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Bail out my ass. - Piano wire. [entries|archive|friends|userinfo]
The richest girl in town.

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Bail out my ass. [Wednesday, Sep. 24th, 2008|11:36 am]
The richest girl in town.
Monday, I used Sputnik to drive to East Oakland and pick up a woman named Joyce from her housing project. We then went to the Oakland Housing Authority's headquarters downtown for a press conference before the meeting of OHA's Board of Commissioners wherein they would be discussing their disposition plan--a plan to dispose of 1,615 public housing units in the city, half of all such units.

The plan involves turning over each of the crumbling properties to an as-yet unnamed "affiliate" for one shiny dollar.

Why?

Because the OHA, like housing authorities all over the country, doesn't have enough money to keep the properties open and maintained.

Why?

Because HUD (the federal Department of Housing and Urban Development) doesn't have enough money to distribute to them.

Why?

Because three-plus decades of the neoliberalist push to privatize every federal program under the sun, including all the safety nets F.D.R. put in place while trying to save the country's citizens from the economic free-fall of the 1930s, has defunded public housing to the point where cities have no choice anymore.

So, when I'm told that we don't have money for public housing, for federal welfare programs, for universal healthcare, for Head Start programs, for increased financial aid for secondary education, for aid to those homeowners and tenants caught up in the foreclosure crisis, I would sincerely like to know WHY THE FUCK $700,000,000,000--that's $2,500 of my money, and yours, and your children's--is being demanded to help out Wall Street.

And so would Rep. Marcy Kaptur, D-Ohio:

Jay Smooth on Economics and Annoying Smart Guys, Or "How America Stopped Worrying and Learned to Love the Nerds":
linkReply

Comments:
[User Picture]From: liquid_siftings
2008-09-24 07:38 pm (UTC)
Unfortunately, the reason that money is needed is that if all of Wall St.'s investment banks were to go down, the long term effect on our country would be a lot worse than $3000/person. Prosperity may not trickle down, but misery sure as hell does.

That said, the people who put the banks into this crisis should not be walking away with golden parachutes (and some, depending on the circumstances, should be in jail); there had better be good oversight for the $700B; since the gov't (and therefore us) is taking on this risk, all initial revenues should come back to the gov't/us until the debt is relieved or bought back; and while we're at it, let's drop some better regulations in there to keep this from happening again.
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[User Picture]From: fightingwords
2008-09-24 07:41 pm (UTC)
Someone made a good point--if what is fueling this crisis is the inability of people to pay their mortgages, why not give THEM the $700B?
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[User Picture]From: liquid_siftings
2008-09-24 07:48 pm (UTC)
well, the government isn't "giving" the banks that money, it is assuming the risk of those investments. There is actually a decent chance that, over time, this will not cost the government anywhere near that much (especially if they set it up correctly at the outset).

Besides, while there were definitely some people who were misled/cheated by the mortgage industry, I'd be more offended if some guy who bought a $1M home he couldn't afford had his mortgage paid outright for his bad decision than by the current proposed solution. Or if some property speculator who overextended himself suddenly received a check for $800K.
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[User Picture]From: fightingwords
2008-09-24 07:57 pm (UTC)
It comes down to the exact same thing. Banks took on this risk knowing full well that people weren't qualified for their loans. They made a lot of money off this risk at the outset--privately--but now want to socialize the risk.

I have no love for people who get a $30M a year salary for completely fouling up our major lending institutions. Fuck them. Give the asshole his million dollars to pay his mortgage. It doesn't matter--either way, we're paying for other people's bad decisions, something I thought Republicans were so averse to doing. Unless it's them making the bad decisions.
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[User Picture]From: liquid_siftings
2008-09-24 08:18 pm (UTC)
I have no love for the CEOs/CFOs/etc. who are at the core of this mess either -- as I said, prosecute them where appropriate, and take their compensation to the extent that you can as well. But it doesn't come down to the same thing.

Socialize the risk, but socialize the possible benefits and better regulate what's left of the industry.

