Archive for the Housing Category

“Peak Land”: The Exodus Toward The Equator . . . or the North Pole? (April 4, 2011)

Posted in Consumerism, Depression, Economics, Global Climate Change, Global Warming, Housing, Peak Land, Population, Recession on April 4, 2011 by e-commentary.org

. . .

7          “Look at the movement of the ‘center of population’ or the ‘median point’ of the population in America over the decades.  Opportunity, open space, sun shine, clean air, air conditioning, ‘right to work laws’ and lax state environmental and occupational regulations attracted individuals and businesses to the western longitudes and the southern latitudes of America.  The center has moved from Maryland to Missouri.  In the coming decades, the population will need to migrate closer to the sun which on this planet means closer to the equator.”

13        “Not enough dead dinosaurs.  The decline in fossil fuels will drive everyone crazy and may drive them to drive south.  About ninety percent of the Canadian population lives within one hundred miles of the United States border.  They can’t move far and remain Canadians.  We will need to move south.  However, people will not have the electricity to condition the air.”

7          “Americans are drifting toward the southwest, yet they cannot live and work there because of the limited water supply even if photovoltaic cells are welcome and promising.  The populace may end up moving to enclaves in Oregon.”

13        “Then we bump into another limit.  We as a people have always lived at ‘peak land’ because the total number of hectares is finite and known.”

7          “With the rising seas reducing the land mass.”

13        “Exactly.  I look at the globe and a map differently.  I see a narrow undulating band of livable land that does not demand the consumption of substantial deceased dinosaurs to stay warm, offers adequate water supplies and provides locally grown food.  The sustainable plat on the planet is contracting.  Even rising temperatures will not be enough to offset the prohibitive costs of heating cold regions and handling short growing seasons.”

7          “Yet as the perverse insulation envelops the Earth, northern climes may become temperate climates.  Canadians may be well positioned.”

13        “All the rates of change are in flux and uncertain.  We are now moving from ‘peak land’ to scarcer land.”

7          “We are on the wrong side of too many tipping points.  Usable land is contracting while the population is expanding.”

13        “While the population is exploding.  A friend estimated that the city will reach five hundred thousand residents by 2030.  I observed that the city would need to contract to fifty thousand residents at most.  He was nonplussed and added an aside about the birth rate.  I agreed that we are over gross and getting grosser.  Nonetheless, our numbers must shrink and migrate.  He remained nonplussed.”

7          “For most people, it does not add up.  They aren’t even doing the math.”

. . .

[April – National Poetry Month]

Bumper stickers of the week:

A half dozen six-word memoirs in an “e-poem” titled “Take only pictures; Leave only footprints.”

Many live humans; Few dead dinosaurs.

Disregard the e-con-omists; Regard the physicists.

Change your attitude; Range the latitudes.

Pay old bills*; Develop new skills.

Consume less junk; Savor more beauty.

So many challenges; So little time.

*          Craft your own financial game plan.  With hyperinflation on the way, purposefully delaying the payment of bills allows one to pay obligations with significantly devalued dollars.  That is the strategy being pursued by the governments. 

Is A “Strategic Default” Of A Mortgage Now A Moral Imperative? (February 28, 2011)

Posted in Bailout/Bribe, Banks and Banking System, Courts, Crime/Punishment, Economics, Housing, Kleptocracy, Law, Society, Supreme Court, TARP on February 28, 2011 by e-commentary.org

. . .

S          “You have heard of them.  A ‘strategic default’ is a default by a person who could make the monthly payments on the mortgage yet elects to cease making the payments because the property is underwater financially.”

D          “There are a flood of them today.”

S          “A strategic default may be de rigueur today.  Look at the law.  Start with the indoctrination process in law school.  Young law students are taught the theory of ‘efficient breach’ which counsels one to breach a contract if breaching the contract is worth more than performing the contract.  That is defined as ‘efficiency.’  The students who answer obediently get on the law review, clerk for the Supreme Court and make millions representing banks, big businesses and insurance companies.”

D          “And assist in running them into the ground.”

S          “That’s the plan.  They don’t even understand ‘efficiency.’  In practice, the party breaching the contract is not spawning a more efficient use of global resources.  The breaching party simply does not want to pay or perform and usually has far more money and can overwhelm the non-breaching party in court.  The party not receiving payment or performance loses big and usually has little judicial relief.”

