I don't know if this belongs in Political, but I'm pretty sure it isn't a "general forum" type of discussion.

We all know that the country--maybe even the world--is facing a long recession, maybe even a depression. The situation isn't unprecedented. It happened in the years between 1929 and WWII. Japan is only now coming out of deep economic problems dating back to the 1990's. The economic engine has slowed and will be difficult to re-start. Recovery must begin with increased spending by the consumer and the government will try many kinds of things to stimulate such spending--tax cuts, government-funded plans to increase employment, management of interest rates to very low levels, etc. All techniques that have been used before.

In the case of the current U.S. economic problems, the heart of the problem seems to be extraordinarily high levels of personal debt and a dramatic and sudden decline in the values of housing, reduced demand for housing, dramatically increased levels of mortgage loan defaults and foreclosures. We're experiencing a cycle that has almost stopped banks from lending and borrowers from being able to borrow. That cycle has spread to other capital goods industries--autos, large appliances, electronics, even items for major household rehab projects. Such decreased demand has exacerbated the economic decline with increased unemployment, reduced income, etc.

So now to my theoretical question. I'm hopeful that it's not a real situation that any of us would experience personally.

Let's say that you found that the value of your house or condo was substantially less than the amount of the mortgage loan you had taken out. Say the value of your house has declined to only 80% of the amount of the balance on your mortgage loan. Let's say that it's clear that the value of your house will not increase to equal the amount of your mortgage loan for, say another five years or so. As the result you know that you can't sell your house for an amount that would pay off the mortgage for that time. In the meantime your credit rating is suffering because of problems with your job. Your credit rating hasn't been a big consideration because the banks or credit card companies won't increase your credit anyway.

If you found yourself in that situation--would you continue to do all that you could to keep making your mortgage payments on time? Or would you simply stop making mortgage payments and live in the house until the lender foreclosed and forced you to move, simply using the amount that you were "saving" by not making motgage payments by spending it on living expenses, a flat-screen TV or a new car? I'm not talking about a personal bankruptcy. My question has to do with simply not continuing to make payments on a loan, the balance of which has become a lot more than the value of the house used as collateral for the loan.

Unfortunately, the situation I've described is a pretty real one for lots and lots of people. The way they answer the question I've posed will go a long way towards determining how long the recession we're all facing will last. What would you do?