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Stephen R Cafaro

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Member Since: Dec, 2007

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· Common Sense - Revisited in the New Millennium

· The Road to the Third World; Conspiring to Destroy America

· The American Dream - President Obama's Job Pan

· The American Economic Paradox - A Short History

· The America Radical

· The case for abolishing private banks

· More free money from your out of touch government

· Contradictory national priorities are a paradox for the political activist

· Will the USA have inflation, deflation or economic stagnation

· Healthcare confusion abounds as President Obama signs the monumental legisl

· Where have all the jobs gone

· What is the future of healthcare reform in the USA

· Stephen Cafaro is now writing for The Examiner

· Common Sense Press Release

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Books by Stephen R Cafaro
There is much speculation about the existance of a recession. The economic definition of a recession calls for 2 quarters of negative growth. Forget that formality because tens of millions of Americans are already in a recession and are on the verge of a depression!

                  A Fundamentally Sound Economic Recession?

It’s hard, if not impossible, to listen to the television or radio without being bombarded with the sad news of the day. If you are among the few who refuse to watch television, then you are sure to get the distressing information from the news paper or magazine of your choosing. If you are a modern day monk who chooses to block out all media, then you, no doubt, get the reports from your friends, neighbors or workplace associates. You just can’t hide from the upsetting and painful economic woes that seem to be engulfing our country. Everyday brings further confirmation of the plight which threatens to destroy our economic system. Most of us are confused by the optimistic, but frequently, conflicting opinions of the experts. Many wonder if we are in a recession. Is the economy fundamentally sound? How should I plan for the future?

Our current dilemma began in 2001 when slews of investors vacated the stock market after the dot com bubble burst. These investors had cash and looked to the highly leveraged housing sector to make their next quick buck. In the subsequent years, the residential home market had an astronomical price run up which left millions of Americans house rich. Indeed, during a 5 year period, extraordinary increases in home prices caused people to clamor and compete to get their piece of the American Dream. The excitement was amplified when the Federal Reserve printed and circulated trillions of dollars at some of the lowest interest rates since World War II. The banks and financial firms were quick to seize on the profit opportunities that develop when frenzied buyers meet easy money in a red hot market place. They supported the rush with a host of mortgage products which made money available to just about anyone who was willing to sign off on a loan.

And so, the home buying panic increased and house prices rose amid the mountains of cash that was readily available. People and investors threw caution to the wind even as the level of speculation moved to an unsustainable pace. Seemingly, it was not an important consideration as most of us are programmed to leap after opportunities that do not have a down side. After all, there was nothing to worry about! Work was steady, the down stroke was minimal, the monthly payments were affordable, housing prices were going up and the future looked mighty good! Investors, home buyers, and those with home equity scooped up their share of the piles of ready cash. Life was good, or so we thought.

But, what goes up must come down and the irrefutable law of gravity now commenced to grab hold of the housing sector! The slow down started about two years ago when home sales began to decline. The general opinion, at the time, was that the housing market was going through a slight correction. Most refused to acknowledge the possibility of a bubble and the potential for a bust. The optimists proved to be correct. There was no bust. Rather, there was a long and pervasive leak which crippled sales, increased available inventories and critically reduced prices. In the midst of all this, many home owners were overwhelmed by increased monthly payments which were the result of the creative financers and their adjustable rate mortgages. Some could no longer afford the payments while others found themselves saddled with mortgages far greater than the value of their homes. The rest is current history as millions of Americans are losing their homes through foreclosure. None the less, the questions remain the same. Are we in a recession? Is the economy fundamentally sound? How should I plan for the future?

Last week, I found the answers to these questions. It came in the form of a phone call from a former real estate client who is now a neighbor. George explained that he had friends who were losing their house. Could I help? I explained my limitations, but George asked that I see his friend none the less. I agreed and we set up a time to meet with his acquaintances, Frank and Mary Gibbons.

The door bell rang at the arranged meeting time, and I greeted George who proceeded to introduce me to Frank and Mary Gibbons. In rushed the three young children of Frank and Mary who were identified as Charles - age 6, Lisa - age 4 and Phillip – age 3. The 3 youngsters quickly went on a whirlwind tour of my home before being rounded up by their stern, but patient mother. Mary admonished the children to behave and to stay in the living room area. I pulled out a pile of toys reserved for visits from my grand daughter, and the children descended on them.