D          “With a few exceptions, the legal system seems to exist to protect and serve the interests of the wealthy and the well-connected. I’ll take my direction from no one other than the MBAs at the MBA (Mortgage Bankers Association) who recommend defaulting on your mortgage if it is not working for you.  The banksters decided not to pay the mortgage on the MBA office building in D.C. (Washington, D.C.), even though the group had the funds to pay.  The banksters strategically defaulted.”

S          “They are indeed an example for all.  When the government bribed and bailed out the banks and other institutions, some contended that the government could not breach the contracts providing for unwarranted and illegal bonuses.  How un-American.  The government should have disregarded every contract and required the banksters to bring suit.  How American.”

D          “Allowing the banksters to file suit would allow them to file in a sympathetic Republican Federal District Court and possibly steer the case to a receptive judge.”

S          “Always a risk in the legal game.  However, before the banksters brought suit, their legion of lawyers would remind them that they could confront defenses and counterclaims.  In court, the government could assert a dozen affirmative defenses and also counterclaim for fraud, deceit, perjury, conspiracy, embezzlement, racketeering, misrepresentation, breach of fiduciary duty, obstruction of justice, etc.  Some of the banksters would not file suit which is the least expensive and, yes, the most efficient way of reaching a just resolution.”

D          “Seems that the courts are stacked against the public.  Nonetheless, there is a small chance that an independent judge might hear some of the cases and hold that the bonuses are illegal.  An affirmative award against the banksters is improbable but not impossible.”

S          “Neither the Republicans nor the Democrats ever intended to bring criminal charges against the criminals.  We seem at times to be alone in a lawless world with millions of laws on the books.  We in America have moved from a democracy to a kleptocracy.”

D          “And no one to throw the book at them.  Except that the law and morality are clear.  Homeowners are morally obligated to default on the payment of their mortgages if the property is underwater financially.  The government is morally obligated to default on the payment of the bankster’s bonuses.  In today’s amoral America, a strategic default is both an economic necessity and a moral imperative.”

S          “Perhaps a provision should be added to Title 18 of the United States Code making it a crime not to strategically default if the property is underwater financially.  Not to strategically default is so un-American.  And inefficient.  We just can’t have that.”

D          “Strategically defaulting immanentizes the eschaton.”

S          “Indeed.”

. . .

Mortgage Bankers Association Defaults:  http://www.thedailyshow.com/watch/thu-october-7-2010/mortgage-bankers-association-strategic-default

Home Sales Data Is Overstated:  http://online.wsj.com/article/SB10001424052748704476604576158452087956150.html

“Three years after a horrific financial crisis caused by massive fraud, not a single financial executive has gone to jail, and that’s wrong.”  Charles Ferguson upon receiving the Oscar along with Audrey Marrs for the Best Documentary for the movie “Inside Job.”

“Almost everyone counted publicly each and every single day of the event known as the ‘Iran hostage crisis,’ yet no one is counting publicly the days that have passed since September 15, 2008 without a single major criminal indictment of the banksters and their ilk who caused the financial crisis that continues to plague this country today.”

[See the “e-ssay” titled “1000 AUSAs (February 9, 2009).”]

Bumper stickers of the week:

Do as I do not as I say

Mortgage Bankers Association: Strategically Default Today

Free $1000 an hour legal advice:  Strategically Default On Your Mortgage Today

Efficiency uber alles

Efficiency is Inefficient

If your property is underwater, should you plant seaweed in the front yard this spring?

Deducing And Deducting The Mortgage Interest Deduction (January 24, 2011)

Posted in Congress, Housing, Less Government Regulation Series, Pogo Plight, Society, Taxation on January 24, 2011 by e-commentary.org

. . .

L          “Decades ago, Congress made a very prudent and sage decision to eliminate the individual tax deduction for interest paid by taxpayers on consumer debt.  An economy driven by unrestrained consumption did not need any additional government subsidy to drive it.”

M          “No need to spray gasoline on a fire.”

L          “Taxes fuel decisions.  The deduction for mortgage interest remained but only for a residence not to support the acquisition of personal property.  The real estate industry secured and protected that deduction.  And you know what happened?”

M          “Humans did what humans do.  Acted like humans.”

