Upper Class Warfare at New Ruskin College
Lecture Notes: 07-31-08
Upper Class Warfare - Part II Laissez-faire
http://www.newruskincollege.com/
The housing bubble’s collapse is the biggest economic news story since the Great Depression. Yet it is still not understood. I can recall quite clearly when it was debated if there was a housing bubble or not. I warned against it. But I recall one belligerent fool going on the air on Kudlow and Company or some such broadcast and saying sassily “I don’t think there is a housing bubble . . . I don’t think people have bought homes they can not afford . . . I don’t think builders will overbuild . . . etc. etc.”
Where is that fool now? Mr. Franklin Raines collected $26 million for rigging the “bonus” compensation system at Fannie Mae. Dr. Greenspan has retired to his pension too. Soon Mr. Bush will retire to his government pension. Recall that it was Mr. Bush who said that the deficit was just “numbers on paper.” (Let them eat cake.)
I have to smile at the press coverage to the effect that the “victims” of “predatory lending” were lured into debt by dishonest agents and brokers. As if their misfortunes now result from a few bad actors. It is so typical of American Journalism to focus on the specific case, the man in the street interview, but miss the totality of the story. And this, your misdirection continues even as the biggest story since the Great Depression continues to unfold.
These “victims” are not incidental to the story they are integral to the scheme. The story of the bubble is the story of millions of such people caught up in the frenzy of the times. The speculative bubble is like a pyramid scheme. It requires new people, new money, to be constantly brought into each new cycle of the swindle. These “victims” are merely the last marks to have been brought into the con before the collapse. The housing bubble was one gigantic Ponzi scheme. The people who told you otherwise were lying to you or fools, or both. And now when they tell you we are at the bottom they are lying again.
And even though now it is collapsing you still can not look at it and see it for what it was. Dr. Greenspan and Franklin Raines were at the top of the scam, the oligarchic masterminds, the newspaper “Home Section” was the means of finding the marks, the real estate agents were the front men, the mortgage brokers the bag men, and so on and so forth. Can’t you see that it was not sustainable from the beginning?
You have been mislead. Tricked. Lied to. And by the way this isn’t the bottom not even close. In the months ahead you will be reporting about the “walk-a-ways.” These will be the marks who got in just a little earlier than your subprime “victims.” As the collapse continues the walk-a-ways will start to perceive that they too are underwater by tens of thousands of dollars and sinking. So they will walk away from their mortgages and homes. This will cause house prices to fall still further. See this is the reverse of the up cycle. As prices fall lower more will walk away.
So what caused the speculative fever in the first place? Greed. And a government more than willing to feed the fever with discounted guaranteed loans. The oligarchic elite who rule this country concluded that if home ownership is good then why not everyone a homeowner? Then too the journalists failed to report on the bubble until it was too late. Of course the journalists are homeowners themselves and may have had a vested interest in promoting the up cycle of the pyramid scheme.
I am trying not to take pleasure in the collapse of the housing bubble. But it is satisfying to see one’s forecasts and warnings come to pass. When I think about how the average person was priced out of the market. How as a group industry and government conspired to drive up prices out of reach of average people. At one point at the height of the bubble only 8% could afford the median priced home in San Francisco. At the time I wrote questioning who was looking out for the bottom 80%. No one cared it seems that the price of land and housing were being driven up out of reach. Not the government. Not the journalists. Not even most people for 60% were “homeowners” and therefore part of the Ponzi scheme themselves.
So this market correction is not just an economic correction it is also a moral correction. For all of you who did not care about the consequences of ever higher prices on your fellow citizens you are now corrected by the market. For those of you who thought you could rig the market by using government to drive prices higher and higher, you are now corrected. For foremost in your calculations was greed, your personal gain from the manipulated market, and for this you are corrected.
The correction will not go on forever and ever. Housing has an intrinsic worth, a sustainable value, and the market left to itself will find this value. Eventually equilibrium will be achieved. Your interference with the market, your tax subsidies, subsidized guaranteed loans, your exclusionary building and zoning codes only delays and distorts the market.
Who will pay for the $300 billion Housing Bill just signed by Mr. Bush? A disproportionate amount will be paid by renters, that 40% of the population not favored by the oligarchy. The Bills sponsors hope that 400,000 “homeowners” will be helped by the Bill. Yet foreclosures and walk-a-ways will be numbered in the tens of millions. But eventually the truth will come out. Laissez-faire.