Mortgages (even "secruritized mortgages") are tied to actual property. Actual property has value. right now, that value is lower than the value of the paper, but not all of the mortgages are being foreclosed. Those properties that do foreclose will revert to whoever owns the paper for those mortgages. Over time, the value of property will rise, meaning that this is cheaper to all of us than writing checks to irresponsible and responsible mortgage-holders.

And please don't take this as any kind of "vote of support" for what's gone on up to this point. I am just hoping that the outrage over this disaster leads to positive regulatory change that will benefit everyone in the long term.
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[User Picture]From: flintultrasparc
2008-09-24 09:06 pm (UTC)
And who benefited from the inflated housing values from the real estate market bubbles? Real estate value is highly speculative, as compared to construction costs that could almost be measured in hours of labor.

It's a sad society that can't provide shelter to it's entire population.

I think the question for the next few months is going to be "How many houses do you own?"
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[User Picture]From: latemodel
2008-09-24 10:29 pm (UTC)
And who benefited from the inflated housing values from the real estate market bubbles?

That's a damn good question, innit? I've been trying to figure this out. There's a longer answer, but:

The answer, I think, is anyone who successfully capitalized some gains. I mean capitalized in the strict sense: took some money, invested it.

This means people who bought assets (houses or debt secured by them), then sold them at a higher price. My brother-in-law works in finance; and because most of his pay is tied to the market, he saves money in low-risk assets like government bonds. It probably also means China, who has been buying our debt and using the interest to build its domestic economy.

Finally, it means workers in the ancillary industries: realtors, loan agents, and tradespeople, who got lots of work during the bubble but squirreled away some of that money in unrelated assets. (That's an if: if they saved.) My plumber, for instance, now owns a house and land in Hungary. It's possible that migrant workers from Mexico, who formed much of the construction work force during the boom, benefited from this.

In short: it means people who made money in the American housing and debt markets, and put it somewhere else.
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[User Picture]From: flintultrasparc
2008-09-25 04:17 am (UTC)
It's called flipping.

Also, rising real estate values benefit landlords who can raise rents (and evict tenants who are unable to pay them). They also allow for dislocation of low-income housing (and local farmers) and replacing it with expensive condos. Higher real estate prices also tend to benefit local municipalities which tend to derive much of their budget from local property taxes.

Right now, a lot of people who own their houses outright but are on a retirement income dependent upon stock values are suffering because housing bubbles have raised their property values and they are having hard time paying the those property taxes.

So, the middle class workers of the real estate industry, petty capitalist who could flip houses, and local governments (which often sunk their increased tax funds into projects that benefit the same kind of luxury development) benefited from the housing bubbles. The investment bankers seem to have benefited from it for awhile (and individually, many of them are diversified the profits they took before the industry collapsed and are going to still be very, very rich).

The poor and the working class got the short end of the stick on this, from beginning to end.
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[User Picture]From: latemodel
2008-09-25 07:40 am (UTC)
I think the point is precisely that the municipal governments are hurting for revenue right now. Yes, they may have misspent their property tax windfalls, but they're now hurting for income tax (through decreased state and federal funding) and sales tax revenues.

The poor and the working class got the short end of the stick on this, from beginning to end.

This is America. We're a capitalist country, so of course the poor get screwed while the rich profit. If we're really clever, we'll find a way to maintain that while transitioning to socialism.
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[User Picture]From: flintultrasparc
2008-09-25 12:08 pm (UTC)
You sure like to use the word "socialism" a lot, in a non-ironic way.

Hey... wait a second. I think I know who you are and we might have been introduced in a somewhat sleepy state one morning in Providence in 2005 after a weekend of noise music in a space that was entirely too hot. I believe I was being drawn along by a tree-hugging Russian of our mutual acquaintance.
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[User Picture]From: elusis
2008-09-24 09:10 pm (UTC)
Seriously - I'll take the $8000 I PAID to get rid of my home in Denver because the market dropped out from under me, and I'll gladly go invest some of it in getting the economy going again.
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[User Picture]From: yeloson
2008-09-24 07:49 pm (UTC)
Exactly.

