Happy 10th Anniversary! Understanding this article, Lehman 10th Anniversary Spin as a Teachable Moment, by economist Michael Hudson, will go along way to understanding why the efforts of our city government to counter the housing issue are, for all intents and purposes, a futile effort. We are swimming in a sea of debt but acting as if that debt is somewhere “over there” while the same waves sweep across us from coast to coast. Efforts to improve affordability and availability of housing that have been proven futile in other cities are dragged out yet again as if, by some magic, they will work here. The reason is that these efforts to improve are a continuation at the local level of the policies that failed to deal with the 2008 crisis and now feed the rich. Think “landlords” and why the city has not asked them to sacrifice one whit while the city residents are called upon to sacrifice and to densify and to let their assets become profit centers for others in the gig economy.
“Today’s financial malaise for pension funds, state and local budgets and underemployment is largely a result of the 2008 bailout, not the crash. What was saved was not only the banks – or more to the point, as Sheila Bair pointed out, their bondholders – but the financial overhead that continues to burden today’s economy.”
Also saved was the idea that the economy needs to keep the financial sector solvent by an exponential growth of new debt – and, when that does not suffice, by government purchase of stocks and bonds to support the balance sheets of the wealthiest layer of society. The internal contradiction in this policy is that debt deflation has become so overbearing and dysfunctional that it prevents the economy from growing and carrying its debt burden.” ...
“The aim of this week’s [10th Anniversary] disinformation campaign is to prevent popular anger advocating what was done in classical antiquity. The ancients fought civil wars for land redistribution and debt cancellation. Today the demand should be for mortgage writedowns to bring their carrying charges in line with reasonable rent charges, limited to the former normal 25 percent of homeowner income – while rolling back the FICA wage withholding and allied taxes levied to bail out the creditor class.”
What that means is that the ordinary citizen has no money to deal with housing. The banks will lend all they can to builders to create expensive structures that are out of reach of the ordinary citizen but not of the monied interests. Banks love to lend because each housing loan creates an asset for them where none existed before. The mortgage creates a corresponding debt for the poor schlub risibly called a homeowner. In a case where the house is used as a profit center, the landlord lets the renter be the de facto schlub by paying the landlord’s debt for him. The city has no money for public housing and will surely face even less tax revenue (our great regressive system) in the future as consumer debt climbs, wiping out consumption and any future income growth, if that growth were even to happen - which is not likely.