L          “They acted humanly rather than humanely.  Citizens and consumers found a way to circumvent the law.  They could not deduct the interest paid to consume goods and services, but they could deduct the interest paid to consume their chateau even if they actually used the funds to consume goods and services.  They simply used their chateau as an ATM (automatic teller machine) to pay for the consumption of consumer goods and then deducted all of the interest on their taxes.  How many really knew what they were doing.  And yet, Americans of every creed and color, every region and religion circumvented the spirit if not the letter of the law.”

M          “The dilemma is that the mortgage interest deduction may be one of the last tax deductions available to the middle class, if the middle class can afford to buy homes.”

L          “Everyone would be better off without the deduction and most other deductions, exemptions and credits.  However, if Congress eliminated the mortgage interest deduction, the amount of the standard deduction may need to rise for a few years and then fall to zero during the transition to avoid jarring economic dislocations.”

M          “It’s not going to be easy.”

. . .

Bumper stickers of the week:

We have met the enemy, and boy oh boy is he ever you and me.  Mr. Pogo.

If one minute of cautionary commentary had been ventured last year for every month of coverage of the assault on Gifford and others, events may have developed differently.

If we as a society diverted one percent of the funds spent on the TSA (Transportation Security Administration) airport monitoring to FAA (Federal Aviation Administration) airline maintenance monitoring, the skies would be 100 times safer.

The Marginal Utility of (House) Utilities: Only 1600 Square Feet! (October 25, 2010)

Posted in Case-Shiller/S&P Index, Housing, Less Government Regulation Series, Market Solutions on October 25, 2010 by e-commentary.org

. . .

K         “In the near future, rather than marketing the total square feet, we will market a structure based on the average cost of utilities per square foot per year.  A person will pay more for a structure to get less because it has well-insulated but fewer square feet and lower fuel bills than another comparable structure.  ‘Natural gas bill:  only $14,700 per year!  And only 1600 square feet!’”

J          “A few individuals have noted that the market for houses won’t stabilize until the average price is more in line with the long run price measured by the S&P/Case-Shiller Home Price Indices or another index of housing prices.  We are not there yet.”

K         “The average size of a new structure must be more in line with the average size in the past so that a family can afford the facility.  The government should not dictate the maximum size for a house; the market should determine the optimal size of the appropriate structure.  Single family homes may not even be the model home for the future.  Townhouses and more open space are more efficient and desirable to house the town.”

J          “The four horsemen of the housing apocalypse ride together – a bigger house means a bigger mortgage, a bigger tax bill, a bigger insurance bill and of course a bigger HVAC (Heating, Ventilation, and Air Conditioning) bill to maintain the monster.  A smaller house means a smaller mortgage, a smaller tax bill, etc.”

K         “And fewer furnishings are needed to furnish it.  The government makes it too cheap to get into the beast.  Then the real costs devour the owner.”

J          “The Republicans and the Democrats and their corporate owners just won’t let the government get out of the housing business.”

. . .

Bumper sticker of the week:

Natural gas bill:  only $14,700 per year!  And only 1600 square feet!

Who Cares About Health Care? (Feb. 22, 2010)

Posted in Debt/Deficits, Global Climate Change, Health Care, Housing on February 22, 2010 by e-commentary.org

. . .

Z          “No one.  Think about it.  Everyone gets free health care today.  They just follow Bush’s suggestion and wander into the emergency room.  An emergency room is not designed to handle the consequences of deferred preventive medicine and other ordinary medical needs, yet the e.r. is the dumping grounds for the populace.  When the patients cannot pay, they file bankruptcy.  Then we pay.  We have inefficient and inequitable socialized and nationalized health care right now in America.  The coverage is codified in Title 11, the Bankruptcy Code, rather than Title 42, covering Public Health and Social Welfare, in the United States Code.”

Y          “So the real economic cost to the nation as a whole is not much more and not much less than the health care proposals.”

Z          “Not when you net all the costs.  Efficient health care is critical to the health of the nation, yet the public really does not care.  Right now, everyone wants a job to go to during the day and a house to come home to at night.  What is happening outside the house to the climate and the environment is not an immediate concern.  Health care, the national Debt and other issues are secondary.”

Y          “The people are still afraid and concerned, yet they are overwhelmed by the lies and the deception.”

