With all of the discussion of the foreclosure crisis within the media and on company networks, there might be some confusion as to how bad is the situation in the housing market. The media has an admitted big-government bias, so it truly is typically rather hard to separate truth from propaganda, specifically during times of financial crisis.

However, the issue of foreclosures is actually quite a bit more severe than even the media is making it out to be. They’re just focusing on the foreclosure crisis and how homeowners and lenders are being affected throughout the credit crunch, while ignoring many other, related troubles.

The housing market was pumped full of inflated money and simple credit for at least the decade from 1997 until 2007, and it began accelerating after the 2001-2002 “mini-recession.” A bubble was inflated in residential real estate to maintain the party going soon after the tech stock collapse, and now you’ll find no markets left to inflate.

The Federal Reserve has been lowering interest rates over the past six months, but this has not helped homeowners save money on their resetting Adjustable Rate Mortgages. Any money they “save” by getting lower-than expected mortgage payments, but higher than they originally paid with the teaser rate, just isn’t reflecting actual savings of income, but just an opportunity expense. If rates had been kept higher, they would need to pay a lot more, but the expiration of the teaser rate is causing them to pay more anyway, just “less more.”

In addition, lower interest rates mean that the dollar is getting devalued, and costs of imported goods (and anything created with imported goods as an input) will increase. Anything produced with oil has been going up, such as plastic goods and items that must be transported about the globe and throughout the country. Trucking businesses are feeling this pain specifically acutely, as the price of diesel has been over $4.00 a gallon for a while now, with gasoline following closely.

Homeowners are also seeing food costs increasing in America and worldwide, with riots and common shortages in some Third Globe countries already happening, and rice shortages becoming reported in the US. The dollar is becoming worth less, so producers of real goods like food raise their prices or create crops which are worth more as ethanol to feed SUVs than as food to feed families.

In this inflationary economic environment, homeowners using a mortgage payment that has increased by 50%, together with the price to feel their car up 30% in a year, plus the cost to feed their household growing at 20% in a year, may be running into some genuine problems. A total individual monetary collapse is in all probability one job loss or medical emergency away for households already living on the edge.

But even if homeowners fall behind on all of their bills in large numbers, the banks as well as the government won’t do anything to assist the people — in truth, quite the opposite has been happening. The Fed is bailing out banks with billions of newly printed dollars each and every week now, and this inflates the money even more, driving up costs even higher, pushing more homeowners into foreclosure as they struggle with rising food, power, and healthcare costs.

But together with the free money the banks are receiving, they’ve no incentive to work with homeowners to put together repayment plans, mortgage modifications, or other programs that can stop foreclosure on houses. The largest banks know they are able to sit back, do nothing, let the foreclosure approach take more than, and make up their loss with assist from the Federal Reserve, paid for courtesy of the people they’ve stolen a home from.

It really is bad out there in the housing marketplace, and will continue to be poor at least through the summer of 2009, if not far longer, when the resetting mortgages will mostly have adjusted by then. But by that time, how much will gas expense? Seven dollars a gallon? Just how much will food cost? Will there be adequate of it to feed everyone? And how will people have the ability to afford either transportation or food, when their mortgage payment has nearly doubled?