In the wake of the housing crash, wide swathes of the desert Southwest, Florida, Atlanta, parts of California, and other places were littered with relatively new homes which were empty. The pre-seeded lawn turf often hadn’t even taken root before the foreclosures began.
Each vacant home represented a personal economic disaster for someone. Families moved in with grandparents. Pets were left in shelters which were filled far beyond capacity. It was only a couple of years ago. For many the memory is still very fresh.
But at about the same time parts of Tuscon started to be reclaimed by tumbleweeds a few hedge funds (and banks) figured that there was yield to be made from renting the homes which were now unused back to the people who could no longer afford to own them. If the homes could be pooled along with the rents, perhaps the investments could even be sold as derivatives.
Market solution right?
I’d encourage everyone to read the attached article because it is a lovely example of the infatuation some people have with their masters. Actually that’s not fair. The guy makes plenty of good points from the progressive perspective. All the ones one would expect. We wouldn’t have any roads without government. (We would.) We’d all die from salmonella poisoning without the government. (We wouldn’t) Society would devolve into a scene from Mad Max where kids with mohawks marauded through the mall with chainsaws. (It wouldn’t.) All the ones one would expect.
Public pensions are really a joke in many parts of the country. In Chicago, Detroit, California, New York and many other places the economy is saddled with completely unrealistic pension “obligations.” The benefits are just too rich for the people who must now pay for pension plans negotiated by union friendly politicians in years past.
Well, it seems that the good g-men at the SEC, the folks who pursue insider trading, might be moving on insider information themselves. I am shocked! Shocked!
The ALCU and the Tea Party groups got together to fight the IRS last week. Looks like they’re getting together again in Georgia to keep cops from taking people’s property. Good.
The big banks, which in 2008 nearly went belly-up because they were overleveraged and needed a taxpayer funded bailout in order to survive a reversal in the economic tide, are even bigger today. They pose more risk than they did 5 years ago. Because they have been designated as “too big to fail” the megabanks now enjoy an implicit subsidy courtesy of you and me. Their borrowing costs are lower because we backstop them. Because of the backstop and lower costs bankers are incentivized to take on more risk. Sooner or later this will create major instability as the market mechanism has been distorted and will seek to correct for this distortion.
I include because he has some interesting things to say about crony capitalism and how it hurts our economy.
For all the bad press this guy gets he’s the only high profile billionaire I know of who is actively calling for free markets. One doesn’t hear Warren Buffett, Carlos Slim, or George Soros denouncing crony capitalism and saying that markets need to be opened up to create more competition. I wonder why?
If Hillary or Jeb get the presidency in 2016, this will be very bad for the Republic. And we’ve had a lot of stuff lately which has been bad for the Republic. What’s even more worrisome is that I understand that the Bushs and the Clintons are family friends. Seriously, friends. Tell me how having either family running the show is good for America.
Probably the last post on this we’ll do on the “Nazis are socialists” debate for a while, but this essay comes from Jonah Goldberg, the author of the book Liberal Fascism so we’ll include it.