Also: Icon love!
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[User Picture]From: fightingwords
2008-09-24 07:57 pm (UTC)
It came from tanyamazon, as did this one.
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[User Picture]From: whypnk
2008-09-24 08:15 pm (UTC)
i once saw a bubble chart that visually represented our national budget. imagine the budget for warfare is a basketball, and the budget for education as a nickel. not cool. *stabbystabbystabby*
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[User Picture]From: flintultrasparc
2008-09-24 08:56 pm (UTC)
National Priorities added a field for the $700 billion proposed Wall Street bail out: "Taxpayers in the United States will pay $700 billion for the proposed bailout of Wall Street. For the same amount of money, the following could have been provided: 5,445,234 Affordable Housing Units"

As to the military budget, U.S. military spending is 50% of the total global military spending. Apparently, we are in an arms race with the whole damn world.

One thing about that budget pie chart though... they were comparing federal discretionary spending (not including social security) for the military and education. Most of the money spent on education in the U.S. actually comes from State and local taxes. It evens out a bit more that way. However we should also include debt payments on past military spending and wars, as well as supporting costs for veterans.

More telling is looking at social spending as part of GDP: Social Insurance (9.8% of GDP), Health Care (6.1% of GDP) and Education (5.1%). The U.S. spends about 19.4% of it's GDP on social spending, while Sweden spends 38.2% (source). The U.S. military budget is 3.7% of the GDP, Veterans programs are an addition 0.5% of GDP. That still doesn't make up for the fact that it's 50% of the world's military spending, nor that the majority of our foreign aid also goes to military budgets of the likes of Israel, Egypt and Columbia. The U.S. also puts lots of military aid into Iraq and Afghanistan, which, ofcourse, it did before the U.S. went to war there as well (maybe if the U.S. wants to fight less wars, it should stop arming the world).

Also, I think people in the U.S. is really feeling the lack of maintenance on infrastructure for the past fifty years; as well as the pisspoor urban planning and sprawl. A devalued currency and rising fuel prices are likely to be more sharply felt by the suburban middle class than say their equivalents in Europe in a similar situation.

The poor are really going to have to fight for the right to the city.
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[User Picture]From: baconmonkey
2008-09-24 09:43 pm (UTC)
not like it's ever safe to trust a guy to tell you how big it is, but seven hundred billion has 11 zeros, not 8.
$700,000,000,000
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[User Picture]From: fightingwords
2008-09-24 09:44 pm (UTC)
Heh. Grazi.
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[User Picture]From: latemodel
2008-09-24 10:43 pm (UTC)
I'd be fine with the bailout, if the taxpayers were getting something for it. That means the government taking over foreclosed houses, using them short-term to (OMG!) house people, and long-term, selling them to people.[1]

That is, if the houses were anywhere useful or sustainable. Instead, we have spent the last decade building in deserts and fire zones; building exurbs that increase our dependence on cars; and, quite possibly, building shoddy houses that require more money in the long term for maintenance.

If that were not the case, problem #2 would solve problem #1. The federal government would buy up houses, and house houseless persons with them. For the above reasons, that won't work. houseless persons are often in that situation because they're out of work, and dispersing them to bumblefuck, need-a-car, I-don't-know-anyone-here Arizona isn't going to solve that.

[1] We could use them long-term to house people, but I think that in reality the US populace would not go in for such large-scale socialism. So, we'd need an exit strategy, a way to de-nationalize all this stuff; and that means selling the houses to homeowners. It may or may not be the best solution, but I think it's the most realistic one.
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[User Picture]From: slutbunwalla
2008-09-25 04:39 am (UTC)
Dear goodness I love that man.

Thank you again, did I thank you before for introducing me to Jay Smooth? I think I did and I'm doing it again.
Also there's Planet Money on NPR which can break things down (not as succinctly and awesomely as he) a bit into what the fucking fuck is fucking up....
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