The bailout does not allow judges to re-write the terms of mortgages. Without this provision, the danger of a resurgent feudalism triples. If people's homes, broadly classified in capitalist logic as 'private property', are not protected from seizure by our wealthy overlords, we inch closer to a universal renter society.
This may cause such immense agitation that it fundamentally alters thinking of construction and dwelling, but I think that the short-term consequences will be a very large stake in real estate for the duopoly of banks that survive nationalization.
My main lady from ohio takes up the issue with rhetorical flare we haven't seen in congress for generations.
The other unknown is the future of US builder confidence: If the contractors get back to work with reduced overhead, and clear of crippling debt, and work-armies of cheap labour, before the housing supply contracts, then the deflation of housing will be so magnificently underway that no one will be able to stop it. Increasing numbers of foreclosures and speculation can help this process by driving down sales prices. Housing will finally be priced on a "parts + labour" model.
In the states, anyway. Considerable difficulties face countries as disparate as, say, Britain and China, where high population density is constructed as a necessity. In Britain in particular, this density is enforced by regulatory apparatai that not even the government itself can break through (a little like Northern California). The government here has missed its building targets massively and repeatedly. The unknown in this context is what effect the total collapse of financial services will have on accession-country immigration and the UK budget. The trickle-through of high-end job loss to the cheap labour market, its impact on London-affordability, and the benefit system, will take several months to become apparent, and several years to finally sweep through. From observation, its quite clear that the City Boys are being so rapidly replaced by Roma in East London that it might just be a decent place to live in a few years time. A deflated, flat-ass broke London is perhaps even more attractive to people who have already survived political and economic armageddons never dreamt of in Western Europe. This at any rate seems to be true in California, where most immigrants are very far from leaving to go back home.
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