The largest transfer of wealth from the public to private sector is about to begin. The federal government will be bulk-selling the massive portfolio of foreclosed homes now owned by HUD, Fannie Mae and Freddie Mac to private investors -- vulture funds.Great, so now, Goldman Sachs and others will become our landlords. Of course, you can't expect these investors to turn down an offer like this; the problem lies in our government, which in a sense has been captured by Wall Street and the big banks. Ever since Hank Paulson, the Treasury Secretary and former head of Goldman Sachs, started to pick and choose who would survive and who would go down during the financial crisis, we've had government collusion with the banks. Now the banks look set to become collectively the biggest landlords in the country, which doesn't bode well for an alleged democracy.
These homes, which are now the property of the U.S. government, the U.S. taxpayer, U.S. citizens collectively, are going to be sold to private investor conglomerates at extraordinarily large discounts to real value.
You and I will not be allowed to participate. These investors will come from the private-equity and hedge-fund community, Goldman Sachs(GS_) and its derivatives, as well as foreign sovereign wealth funds that can bring a billion dollars or more to each transaction.
In the process, these investors will instantaneously become the largest improved real estate owners and landlords in the world. The U.S. taxpayer will get pennies on the dollar for these homes and then be allowed to rent them back at market rates.
[Adventures in Reaction]
Saturday, August 27, 2011
The New Landlord
A Huge Housing Bargain - But Not for You:
Subscribe to:
Post Comments (Atom)
This kind of thing is the main cause of antisemitism.
ReplyDeletehttp://portal.hud.gov/hudportal/HUD?src=/topics/homes_for_sale
ReplyDeleteYou're perfectly free to buy house from HUD if you like. There are even some generous tax breaks if you qualify.
Fannie homes are available from here.
http://www.homepath.com/
It's true, if you want to buy 10000 homes in a shot and manage the rentals, that may require showing up with a billion dollars and a plan.
This is the time when people with saved sound money can enter the market and buy cheap houses for themselves.
ReplyDeleteBuy gov't reo inventory in bulk here.
ReplyDeletehttp://www.prescientore.com/
The jooze love Obama,he is their boy.
ReplyDeleteSo then Resolution Trust Corporation 2.0?
ReplyDeleteSo then Resolution Trust Corporation 2.0?
ReplyDeleteMy impression of the RTC is that it allowed relatively small investors to buy distressed properties. E.g., someone with $500,000 could buy a couple foreclosed-upon apartment buildings. This sounds much more oligarchical, where only the obscenely wealthy and politically connected get to bid.
You're perfectly free to buy house from HUD if you like. There are even some generous tax breaks if you qualify.
ReplyDeleteYes, but will individual buyers get anywhere near the same terms as bulk buyers? When the PPIP appeared on the scene, it seemed designed specifically to enrich banks and "asset managers."
@ jmperrry: "My impression of the RTC is that it allowed relatively small investors to buy distressed properties. E.g., someone with $500,000 could buy a couple foreclosed-upon apartment buildings."
ReplyDeleteI'm trying to understand this. First, there are not many people with half a million large cooling off in a low interest account at BOA. But even if you could find them, would they want to purchase a brace of distressed apartments that likely require much more in ready reserves than the initial investment? Consider: there are probably back taxes, then upkeep (ever see the bill for building maintenance?, especially given all the city/county codes and inspections. Also, insurance and security.
No--such a thing is not for the average high income cat. And while I'm not sure what "obscene wealth" could be, those are usually words spoken by the resentful, I suspect that investing in a building would be more the work of a limited partnership, or someone who controls at least several tens of millions of liquid dollars.
I'm guessing the reason any apartment/condo is on the block is due to the fact that tenants are not paying rents. In that case, who would want to take the risk, regardless of price, unless they have the money to sit on the property until things get better? Better to turn it into Section 8, put a high fence around it with signs telling regular folk to stay away, and increase police presence (or not).
Mpresley:
ReplyDeleteNo--such a thing is not for the average high income cat.
Distressed real-estate investing isn't common for the average investor of any size.
And while I'm not sure what "obscene wealth" could be, those are usually words spoken by the resentful
You're reading too much into it. By obscenely wealthy, I just meant organizations that have billions to invest and the economic clout to match.