. . .

Bumper sticker of the week:

Streamline national health insurance

The Double Ought (00) “Decadent Decade” (January 4, 2010)

Posted in Afghanistan, Bailout/Bribe, Bernanke, Bush, China, Congress, Debt/Deficits, Economics, Federal Reserve, Foreign Policy, Greenspan, Health Care, Housing, Iraq, O'Bama, Presidency, Supreme Court on January 4, 2010 by e-commentary.org

1999:  No major wars yet percolating problems in a dozen venues; budget deficit surplus of about 236 billion dollars, although Bush inherited about a 5.7 Trillion dollar National Debt; and a boiling but unstable and slowly cooling economy.

The decade that threatened to come in with a bang sauntered in with only the traditional fire works.  Y2K may have been such an epic universal non-event because everyone realized that it was a real deadline that could neither be disregarded nor overlooked.  It was not Y2.001K.  Problems were timely addressed in a timely manner in time.  That was not the attitude for the remainder of the decade.

An outwardly non-descript and largely unknown bumbling scion who had been shepherded by others for their own purposes through an uneventful life was appointed by the Supreme Court to run things.  The ship of state sailed uneventfully for a time.  A written invitation to impending disaster delivered to and disregarded by the White House in August, 2001 was honored in September, 2001 by a quartet of airships.  The course of action was simple.  Know who we are and remain faithful to who we are.  Stay our course.  Redouble our vigilance and redouble it again (and redouble it one more time).  Too many in power and influence in the country lost their heads.  Leadership was non-existent.

A perfect storm.  An obscenely incompetent President, a flagitious and arrogant vice-President, a smug, bungling and petulant Secretary of War/Defense (Rumsfeld), hamstrung Secretaries of State (Powell and Rice), a mendacious Secretary of the Treasury in the second term (Paulson), a marginal Attorney General (Gonzales) and their ilk were not the Dream Team.  The damage they inflicted in the decade will take decades to repair.

Bush proclaimed that WeMaD (Weapons of Mass Destruction) and almost everyone joined in the madness.  No one ever made a compelling case for the invasion of Iraq.  The national press (WP, NYT and so many others) yearned for war, any war, just give us a war with photo ops and film at eleven.  The major television networks (NBC, CBS, ABC, Faux) were thrilled and went wild with glee.  It was a time, the only time, to watch their coverage non-stop to bear witness in real time to the folly and the madness.  The few dissenting voices (Warren Strobel and Jonathan Landay with Knight Ridder’s Washington Bureau, Terry Gross and guests with NPR/Fresh Air, Walter Pincus with the WP and a few dozen other courageous individuals) did not reach a wide audience.  They were voices in the darkness.  The Iraq quagmire is the greatest foreign policy blunder in American history.

Deficit spending and economic looting became the national pastimes.  Almost everyone involved in directing and controlling the economy (Reagan, Gramm and Rubin in earlier decades with the assistance of Bush, Greenspan, Paulson, C. Cox, Geithner, Summers and others in this decade) almost without exception (Brooksley Born and a few others) were committed to undermining the American economy at every opportunity for the benefit of a few.  One must concede that they succeeded handsomely.  Although they are domestic economic terrorists, their activities never became the subject of the vaunted “war on terror.”  No one ever made a compelling case for the bribery and bailout of Wall Street.  Bernanke* remains the enigma, the outsider and the ultimate insider, who did not recognize what was obvious before and after he became Chairman in February, 2006 and disregarded the advice of his colleague Edward Gramlich.

The first African-Irish-American was elected President.  There were a few things they did not tell him before he got elected that he learned quickly after he got elected.  He re-nominated Bernanke* to run the Federal Reserve which may be the only option given the limited economic talent in America.  His appointments to date are adequate, yet the administration is still seeking traction and direction.  Health care is becoming his domestic economic quagmire.  Although it is not really the job of the government to provide jobs and/or homes, the populace wants a job to go to during the day and a house to come home to at night.

About the House.  And the Senate.  Congress could be declared a natural disaster area.  The Republicans are useless, the Democrats are not particularly useful.  Forty-five percent of Americans respond to and are motivated by fear and loathing; the Republicans know and stoke their base.  The Republicans may make great strides in the November elections.  The party committed to destroying government may again be given that opportunity.

