Ran into a successful mortgage lender who has been in the business for decades at the garbage dump friday. He's the optomistic sort. I asked one question about how business was and let him run with it as I wanted to get his true thoughts on where things were at without biasing the conversation.
He said, to quote, "it feels exactly like 2007." The one difference he told me was that the mortgages are no longer bundled and sold to Wells Fargo (his words) but to Fannie Mae.
I will let you judge if that is good news or not, I have my own ideas.
But I ask that, in that way, of folks several times a week, I put more weight on some folks opinion more than others. The general consensus I see is folks who think it's going to blow up but are betting the house in the meantime thinking they can time it right and get out before it does. A few of them are greedy. They've made it and don't need to. But a lot are gambling because they need it and don't see another way.
Your chart is from Pikkety and Saez, one from Berkeley the other from France run by very socialist policy.
The problem with pointing out differences in cohorts of income levels of people is that they they change cohorts often, few more often than the upper cohorts. IOW rooting for the same team every year is similiar to this because the players are always different.
If there were no bailouts by the federal government that chart would look a whole lot different.
As to the second chart they are calling a 3rd bubble. Taint one. As Economics 101 stated a recession is caused by over investment. There taint none.
The previous recession was caused by over-investment in real estate, the dot com recession was also caused by over investment in internet stocks. The investment we have now is owned by people who can service the debt i.e. not over invested.
In California home prices are up to close to bubble prices, but the difference is, they are being purchased by actual buyers to be lived in by actual homeowners, not for quick flips with low wage families on a syated income refinance to buy another to homes so the can do another couple syated income refinance and pull money out to buy a harley, a motorhome and a sand rail.
The comparison to 2007 is totally inapt. Home prices are up on the coasts where we've basically run out of land to build on. There's no bubble here to be burst because homeowners aren't underwater.
What has happened over the past decade is a massive shift in wealth from the poor to the rich. All those homes that were in foreclosure in 2007 got gobbled up cheap by rich people. Fast forward to 2017 and those rich people have doubled their investment AND can rent out those homes at really high rates. The average working joe is paying half his income in rent and can't save enough to buy a house.
But hey, maybe if we give the rich another tax break like Trump wants, it will trickle down to everyone else? And if we take away health care for the working class, that might make things better too?
I think you have it right Gary except that most of the housing is being snapped up by Wall Street REITs. One of the first acts of the current administration was to extend FHA mortgage insurance to owners of rental property. This lowers the risk of being a landlord so makes it easier to bundle and resell those mortgages.
This ties into Trump's much touted apprenticeship program. We are going to need a lot of electricians to maintain the electric fences around these homes.
The US is starting to look a lot like Central or South America where a small percentage of the population owns/controls/benefits from almost all the wealth. The lower class is continually milked on a slow drip, according to market pressures. Rent manipulation, high interest loans, bank closures and government corruption add to the unpredictability as well as the hope for a better tomorrow.
The difference is the two class system in CA and SA is known and obvious, especially by those living in it. Here in America, we think we are free, and sing the songs and send our young to fight for the Saudis and oil security, and believe in hard work. Ever more hard hard work. Lots and lots of hard work. And we then pray that the hard work will pay off and overcome the bad luck that periodically raids what wealth we might accumulate. Just the credit card debt in america is enough to keep the screws on tight.
We will never be able to replace this massively corrupt government with the heavy yoke we collectively carry. Hell, we fight over allegiance between two political choices when they are both terrible, terrible corrupt people. Keeps us busy, better than education and protest. Politics, looking much like religion, is now the opiate of the people.
“Whoever controls the media, the
images, controls the culture.”
- Allen Ginsberg
This fall the Supreme Court is going to take up the case of gerrymandering legislative districts along political partisan lines.
It has been deemed unconstitutional to create legislative districts strictly on the basis of racial characteristic. Creating bulletproof districts along political party lines has been prevalent for many years on both the Democrat & Republican side. This is how President Trump was able to get elected even though the majority of voters picked Hillary Clinton.
