On the housing crisis and running out of options
Phoenix Insurgent uses the occasion of some very suspicious options trades to give a pretty good economics and current events SITREP solidly grounded in power elite analysis.
The spawn of Cthulhu in the room, of course, is the Federal Reserve — as illuminated by the Austrian Theory of the Business Cycle. The ATBC offers an excellent understanding of what’s going on and a trained eye can spot its influence on a lot of the commentary out there on the current economic crisis, despite laughable Establishment attempts to blame house flipping. It occurs to me, though, that I haven’t seen recent ATBC commentary that points out something that seems rather obvious to me (although I suppose my take on it could be flawed).
While ATBC offers insight on the nature of the boom-bust cycle, the more specific matter of why this particular boom-bust cycle has been taking place in the housing & mortgage market (in particular) seems largely attributable to demographics and rightly-placed anxiety over the future of the US government Social Security system.
My own recollection is that it was in the mid-90’s that it largely started hitting popular awareness that Social Security was screwed beyond all hope. Savers realized a higher rate of return was necessary if any hope for retirement was to be found on an individual basis. Stocks soared, fueling the dot-com boom, as the achievers among Gen-X figured their best individual hope was in weighting the mutual fund choices in their 401ks heavily toward growth funds. When that blew up in our faces in 2000-2002, those who could turned to over-buying housing, not just buying comfortable shelter itself, but desperately searching for some sort of retirement strategy. The retirement planning mantra for years was to “buy the biggest house you can afford”, which in practice easily became “buy the biggest house you can qualify for a loan on”.
As credit was loosened by the Federal Reserve inflating the money supply to enable ever greater and greater government spending, the purchasing power of the dollars in the hands of the productive class declined and real productivity slumped (regardless of official statistics) as a result of white market enterprise malinvestment caused by the same reason. Now, as the economy inevitably turns south, a lot of buyers are trapped in houses they can’t really afford, foreclosures are mounting, mortgage companies are in trouble and Establishment apologists for state capitalism rush to point fingers at real estate entrepreneurs in hopes you will “Pay no attention to that man behind the curtain!”
Ultimately, it all boils down to this — we’re all screwed, it’s all the state’s fault and any state efforts to address the problem through monetary manipulation and government spending are only going to make the problem worse.
The metaphorical “stars are aligning” for potential revolution in the sense that the productive class has almost nowhere left to turn. We’re almost out of options. In black & grey market counter-economics we find the potential high economic growth necessary to buffer the parasitism of the political class elite on the productive class. In voluntary mutual aid networks we find a potential non-state social safety net that provides the dignity and community that makes life worth living.
For those options to be exercised on a mass scale will require a lot of changes in popular thinking, though. It remains to be seen whether sufficient advocacy can be brought to bear to accomplish such wholesale shifts in popular consciousness. Let us hope it can. The future is in our hands every single day, folks. Another world is possible.
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I would tend to agree with you, it seems as though the parasitic class is beginning to perish on its own.
Though it may not be obvious to most market speculators now, I think they know in the back of their minds that something big is about to occur.
Hopefully, we can bring it about.