It seems to be a good beginning in keeping with methodical Obama whose style avoids drama. Most probably no hasty announcements will be made. The transition period runs into eleven weeks – allowing for time to think over names and candidates. Everything can wait but instant start must be made over economic and financial issues. It is being rumoured that Obama will be waiting till Thanksgiving before announcing a new secretary for the Treasury. But that is not as soon as the nation expects. Obama and his team must get down to the foreclosure related crisis here and now without delay.

At this stage the outgoing White House members cannot really do anything major except for granting pardons, issuing few unimportant orders and tampering with irrelevant regulation. Serious matters like health care or aviation rules are left untouched. So following protocol the departing White House and Congress members are allowed to enjoy their final days without disturbance.

But in the financial market eleven weeks is a long time. In the past couple of weeks vital governmental decisions have been taken in financial matters – take over of Fannie Mae and Freddie Mac, bailing out of AIG, allowing Lehman Brothers to collapse, increase of reo homes, passing of a jumbo bail out package, amassing by the Treasury of certain bank shares and taking of measures by the Federal Reserve to allow for cash to flow in the money markets. Supposedly more dramatic efforts might not be required during the coming eleven weeks because with such massive bail out efforts perhaps there will be none left to be saved.

Other things however could go wrong. The Treasury has been given absolute powers to make serious decisions about large financial bodies and to ink agreements that will last for many years. Since it is Obama and his team that will be honouring these commitments it is imperative that this new group enters the room where the decisions are being made and not allow politely for another eleven weeks to flow by. Obama team is going to be accountable tomorrow for decisions being taken today. There is also the chance of the Congress being mischievous. Obama should sit up to these realities here and now.

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One of the many who voted against him is Alicia Smith. She left her job about two years ago so as to have a baby. But now she cannot get another job. Her hope is that Obama will generate more employment. Smith said, “I’ve tried to find work but it’s hard out there.”

The unemployment rate in Florida is the highest since the last fourteen years. With foreclosures fanning the flame of economic blues the voters are mainly thinking about their pocket. According to an analysis conducted by Associated Press, Obama’s victory was largely due to the cloudy economic mood. McCain and the Republican Party were blamed for it. A correlation showed that for each 1% of foreclosed houses McCain lost 16% points.

Obama sailed through Florida with 50.9% of the votes. Since Bill Clinton (1996) this is the first Democrat candidate to win from Florida. Ever since 1964 during eleven elections this is the third time that a Democrat was won. David Denslow of University of Florida commented that the greater number of foreclosures in a county the more likely was it that votes would favour Obama. Of the six counties with the highest number of foreclosures in Florida, Obama won four. Republicans had won two of these – Tampa and Osceola, in 20004. Osceola County had the highest number of foreclosures among the counties with a rate of 1:69. The foreclosure percentage was 1.4.

Unemployment rates had a weaker correlation with the results of the election. For every 1% of the unemployed working force McCain gave ground by 1.8% to his rival.

This poses the question that although there has been a strong connection with foreclosures and election results why is it not so with unemployment? Stan Geberer of Fishkind & Associates of Orlando said, “I suspect that foreclosures might be a surrogate for some other kind of conditions, like really bad consumer confidence. Foreclosures may have more associative properties of whatever else is going on in the economy and may be a better surrogate than unemployment.”

Of all the economic variables, foreclosures have increased much more sharply since the last elections of 2004 when Bush defeated Democrat Kerry with 52% of the votes in the state. In September there were nearly 48,000 reo homes in September 2008 as compared to 10,350 in January 2005.

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President elect Obama has also come up with similar suggestions but Schwarzenegger’s plan is slightly different. He is trying to project California as a safe haven for the mortgage lenders, commented an advisor to the governor, David Crane.

If lenders wanted to avoid a stay on foreclosures they would have to show that they have an effective modification alternative for the troubled mortgages. California is one of the worst foreclosure hit states in the country. Schwarzenegger’s plan will affect all regulated lenders whether of the state or the feds in California. Crane added, “We are keenly interested in just keeping people in their homes.”

