Every day, it seems a new report comes out praising the ongoing housing recovery. In Georgia, home prices are up 5 percent over last year, a year in which we also had one of the highest foreclosure rates in the country. Seems a little odd, doesn’t it? Don't foreclosures usually drive down the market?
That’s because the housing “recovery,” as they’re calling it, is fueled almost entirely by Wall Street private equity firms, hedge funds and the Fed's unwavering support. After creating a massive bubble in home prices that eventually burst and caused our economy to go into a tailspin, these guys have decided to come back for more, and figured out a way to profit off their destruction -- by turning foreclosed homes into rentals and securitizing the rental income.AlterNet
The Ugly Truth About America's Housing "Recovery" -- It's Wall St. Buying Homes to Rent Back to Their Former Owners
Shabnam Bashiri | community organizer with Occupy Our Homes Atlanta
Disgusting.
ReplyDeleteSince they have strong ($$) representation (lobbyists) in Washington I've forwarded this to NAR for comment.
ReplyDeleteWhat a racket. These guys run the S.S. Securitization onto an iceberg the size of Olympus Mons, get the largest bailout in the history of the cosmos, and then re-securitize the rental income stream from the sods they just threw into the street?
ReplyDeleteWhat are they calling the tranches? Funny, Lame and Totally Fucked?
Good Lord. Our politicians are willing to turn us all into serfs. I don't think there is a single one left who works for us. Obama appointed another former cabinet official today whose background is big finance and corporate CEO-hood.
ReplyDeleteYeah but here's the thing, the cohorts (institutions) that they think they are going to sell the securities to aren't the ones that end up with with the balances to buy them....
ReplyDeleteAnd these things are likely to build up on the bank's balance sheets again until the whole thing blows up again due to a too small fiscal deficit... Just like 2008.
They won't be able to get rid of these securities because there are not enough balances in the right place in the system for somebody to buy them .... Another ticking time bomb until the deficit finally gets too small....
Although this time looks like the govt has ex ante indemnified the banks.. So they will ultimately get stuck with these non-performing securities all the while going on TV advocating for a balanced budget.
What a bunch of dopes....
Rsp
Buffett talked about this a few years ago. But he thought the government should buy the houses, but was worried about how people would game the program. Now Wall St. will game it. And S&P and Moody's can rate the securities AAA.
ReplyDeleteI've been following this for some time. Banks have been holding foreclosed properties off the market or delaying foreclosure in order not to flood the market with inventory and depress prices (to their true value). Part of this strategy involved bundling properties and selling them to "investors" as rentals (to be flipped when the market turns up eventually, as it always does).
ReplyDelete"...(to be flipped when the market turns up eventually, as it always does)."
ReplyDeleteAs the next R.E. bubble starts to form.
Wash 'em up and get 'em ready.
Calling Mike Lewis.... Get to work on a sequel to the Big Short.
ReplyDeleteRight Ed.... I wonder if they are turning 2013 into a 2008 redux.... Rsp,
ReplyDelete"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered.. attributed to Thomas Jefferson
ReplyDeleteMatt, you are on the right track following net flow between the Treasury and the domestic economy.
ReplyDeleteMMT reduces macro economic analysis to simple addition and subtraction. At least the part most likely to affect us.
The net must at least be zero and if we are to have sustainable growth as compared to bubble growth the net must be positive....when a bubble pops what is left?
F. Beard...
ReplyDeleteYou're pretty much preaching to the choir here.
This doesn't address the liquidity problem...the government is the only entity with unlimited liquidity.
You seem to want to shift most of that burden to the private sector somehow.
I don't think it's feasible but I am open to your (anyone's) ideas on the matter.
"what is left"
ReplyDeleteAfter much chaotic liquidation, I guess govt ratifies a new (lower) price structure?
rsp,
After much chaotic liquidation
ReplyDeleteLiquidation that results in an upward transfer of wealth.
So we end up losing what we worked for and lower wages to boot.
It's a wonderful world.
After much chaotic liquidation, I guess govt ratifies a new (lower) price structure?
ReplyDeleteThis is what TPTB are desperately trying to avoid. It's really, really unpopular politically and tends to result in regime change as in throw the bums out.
"This is what TPTB are desperately trying to avoid" - Tom
ReplyDeleteYeah, by actively trying to make it worse. Maybe they really don't get it, but I'm a skeptic on this one.
The goal of austerity and neo-liberal economics is to transfer real assets, property, to the elite. It is being accomplished, slowly, by forcing governments to divest public assets. In the case of the housing stock, the public assets were formerly owned by the people as individuals. Due to job and income loss and subsequent foreclosure, the asset transfers in this case are going directly to the elites, because the government is not implementing debt reduction. Whether it is the transfer of public assets like parks, utilities and other services, or the housing stock, the end result is that we are reduced to being rent- and fee-paying tenants.
