A a Perspective on U.S. Farm Problems and Agricultural Policy by Lance McKinzie

Author:Lance McKinzie [McKinzie, Lance]
Language: eng
Format: epub
Tags: Public Policy, Science, Agriculture & Food Policy, Life Sciences, Social Science, Political Science, Regional Studies, General
ISBN: 9780367163747
Google: 196iDwAAQBAJ
Goodreads: 48634207
Publisher: CRC Press
Published: 2019-04-09T05:00:42+00:00

A study of the earlier panics of 1837, 1873, and 1929 shows that a chaotic period in real estate is even worse than chaos in other aspects of the economy because when people carry heavy real estate debt, the panic takes a long time to work its way through the system--partly because people are slow to acknowledge the actual situation and also because there are few options for remedy:

A stock market crash can be liquidated quickly, but the process of mortgage liquidation is very slow. For several years, borrowers and lenders both hold on, expecting that prosperity is just around the corner. There are no market quotations on homes so that neither party realizes the situation. When foreclosures do occur, properties are commonly taken over by the creditors, partly because of the dearth of buyers and partly because the creditors do not realize the situation. Before it is cleared up, the creditors must be willing to sell at market prices and the properties must pass back into the hands of persons who want them. Many creditors still held farms in 1932 that were taken over in 1921. These were held because of the unwillingness to accept the loss, expectations of profit or fear of breaking the market (Warren and Pearson 1935, p. 242).

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