The 90 days of grace should give enough time to the lenders and borrowers to renegotiate amicable feasible plans that would benefit both parties. Foreclosures weigh heavily on the lenders as regards money and time. This way the loss would be lessened for them. The modification would lead to a lowering of the monthly amount that borrowers would have to remit. Preston DuFauchard of California Department of Corporations gave his opinion on similar lines. The aim is to make lenders work aggressively so that they avoid the stay order that will be enforced by the state.

Schwarzenegger has another part to his plans that aims at preventing future housing bubbles that ultimately lead to foreclosures. More additions will be made to the economic stimulus package and discussions will focus on the increasing deficit budget of the state. The governor is keen to see that the Department of Real Estate and Department of Corporations of California put into force federal laws and controls like Truth in Lending Act to rein in the activities of realtors. He wants a revamping of lending practices for the protection of borrowers. Expanding the duties of the fiduciary duties for mortgage brokers could do this. This will be of benefit to the borrower in the event of a lawsuit. Lenders making false statements would be penalized. The conditions for issuing licenses to mortgage lenders would be made stringent and standard. California would cooperate in setting up a national database enabling the public to check the bad records of loan originators. Borrowers would also be made more financial literate to understand the loan terms before inking contracts.

California would be asking from the federal government a generous portion of $700 billion (TARP) for buying and modifying reo homes.

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By surfing through the websites of auction companies one can get to locate the foreclosed units of choice. Buying at an auction sometimes means saving 60 to 70 cents on the dollar. One does not have to worry about the title or past dues and unpaid taxes. There are many attractive houses and most of them are in good condition. The process of buying at an auction takes a comparatively longer time. The bank takes about a fortnight to decide whether to accept or reject the highest bid. The buyer has to put in a lot personal effort to check on the house and comb through papers.

A realtor could guide the buyer as regards foreclosed houses but this too takes time as one hops from one property to another. The realtor however is more experienced than the individual buyer and will know where to and where not to knock. Moving forward to buy a foreclosed house through a real estate agent is more conventional and comfortable. A point to bear in mind is that there is more equity to be found in old and distressed reo listings than the new ones.

The buyer can purchase in auctions held on the steps of courthouses. These units are listed in the newspapers. The price is the lowest in the market but there may be due taxes and liens on the property. These will have to be cleared. There might be pending repair bills of contractors to be paid. Thus it is difficult to calculate the actual cost of the house. Often the property is in bad shape. Foreclosure victims tend to vent their frustration and anger on the unit before leaving. Even if they do not, one thing is sure – the financial condition of the previous owner was such that it did not permit regular repairs. Another problem is that outsiders often move in to vandalize vacant houses. Sometimes it so happens that the house has no value and it has to be demolished. The only thing of worth is the land. All these have to be weighed before bidding at court auctions.

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After World War I ominous signs had also been given out. During the Roaring Twenties stock markets became dizzy and rose by 667%. This drove speculators and investors into a tizzy. Experts knew that this could not be sustained – the wave was bound to fall. The middle class scenting easy money snapped up not only stocks but also bonds, properties and invested in coal and oil.

But when the inevitable happened and Wall Street began to crumble fear gripped the nation as investors rushed to yank out their money. It was not just the individual investor but also big firms and trusts that panicked. They began purchasing their own shares in a frenetic bid to survive that has been described by renowned economist Galbraith as–“fiscal self-immolation”.

Generally October 28th and October 29th are known as Black Monday and Black Tuesday but the crash started on 24th October when heavy selling activity took place. On these two days the Dow Jones fell by 12.82% and 11.73% respectively.

Compared to yesterday the government’s handling of the foreclosure-triggered financial crisis has been praised. It is anticipated that these measures taken by the administration will prevent the country from falling into another depression.

Ben Bernanke the chairperson of the Federal Reserve is an academic and authority on the Great Depression of the thirties. He has unhesitatingly cut interest and injected billions to allow flow of cash. This strategy is known as ‘helicopter drop’ – a term borrowed from Milton Friedman an economist of fame. The critics of Bernanke sometimes sarcastically refer to him as “Helicopter Ben”! The motivating force behind this action is that if the people can avail of extra cash then some amount will be spent and the wider economy will get going and not stagnate.