The nine members of the Supreme Court are more myopic and narrow-minded than just about any other Court in the history of the Republic.  The Court sports two religions (with one exception), two schools (with one exception), and two (mas o menos) schools of thought (with a few exceptions), yet it has two women, too.  The war at the Court and for the Court continues.  O’Bama may have an impact, although the impact of the economy on O’Bama’s future will greatly impact his impact on the Supreme Court.

The profit-maximizing universities in America should be part of the solution, but they are part of the problem; they may be more accurately described as part of the process and the processing.  They recruit, train and drill the next McNamaras and Rumsfelds.  To their credit, they adhere to a thirty-year business plan rather than the three-month strategy pursued by other businesses.

The information made public in the National Intelligence Reports over the decade patiently and exhaustively chronicles the decline of America’s role in the world after six decades of preeminence.  America has done much wrong during that time, yet America has done far, far, far more good, often with resentment and usually without thanks.  On balance, everyone is better off with the United States as the dominant superpower.  This is China’s century.

Now:  Multiple wars, battles, skirmishes and police actions with two major foreign base camps (Iraq and Afghanistan); massive and growing deficits and about a 12.3 Trillion dollar National Debt; zero private-sector employment gain and zero economic gain for the average family over the decade; and no industry to inflate other than the federal government industrial complex.

[See the “e-ssays” dated Jan. 5, 2009 titled “The Millennium to Date”; dated October 6, 2008 titled “A Bleak Day:  The Trillion Dollar Tragedy”; dated September 29, 2008 titled “Futile Efforts”; dated May 4, 2009 titled “Picking the Supreme Beings”; dated May 14, 2007 titled “Term Limits”; and dated Jan. 30, 2006 titled “Greenspan’s Legacy:  Apres moi, Le Meltdown.”]

Bumper stickers of the week:

The Recession is Over.

The Recession is Over; Let the Depression Begin

Halcyon Ano Nuevo

Less Government Regulation Series: Homebuyer Tax Credit (Oct. 26, 2009)

Posted in Automobiles/Automobile Industry, Housing, Less Government Regulation Series, Taxation on October 26, 2009 by e-commentary.org


A clunker of an idea.  The Homebuyer Tax Credit is another terrible scheme.  The government allows individuals to take an $8000 credit for the purchase of a home.  The government should quit trying to implant everyone in a single family house and instead allow individuals to live in a structure they can afford.  The mortgage interest tax deduction and the exemption from income of $250,000/$500,000 on the sale of a personal residence under defined circumstances should be rescinded.  The real estate market must be allowed to settle down rather than being jump-started with federal money.  Meddling is muddying the mess more.

And, once again, the deficit-loving Republicans are also behind this raid on the public fisc.  Senator Johnny Isakson (R-GA), a free-spending “socialist” from Georgia, is supporting the extension of the act.

Seems that the houses and cars are being sold to buyers who were already planning to acquire a house or a car anyway.

[See the “e-ssay” dated August 3, 2009 entitled “Less Government Regulation Series:  The Terrorist Tax Again” discussing among other things the clunker program for cars.]

Bumper stickers of the week:

Like giving steroids to a grandmother

Government Tax Credit: Get A Home Without It

Housing Revisited (June 22, 2009)

Posted in Case-Shiller/S&P Index, Depression, Economics, Greenspan, Housing, Recession on June 22, 2009 by e-commentary.org

Four years have past, four summers, with . . . the housing market continuing to deteriorate.  The cover of the June 18 – 24, 2005 edition of “The Economist” depicts a falling brick with the words “House Prices” on it and leads with an article entitled “After the fall.”  The article and earlier articles in the magazine were prescient in warning about the explosive rise and pending collapse of house prices.  In conclusion, the article notes:

“Of course, by the time American prices begin to fall, probably sometime next year [2006], they will not be Mr. Greenspan’s headache.  He will have retired and someone else will be in his job.  If weaker house prices push the economy towards recession, the awkward truth is that America’s policymakers will have much less room to manoeuvre than they did after the stock market bubble burst.  Short-term interest rates of only 3% leave less scope for cuts.  In 2000, America had a budget surplus.  Today, it has a large deficit, ruling out big tax cuts.