My point is this: when the RTC sold properties, it did both individual and bulk sales. Individual investors (rich individual investors, but still..) would have had a chance to buy properties if they wanted to. In contrast, in this crisis, the government has emphasize bulk sales to larger, politically-connected buyers. Given the government's actions so far, this has a high likelihood of abuse and under-market sales.
"Now the banks look set to become collectively the biggest landlords in the country, which doesn't bode well for an alleged democracy."
ReplyDeleteBanks owning all the real wealth, becoming all the average Joes' landlords, IS the inevitable result of fiat currency. It's the whole point of encouraging a society to stop using gold as money.
Geez, when you play Monopoly, if I had the right (but YOU didn't) to go make more Monopoly money and use it, pretty soon I'd, of course, own everything, too.
I spent a lot of time arguing with "anonymous" on the other thread whether gold-as-money leads to feudalism.
Clearly, we see that NOT using gold-as-money leads to feudalism -- with the banksters as the Lords of the Realm.
"And while I'm not sure what "obscene wealth" could be, those are usually words spoken by the resentful,..."
ReplyDeleteAnd? Yes, I do resent Goldman Sachs and other wealthy interests who rig markets and buy political favors from the officials whom they have bribed or bought. I resent it. Deeply.
I spent a lot of time arguing with "anonymous" on the other thread whether gold-as-money leads to feudalism.
ReplyDeleteI never argued gold necessarily leads to feudalism.
Clearly, we see that NOT using gold-as-money leads to feudalism -- with the banksters as the Lords of the Realm.
Feudalism and variations of it throughout history have occurred when you had gold or some other commodity as money. Obviously it's not simply contingent upon whether or not you have gold or some other commodity standard.
A lot of the contemporary populist sentiment that has been channeled into pro-gold views would have been pro-silverite 100 years ago.
"I never argued gold necessarily leads to feudalism."
ReplyDeleteSure, ya did. (Or another "anonymous" did. How can I know if you refuse to pick a handle?)
This whole argument started with you what-if-ing that the prince might hoard all the gold. Then what would the peasants do but starve and sell themselves into serfdom?
"A lot of the contemporary populist sentiment that has been channeled into pro-gold views would have been pro-silverite 100 years ago."
Shrug. *Any* precious metal will do as the medium of exchange. Provided it is rare, useful, beautiful and must be discovered and wrest from the ground with much blood, sweat and tears, the peasantry has a check on the self-serving greed and corruption of banksters and evil princes.
I use gold as shorthand for "precious metals" because typing all the letters in "precious metals" gets tedious.
Let's be clear, one more time:
The kind of money, because it prevents corrupt and spendthrift gov'ts from devaluing it by creating it at will, that motivates Joe Average to work hard and save, must be desirable of itself, useful, rare, fungible, nearly or totally indestructible, and difficult for gov't to produce more of.
Gold (and silver, and platinum, and palladium) fits the bill.
Other things for use as money:
Iron? No. Not rare enough.
Cattle? Not indestructible.
Diamonds? Not fungible (one diamond is NOT identical to another the way one oz. of refined gold is perfectly interchangeable with another).
Land? Not fungible.
Paper money? HAH! Not indestructible and CERTAINLY not impossible for gov't to print, willy-nilly.
Gold IS the defender of the middle class. A thriving middle class is the very antithesis of a feudalistic society.
Listen to the wisdom of your great grandpappy:
Virtually ALL societies, after perhaps trying a multitude of things for money, settle on and / or go back to, precious metals. We, Americans, will too.
(Silver is still cheap, and platinum, currently being at the unusual gold/platinum ratio of 1 to 1, is a buy here, too. When the gold/platinum ratio snaps back to 3 or 4 to 1, you can trade your platinum for more gold ounces than you'd have gotten here if you just bought gold.)
I resent Goldman Sachs as much as the next guy, that's why I'm rubbing my hands with glee at the prospect of their getting bogged down in this. This will prove to be a Napoleon-goes-to-Russia moment for tons of publicly traded rent-seeking companies.
ReplyDeleteHere's why: property management (especially for poor renters) is tedious, and costly, and it's hard to hire people to do it for others. It isn't scalable at all. It requires local expertise all the way through, and the people who have that expertise aren't going to want to work for salary for some GS subcontracting firm.
