, even though it is fundamentally the responsibility of each nation to guarantee basic rights for its own people, as a matter of domestic policy.”

“Human Rights at Home: A Domestic Blueprint for the New Administration” recommends either transforming or replacing the current U.S. Commission on Civil Rights (USCCR) with a U.S. Commission on Civil and Human Rights to bridge the divide.  Armed with a broader mandate, this new commission would monitor both civil and human rights progress in the U.S., report on U.S. compliance with international human rights treaties, and investigate and hear complaints of human rights violations in the U.S.

A group of experts and senior officials from various federal agencies would implement the findings.

To avoid the politicization plaguing the present USCCR, the report recommends that every commissioner be nominated by the president and confirmed by the Senate to ensure “highly qualified leadership, broad bipartisan consensus, accountability, and professionalization of the Commission’s work.”

Currently, the president and the Congress are each allowed to appoint four out of the eight commissioners to the USCCR without either branch consulting the other. Single party dominance has also worried some critics after two commissioners reregistered as independents shortly after being appointed as Republicans, bringing the total of Republican commissioners to six.

Powell said that independence and credibility are critical in investigating allegations of human rights violations, such as those during the responses to 9/11 and Hurricane Katrina.

A recent survey by The Opportunity Agenda reveals substantial support for advancing a strong human rights agenda in the U.S. For example, 80 percent of Americans believe each person has certain basic rights even if governments don’t recognize them and that the U.S. should “strive to uphold human rights in the U.S. because there are people being denied their human rights in our country.”

Plus, the public also overwhelmingly agrees that equal access to public education (82 percent), equal opportunity regardless of race or gender (85 and 86 percent), a right to health care (72 percent), and freedom from torture and fair treatment by the criminal justice system (83 percent) are in fact human rights.

Such social justice issues of fairness and equality speak to the heart of the Blueprint’s aims.  As Powell notes, “We should make the transition from a society of structural inequality to one in which not only the very highest glass ceilings are broken, but also in which sticky floors and broken ladders to opportunity are repaired.”

Joe the Plumber and Taxes

From Dean Baker:

Much of last night’s presidential debate centered on “Joe the Plumber,” Joe Wurzelbacher, a plumber who Barack Obama met while campaigning in Ohio. According to the New York Times, Mr. Wurzelbacher says that he is planning to buy a plumbing business that has profits of between $250,000 and $280,000 a year.

While this income would put Mr. Wurzelbacher above the threshold where he could expect to pay higher taxes under Senator Obama’s tax plan, the increase in his tax bill would be relatively modest. Under Senator Obama’s plan, the tax on income above $250,000 would increase by 3 percentage points from 33 percent to 36 percent. This means that Mr. Wurzelbacher could expect to see his tax bill rise by between $0-$900, assuming that this plumbing business would be his entire taxable income. If he has additional taxable income, then he would see a larger increase in his taxes.

Whoa that sounds really burdensome for someone making $250k or more a year. Interestingly enough, Wurzelbacher is not even in that top 5 percent of the income earners to even be worried about such a hike.

Some are speculating whether or not Wurzelbacher was actually planted by the McCain campaign to portray Obama as a tax and spend liberal.

Here is the exchange between Joe the Plumber and Obama in case any of you missed it.

The New Yorker Endorses Obama

The New Yorker more than made up for its sad attempt at satire this summer with its recent full-throated endorsement of Obama. To date, this has got to be the most forceful and persuasive case for Obama I have seen yet.  The editorial draws contrasts between the Obama-Biden and the McCain-Palin ticket on numerous issues, but the differences on energy and on the courts were the most dramatic and powerful points in the piece.

On energy and global warming, Obama offers a set of forceful proposals. He supports a cap-and-trade program to reduce America’s carbon emissions by eighty per cent by 2050—an enormously ambitious goal, but one that many climate scientists say must be met if atmospheric carbon dioxide is to be kept below disastrous levels. Large emitters, like utilities, would acquire carbon allowances, and those which emit less carbon dioxide than their allotment could sell the resulting credits to those which emit more; over time, the available allowances would decline. Significantly, Obama wants to auction off the allowances; this would provide fifteen billion dollars a year for developing alternative-energy sources and creating job-training programs in green technologies. He also wants to raise federal fuel-economy standards and to require that ten per cent of America’s electricity be generated from renewable sources by 2012. Taken together, his proposals represent the most coherent and far-sighted strategy ever offered by a Presidential candidate for reducing the nation’s reliance on fossil fuels.