This is also how we continue to get legislators who stay at the trough for 30 - 40 - 50 years at a time. The incumbent party will never throw out their own guy and the votes are always stacked against the insurgent party.
If the Supreme Court rules partisan based gerrymandering violates our constitutional right to representation then the make up of Congress will change greatly. This would be a positive step for eliminating gridlock and politics by partisan polemics.
If we could combine this with term limits we might get a more representative government which, I am sure, every patriot would applaud.
Does anyone really think those in power will voluntarily vote to limit their power? By a majority? I think the only chance of that happening in present day Washington is if there are a few of them swinging from the lampposts. During the Vietnam protests, they chose by a wide majority to fight instead of consider any other position. "Fight" meant planning for concentration camps for protestors, mass arrests and detention without trial, armed resistance at demonstrations, etc. Only when the reasons for the war became irrelevant did they back down and eventually concede.
Gerrymandering and the call to eliminate it has been a beloved tactic of either "side" for 200 years. It will not be changed by those that now benefit from it, and sooner or later, they will all benefit from it. Term limits has now taken up residence next to gerrymandering and "getting America back on track" as another beloved talking point designed to get votes and never go away.
This is corruption pure and simple. Deep, ingrained and unavoidable corruption. The Supreme Court can only reflect that corruption, Congress won't change it, and Executive leads the way to more of the same. The Fourth Estate is commercially marginalized by the culture of corruption and unable to have an effect since people no longer read or can comprehend if they do read.
And the fact that posts like this generate lots of discussion (a good thing), they will never make one diddle of difference in our complaint, even if we could agree. Until we demand and make a government that puts people first (in actuality, not a slogan), we will be raped and pillaged by those that are sworn to protect us.
Couple of thoughts
First, most of the time when this graph of the rich getting richer is shown, its discussed as if wealth is a fixed size pie and that the rich got it by taking it from those below them. The quantity of wealth is not fixed, its created by the movement of goods and services that are provided to people. Jeff Bezos and Amazon didnt become a billionaire by taking more money from the lower class. He provided a platform that out walmarted walmart and everyone who uses it sees the benefit of it and enjoys it and in most cases spends less money for it than they would have. Both parties benefited.
Second, you cannot add millions of people to public assistance and expect the lower half to become more wealthy. It disincentives them to work hard and change their status, and the tax burden on those above them reduces their wealth accumulation as well.
Third, that huge group of people known as baby boomers are now aging and have gone from there peak earning years of the early 2000's to their retirement years
Finally, as messed up as our political system is, America is still the greatest land of opportunity out there. We should make hay while the sunshines, and at the same time be prepared for the worse. We should not put off one because of the other. Sitting around watching the news and worrying about what might happen steals the energy and dreams we need to make things happen.
What's not to like about gated communities with armed guards like Brazil. As long as you are the guy behind the gate, the guy guarding the gate, the gate builder, the electrified barbed wire guy(cabmaker's cousin), or the guy trying to kidnap the guy behind the gate's women & children, all is good.
Even being the cabinet guy, who builds the crazy expensive stuff for the guy behind the gate, isn't that bad.
Obviously you want to be in a service industry for the guy behind the gate.
It's too bad that gated communities do not work both ways, keeping the rich people in while keeping me out. They should have to show justification for leaving, much as I have to show justification for going there. I would happily not go there if they would stay there and not go where I am.
As I am looking for a retirement opportunity, perhaps I will purchase property immediately outside the gate of a gated community and put up a gate of my own, with electrified barbed wire, CCTV, attack dogs, and armed sentries.
I can set up a toll both business, and charge for passage in both directions. It should pay for itself in no time, and after that it is pure profit.
Then I can sell the gate business, and with the proceeds I can afford to move to a gated community.
If you have to ask how much the land costs in front of the gate...you can't afford it.
The kidnappers typically burn everything on the way out. You will need to really think this out before you offer the guy guarding the gate a new job. Also just like tools in the shop, you have to supply the ammo & guns.
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