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The Last Ten Years And Us

By On

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.

Hudson writes:

“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.

About Dick Conoboy

Editor • Member since Jan 26, 2008

Dick Conoboy is a recovering civilian federal worker and military officer who was offered and accepted an all-expense paid, one year trip to Vietnam in 1968. He is a former Army [...]

Comments by Readers

Jon Humphrey

Sep 21, 2018

“The definition of insanity is doing the same thing and expecting a different result.” Our government, politicians, and their very wealthy donors do exactly that all of the time. I’ll give you my two cents as to why. I think part of it is obviously just that they don’t care, but I think it’s more than that too. 

If only there were some practical, tried, ture, inexpensive, timely, and tested solution that would address virtually all of our social and economic issues that cost many times less than the Waterfront like a publicly owned fiber optic network. Perhaps someday the technology will exist to carry out entire conversations electronically, via some kind of electronic mail, or maybe even run a paper online…  Perhaps then our leaders will listen…. (Current cost of the Waterfront $130 Million and climbing, cost of a city wide fiber network that would pay for itself eventually, less than $30 million initially (would pay for itself and turn a profit), even using the city’s grossly, and intentionally over-stated figures).

So why don’t they listen, why do they insist on old solutions no matter what is going on, and why don’t they care? Well, the problem is bigger than just getting them to stop drinking the Big Telecom Kool-Aid and look at new solutions like fiber. It lies in the preferential treatment and coddling of the very wealthy, espcailly developers, that has been going on for decades. It takes leaders willing to shake them out of their comfort zones by talking to them slowly while using the words they find most terrifying, RESPONSIBILITY, BEING AN ADULT, and COMMUNITY. It also lies in proving their old ideas about how to “fix” the economy wrong. For example, Waterfront projects are truly idiotic in the modern age. We are simply past the point of physical expansion for profit for a while, probably until we start to settle other planets. Sure they create temporary construction jobs, and our population keeps growing so we need more rent controlled, public housing, but paired with problems like global-warming many Waterfronts are finding themselves underwater during certain times of year. Florida is literally moving much of its historic Waterfront back at huge expense. Most of them are losing money and will continue to do so in the long term. So investing in a Waterfront right now is the height of stupidity.

In another example, I have a friend that runs a high tech small business in Fairhaven who is competant and could easily expand. His landlord sits on at least 40% of over-prcied spaces that are vacant, and have been for years. He approached my friend about expanding, so my friend asked for a discount since literally all of the spaces around him are empty right now, the landlord said no. Now correct me if I’m wrong, but some money at a discount is still more than nothing right? Especially when you have lots of empty spaces. Guess his landlord just can’t use a calculator. But I thought the very wealthy were all intelligent people who worked really hard for their money. They’re the ubermensch right? That’s why they’re rich. LOL, hardly. Many of them simply inherited their money, never had to work for anything, and are as dumb as a bag of hammers. Nervous that they’re running everything yet? You should be. 

So why are we sticking with old solutions that don’t work when the largest growth sectors in the economy are based around small, internet based businesses that mostly just need good, cheap, broadband? It comes down to two things.

1. Our landlords and leaders have been wealthy for so long that they have lost touch with and are largely unaffected by the changing world around them. They simply don’t see that new solutions exist. Even ones that would benefit them. They have become like children who need to be reeducated, but are unwilling to do so. Their wealth cretes a blanet of incompetance that they wrap themselves in everyday.

2. By constantly bailing the very wealthy out, they have come to expect on the corporate welfare (aka socialisism for the wealthy) programs that exist to be there forever. After all, we built the shittiest cars in the world so bailing out incompetant companies would yield better cars, and bailing out our landlords will do the same for housing right? Well, no. The Japanese and Germans still make way better stuff and they have socialized democracies. Still, the councils and Mayor Linville certinally seem to think that bailing out their millionmaire loser buddies, who almost tanked the economy, will somehow produce a different result.

Why? Because, they are economically insane. Our form of capitalism has become like a religion to them. They have no objectivity and are incapable of adaptating to a new world. They will try the same solutions over and over again because, deep down, they just can’t bring themselves to accept the fact that they don’t work. That, and a lot of them profit off of the current situation. See Dan Hamill and April Barker for details. Also, they really just don’t give a shit if people have affordable housing or not. They just want the money for their tribe of elite adult children.

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