There was once reason to hope that McCain and Obama would have a sensible debate about energy and climate policy. McCain was one of the first Republicans in the Senate to support federal limits on carbon dioxide, and he has touted his own support for a less ambitious cap-and-trade program as evidence of his independence from the White House. But, as polls showed Americans growing jittery about gasoline prices, McCain apparently found it expedient in this area, too, to shift course. He took a dubious idea—lifting the federal moratorium on offshore oil drilling—and placed it at the very center of his campaign. Opening up America’s coastal waters to drilling would have no impact on gasoline prices in the short term, and, even over the long term, the effect, according to a recent analysis by the Department of Energy, would be “insignificant.” Such inconvenient facts, however, are waved away by a campaign that finally found its voice with the slogan “Drill, baby, drill!”

On the courts:

The contrast between the candidates is even sharper with respect to the third branch of government. A tense equipoise currently prevails among the Justices of the Supreme Court, where four hard-core conservatives face off against four moderate liberals. Anthony M. Kennedy is the swing vote, determining the outcome of case after case.

McCain cites Chief Justice John Roberts and Justice Samuel Alito, two reliable conservatives, as models for his own prospective appointments. If he means what he says, and if he replaces even one moderate on the current Supreme Court, then Roe v. Wade will be reversed, and states will again be allowed to impose absolute bans on abortion. McCain’s views have hardened on this issue. In 1999, he said he opposed overturning Roe; by 2006, he was saying that its demise “wouldn’t bother me any”; by 2008, he no longer supported adding rape and incest as exceptions to his party’s platform opposing abortion.

But scrapping Roe—which, after all, would leave states as free to permit abortion as to criminalize it—would be just the beginning. Given the ideological agenda that the existing conservative bloc has pursued, it’s safe to predict that affirmative action of all kinds would likely be outlawed by a McCain Court. Efforts to expand executive power, which, in recent years, certain Justices have nobly tried to resist, would likely increase. Barriers between church and state would fall; executions would soar; legal checks on corporate power would wither—all with just one new conservative nominee on the Court. And the next President is likely to make three appointments.

Obama, who taught constitutional law at the University of Chicago, voted against confirming not only Roberts and Alito but also several unqualified lower-court nominees. As an Illinois state senator, he won the support of prosecutors and police organizations for new protections against convicting the innocent in capital cases. While McCain voted to continue to deny habeas-corpus rights to detainees, perpetuating the Bush Administration’s regime of state-sponsored extra-legal detention, Obama took the opposite side, pushing to restore the right of all U.S.-held prisoners to a hearing. The judicial future would be safe in his care.

Not Just Equity Injection

Nobel Prize Winning Economist Paul Krugman provided the most succinct and comprehensible explanation as to why we need to inject liquidity into financial markets I have seen thus far in his column today.

What is the nature of the crisis? The details can be insanely complex, but the basics are fairly simple. The bursting of the housing bubble has led to large losses for anyone who bought assets backed by mortgage payments; these losses have left many financial institutions with too much debt and too little capital to provide the credit the economy needs; troubled financial institutions have tried to meet their debts and increase their capital by selling assets, but this has driven asset prices down, reducing their capital even further.

What can be done to stem the crisis? Aid to homeowners, though desirable, can’t prevent large losses on bad loans, and in any case will take effect too slowly to help in the current panic. The natural thing to do, then — and the solution adopted in many previous financial crises — is to deal with the problem of inadequate financial capital by having governments provide financial institutions with more capital in return for a share of ownership.

This sort of temporary part-nationalization, which is often referred to as an “equity injection,” is the crisis solution advocated by many economists — and sources told The Times that it was also the solution privately favored by Ben Bernanke, the Federal Reserve chairman.

I, of course, am no economist, but I do have to quibble with the intimation that aiding homeowners somehow cannot be enacted concurrently with a plan to inject more cash into the credit markets. And even if the Gordon Brown plan successfully contains the global credit crunch, that does not necessarily mean that it might not still be adversely affected albeit to a lesser extent by a persisting foreclosure crisis.

