Mian individual decreased from 3.2 million to 2.9.

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Mian and Sufi give the example of a family with a house valued at $ 100.00, financed with a mortgage of 80,000. If the price of the house falls 20%, the family does not lose a fifth of the value of their house, but all the margin that remained after the mortgage. There the problem does not end, but a vicious circle begins. If the bank evicts the family, the impact on the neighbors is disastrous. The bank will sell the house at the balance price, depreciating the value of the rest of the neighborhood. The neighbors, who were already shrinking, now see themselves with water around their necks. Private indebtedness thus becomes a mechanism that increases social inequalities. Precisely because of this, and because of the marginal capacity of consumption of impoverished families, especially sensitive to a fall in house prices, the prick of a real estate bubble generates a consumption collapse far higher than it would cause if the debt burden were distributed equally.The result of this vicious circle causes enormous damage to the economy as a whole, but it does not threaten everyone equally. It is the families with the least income who have seen their wealth destroyed overnight. The rich diversify their investments and do not suffer the same dependence on the vagaries of the real estate market. Among Americans with more money, the net worth of each individual decreased from 3.2 million to 2.9. In relation to the rest of the country, the balance of the crisis leaves them with more money.The authors focus on the United States, but their teachings are valid for any other country. When they mention Spain it is to criticize our mortgage legislation, more intransigent than the American one, in which the dating in payment puts an end to the relationship between debtors and creditors. They also observe that, in the case of Europe, this relationship is not articulated only around lines of social class, but according to national borders. Thus, creditors such as Germany, Finland and the Netherlands are in an advantageous position. The debtors, Spain among them, we are doubly harmed.

Categories: United States


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