The Economy's House of Cards Foreclosure stats for February indicate that 308,000 U.S. households received some type of foreclosure related notice during the month. Of all U.S. residential mortgage holders, 15% have either missed some payments or are in foreclosure. Mainstream news outlets reported these depression level numbers as 'good news' because the rate of foreclosure activity was only 6% higher in February than the huge level that had been reached a year earlier. Housing is at the epicenter of the economy's problems and the situation has consistently gotten worse since the market peak in September 2005. The decline has continued even though there are numerous federal and state programs aimed at shoring up the housing market. Government policy seems to have been highly effective at creating the housing bubble, but impotent in cleaning up the mess. President Obama stated in a speech in Mesa, Arizona in February 2009 that his administration's housing programs would help three to four million homeowners avoid foreclosure through loan modification programs. More than a year after that speech, the latest figures indicate that 116,300 home mortgages have been modified through federal programs. At that rate, it will take as long as 34.4 years to fulfill Obama's promise. The abysmal failure of its loan modification efforts seems to have led the administration into new directions. As part of last November's "Home Affordable Modification Program", the federal government will now pay to get people out of their homes by encouraging short sales. A short sale in real estate is when a bank agrees to accept less than the outstanding mortgage owed as payment for a house. The government's plan pays the owner $1500 and the bank $1000 to agree. Real estate agents get much more however. They have to appraise the house (a major arena for corrupt practices during the housing bubble) and get a commission for arranging the sale. Neither homeowners, nor banks are likely to be pleased with this gift to the real estate industry - an industry known for its generous political contributions. It was noted in news reports by early 2006 that U.S. foreclosure rates were starting to climb and a possible crisis was imminent. After four years, government programs haven't 'fixed' the problem, nor are they likely to in the foreseeable future. Mainstream news outlets are now reporting that U.S. foreclosures this February experienced their lowest rate of increase in four years. Foreclosures are continuing to go up, but at a slower rate. The numbers are not getting better. A casual reader of the news might miss that important point. The ultimate nightmare ending of a housing collapse in a bad economy can be seen in Detroit today. The mayor of Detroit has just suggested bulldozing up to a quarter of the city. In some areas only one or two buildings are occupied per block. Faced with a $300 million budget shortfall, the cost of maintaining city services for these areas is prohibitive. Youngstown, Ohio and Flint, Michigan already have programs to demolish empty neighborhoods. Kansas City just voted to close down half of its schools and along with a number of Midwestern industrial cities might be implementing such programs in the future. Federal assistance will be needed to help Detroit implement its program. Perhaps this new housing aid program will be called the "Home Bulldozing Modification Program".   Daryl Montgomery Organizer, New York Investing Meetup http://investing.meetup.com/21 This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.