It has captured my attention that many people are blaming today’s mortgage problem on banks who have given millions of dollars to people who are less than deserving of loans. It’s difficult to believe that this is the case. The mortgages labeled as sub prime are only 7% of the total outstanding mortgages.

According to Professor Mark J. Perry’s Blog for Economics and Finance

Fortunately, subprime ARMs make up only 7% of the total mortgage loans outstanding according to the MBA, or about one out of every 14 loans, and of those subprime ARM loans outstanding, about 1 out 20 were in foreclosure in 2007-Q3, or about 1/3 of 1% of all mortgages.

So it seems impossible that this tiny portion of foreclosed mortgages could possibly cause such a large drop in housing prices. Some say the failing sub prime mortgage market poisoned land values in surrounding areas, which caused a ripple effect that lowered prices of  neighboring land. In the end, decreasing prices pared with adjustable rate mortgages led to large scale foreclosures.

What if we take a different idea altogether into consideration. Many modern day cities in the United States was built around the gas combustion automobile. For the past 70 years the country has been developing a system of roads and highways that connect dense cities and jobs to the suburbs. This system was great while gas prices were low, but as prices doubled it became difficult for many to pay commuting costs.

Originally, When the United States began industrializing rapidly, the main mode of transportation for both was predominately rail. It was after 1910 or so that a shift occurred to the automobile and trucks for transportation.

If gas prices reached a point where people could not pay their mortgages, would it be possible that this was the cause of the larger scale foreclosure rate? The same principle behind the ripple effect of foreclosures can be put into action again here. After a few foreclosures, housing prices would fall in the area and increase the monthly cost mortgage cost for the people who were paying their adjustable mortgages without a problem.

So, what is the solution? Go Electric!

Convert your car.
Buy an electric.
Buy a hybrid.
Take the train (if possible)
Install Solar Panels.

Now that gas prices are becoming a problem, solutions are being put into action. It’s never optimal to live in a reactionary society, but it’s the most efficient system we have. We’re not at a critically point now but, logically speaking, eventually something will have to be done. Small changes over a long period should alleviate the problem and eventually lead us to a more sustainable future.