Housing Crash II – Will Responsible Homeowners Be Next?

As the economic carnage continues reverberating into every crevice of American society, with company after company laying workers off in droves, with the housholds of the newly-unemployed cutting back spending drastically, thereby causing a loss of revenue at the businesses where they now spend less or even stop spending alltogether, which in turn puts more pressure on already-hurting businesses to cut back their expenses to survive, ofetn resorting to layoffs, which adds to this vicious cycle anew, so this effect has a natural tendency to snowball.

As the dominos continue to fall, and once-solid, robust businesses that under anything but the most dire circumstances would not be in danger of failing or being forced to lay off workers, start  laying off workers and/or simply close and go under, has got me started thinking about all the responsible homeowners who, prior to the loss of a key source of income, were in no danger of of delinquency, let alone defaulting on their mortgages.

Surely among the 1.3 million who lost their jobs within the last 2 months, there must be scores of responsible homeowners among them.  They bought what they could afford, put 20% down, got a fixed rate mortgage, have built up some equity, carry little CC debt, maybe have 1 modest car loan, probably have some emergency cash, and in general have done everything right and have been prudent and fiscally responsible.

But they still have a mortgage to pay – along with taxes, utilities, food, gas, insurance, car loan, basic neccessities, ect.  The job market is horrendous and  credit is tight.  If things continue as they are, are we gonna start seeing what by every accepted definition were responsible homeowners, get caught up in and washed downstream in the toxic tidal pools of debt along with their irresponsible counterparts?  And will we  be expected to bail them out, too?