Rescuing Alice from the Labyrinth

Today, I am just "venting".

I have a running love-hate relationship with the financial community. It is the same sort as that Lewis Carroll's Alice experienced with the Mad Hatter whose presence was necessary in her travels through the labyrinth but whose intentions were not completely pure. My frustration of the moment stems from the hassle encountered in approval of a loan. You see, our family was one those that had to resort to a short sale of its home during the recent "Great Recession". Some statistics indicate that as many as 30% of all home sales between the end of 2008 and the beginning of 2013 were either auctioned homes from foreclosures or short sales. Homes that had been valued in the high six figures and that had depreciated in value by as much as 20% of their 2007 appraisal value by late 2008 were selling for as much as another 39% below their new valuation in foreclosure sales and as much as another 23% if sold through short sales, according to RealtyTrac^tm (http://money.cnn.com/2013/02/28/real_estate/short-sales/index.html) Great swaths of America were negatively impacted and areas from California and Arizona through the southwest to the central Great Lakes of Michigan, Illinois and Ohio to the Middle Atlantic states of New Jersey and New York to the Southeast states of Georgia, Alabama and Florida. Literally hundreds of thousands of sales were involved and millions of people were affected.  Most of those affected were good, hard-working people who were caught in the “perfect storm” of financial circumstances that resulted in the “Great Recession” And most, like us, are doing the best they can to turn the corner and contribute positively to the growth of a stronger American economy. Yet, like us, they are continually frustrated by new challenges in the form of revamped bank credit restrictions and credit bureaus that use antiquated algorithms that were suited for the more stable financial world that existed before the Great Recession.  The result has been a “chicken and egg” driven economy.  Which comes first: the chicken or the egg?  The economy needs buyers (70% of America’s GDP is from personal purchases) who depend upon credit to make their purchases but who are stymied by the new banking regulations and the old algorithms used by the three major credit bureaus.  It has gotten so crazy that, even if you have a nearly 30 year  perfect history of making payments but you are one of those whose home was sold as a short sale you are to be considered a  “bad credit risk”.  Interestingly, economists scratch their heads and wonder why the economy is not healing faster.  It just seems to be sputtering along, stuck in perpetual second gear.  Well, it seems to me that greater effort needs to be expended to help those with historically good credit histories get back into the purchasing and income generating economies as quickly as possible.  That’s not an easy task in today’s economic and political climate. Neither is anywhere close to what they were 30 years ago.  Thirty years ago most of that 70% of American GDP was taking place on “main street USA” – not so today.  Thirty years ago there was still a consensus of opinion that what was good for America was of greater importance than what was good for the Democratic or the Republican parties – not so today.  Our economy is more restricted and is influenced to a far greater degree by forces beyond our own borders.  Our political parties have turned their every four year battle for the right to dictate policy into siege campaigns hell-bent on proving the other party wrong or tripping the other party up regardless to the cost in economic progress, human suffering or national prestige. The end result is that money flows away from main street and away from the people whose purchases and credit could help to heal and rebuild a stronger American infrastructure.  And while everyone is fixated upon whether the Queen of Hearts or the Queen of Clubs will win their campaign for dominance there is the very real potential that “Alice” will be forever lost in the labyrinth.