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While the pundits and the Government continue to cry, “Propserity, prosperity,” the bottom line shows a worsening economy. It all started with a political movement to help the poor through expanded credit availability.
Our current economic meltdown results from the federal government, under both Democrats and Republicans, declaring home ownership to be a “good thing” and treating the percentage of families who own their own home as if it was some sort of magic number that had to be kept growing– without regard to the repercussions on other things. We are now living with those repercussions, which include the worst unemployment in decades. That is the price we are paying for increasing home ownership from 64 percent to 69 percent. -Thomas Sowell, Townhall
The Government attempted to “democratize” credit, and the results are in. It didn’t work.
The recession has forced a financial reckoning for Americans across the income spectrum. The pressure is especially acute for the low-income Americans who relied on borrowing for daily expenses or to gain the trappings of middle-class life. Shifting credit practices over several decades had enabled them to live beyond their means by borrowing nearly as readily as the more affluent. But the financial crisis and recession have reversed what some economists dubbed the “democratization of credit,” forcing a tough adjustment on both low-income families and the businesses that serve them. -WSJ
About 30% of foreclosures in June involved homes in the top third of local housing values, up from 16% when the foreclosure crisis began three years ago, according to new data from real-estate Web site Zillow.com. The bottom one-third of housing markets, by home value, now account for 35% of foreclosures, down from 55% in 2006. -WSJ
I would have thought the rental market would improve as the ownership market fails, but there are surprises even here.
Apartment vacancies hit their highest point since 1986, surging in cities from Raleigh, N.C., to Tacoma, Wash., as rising unemployment continued to chip away at demand during the traditionally strong summer rental months. The U.S. vacancy rate reached 7.8%, a 23-year high, according to Reis Inc., a New York real-estate research firm that tracks vacancies and rents in the top 79 U.S. markets. The rate is expected to climb further in the fall and winter, when rental demand is weaker, pushing vacancies to the highest levels since Reis began its count in 1980. -WSJ
How bad will the results be?
Tainter observes that when the costs become high enough, people seem to give up. By the end of Roman era, for example, the burdens of empire were so heavy that people sold themselves into slavery to get free of them. So many people did so at one point that the authorities had to come up with another solution; they outlawed the practice. Henceforth, Roman citizens were required by law to remain free!
…Circa 2009, there is hardly a soul in the entire world who has not been corrupted by the barbarie della reflessione of the late imperial period. Both patricians and plebes are for bailouts. Both business and labor back stimulus programs. The taxpayers and the politicians who rule them are of one mind. Liberal, conservative, rich, poor, Republican, Democrat all speak with a single voice: ‘Screw the next generation!” The golden age is over, in other words. In the space of 40 years it passed from gold, to silver, to paper…and is now somewhere between plastic and navel lint. -Whiskey and Gunpowder
The next step is likely to be the meltdown of the Dollar. A lot of people are resisting this, saying the news of the Dollar’s demise has been premature, but notice the wording—it’s just premature, not wrong. There are several forces driving the death of the Dollar, including the movement away from selling oil in dollars, as reported in RedState and other places. Much has been made that this will be a gradual shift, over the next four or five years, but the shift is definitely taking place, and will eventually cause a great deal of pain. The second force driving the death of the Dollar is the US Government’s overwhelming debt and obvious policy of letting the Dollar devalue.
The nations of earth have no faith in President Obama’s fiscal restraint and given the massive levels at which the U.S. is printing currency — may believe that it is the President’s policy to lower the dollar’s value to pay off the U.S. debts lower value dollars. -RedState
Energy is the engine of an economy, of course, and we’re doing everything we can to kill off our energy supplies. Sunoco closed a refinery last week, one of the few refineries left in the US (WSJ). At the same time, Mr. Obama has shut down drilling for oil here in the US once again, this time reneging on land leases made in the final days of the Bush administration.
The Department of the Interior has frozen oil and gas development on 60 of 77 contested drilling sites in Utah, saying the process of leasing the land was rushed and badly flawed. -Blogs for Victory
We are now near the point of riots over government given money.
People driving into downtown Detroit Wednesday glimpsed the desperation that has gripped much of America’s poor and melting middle class, especially in the country’s central cities. The nearly 50,000 Detroiters who lined up outside Cobo Center seeking federal housing assistance recalled the images that shook the world in the wake of Hurricane Katrina. This time the culprit was not a natural disaster but a collapsing economy, foreclosure crisis and shredded social safety net that the federal government has only begun to repair. -Freep
Rush had a clip of an interview from Detroit; I’ve posted the relevant minute or so below.
The bottom line problem is just this: People elected Mr. Obama because they think he can create money out of think air. As long as we think money is valuable of its own accord, rather than the work and resources the money represents, and that we can create wealth out of thin air, we won’t be any closer to a resolution.
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