Recovery and Mobility

In order for any kind of recovery to arise out of this Depression, workers must have the mobility to move to where the jobs are. The housing crash in the USA and policy response to it is impeding this necessary step.

In areas where jobs are vanishing, housing prices are falling as well. Many owners, whose houses are worth less than the mortgages, who can still afford their housing payments feel trapped in their houses because to sell would mean bringing cash to the close. They feel unable to move to areas where job prospects are better.

Government efforts to "keep people in their homes" are misguided for this reason as well. It is little benefit to a person to keep him in his house when his long term economic prospects are poor in that locale.

We propose as a better policy and an aid to stuck property owners a system of municipally-owned housing trusts to take title to physically sound, but financially impaired, properties. The former owners would formally lose their equity (the market has already taken the value away) but with out the negative credit event associated with default, and banks would accept conversion of their mortgages into municipal bonds secured by the properties. The former owners would then have the option to continue renting their homes at market rates, or move on to greener pastures.