equity in the first three quarters of 2002."
(President's Report 2003 p. 33) The report contends that this was also
due to increasing home values and declining mortgage interest rates.
Perhaps so; but what is neglected in this evaluation are the other economic
factors affected by 9/11, as well as the very significant fact that a
generation ago, Congress saw fit to eliminate tax deductions for consumer
interest except in terms of home equity and mortgage loans. (Youdebate.com
Web site) Therefore, it is reasonable to assume that consumers who needed
to borrow to pay for other things would look for ways to do so by using
financing with deductible interest, rather than credit cards and consumer
loans. The fact that unemployment for the same period was running at 5.5 to
6.0 in the period, after rising 1.8 percent after the terror attacks
(President's Report 2003 p. 47), could easily account for consumer need to
borrow and refinance to cover that need. What makes this possibility all
the more cogent is that in the aftermath of 9/11, unemployment not only
rose, but also lasted longer. The number of workers unemployed for 26
weeks or more rose in 2001 and remained high in 2002 and, as the report
noted, long-term joblessness is costly to those unable to find work.
(President's Report 2003 p. 47). When the unemployment runs out, consumers
might have no choice but to cash out the equity in their homes.
However, new sales of real estate were also relatively high during the
period, a fact attributed to the lowest mortgage rates in 40 years by an
article in The Futurist, which also noted that middle-income buyers and
minority groups were both involved in the mini-boom. (Cetron & Davies 2003
p. 27+) This could be seen as proof that the terror attacks and the
joblessness in the aftermath did not a cause the cash-out run, but that
would be to ignore that completely understandable desire ...