The Housing Crisis and a Fight-Back Program

The current economic crisis has been building for years. At its root is the massive elimination of decent-paying jobs and lowering of wages in the U.S. and worldwide, a phenomenon explained and analyzed so well in the party’s newest book, “Low-Wage Capitalism.”

The capitalist class was able to delay the inevitable economic collapse in significant part through the creation of the housing and home refinancing boom and its offshoots, racist subprime predatory lending and exotic adjustable-rate, pay-option, interest-only and negative amortization mortgages. People were sucked into putting their homes up as collateral for loans based on artificial appraisals that vastly overstated their value.

The financial interests made huge profits off these loans with their high interest rates and exorbitant fees. However, the lure of quick profits overcame any rational analysis of what was going on, so every single financial institution became involved in the mortgage boom, buying trillions of dollars of mortgage securities with no regard to the long-term prospects. It was classic overproduction as described by Marx, but within the financial sector.