Consider: first you have to advertise discreetly (so that you draw the "right crowd"), then you have to select tenants in a way that's discriminatory but not provably so, then you have to set up expectations and meet repair and upkeep demands, then you've got to evict people. All of those steps require horse sense, and if Goldman Sachs new how to cultivate that, we'd have an entirely different country, now wouldn't we?
Matt, the thing you don't understand is these people get to change the rules. In fact, times that's where they thrive the most -- during times of social upheaval where they can have the rules changed to benefit them the most.
ReplyDeleteSure, landlord-ing is a hassle for ordinary people, but when Goldman Sachs owns a few million (or tens of millions) of rental properties, you'll see that a lot of the standard difficulties will melt away.
"first you have to advertise discreetly (so that you draw the "right crowd"), then you have to select tenants in a way that's discriminatory but not provably so"
ReplyDeleteNo they won't -- they'll be able to rent to anyone. The trash tenants will not only still be gov't subsidized (section 8 etc), but there will probably be some new program to insure Goldman Sachs (or whomever) against property damage caused by section 8 tenants.
"then you have to set up expectations and meet repair and upkeep demands,"
People will be desperate. Expectations will be low. That's the advantage of high unemployment and of monopolies.
Weimar all over again with the banking cartel looting an entire country just like they did in Germany.
ReplyDelete"Clearly, we see that NOT using gold-as-money leads to feudalism -- with the banksters as the Lords of the Realm."
ReplyDeleteWhat leads to feudalism is allowing a gang of sociopaths to take over your society.
Everything else is details.
Sure, ya did.
ReplyDeleteNo, I didn't. Do you not know what "necessarily" means?
I use gold as shorthand for "precious metals" because typing all the letters in "precious metals" gets tedious.
You apparently don't understand what the silverite issue was about. When I say that contemporary pro-gold populists would have been silverites 100 years ago, I'm not saying it's because they like any and all precious metals.
difficult for gov't to produce more of.
You don't have to be able to produce something, to centralize something.
Virtually ALL societies, after perhaps trying a multitude of things for money, settle on and / or go back to, precious metals. We, Americans, will too.
And in many of these societies the precious metals were greatly centralized and there were monopoly privileges on credit creation.
If we go back to a gold standard, it's not likely to be some entirely disintermediated, decentralized money economy. The central banks, governments, major financial institutions, trading partners, that control much of gold will likely come to some arrangement like Bretton Woods. Average people will be dealing with paper or electronic claims. Convertability will likely be for large institutions or international deals.
" it's not likely to be some entirely disintermediated, decentralized money economy. The central banks, governments, major financial institutions, trading partners, that control much of gold will likely come to some arrangement like Bretton Woods . Average people will be dealing with paper or electronic claims. Convertability will likely be for large institutions or international deals."
ReplyDeleteOr not.
Your faith in globalization and the continuance of the current order, are fascinating.
By the time that we return to the gold standard, in order to bring about such a return to honest money, there will have to have come the ruination of a looooooot of very rich, very powerful, people who've been benefitting very much from working the current system of paper promises. Those people won't be giving up their fun easily.
And such ruination on such vast scales brings ugly things like burning cities and roving bands of looting, starving hoardes.
America's history will rhyme with Rome's.
Because, the cause, at root, of all the current unpleasantness, as Rome discovered, you can't have a first world society with a 3rd world population.
And barbarians are no more capable of fancy schmancy ideas like central banks than they are of going to the moon.
Frankly, as the ongoing imminvasion by primitives into first world nations reaches its apex, there's every reason to expect, not your new Bretton Woods, but a new Dark Ages, for many formerly modern countries,
with only a handful of small, ethnically homogeneous countries maintaining some semblence of Western Civ.
No Western Civ, no central banks printing paper and certainly no "electronic claims."
The chaos of, and eventual partial recovery from, the coming collapse is likely to play out through these stages: After the decapitation, figurative or literal, of the current woeful bunch of elites and mass starvation, when the survivors have recovered sufficiently that they've got anything at all to trade, once past the straight barter stage, the next one is precious metals, held in your little hand.
Unbacked paper promises are what have led America to the precipice. After we crash, survivors will respond to paper promises with the raspberry they deserve.
And "electronic claims"? Hard to conjure when the power plants no longer run.