The $700 bail out step by the Treasury has been in the right direction. It has skirted the great bank failure that occurred during the time of the Great Depression. But one has to accept that the government does not have one silver bullet to solve all the foreclosure related problems.

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During the time of the Great Depression during 28th and 29th October there had been rampant panic gripping the entire nation because the government was reluctant to interfere in financial matters. It did not take any of the steps the administration is taking now to prop up the crumbling financial set up.

Although the situation is being handled differently there are many similarities. Yesterday as of today the warnings were there but missed resulting in falling confidence of the investors. Seventy-nine years have passed since the collapse of the thirties but history does not have a kind word for the policy makers of USA at that time. It is a blueprint to guide the leaders of today about what to do and not to do in the face of a similar crisis. The foreclosure crisis is mirroring history.

At that time of the Great Crash the government took the wrong step of shrinking credit supply by raising interest and import tariffs. It was a clumsy effort. Income tax was increased in the 30’s to balance the budget. Fundamentally the government did just the opposite of what the administration should have done, said Sung Won Sohn of California State University. She said, “When we think about these things today, it’s almost ridiculous and comical what we did back then.”

Today also the government is coming forward but it has failed to fully comprehend the crucial role it has to play in stabilizing the situation. Following 1929 every one out of five banks collapsed causing a huge drying up of available credit. This caused the recession to turn into a depression commented Vincent R. Reinhart, previously director of the monetary affairs of the Federal Reserve. He said, “The Fed just sat by and watched thousands of depository institutions fail. That’s a major difference from the current policy.”

Today the steady flow of increasing foreclosures and reo homes had been giving out warning signals that were ignored or not given importance. Back then warnings had also gone out but not taken seriously. The post World War I period saw stocks rising by 667% driven by dizzy euphoric speculators. It was clear that the wave would crash – it could not be sustained

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Mark Jane is a fifty-two year old man. He had suffered little in life till the eviction notice came. Jane suffered the same fate as his fellow citizens - he lost his home to foreclosure when the nation’s housing market collapsed. Along with him, his three dogs lost their home too. What hurt the most was leaving his three Chihuahuas, namely, Inky, Trixi Ann and Jerri Li in an animal shelter, in Etowah Valley Humane Society’s animal shelter, which is situated in Bartow County. The three dogs were blissfully unaware of what was going on and were prancing about happily when they were left there. Mark left quickly – he didn’t want to create a scene by crying in public.

Jane was an expert, who helped in construction companies for leveling sites for development, till a year ago when he was laid off. He said, “I lost my dad and my sisters.” The final blow came when he lost his dogs, “I tell you,” he said, “nothing hurt like that.”

Then came spring – and it brought along with it a litter of kittens and puppies. The shelters were already full of dogs, cats and other pets, which their owners had left there because of their homes being foreclosed – now with the new lot, it was becoming impossible for them to manage.

The number of euthanasia cases surged high. This is supported by the euthanization figures at a couple of shelters in metropolitan Atlanta’s largest regions. They’ve crossed their limit. Animal rescuer Stacey Hall said, “This is as bad as I’ve ever seen it.”

The rest of the nation is suffering a similar fate. An organization which looks into the animal issues throughout the country reported that all the animal shelters had their inventories stocked way above the limit. Now there is an added problem for these shelters – the high price of gas, which they have to fit into their already tight budget.

The national society estimates that on an average, there are about 6 to 8 million animals throughout the country, which have been placed in shelters.

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The country’s economy is facing its biggest threat from the break down of the real estate market. The combination of surging foreclosures, depreciating home values and ever increasing mortgage investments is affecting both individuals along with businesses.

Federal Reserve Chairman Ben Bernanke is due to address a Berkeley, Calif., conference via satellite on Friday on the mortgage collapse. He is scheduled to address government officials and lawmakers to advise them on working on more ways to avail more relief.

The Bush administration is working on a plan to provide relief to over 3 million distressed homeowners by preventing their homes from becoming reo homes. This is done by the government, which is guaranteeing for billions of dollars worth of affected mortgages. This plan also plans to change the loans a bit so that interest rates could be lowered for a five-year period. The collapse in the housing market has started off the worst possible global credit and economic crisis in more than half a century. To battle against this foreclosure crisis, the government has taken serious action. The Treasury Department has done the same. It has put in $250 billion into banks for a partial ownership. The Fed this week bought out huge amounts of debt from companies. The government also cut down interest rates to 1 percent! This is the first time interest rates have been slashed so low in the last fifty years.

