9/11 Related One of the Causes of the Foreclosure Crisis

Posted on August 26, 2008
Filed Under Foreclosure Homes |

9/11 was a watershed in the lives of Americans and is being analyzed to be one of the causes of the foreclosure crisis. It is a common scene of individuals and their baggage being frisked at numerous entry points with little regard for human dignity. This is one of the legacies of 9/11. It is not just entry into places like United Nations or the Federal Reserve but is happening at any firm on Wall Street big or small. Americans have accepted it as a way of life.

Experts in the line are beginning to wonder whether the only fall out from 9/11 is a fear psychosis or is something deeper. Is it the prime cause of falling house values and the foreclosure crisis? A potent question making the rounds is that perhaps the sub-prime loans and speculative trading were only tools like hijacked airlines for a much bigger dangerous reason? If it is so the ultimate cost of that one single drama could run into trillions of dollars. Realization of it could unite the country, as never before – that is if the Americans wake up to the fact that this foreclosure crisis is a greatest threat since the last World War II.

When the radical Islamic terrorists struck, blowing off the World Trace Centre, the country was in the second year of three-year decline in the stock market. Nevertheless borrowing was not peanuts. The federal rate fell by 6% from the Internet boom years to 3.65% in August 2001. Following the attack, within weeks it fell to 1.75% as the corridors of power tried to keep the economy from grinding to an absolute halt. But the rate of the federal funds continued to plummet to strike the all time low number of 0.98% in December 2003 – two years after the attack. Stocks then began to recover because of the low rate hovering around 1% as low cost mortgages set off a housing boom.

The average American found that with an average pay cheque they could move into mansion. Those who had cash realized that by depositing money in banks they could earn in reality nothing. Borrowing money came to be practically free. The foreclosure crisis can be related to the fact that the Federal Reserve kept the interest rate too low for too long.

The terrorist bled the country internally with the foreclosure crisis and externally with the cost of oil and wars.