Mortgages: US crisis is a long way from over

When the US Bureau of Statistics launched its figures for poverty in the US population, Al Jazeera news went to a food charity outlet and asked people how they compared to the official US government figures which are different from the Bureau of Statistics figures published yesterday.

A single mother with three children answered their question: she earns USD22,500 per annum - above the official simplistic poverty line figure for such a family used by the wider US Government. So she does not get all the "passport benefits" that being below that threshold would entitle her to. She struggles she says.

The reason she struggles is the reason there was a global financial crisis: her monthly mortgage payment is almost USD3,000 per month. That's more than her gross income.

The interviewer did not ask how she manages so one has to make some assumptions. It is likely that she is buffered from repossession by the laws imposed on financial institutions to make them take possession of homes only in extreme cases.

That raises the simple and blunt question: how many other families are not paying their basic bills and, in the case of mortgages, how are those unpaid bills falling back into the balance sheets of banks.

Banks are already railing against the requirements to increase their capital ratios: as more loans fall into arrear but not, under the new requirements, default, that only moves bad or doubtful debt under a different heading in the balance sheet. It's still there.

The artificial accounting that this provides removes some of the effect of bad debt. But with almost 90 banks failed in the US this year, most exposed to small and medium borrowers, the problem is merely hidden not solved.