Upper Class Warfare - Part II Laissez-faire
http://www.newruskincollege.com/
The housing bubble’s collapse is the biggest economic news story since the Great Depression. Yet it is still not understood. I can recall quite clearly when it was debated if there was a housing bubble or not. I warned against it. But I recall one belligerent fool going on the air on Kudlow and Company or some such broadcast and saying sassily “I don’t think there is a housing bubble . . . I don’t think people have bought homes they can not afford . . . I don’t think builders will overbuild . . . etc. etc.”
Where is that fool now? Mr. Franklin Raines collected $26 million for rigging the “bonus” compensation system at Fannie Mae. Dr. Greenspan has retired to his pension too. Soon Mr. Bush will retire to his government pension. Recall that it was Mr. Bush who said that the deficit was just “numbers on paper.” (Let them eat cake.)
I have to smile at the press coverage to the effect that the “victims” of “predatory lending” were lured into debt by dishonest agents and brokers. As if their misfortunes now result from a few bad actors. It is so typical of American Journalism to focus on the specific case, the man in the street interview, but miss the totality of the story. And this, your misdirection continues even as the biggest story since the Great Depression continues to unfold.
These “victims” are not incidental to the story they are integral to the scheme. The story of the bubble is the story of millions of such people caught up in the frenzy of the times. The speculative bubble is like a pyramid scheme. It requires new people, new money, to be constantly brought into each new cycle of the swindle. These “victims” are merely the last marks to have been brought into the con before the collapse. The housing bubble was one gigantic Ponzi scheme. The people who told you otherwise were lying to you or fools, or both. And now when they tell you we are at the bottom they are lying again.
And even though now it is collapsing you still can not look at it and see it for what it was. Dr. Greenspan and Franklin Raines were at the top of the scam, the oligarchic masterminds, the newspaper “Home Section” was the means of finding the marks, the real estate agents were the front men, the mortgage brokers the bag men, and so on and so forth. Can’t you see that it was not sustainable from the beginning?
You have been mislead. Tricked. Lied to. And by the way this isn’t the bottom not even close. In the months ahead you will be reporting about the “walk-a-ways.” These will be the marks who got in just a little earlier than your subprime “victims.” As the collapse continues the walk-a-ways will start to perceive that they too are underwater by tens of thousands of dollars and sinking. So they will walk away from their mortgages and homes. This will cause house prices to fall still further. See this is the reverse of the up cycle. As prices fall lower more will walk away.
So what caused the speculative fever in the first place? Greed. And a government more than willing to feed the fever with discounted guaranteed loans. The oligarchic elite who rule this country concluded that if home ownership is good then why not everyone a homeowner? Then too the journalists failed to report on the bubble until it was too late. Of course the journalists are homeowners themselves and may have had a vested interest in promoting the up cycle of the pyramid scheme.
I am trying not to take pleasure in the collapse of the housing bubble. But it is satisfying to see one’s forecasts and warnings come to pass. When I think about how the average person was priced out of the market. How as a group industry and government conspired to drive up prices out of reach of average people. At one point at the height of the bubble only 8% could afford the median priced home in San Francisco. At the time I wrote questioning who was looking out for the bottom 80%. No one cared it seems that the price of land and housing were being driven up out of reach. Not the government. Not the journalists. Not even most people for 60% were “homeowners” and therefore part of the Ponzi scheme themselves.
So this market correction is not just an economic correction it is also a moral correction. For all of you who did not care about the consequences of ever higher prices on your fellow citizens you are now corrected by the market. For those of you who thought you could rig the market by using government to drive prices higher and higher, you are now corrected. For foremost in your calculations was greed, your personal gain from the manipulated market, and for this you are corrected.
The correction will not go on forever and ever. Housing has an intrinsic worth, a sustainable value, and the market left to itself will find this value. Eventually equilibrium will be achieved. Your interference with the market, your tax subsidies, subsidized guaranteed loans, your exclusionary building and zoning codes only delays and distorts the market.
Who will pay for the $300 billion Housing Bill just signed by Mr. Bush? A disproportionate amount will be paid by renters, that 40% of the population not favored by the oligarchy. The Bills sponsors hope that 400,000 “homeowners” will be helped by the Bill. Yet foreclosures and walk-a-ways will be numbered in the tens of millions. But eventually the truth will come out. Laissez-faire.
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