The whole world economy is at risk.  The IMF has warned that, just as the upswing in house prices has been a global phenomenon, so any downturn is likely to be synchronized, and thus the effects of it will be shared widely.  The housing boom was fun while it lasted, but the biggest increase in wealth in history was largely an illusion.”

In the last few weeks, when someone applied for a building permit to construct a 12 by 16 foot shed, too many commentators were ready to proclaim the housing crash ended.  Few seem to realize that the housing market is just starting to crash.  The infection is now impacting families with reasonable fixed-rate 30-year mortgages and long-term ties to their communities who are losing their jobs and will soon lose their homes.

Until housing prices drop to at least the extrapolated historical levels of a bench mark such as the S&P/Case-Shiller Home Price Indices, the decline in prices will continue.  The Federal Funds Rate is zero which eliminates the primary tool to shape economic events.  The Fed is creating other gimmicks to stimulate the economy that are unwise, unwarranted and unfounded in law.  More later.

Bumper stickers of the week:

Still pushing hard on a string

Everything that goes down does not necessarily go up

The Play For Our Age (June 8, 2009)

Posted in Economics, Health Care, Housing, Society on June 8, 2009 by e-commentary.org

The play to define and describe our generation is set in a mock up of a blighted and unkempt McMansion surrounded by an unlandscaped dirt yard.  The first floor is exposed on the stage, the basement is below and out of sight, and the second floor is partially revealed.  Each floor is stratified by age – the grandparents hide upstairs, the parents cope on the first floor, and the children/grandchildren exist in the basement and escape through their own side stairwell.

No generation can afford to live in the cave alone.  The grandparents cannot afford any end-of-life convalescent care and must pass away at home.  The parents transition from periods of employment to underemployment to unemployment and back.  The kids cannot find steady employment and work part-time and odd jobs to contribute some rent.

The dialogue revolves around and keeps returning to the elusive American Dream and the ever-present American Reality.  (Insert here:  Witty and mordant asides, pithy and painful dialogue and trenchant and truculent commentary.  Use incidents, comments and details to reveal and elucidate Truth.)

[See the “e-ssay” dated April 24, 2006 entitled “McMansions and the (Extended) Family of Tomorrow.”]

Bumper sticker of the week:

Life in the land of the freeway and the home of the Wave

The Virtual Horserace (November 17, 2008)

Posted in Economics, Greenspan, Housing on November 17, 2008 by e-commentary.org

During the dot.com bubble, a small number of affluent investors (consultants, dentists, consultants to consultants, public employee retirement funds, consultants to consultants to consultants, candle stick makers, etc.) anteed up large bets in cash up front; few horses crossed the finish line a few years later; everyone absorbed the losses with little intermediate-term damage.  Okay, they will retire later and perhaps with less money.  Life went on.  [See the e-ssay dated December 4, 2006 entitled “When the Bubbles Burst”]

During the “Greenspan Bubble,” however, the seeds of the Depression were sown democratically across the land.  (Almost) everyone in the populace placed huge bets on credit; few horses will ever complete even the first stretch of a 30-year race (mortgage term); the negative consequences are predictable and devastating.  The intermediate-term loses may be 3 to 5 to 7 Trillion in the US and a few Trillion overseas.

Astute observers knew that something evil was going on behind the scenes during “Hurricane Al,” but the contours of the corruption did not emerge until recently.  The Wall Street Boys devised something noxious known as a “Credit Default Swap” that involves a “virtual horserace” without real money that jeopardizes the economy and the American economic and political system.  The real nightmares are the bets placed on bets placed on bets placed on bets placed on bets placed on bets placed on bets in this virtual and unregulated gambling casino using CDSs as tokens.  These players were betting on outcomes in the horse race and then insuring the outcomes without any money, margin or reserve.  The winners (who may need to lose in order to win) of the game want to be paid; the losers cannot pay and never intended to pay.

No one will say that these gamers are “domestic economic terrorists.”  Saying something that true and stark is deemed to be impolite and impolitic.  The CDSs are a cancer on the country.  The losses may be 25 to 50 Trillion or more.  The Economy cannot absorb the losses.

Bumper stickers of the week:

We will get fooled again.

“All you need in this life is a tremendous sex drive and a great ego.  Brains don’t mean a shit.”

Mayor Anthony “Captain Tony” Tarracino (1916 – 2008)