A Ticking Time Bomb

Obama made a modest effort to fix the debt crisis with his HAMP program. But as this bit from Wikipedia makes clear:

Neil Barofsky, then the inspector general of TARP program, testified before Congress that HAMP was “clearly a failure.”

Obama has not faced up to his failure.

From the Calculated Risk blog, here are the stats about homes at risk:

Click to Enlarge
And this graph makes clear that the more a house is "underwater" with its mortgage, the higher the likelihood that the owners will default:

Click to Enlarge
And this is the consequence on the wealth of American families. Here is the portion of their homes owned by Americans. As you can see, with mortgages high and values down, most of the home is owned by the banks:

Click to Enlarge
The American public is facing a poor job market and watching their house values continue to sink. Obama needs to work on both these fronts.

• Create some kind of WPA program to let the young and unemployed get a foothold in the job market by creating "make work" jobs that actually would do some good: filling potholes, painting, cleaning up streets and parks, etc.


• Create a lifeline to underwater home owners who are struggling to make payments. Let them sell future equity in their homes for cash now or to lower their mortgage payments.

Both of these programs would lift the spirits of the people.