A recent report was discussing how Millenials are skipping the home-ownership thing. Some are not buying. Some are renting pods to live in, and it is all part of that minimalist, cool kid vibe. See, Millenials are about experiences and the experience one can have.
This is pure bullshit. Shelter is always needed. What has happened is Millenials are priced out of homeownership, but the media cannot discuss this in too great of detail or it reveals them for the FIRE economy PR men that they are. Let’s walk through the problem.
- The housing bubble happened and popped. This was after an elevation in new home construction and a record spike in prices.
- Rather than letting the market clear, the Feds & Federal Reserve bailed out the TBTF banks, swapped agencies for Treasuries and suspended mark to market. The system also made moves to prevent a true wipe out of home prices which would have involved an overshoot of the trend line downward.
- Banks slow released foreclosures to the market. Blogs like Irvine Housing blog showed how people lived mortgage free for years in homes. This prevented supply from flooding the market, pushing prices down.
- Banks also did not lend to homebuilders. Check new home starts since 1980. Always over 1 million homes built, and then in the mid-00s it is 2 mil. Since the crash, there has not been a year over 1 mil. Sure there had to be some crash after the inflated numbers of ’03-’08, but there has been a deficit for a decade now. This suppresses supply and helps banks move those older homes in their repo pipeline at higher prices.
- The Federal Reserve deployed its QE and zero interest rate policy (ZIRP) for a decade. This 0% money went to big players like hedge funds and private equity who scarfed up homes as soon as they went on the market or other homes that hit the county auction bloc, removing them from the supply. These homes then were rented out to people priced out of buying but able to pay that monthly rent nugget.
- Obamanomics imported immigrants to hurt job prospects for natives, with a backdoor subsidy of student loans to maintain consumption. Job growth was primarily temp and part time to avoid qualifying for health care, and bartenders and waiters made up many new jobs. Zero Hedge and even mainstream reporters noted the number of Americans taking out more loans than schooling required just because they qualified. It helped maintain their lifestyle.
This is why Millenials are priced out. The Case-Shiller Index is higher than it was in the mid-’00s bubble and we have had anemic growth. Add on a dollop of bad job prospects for a decade and college debt at record levels, and you have a worse buyer profile. This is all to keep the inflated fictitious wealth of the real estate asset holding class elevated. This maintains the current power elite.
“Oh no, people would get wiped out!” Wrong! The current asset owners would be wiped out and the underlying assets would be sold to people with capital to purchase them at prices they felt were fair as determined by the market. The current owners, who also own our politicians and decision makers in the system, have convinced everyone that this specific manner of economics and political control must go on or else. This really traces back to the Mexican bailout of the mid-’90s, which backstopped Wall St but was pitched as bailing out our critical neighbor, Mexico.
The or else is pitched to us as the end of the world, but probably involves a blackmail ring that they have for mediocrities like President Obama and Senator Marco Rubio to be in their puppet positions. This is how you get Trump, and this is how you get AOC. They thought Obama might be the outsider black guy to take down the corrupt ring, and were bamboozled. Same thing is happening now with Trump, and will happen later with AOC and her peers. It only is a matter of time before people udnerstand that there is no reforming this system as any reform really means that the current elite would no longer have pre-eminence in our sociopolitical system. On to the links…
A Fair Syria Recap – Salon manages to run the most fair piece on the Syria war you will see in a mainstream site. This reproter answers questions and shockingly, lived in Syria during the conflict. She knows what was up. This is not ghoulish Max Fisher, from the comfort of his American apartment, breathlessly telling you for the fifth time that Assad was near death and we must intervene.
The Paris Fire Doesn’t Add Up – Interesting blog post on the coincidences of the Notre Dame fire and other odd moves with religious statues in the lead up to the fire. The official story will never satisfy anyone with half a brain. Too much has leaked out about the safety measures and the sprinkler systems for any of the immediate official announcements to make sense.
Anton on the Trump Doctrine – It is good that Anton believes this because hopefully, more forpol bureaucrats may be persuaded. The downside is that this has no effect as long as Jared “Felon’s Son” Kushner and the neocon old timers surround the president.
Do The Masses Matter – Interesting essay at Jacobite on the withering of the masses’ power. Centralization and automation are enabled by technology, and it has chipped at the power of groups of people bit by bit.
China Can Stand Alone – This is an investigation into China’s military. The sobering fact for the Americans using confrontational rhetoric is that China most likely cannot be defeated militarily anymore. The USG empire must have been holding out hope that if they could not fix things with trade, they could just cause WW3 and destroy China. Might not be the case anymore.
2 Comments Add yours
I don’t think it’s millenials being priced out here, at least not intentionally. What’s being priced out is diversity (as well as low status whites, for that matter). If legal discrimination is no longer possible, then financial discrimination comes to take its place.
Millennials are indeed being priced out. Real wages have dropped significantly since 1971, when Nixon ended the Bretton woods monetary system and what was left of the gold standard constraints on creating fiat money. The result is that capital owners get a bigger share of the pie and wage earners get less. Anyone paid by the hour or year – garbage collector or attorney has lost ground. Older people in the US tend to have pensions, 401ks, rental properties &c. that provide them with some return on capital, so they can cash in a bit. Mostly the beneficiaries are politicians, regulators, holders of all the jobs that didn’t exist in 1970 – ie. Assistant Dean of Diversity (Salary $235,000) – and wall street.