New economic reports due to be out on Friday will provide fresh information as to the stress on the American consumers. Economists anticipate that the income will hardly grow in September, rising up by a bare minimum of 0.1 percent. American consumers cut down on their spending in the previous month by 0.3 percent, according to the economists’ predictions.

Considering the current economic condition and the high unemployment rate, employees cannot expect their employers to be extra generous with their compensation to their employees. Economists are predicting that workers’ salaries along with benefit costs are expected to appreciate by 0.7 percent in the third quarter this year. That would go hand in hand with the same size increase from the second quarter this year. However, economists say that tougher times are still ahead.

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The number of reo listings and the unemployment rate in Los Angeles is rapidly going up. Meanwhile, the local bodies across the state are wondering which essential service they need to cut down upon to prevent their financial condition from depreciating as rapidly as it is.

American policymakers are now rethinking as to the basic way America does business. The foreclosure crisis is the only topic of discussion in town now – in café’s, around street corners, around kitchen counters etc. One can only hear people console each other about their lost jobs, bad investments and even if they can afford to celebrate the forthcoming Christmas.

However, an elephant sanctuary is in the making during the foreclosure crisis. The Los Angeles City Council is presently looking into a proposal regarding Billy, an elephant from the Los Angeles Zoo. They plan to spend about $10 million for an elephant sanctuary in the San Fernando Valley. This sanctuary is for the benefit of Billy and his friends where they can enjoy themselves.

Maybe this is not the kind of response many politicians would give to this act of kindness on the behalf of the municipal towards animals, but what?

The City Council is full of politicians trying to feel important, who need to prove their fat salaries, large staffs and huge pensions. It’s just harmless talk for them to discuss and waste their energy giving their opinion on things they don’t need to – such as why they oppose Proposition 11 – or even other subjects like – such as the topic of opposing the mass genocide in Darfur.

So during the foreclosure crisis and all these reo homes the state is facing right now, is this the correct time to discuss about elephants?

Member of the council, Tony Cardenas is the man behind the proposal regarding a sanctuary for elephants. He truly does care about the condition of the animals at the Los Angeles Zoo. And Cardenas is not wrong when he says that it is the responsibility of the council officials to care for all its assets in a proper manner. But Tony Cardenas had to wait, until the better half of the $39 million Pachyderm Forest was complete, before he suggested that the zoo shouldn’t have elephants at all.

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The Donacas shut their home except the garage door where they left the engine of their 1981 Cadillac Eldorado switched on. The inevitable happened – poisonous gas filled their home and concerned authorities arrived to find Raymond, 71, Deanna, 69 and their dogs – dead.

The Crook County Sheriff’s Office said, “It is believed that the Donacas committed suicide after attempts to save their home following a foreclosure notice left them believing they had few options.” Raymond’s brother, Don says, “He got so deep in debt he couldn’t figure out what else to do.”

Even though the Donacas went a bit too far, the suicides just show how the foreclosure crisis is impacting the emotional lives of the victims. Psychologists go on to say how the fast growing rate of foreclosure filings and the tension and worry about keeping up with mortgage payments are creating a variety of mental problems – anxiety disorders, depression and taking to alcohol and gambling. In some cases, victims succumb to suicide.

Hotlines are facing a huge rush as many frustrated homeowners turn to them. The American Psychological Association and other concerned organizations have handed out tips on how to handle the emotional stress caused due to the sub prime mortgage crisis. The society is witnessing more drinking, domestic violence and marital problems. Besides, children are trying hard to keep up with the extreme tension as they are forced out of their homes along with their families.

Richard Chaifetz is the CEO of ComPsych, which is a firm that counsels home owners over their home-related fears. He correctly says, “They’re depressed, anxious. It’s affected marriages, relationships. People tend to catastrophize, and that leads to depression. Suicide rates go up. We see an increase in drinking, outbursts at work, violence towards kids. Before their houses were like ATMs. Now, they feel trapped like a rat in a corner.”

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