Earlier this year Credit Suisse estimated that 6.5 million mortgages could fail by 2012. Now some of that could be abated by simply freeing up credit, but that’s not a real panacea. A few weeks ago Joseph Stiglitz recommended a set of principles that would help stem the foreclosure crisis that has gotten surprising little attention.

First, housing can be made more affordable for poor and middle-income Americans by converting the mortgage deduction into a cashable tax credit. The government effectively pays 50% of the mortgage interest and real estate taxes for upper-income Americans, yet does nothing for the poor. Second, bankruptcy reform is needed to allow homeowners to write down the value of their homes and stay in their houses. Third, government could assume part of a mortgage, taking advantage of its lower borrowing costs.

I  especially agree with the need for bankruptcy reform.  If Congress gets together again after the election to pass a stimulus bill, it should do contain provisions allowing bankruptcy court judges the option of adjusting the interest rates and even the principal on how much homeowners owe their debtors. It could save homes and allow people to put their financial lives back together again.

If we are going to throw cash at financial markets, we at least need to provide aid to homeowners.

Regulation Chatter

In a post entitled, “Obama’s Faulty Logic” Sebastian Mallaby at the WaPo’s blog Post-Partisan apparently has grown tired of the regulation versus deregulation soundbites on the campaign trail have devolved into an “appealingly simple” rhetorical trope. The UK economist takes issue with how the Obama campaign tried to draw “link between the Wall Street blow-ups and a lack of regulation,” and suggesting that the conventional wisdom regarding deregulation was somehow unique to Bush, McCain and his advisers.

Malaby tells us that:

Embarrassingly for Obama, the principal piece of financial deregulation over the past decade was the reform of Glass-Steagall, the law that separated investment banks from deposit-taking ones. This reform was sponsored by McCain’s friend, former Republican Senator Phil Gramm, but ending the division between the two types of bank was a policy that the Clinton team also supported, which does not fit the Obama narrative.

Mallaby fails to point out, however, that even after the push for deregulation of financial markets and other areas of our economy including telecom and elsewhere was not only met with deep skepticism within the Democratic party, but was widely considered an long term strategy for generating economic growth.  Yes, the Washington consensus of the Clinton years erred on the side of deregulation as a means of harnessing the power of the market, but few thought the federal government should permanently abdicate its role as a regulator or overseer of the market.

To the contrary, one of the great lessons of the late 90s, particularly after the financial contagion crisis, is that that government does have a role to play in world where capital – and the shocks associated with it – moves at the speed of a few clicks on a mouse.

But the Bush administration was wedded to the notion that the market will solve its own problems even if industries experience such dramatic change that they necessarily merit regulation and oversight. Consider mortgage lending. Mortgage lending has changed dramatically during the last several years. According to the Pew Center on the States, “10,000 lending institutions were in business 20 years ago; today, just a few dozen lenders dominate.” But once the source of capital went for home loans went from mainly small lenders to primarily bonds underwritten by the financial markets, the evaluation of the loans themselves changed. Put simply, they were less likely to be valued on the basis of their performance than they were on their size and terms.

This evolution of the lending market also coincided with another change. By incorporating the use of data metrics, such as credit scoring and consumer data, credit became much more accessible. As a result, the subprime lending sector expanded as the creditor market overall began to grow.

In order to keep up with the proliferation of loans in a market with increasingly lax lending standards many resorted to a less rigorous computerized underwriting. This imprecise method of rating the creditworthiness of borrowers often led to many people being offered subprime loans despite qualifying for more conventional loans.

Subprime loans are high cost loan products often, but not always, sold to borrowers are low-income or have a modest savings, or with less than pristine credit. By contrast, prime loans are sold at market rate to people with solid credit scores at competitive low interest rates. To hedge against the lending to borrowers with “higher credit risks,” subprime borrowers are charged higher rates. According to the Center for Responsible Lending, more than 80 percent of those loans came with adjustable interest rates as opposed to a 30 or 40 year fix rate mortgage loan.

