The theme of this week’s This American Life radio program is ‘Scenes from a recession.” In the first act:

Ira goes to the Rogers Park area of Chicago to talk to some condo owners who are in a precarious situation—since the housing market crash, the developer who renovated and sold them their units has all but disappeared. He’s in foreclosure on half of their building’s units, and in the meantime, they have no one to pay for the upkeep and maintenance of the building they all bought into.

It’s a nightmare situation for the owners. At the end, Ira talks with two of the owners about why they haven’t just defaulted on their mortgages in order to get out of this horrible situation. First, each owner concedes that the consequences of default would not be that onerous for them, but then each owner explains why she stays. The first owner says it’s a matter of honoring her word: she signed a contract, she has the ability to pay on it. The second owner says that she stays out of a sense of obligation to the community of unit owners. Her departure would just make the situation that much worse for the remaining owners.
I’m shocked at the stark contrast between the attitudes of these people and of the people and institutions who got them into this situation–not just the slimy developer who fled the country, but also the bank that is stalling on foreclosure as long as possible, when foreclosure is what the unit owners need to move forward.
I know that this story was produced so as to highlight this contrast, but I’d say it’s a pretty clear depiction of how we’ve gotten into our current economic mess.

Categories: Economics