Our Economies Run On Housing Bubbles
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Rene Magritte Memory 1948 We are witnessing the demise of the world’s two largest economic power blocks, the US and EU. Given deteriorating eco
[See the full post at: Our Economies Run On Housing Bubbles]Zero interest rates, government ‘help to buy’, mass immigration; the UK has found all sorts of ways to prolong this ponzi. So much so that the thick as two short planks estate agent who lives next door to me is telling me that prices will never come down, this time is different, it’s a sure thing, yadda yadda yadda.
Irony is, she cant actually afford to buy the poorly-built shoebox she rents on her non-existent commission because, in her own words, the market is dead. Gee, I wonder why. This is a very common level of stupid in this country, especially here in Londonistan. Greed breeds envy, few understand what is really happening, but everyone still thinks they will be a winner in the housing lottery.
Debt is not money, be it public or private, unless it leads to increased productivity, and is self liquidating.
Return to honest money, held in individual hands and watch this dilemma right itself.
Let .govs stand on the corner and beg for alms,,,or maybe hold a bake sale.
As the Private Banks create loans out of nothing then surely a Government can pass a law saying that ALL bank debt must be reduced by say 33% with a restriction on further lending by the Banks. Surely that would be better than crediting everybody’s bank account with $x dollars a la Steve Keen. I know it would be unfair to those who don’t owe anything and that is mostly us old people but as we have shafted the youth of today I don’t think that is a big ask. The other matter of money that concerns me is the idea of a cashless society. If 97% of all money is created by the Banks and only 3% by Government isn’t a cashless society the ultimate in privatisation? Everything will then be controled by private companies.
I am reading Henry Miller’s “Nexus” once again. I think I first read it over 40 years ago.
The amazing thing about this book – to a modern reader – is how the protagonist was always short of cash and had to have a massive number of acquaintances who would lend him small sums of money.
He was obliged to deal face-to-face with lots of different people and to understand them to some degree. He only repaid the ones who he thought he might need to borrow from again. It is so very different from using a credit card. Of course there were no mobile phones or internet so meeting new people was a much more important activity. In some ways, people had a lot more freedom to carry on affairs and so on.
One more thing. The protagonist could go to a restaurant in Manhattan and have a steak and a drink for under one dollar – in the 1930’s. I guess unlimited credit must have something to do with it. 🙂
Living in the midst of one of these epic bubbles (Greater Toronto Area), it is frightening to experience on so many levels. While I can’t help but hope the crazy asset price inflation in housing continues for a few more years (at least until my wife retires and we can take advantage by selling our highly over-priced home–we could probably get about $1 Million for our 1500 square foot home we purchased for $210,000 in 1995–and move out of the GTA where we could purchase 4 or 5 homes of equivalent size/quality), I see the downside also.
My children have little to no hope of ever being able to afford purchasing, let alone renting, in the GTA without going into deep, unsustainable debt. With the increased ‘values’, our local Town is pursuing development of suburban homes and retail plazas like there is no tomorrow, paving over very limited farmland at a pace that boggles the mind.
I have been opposing this development for some years but the cognitive dissonance and propaganda surrounding the ‘growth is progress’ narrative is astounding and virtually impossible to counter. In fact, my local councillor seems far more interested in backing the plans of a developer to place increasingly dense housing in our area despite the backlash from virtually all local residents (one can’t help but wonder whatever happened to representing the wishes of voting citizens over the monied interests; I know, it likely has never existed except in our conditioned minds).
My town lives in a somewhat enviable position in having a good chunk of arable land remaining, but it has been disappearing at an alarming rate the past decade or two and I see no end in sight. Such short-sightedness is not in short demand here in Canada where the power-brokers are pursing the growth narrative with all possible speed. It’s such a shame.
Infinite growth on a finite planet, what could possibly go wrong?Ballooning debt resulted in jacked up commodity prices –for a while –until the shrinking income of the mass of people made things unaffordable. So the debt-based apotheosis of capitalism on the backs of exploited workers comes to a slowing down time.
Slow growth is, of course, good! Is it a Gaia feedback loop in favor of dynamic equilibrium? I wonder because the global economy still has plenty of oil. Energy has even become pretty cheap. No shortage of finance to say the least. Population mushrooming still. Extreme poverty lifted en masse in developing regions. ZIRP rates. Stability overall. But growth is slowing. The result of an unknowably complex combination of factors? But trending in the right direction.
[“If not for the constraints, whether they emanate from energy and/or finance, would growth have been able to continue at prior levels? Both the energy and the finance/political camps mostly seem to think so.
The energy crowd -peak oilers- appear to assume that if energy would have been more readily available, economic growth could have continued pretty much unabated. Or they at least seem to assume that it’s the limits of energy that are responsible for the limits to economic growth.“]
Of all constraint that will tighten the noose on us, ‘Peak Oil’ is the queen bitch of them all. But far from the only one hitting us hard;
*Demographics, and therefore LAND will (it already started decades ago for some, centuries ago for others) provide us with a crude reminder of a primal reality.
*Water …
*Barring a deus ex machina discovery in physics that would transcend our energy predicament, diminishing returns on technological advancements coupled to vicious scaling issues will dissipate the fog of euphoria that’s currently acting as an anesthetic.
— i.e. There is no such thing as “Moore’s Law”. Transistor size are approaching silicon’ hard physical limits and even if they weren’t , they would not make cars fly…[“But what kind of growth do both ‘fields’ envision? Growth to what end, and growth into what? 4 years ago, I wrote What Do We Want To Grow Into? I have still never seen anyone else ask that question, before or since, let alone answer it.
We want growth by default, we want growth for growth’s sake, without caring much where it will lead us. Maybe we think unconsciously that as long as we can secure growth, we can figure out what to do with it later.“]
You mean that a nice home, on a nice plot of land with a beautiful garden was never in the cards for every citizen of the planet ?
You’re saying that this wasn’t the overarching goal of the epic increase of productive capacity ?
😉
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One of your all time best post Ilargi…
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