To be sure, when done responsibly subprime lending can lead to opportunities for many people who might otherwise never own a home or obtain credit civil rights advocates have an interest in preserving the subprime market. But during the past few years, we have witnessed an explosion in risky mortgage products and a rapid decline in the use of sensible lending practices.

Congress should have stepped up their efforts in calling hearings to shine a light on the most egregious violators of fair housing laws and place pressure on federal agencies to go after these so-called independent brookers who are exploiting borrowers and find out why there was such an incentive from wall street investors to get as many loans on the books as possible.

A little oversight would have revealed the inefficiencies withing the market and the looming burst of the bubble was near.

As Obama rightly noted in his speech at Cooper Union in New York earlier this year:

Under Republican and Democratic administrations, we’ve failed to guard against practices that all too often rewarded financial manipulation instead of productivity and sound business practice. We let the special interests put their thumbs on the economic scales. The result has been a distorted market that creates bubbles instead of steady, sustainable growth; a market that favors Wall Street over Main Street, but ends up hurting both.

Nor is this trend new. The concentrations of economic power and the failures of our political system to protect the American economy and American consumers from its worst excesses have been a staple of our past: most famously in the 1920s, when such excesses ultimately plunged the country into the Great Depression. That is when government stepped in to create a series of regulatory structures, from FDIC to the Glass-Steagall Act, to serve as a corrective, to protect the American people and American business.

Support John McCain While You’re at the Beach

So after you are done whining about the economy, you can support John McCain’s presidential campaign by simply heading to the beach.  And don’t forget that sun tan lotion.

Take Care of Lupita, Lou

Latinos and the Electorate

Vandalsim and Crime Linked to Foreclosures

News of foreclosures so far have focused largely on the affects of financial markets and individual families, and deservedly so. But there is another dimension to the mortgage crisis that thus far is getting scant attention – vandalism and crime. Low to middle-income areas, particularly in new developments, with high foreclosure rates create pockets of unoccupied homes vulnerable to vandalism, theft, and other types of petty and even violent crime.

Consider North Carolina. A Charlotte Observer investigation found the following:

“While the crime rate citywide held steady, the rate in the heart of Charlotte’s 10 highest-foreclosure areas rose 33 percent between 2003 and 2006, an Observer analysis found. All of them are suburban areas filled with starter-home subdivisions. They were built since 1997 with homes valued at $150,000 or less.”
The Charlotee Observer, Dec. 09, 2007

“In Peachtree Hills, police are summoned nearly 300 times a year, mostly for property crimes in the 147 homes. But the 4-year-old neighborhood, near Sunset Road, has also seen robberies, shootings and gang displays more commonly associated with violent urban areas — not new subdivisions.”
-The Charlotee Observer, Dec 09, 2007

“In 13 neighborhoods at the heart of Charlotte’s most concentrated foreclosure areas, police recorded 52 violent crimes and 395 property crimes last year. That’s not as high as troubled inner-city areas, but it’s up 33 percent in three years and it’s surprising in new suburbs.”
-The Charlotee Observer, Dec. 09, 2007

As a result, another little known industry is thriving. Property maintainers are being called upon by banks to keep up appearances, as it were. Lost Pond Construction Inc in Ohio is a typical example:

The most common job is simple: An exterior inspection to make sure someone is still living in the house after the owner starts missing mortgage payments. If the owner is still there, the contractor does nothing more. Safeguard commissioned 4.8 million of those inspections last year – about 12,000 in Northeast Ohio just during September and October, the latest months for which local numbers are available.

In the fraction of cases where the home goes into the foreclosure process, a contractor like Lost Pond is sent by Safeguard to make sure the house is secure by doing things like changing the locks and boarding up any broken windows.

Once the foreclosure process is complete and the lender takes ownership of the house, Safeguard offers a range of services to the lender – including remodeling, repair and cleaning services. Safeguard did about 2,000 of those jobs in Northeast Ohio in September and October.

Perhaps, this is proof that markets do have a certain magic to them.

By spotting these vulnerable areas ahead of time and working jointly with local police forces, lenders, municipalities, and the federal government, we can find a way to curb the depreciation of these newly developed properties and reduce crime. That way these neighborhoods can still be attractive to future home buyers once the mortgage industry rebounds.

But, of course, the main focus should be on preventing foreclosures from spreading in the first place.