ReplyDeleteYeah, by actively trying to make it worse. Maybe they really don't get it, but I'm a skeptic on this one
ReplyDeleteCreate another bubble?
Flippers’ Paradise: The massive jump in list prices for Culver City. Median list price up almost 100 percent from two years ago. Record low inventory. Distressed properties 3 times the amount of MLS listed homes.
Could see this coming from a mile away. You can't have it both ways. Either it is crazy risky and a 'control fraud' to lend to blue collars or it isn't. Make up your minds. The elite dems couch words, but what is meant when they say subprime lending, is allowing blue collar, primarily non-white workers in the service sector to own homes. The countrywide way of allowing skipped payments when the economy tanks, y'all were calling criminal a few months ago, ready to toss those bankers in prison. If you are a $15/hr blue collar worker and you can't get a government backed home loan anymore, because it would be 'irresponsible' by Government standards. What other options are there? use a loan shark? Give houses away? Have government directly rent them out? Let the middle class buy them and rent them to the lower middle class? Put all the people that don't have 'good middle class jobs' into housing projects after the foreclosures? What the hell do you suggest?
ReplyDeleteObviously it would be better if wages were allowed to rise and lift people out of poverty so they could afford to own a home like regular workers did in the last century. It would be even better if government always ran deficits large enough to offset trade leakages. Keep dreaming! Economic nirvana for orthodoxy is 2% inflation with constant wages for the lower classes and no lid on the wages of 'good' middle class government subsidized jobs and huge rents for the upper class.
"Create another bubble?"
ReplyDeleteThat's what I'm afraid of.
Seems like every lurch of growth has been fueled by a bubble so that the rich can come in and vacuum up the assets.
Awesome quote!
ReplyDeleteEconomic nirvana for orthodoxy is 2% inflation with constant wages for the lower classes and no lid on the wages of 'good' middle class government subsidized jobs and huge rents for the upper class.
Not to worry with wages rising 4.5% and production in the toilet as per reports today.
ReplyDeleteAND NOW TODAYS ASSHOLE OF THE MONTH: August 13, 2009-- This years lucre — $700 million, plus some minor salary — is the first of 5 equal payments that will net him a cool $4.7 billion dollars. Nice work if you can get it.
All I can say for sure is this represents a massive transfer of wealth from Shareholders to management.
Stephen Schwarzman (CEO) of blackstone burn in hell. This prick managed the Chinese Soveriegn Wealth fund and lost 1 Billion dollars the same year he got the 700 million. He is the prick that caused the real estate bubble and now this parasyte is getting ready to hypothecate the same real estate. How many yahts can you float around in Stephenm, you are no Steve Jobs you are no Einstein you are however equivalent to Maddoff and Skilling and Stanford. Just my opinion. The net result of all this is who ever invests with blackstone will get hosed, because when the movie theater catches on fire Schwartzman will have his own escape exit, while the masses burn.I hope the hackers put this assholes address on the internet.
Well, Ryan, the dilemma you point to has a solution but only if the implications of the institution known as "private ownership of land" are understood and taken seriously. Few economists or policy makers have ever been willing to do that. Two notable exceptions were the "outsiders" Henry George and Silvio Gesell. The postwar solution was to broaden the base of private ownership. It seemed to work for a while because prices had lowered after the depression, the government offered attractive loan terms to veterans, wages were relatively high after the war, etc. As long as wages were still on an upward trend many people were still "winners." Whether we have a fairly large number of petty rentiers or a few large ones amounts to rearranging of furniture. Some people will always be left out.
ReplyDeleteThese homes are being bundled up and packaged into rental reits. I watch the rental market in my area and these guys are overbidding on properties, not adequately fixing them up, and charging way too much for rent. I know of one hedge fund that purchased thousands of homes last year and seventy percent of their inventory is still vacant.
ReplyDeleteThis whole thing is gonna blow up, but when it does they will have already sold these triple A rated reits on the secondary market, leaving pension funds and mom and pops holding the bag yet again.
...the government is the only entity with unlimited liquidity. paul
ReplyDeleteYes, with wrt to government money which is currently full legal tender fiat. We should use that unlimited government liquidity to bailout the entire population (including non-debtors who, btw, are also cheated by the counterfeiting cartel as any Austrian knows (but little else)) from under the banking cartel. And it can be done without significant price inflation risk IF the bailout is combined with a ban (at least during the bailout period) on further credit creation by the banks or the Fed.
You seem to want to shift most of that burden to the private sector somehow. paul
Huh? The universal bailout would provide the private sector with huge amounts of new PERMANENT liquidity since the monetary sovereign should NEVER run a budget surplus.
But yes, after the bailout period, I see no reason why we can't and shouldn't allow genuine private money supplies in case the monetary sovereign creates either too little or too much liquidity.