The four of us sat down at the dining room table which was in eye shot of the exploring young people. We looked at each other pensively until George nudged Frank and told him—“go on, explain this to Steve”. Frank was a massive man weighing in at well over 230 ponds and standing at least 6 feet tall. He had heavily calloused hands and a V shaped upper body evidencing his work at some type of hard labor. Frank scrambled through a handful of papers while reluctantly uttering. “Well Steve, I think I might lose my house. I have been out of work for seven months now, and I am three months behind on my house payments. I used up the last of my savings trying to keep my payments current. I’ve tried to find work, but there is nothing available in the construction business. My wife works, but she only makes about $400 a week, sometimes $500 if she gets overtime. George thought you might be able to help me refinance my home.” His big body was trembling as he continued to ramble on, sometimes incoherently, about his money problems. As he spoke, Frank was rapidly fingering through the pile of documents. Frustrated, he laid out all the papers in front of me and asked. “Can you help us Steve?”

I picked up the papers just as my Golden Retriever made his way into the living room. The 3 youngsters were initially horrified at the sudden appearance of the large dog. Seminole, my dog of 13 years had just awakened, and hastily entered the room to investigate the playful shouts of the children. After some assurances from their mother, the kids settled into petting Seminole, who was now lying on the floor enjoying the attention of his youthful audience. I returned my attention to the documents, and quickly ascertained that Frank and Mary had purchased their home for $267,000 and had a mortgage remaining on it of $266,000. In addition, they owed $8,600 in past due payments. I knew the area where the house was located and noted the residence is worth $140,000 at most. I would have bad news for Frank and Mary Gibbons.

I looked up at Frank and Mary and explained the situation to them in detail. There is no easy way to tell someone they will lose their home. I attempted to soften the blow by offering to negotiate with the lender, but they had already attempted that on their own. I explained the short sale process and encouraged them to get a lawyer, but they had no money for a lawyer. In the midst of all this, the squeals and laughter of the children had become pervasive. Seminole was in the process of returning the playful caresses with a series of affectionate kisses using his slobbering tongue. It was a scene out of Norman Rockwell Americana as the kids first ducked, and then placed their smiling faces in the direct path of the darting tongue. I smiled briefly at the antics before apologizing to Frank and Mary for my inability to assist them.

Mary was quite solemn. I had not told her anything she did not strongly suspect. Her young face bore the hard lines of many sleepless nights and her shoulders stooped under the burden of her personal struggle. It crossed my mind that women suffer this type of loss much harder than men. She clasped my hand gently and assured me that there is nothing for me to be sorry about. I was clearly shaken by this tragedy. I felt strongly for the couple knowing they were hard working people. They had placed all their savings into the ill fated adventure, and through no fault of their own, they would soon be forced to abandon their dream.

We all shook hands and briefly embraced as we concluded the meeting. There was a final meeting of weary eyes and a tormenting silence. Mary and Frank retrieved the kids from the overly affectionate retriever. Just then, Charles, the oldest of the 3 siblings inquired. “Dad, can we stop for some ice cream?” Frank was stepping rapidly toward the door and responded. ”I’m sorry son—I forgot my wallet!” The young man retorted. “Awe Dad, you’re always forgetting your wallet.” The big man turned around and hoisted his son into his arms, while quickly brushing a lone tear from his eye. It was obvious that the man was emotionally torn.

“Wait a minute” I responded. “It’s my treat tonight because you guys did such a great job of keeping Seminole out of trouble”. I forced a $20 bill into the Frank’s large hand and quietly reiterated. “It’s my treat”. The kids screamed their approval, but there were no other words that needed to be said. As I watched everyone walk to the driveway, I was troubled by the tormenting thoughts of their future. Soon they would be forced from their home and would have to begin a new life. Would they survive as a family, or will a divorce rip them apart? Will crime enter the equation as survival at any cost is the final solution for many? Or will they simply put their heads down and make a new future?

Of one thing I am certain, Frank and Mary are in a recession and soon will be in a depression. The economy is not at all sound for this family. In fact; it is a tragic train wreck. As to their future, only God knows how they will weather the storm. There are millions of Frank’s and Mary’s suffering a similar fate. I am certain that there is no question as to the existence of a recession in their minds. But as the financial debacle continues to unwind, I sense more of us will be drawn into the growing recession. In the meanwhile, as I watch Frank and Mary enter their car, I am reminded of the words of an elderly friend who admonished “There, but for the grace of God, go I”.

My book, The Road to the Third World”, explores the housing calamity as well as a plethora of other issues which threaten the viability of our great country. It is left to the rest of us to contain the problem, less we become the next Frank and Mary.



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