Your faith in globalization and the continuance of the current order, are fascinating.
ReplyDeleteIt's not premised on "globalization and the continuance of the current order".
By the time that we return to the gold standard, in order to bring about such a return to honest money, there will have to have come the ruination of a looooooot of very rich, very powerful, people who've been benefitting very much from working the current system of paper promises. Those people won't be giving up their fun easily.
The term "gold standard" implies a monetary system mediated by institutions like states, banks, courts, etc. Any return to it is likely going to involve "very rich, very powerful, people". A total collapse down to barter and trade with precious metals isn't a "gold standard". Intermediaries standardize the gold. That's why you had coinage, stamping, etc.
There are "very rich, very powerful, people" who wouldn't necessarily mind going back to a gold standard.
There were "very rich, very powerful, people" around when gold and other commodity standards were in place.
You can have "paper promises" under a gold or any other commodity standard. "Paper promises" are simply liabilities. As long as more than one person exists, and those people can do basic accounting, you can have paper promises.
America's history will rhyme with Rome's.
Because, the cause, at root, of all the current unpleasantness, as Rome discovered, you can't have a first world society with a 3rd world population.
Following Rome, you had land centralization, feudalism, precious metals used as money, international trade, finance, "paper promises" such as letters of credit created by Knights Templar bankers, all sorts of things you claim are incompatible.
Frankly, as the ongoing imminvasion by primitives into first world nations reaches its apex, there's every reason to expect, not your new Bretton Woods, but a new Dark Ages, for many formerly modern countries
You can have international trade and arrangements with subsistence or below subsistence populations where the vast majority doesn't engage in significant market activity. Ireland was exporting food to England and elsewhere during the potato famine. There was international trade and banking in previous Dark Ages. The Crusaders didn't carry all their gold on their journeys. They relied on the networks of Templars and other banking orders and carried paper claims. Hawala is a form of Islamic international finance that operates in the third world.
And "electronic claims"? Hard to conjure when the power plants no longer run.
It can have lower overhead and scale much more than a network of buildings or offices staffed with lots of people doing paperwork.
Anon - these are straw men. Nobody denies there would be speculative reserves and sophisticated financial instruments with gold/silver/copper as money. The point is that hard currency puts a natural check on expansion of the money stock: no new money could be created without the expenditure of prior savings. All currency is a claim on existing resources. When new currency can be ginned up out of thin air, it claims its share from future wealth, since their is no prior accumulated wealth to support it. And the early recipients of that new money (government, the preferred dealers' network, defense contractors, etc.) get to make that claim first. Downstream recipients of the new money find resources more scarce and prices rising ahead of their earning capacity. This is the ONLY way paper money can operate. A gold standard is the ultimate democratization: the downstream gold is worth as much as the upstream gold.
ReplyDeletecont.,
ReplyDeleteThe fear that King Scrooge McDuck will come along and take ALL the gold, the silver, the copper, etc. is, I suppose, a valid one which is why we keep and bear arms. But if mere seizure of wealth was adequate, we'd all be subjects of the Mongol empire. The King can't eat his gold, he can't burn it for fuel or use it as refrigerant, etc. Most important, he can't keep issuing debt beyond the ability of existing resources to pay, so no more wars for democracy, no more Leviathan, no more delusional social engineering schemes, etc.
Paper money is bad any way you look at it. Paper money GUARANTEES the parade of horribles you talk about. By contrast, no king has ever been able to confiscate all the nation's wealth without the huge standing armies and nuclear weapons of the social democracies that paper money alone can finance.
And finally,
ReplyDeleteHard money democratizes savings. With paper money, the poor schlep has to hand his savings to Wall Street, praying that the 30-yo MBA who gets to play with it will keep it appreciating ahead of the next paper money-bubble to blow up. The poor can become rich under a gold standard and most important, the rich can become poor. When the claims come in on High Finance's speculative instruments and there's no real money to back them, that is that. No Fed with its printing press to lineback a fraudulent banking system. Banker frauds must flee to jail with the lynch mob on their heels instead of paying themselves huge bonuses.
The point is that hard currency puts a natural check on expansion of the money stock: no new money could be created without the expenditure of prior savings.
ReplyDeleteThe point is that something doesn't have to be elastic in supply to be centralized. Land is extremely inelastic and has been generally centralized since the beginning of the neolithic.
