Mortgage Crisis Threatens Economy
The U.S. economy is reeling from the collapse of the "housing bubble" which has led to a drastic increase in home foreclosures. Most of the foreclosures have occurred because the homeowners had been issued loans which were misleading and which they could not afford. When the boom in home buying stopped and home values began to go down, these owners had no choice but to abandon their debt. The foreclosure epidemic led to the failure of a major securities firm, Bear Stearns, which had purchased many of these so-called "sub-prime" loans. In a controversial decision, the Federal Reserve Board issued a non-recourse loan of $30 billion which would cover any losses in Bear Stearns' investments in mortgage-backed securities. This facilitated a merger with J.P. Morgan. Although the move helped avert an immediate securities panic, it also has the effect of assuring investors that the government will rescue them from poor investment decisions.
The following are recent background stories on Newsbatch topics:
Africa
The US is developing a military presence in West Africa.
Despite pronouncements of humanitarian goals, skeptics suggest that oil imports
are the driving impetus of such activity. See story from
Christian Science Monitor
More than 200,000 people remain in Kenyan camps three months
after ethnic clashes killed 1,200. See story from
Christian Science Monitor
With President Robert Mugabe taking the unusual step of
claiming electoral "errors and miscalculations" by his own handpicked
Zimbabwe Electoral Commission, the stage now is set for the 84-year-old leader
to challenge his party's loss of its parliamentary majority and to claim an
outright presidential victory in the March 29 elections. See story from
Christian Science Monitor
With inflation at 100,000 percent, few can afford even basic
goods in Zimbabwe. See story from
Christian Science Monitor
Americas
Although Cubans now can enjoy cellphones and DVDs legally,
few can afford to go beyond window shopping. See story from
Christian Science Monitor
Opposition lawmakers have called for Haiti Prime Minister
Jacques Edouard Alexis resignation in the wake of violent demonstrations over
the rising price of food. See story from
Christian Science Monitor
Arms Control
Russia and the U.S. appear prepared to enter a new area of
cooperation concerning arms control. See story from
Christian Science Monitor
Civil Liberties
The House failed to reach a two-thirds majority for
overriding President Bush's veto of a fiscal 2008 intelligence budget that
requires CIA personnel to obey the Army Field Manual's ban on waterboarding and
other forms of torture of prisoners. See
vote
The House passed a bill extending the Foreign Intelligence
Surveillance Act until Dec. 31, 2009. See vote
Drug Policy
Montana has had phenomenal success in reducing methamphetamine
primarily through advertising. See story from
Christian Science Monitor
An effort to eliminate a legal inequity – one that has hit
African-Americans especially hard – federal judges have begun reducing the
sentences of thousands of crack-cocaine offenders. Some police groups and
prosecutors, as well as US Attorney General Michael Mukasey, assert that in
trying to right a historic wrong, violent criminals are headed en masse back to
the streets. So far, indications are that this is not the case because the
release process has safeguards built in. See story from
Christian Science Monitor
Economic Inequality
Economic woes hit state budgets as soaring inflation and
shrinking tax revenues will make it tougher for at least 25 states to fund
public services. See
story from Christian Science Monitor
Education
California, home to 1 in 9 American schoolchildren, is on
the brink of what may be the biggest public education crisis in state history.
Facing a $16 billion state budget shortfall, Gov. Arnold Schwarzenegger has
proposed $4.8 billion in school-funding cuts, or 10 percent of education
spending. See
story from Christian Science Monitor
Environment
A long-simmering debate has come to a boil among climate
policy specialists over the most effective way to ensure humanity has the necessary
hardware it needs to reduce greenhouse-gas emissions to virtually zero over the
course of this century. At issue is whether the current tack on climate
policy, which emphasizes the establishment of binding emissions goals, should
take a back seat to an all-out push to develop the technology needed to
accomplish that feat. See story from
Christian Science Monitor
A $16 billion environmental lawsuit tests filed against
Chevron-Texaco by Ecuadorean indigenous groups is one of the largest
environmental suits against an oil firm and could set a precedent. See story from
Christian Science Monitor
For the first time since 1980, when long lines sprouted at
gasoline stations, Americans are beginning to cut down on their driving. The
slight decline in total miles driven – apparent first in December – may
indicate that the twin forces of high gasoline prices and a struggling economy
are starting to affect the US lifestyle. See story from
Christian Science Monitor
Grain prices soar globally as rice shortages are appearing
across Asia. In Egypt, the Army is now baking bread to curb food riots. While
rice production is rising, consumption is growing faster. Steadily rising
demand from developing countries, and biofuel policies that mop up excess
cereal production, have all helped boost world prices. See story from
Christian Science Monitor
Globalization
The House authorized spending $50 billion over five years
for U.S. support of global programs to combat HIV/AIDS, malaria and tuberculosis,
mainly in sub-Saharan Africa. The bill discontinues a mandate that one-third of
AIDS spending be allocated to abstinence programs. See vote
Immigration
The border fence in rural areas is a veritable patchwork. See story from
Christian Science Monitor Where U.S.-Mexico border fence is tall, border
crossings fall See
story from Christian Science Monitor
Arizona is already at the cutting edge of immigration reform
and seems poised to undertake yet another experiment: a guest worker program
created and administered by a state rather than by the federal government. See story from
Christian Science Monitor
Iraq
In Iraq, Sunni insurgents still aim to oust U.S. and
Shiites. Although. David Petraeus and US Ambassador to Iraq Ryan Crocker told
Congress of two main threats to Iraq's stability: Iran-backed Shiite militias
and Al Qaeda in Iraq (AQI) there was little said about the broader state of the
Sunni insurgency. But homegrown Sunni insurgent groups not directly tied to
AQI remain committed to fighting US forces and driving Iraq's Shiite
led-government from power. While they have assumed a lower profile, they
benefit from the support of former regime figures and militant Sunnis abroad as
well as the proliferation of weapons and ammunition flowing from Iran and Syria.
