State Of California Another Victim Of Foreclosure Crisis And Government Growth

By Author: Nick Adama
Total Articles: 197
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Since the collapse of the economy began with the rising foreclosure rate in subprime mortgages, the state of California has become a microcosm of the entire American housing market. With each passing month, the state finds itself closer to filing bankruptcy, receiving a federal bailout, or both. California became host to some of the the hottest real estate markets in the country, but the collapse has hurt both the government and the people.

During the housing boom, California was the heart of the mortgage industry and especially the subprime mortgage sector. Lenders in the state pumped housing markets all over the country full of cash, but the people of California themselves received the most money from the growing mortgage industry. With cheap money pouring in from Wall Street investment firms to these lenders, the only consequence could have been a bubble.

As real estate values increased by 10%, 20%, 50%, or more every year, everyone became a speculator. Instead of having a job and saving up for a house, Americans could buy a house so that they could avoid having a job. All they had to do was wait for the next ...
... greatest food to purchase their home for an even more ridiculous price. And for a number of years, this tactic worked and people made money hand over fist.

But, most important for government, higher real estate values also translated into higher property tax rates. As a result, local and state governments in California grew beyond all reasonable bounds. More services were offered, entitlement programs created, and bureaucrats hired and paid enormous salaries and pensions for living parasitically off of the citizens of the state. All this was funded through cheap Federal Reserve and Wall Street money.

But all bubbles must come to an end, and the real estate bubble in California and across the country was no different. The bubble burst in a mess of rising foreclosures, declining home prices, and continuing job losses. The state has reacted to this by trying to keep up its bloated size, and property taxes have fallen little, if any. This makes it more expensive to purchase a home in California, and has caused further declines in home values. But the state refuses to shrink, even in an economic collapse.

And due to the recession, which has hit Californians especially hard in terms of property value declines and job losses, no one wants higher taxes just to maintain expensive government salaries and entitlement programs. As more people apply for public aid, fewer people are available to fund these programs and do not have enough money themselves. As a result, the more government tries to save people, the more people it pushes out of employment and onto the streets.

So, as a result of a government grown enormous and a population unable to afford the price any longer, the state of California in danger of running out of money nearly every month. The budget shortfall (not the budget itself) is in the tens of billions of dollars. In addition, the state seems unwilling to balance its books and live more frugally, as millions of people across the nation are being forced to do by economic circumstances.
Nick publishes articles for the My Foreclosure Lender site. These articles provide information to borrowers dealing with the loss of a home, describing a number of solutions they can use to prevent foreclosure. The site details numerous methods, such as mortgage modification, foreclosure lending, deed in lieu, filing bankruptcy, and others. Visit the site to find out more about how foreclosure works: http://www.myforeclosurelender.com/