Claims have regularly exceeded stock on gold and other commodity standards.
A gold standard is the ultimate democratization
If you went back in time and told the slaves at Larium or medieval serfs that precious metals were the "utlimate democratization" they would think you were making some kind of sick joke.
Most important, he can't keep issuing debt beyond the ability of existing resources to pay
History is quite clear that debts have a tendency to exceed the ability to pay on precious metal or commodity standards generally. This is why the tradition of debt cancellation jubilees arose in the ancient Near East. Adam Smith noted in The Wealth of Nations that no government ever paid off its national debt.
no more wars for democracy, no more Leviathan, no more delusional social engineering schemes, etc.
no king has ever been able to confiscate all the nation's wealth without the huge standing armies and nuclear weapons of the social democracies that paper money alone can finance.
You're basically contravening all of history. Large standing armies and imperialism have existed under precious metal and other commodity standards. One of the earliest examples of a "gold standard" is as an outgrowth of financing large armies. Generals took minters along with them to melt down booty and standardize the gold booty into coins or whatever.
Okay, Anon,
ReplyDeleteYou like paper money. You don't want to see a gold standard.
But, eventualities will eventuate as they will.
You don't like gold?
Okay, go ahead and put your money where your mouth is. Gold's in a bubble, right? So, short it.
S'arright. More for me.
We goldbugs have been listening to arguments like yours against gold, now, from the Gold Cartel, for 11 years. Meanwhile, the dollar continues to lose purchasing power, and gold to gain it. Us Joe-Average savers in gold have been rewarded.
EX.: When the housing bubble in 2004 was nearing its pop, the average home price in CA was $375 K and gold was selling for $375 / oz. At that time it took 1000 ozs. of gold to buy a house.
Today, post-housing bubble pop, you can buy a house in Las Vegas for 150 K, and gold is at $1800
Today, gold is at 1800, so it takes 85 ozs. to buy a Las Vegas house.
Had you bought 1000 ozs. of gold in 2004 instead of a house in CA, you could now buy 12 Las Vegas houses.
Since 2000 savers in gold have been rewarded. Buyers of crappy houses built by illegal immigrant labor, not so much.
For much of history, a house costs 100 ozs. of gold. So it's time to buy Las Vegas houses, right?
No. When, historically, you blow a bubble in one financial asset and beat another to unheard-of lows, when the pendulum snaps back, it snaps farrrrrr to the other side.
WHEN you can buy a house in CA for 10 ozs of gold, then there's a bubble and its time to trade your gold for houses.
You like paper money. You don't want to see a gold standard.
ReplyDeleteNever said that.
But, eventualities will eventuate as they will.
I suggested we might return to a gold standard.
You don't like gold?
Okay, go ahead and put your money where your mouth is. Gold's in a bubble, right?
Never said these things.
We goldbugs have been listening to arguments like yours against gold, now, from the Gold Cartel, for 11 years.
They haven't made the same kinds of arguments. They generally want to conceal or obfuscate issues of centralization, network effect, monoplistic value, rent.
Meanwhile, the dollar continues to lose purchasing power, and gold to gain it. Us Joe-Average savers in gold have been rewarded.
EX.: When the housing bubble in 2004 was nearing its pop, the average home price in CA was $375 K and gold was selling for $375 / oz. At that time it took 1000 ozs. of gold to buy a house.
Today, post-housing bubble pop, you can buy a house in Las Vegas for 150 K, and gold is at $1800
Today, gold is at 1800, so it takes 85 ozs. to buy a Las Vegas house.
Had you bought 1000 ozs. of gold in 2004 instead of a house in CA, you could now buy 12 Las Vegas houses.
You're supporting the point I made earlier. The term "gold standard" implies a monetary system mediated by institutions like states, banks, courts, etc. Any return to it is likely going to involve "very rich, very powerful, people". A total collapse down to barter and trade with precious metals isn't a "gold standard". People speculating on the rise in gold, a return to a gold standard, being able to convert gold holdings into houses, etc., are implicitly betting on certain "very rich, very powerful people" and institutions so that claims are honored, there is enforcement power, etc.
How Goldman Sachs et al steal
ReplyDeletehttp://www.youtube.com/watch?v=evOzYj5YzDE&feature=player_embedded