See story from
Christian Science Monitor
The Iraq war has been perhaps America's bitterest lesson
since Vietnam in the realities of war and geopolitics – profoundly altering
ordinary citizens' sense of their country, its essential abilities, and the
overall role it plays in the world. Poll after poll shows that Americans are
worried about US troops. They're distressed at the war's rising human and
financial cost and are fully aware of the globe's rising tide of
anti-Americanism. Most of all, they may be confused – unsure of how the United
States got here, uncertain about what to do next, and in doubt about how, and
when, the conflict will end. See story from
Christian Science Monitor
War in Iraq presents a paradox on the American home front:
The military effort has had little discernible impact on most Americans, but by
some forecasts, the Iraq effort will end up costing more per citizen than many US
wars with higher numbers of casualties – Korea, Vietnam, and the Civil War. See story from
Christian Science Monitor
Israel-Palestine
Palestinian moderates push for Fatah and Hamas to reconcile.
A Yemeni initiative aims to start a dialogue between the rival factions, a
prospect that both Israel and the US have advised against. See story from
Christian Science Monitor
Mortgage Crisis
Amid reports that potential losses in the US housing crisis
could near $1 trillion, Congress, the White House, and even the leading
presidential candidates are converging on a strategy to create a federal safety
net for hundreds of thousands of families facing the loss of their homes. At
the heart of the emerging consensus is a bigger role for the Federal Housing
Administration in helping borrowers refinance loans they cannot afford to pay.
See story from
Christian Science Monitor
The Senate failed to reach the 60 votes needed to double
funding in a House bill for mortgage counseling by nonprofit agencies. The
amendment sought to increase the outlay from $100 million to $200 million in
order to extend counseling to an additional 250,000 holders of problem
mortgages. See vote
The Senate killed a measure that sought to give bankruptcy
judges authority to change the terms of subprime mortgages on primary
residences. The proposal would have given the judges power to cut interest
rates and principal to help borrowers keep their homes. See vote
After weeks of gridlock – and a presidential veto threat –
the Senate passed a bipartisan housing package that Democratic leaders say
President Bush will sign. The $15 billion Senate package includes tax breaks
for home builders and homeowners, $100 million to boost mortgage counseling for
families, and $4 billion in block grants for communities to purchase and
rehabilitate foreclosed properties. See story from
Christian Science Monitor See vote
The $15 billion housing package includes billions in tax breaks for home
builders, block grants and tax breaks for the purchase of foreclosed
properties, and $100 million in counseling for homeowners facing foreclosure. See story from
Christian Science Monitor
Faced with a deep slump in housing and credit markets, Washington
has found it easier so far to throw lifelines to big business than to ordinary
Americans. See
story from Christian Science Monitor
The federal government is increasingly focused on how to
resolve the US mortgage mess, but the effort means grappling with controversial
issues of who should receive help and who will pay for it. See story from Christian
Science Monitor
Political Reform
The Senate refused to ban earmarks from the fiscal 2009
budget resolution. See vote
Social Security
Lawmakers are preparing to get serious about the long-term
solvency of America's Social Security and Medicare programs – but not until the
next Congress convenes. The latest annual report on the prospects for Social
Security and Medicare projects a $42.9 trillion shortfall over the next 75
years, at current levels of benefits and taxation. See story from
Christian Science Monitor
