Part 3 of a 5-part series…
Keynes General Theory (Employment, Interest and Money)
Said Obama in 2009: “Consider the vicious cycles. Declining asset prices lead to margin calls and deleveraging which leads to selling, further declines in asset prices, perpetuating the cycle. Lower asset prices mean banks hold less capital. Less capital means less lending. Less lending means lower asset prices, and the cycle perpetuates. Falling home prices lead to foreclosures which lead home prices to fall even further, forcing more foreclosures, forcing losses in the mortgage sector, forcing reductions in lending, forcing housing prices further down. A weakened financial system leads to less borrowing and spending, which leads to a weakened economy, which leads to a weakened financial system. Lower incomes lead to less spending, which leads to less employment, which leads to lower incomes. And I could go on. These are not processes that are self-correcting.” – ‘Barack Obama, ‘Responding to An Historic Economic Crisis — the Obama Program‘
No, they are not self-correcting, Mr. President.
They were caused by something or someone, and that something-one has to fix what they broke.
Right now, there is still a pretty fluid “buyer’s market” in the home-selling industry. What that means to homebuyers is that houses are still pretty hard to sell in a post-declining market, which also means that the houses out for foreclosure now are pretty reasonably-priced and new home sales haven’t quite picked up their former hot rate speed at this time.
Considering that the homes have been waaay over-bloated in pricing for at least the past 25 years or so, there’s no room for arguing about what that does to the average homebuyer’s pockets.
A housing market in a small town like Columbus, Georgia, for instance, meant that the average cost of a home in the late 1990s-Y2000 was around $50-80,000. These homes are in pretty good to excellent Black neighborhoods in midwest Georgia, they are not in “low-end” neighborhoods. Those houses now sell, on the median, for between $128-$145,000 and with no added value or costing or pricing mechanism that would explain the increase except for price-gouging and inflated appraisals. Costs of materials and supplies would not have gone up enough to justify an increase of $48-$55k in market prices in that short a time period.
At the same time, average incomes in Columbus went up from a little under $35k to about $45-$47k during that same time period. The average increase in wages in Columbus was around $10k, the average increase in home sales pricing was $48k at the LOW end, and not counting the usurious interest rates.
A $150-$250k house ended up costing about $1.5M in short order.
For the small town scenario where good paying jobs are lacking, that’s nearly a 21-degree range of difference between average incomes and the average cost of a home. Don’t get too technical with the numbers, the income increases simply don’t cover the increases in cost of housing without squeezing the *&^% out of people’s discretionary spending or ‘fluid’ income. Period.
Right now, the data is saying that Black people who RENT in America is now at 51%.
That means that MORE than half of the 45 million Black people in America are RENTING and not buying property, which includes the ever-valuable and ever-increasing LAND RIGHTS that go with owning a single-family home. Home ownership is economic empowerment, when done right.
More than half renting is far too much transient movement in Black America when it didn’t have to be that way in the first place. Someone was holding the money wheel and pulling the predatory scam strings on what turned out to be some tremendous housing money pits.
Here’s how President Obama explained what Michael Lewis (author of “The Big Short: Inside the Doomsday Machine” and many other finance and economic books related to his own days on Wall Street) had already told us:
To put the point a different way, an abundance of greed and an absence of fear led some to make investments not based on the real value of assets, but on the faith that there would be another who would pay more for those assets. At the same time, the government turned a blind eye to these practices and the potential consequences for the economy as a whole. Bubbles were born, and in those moments greed begets greed and the bubble grows. Eventually, however, the process stops and reverses; prices fall, people sell. Instead of an expectation of new buyers, there is an expectation of new sellers, greed gives way to fear and this fear begets fear. This is the paradox at the heart of financial crisis.
About Them There “Blind Eyes and Bubbles”
It was recently reported that Elizabeth Warren said:
“They (the Obama Administration) protected Wall Street. Not families who were losing their homes. Not people who lost their jobs. Not young people who were struggling to get an education.”
When a Democrat opposes a Democrat, either the rubber meets the road or the shit hits the fan.
For some reason that we can only speculate about, (maybe his own particular brand of elitism?), President Obama bought into the idea that Wall Street needed to recover in order to pick up the American economy. That leaves a funky taste in our mouths to hear Warren tell it, because the people he protects publicize his political stances as those of a “Kenyan-born Muslim-loving social outcast of a food stamp-giving Nigger” even as he does it.It isn’t all that hard to put those things together if we’re paying more attention to actions than words.
According to Warren, President Obama was kissing their high-falutin’ asses whilst Wall Street was crapping in our mouths and on our front lawns like the ravenous dogs that they are. So right here is where we are right now.
Elizabeth Warren is saying that President Obama, as of this year, turned a “blind eye” himself, to all of Wall Street’s shenanigans — Black people included. Maybe his theory, and we’re only guessing of course, is that a “rising tide” somehow ultimately lifts Black America’s boats, too.
Once we get past all the screaming of the Black Glitterati who were not there for us before this economic crash, and who seemed to have only been mad because they didn’t get a seat at the Hi-Falutin’ Black Snob Glitterati Gala Table in D.C., we have a murky problem here that directly involves BEEF with the President about how much he does not care about Black people. If it ain’t the “Muslim” problem for him, it’s the “Soul Patrol” issue on the other side, and all he can do is laugh it off, IF he even hears it at all.
Really, where is BLACK ECONOMIC RECOVERY amidst all of this political wrestling and haggling?
Who speaks for us when it’s time to take these “liquid undefined demands” about our economic distress or maladies to the President and ask him what he plans to do about it?
Where is the protocol, like LULAC for the Latinos or GLAAD for the gay people?
Name me one pro-Black national organization, even ONE – the CBC, NAACP, SCLC, NUL, NOI, anyone at all … that did its research and homework and pulled a bootstrapped chair up to the table with JP Morgan Chase, Regions Bank, Citibank, Wells Fargo — or even Banco Americano, any of those “big boot” banks after they were fined and found guilty of intentionally sabotaging the American economy. How many Black people do these entities employ and at what rates of pay? Livable wages plus benefits, like healthcare, et al? And since we pay such “throw them some eye shade puh-lease” interest rates and gouged-out monthly accounting fees to these over-bloated convoluted Big Bank Hanks, which one is called Bank of Black America?
Where and when did our Black organizations go after the most infamous subprime lenders who underwrote COUNTRYWIDE, SPECTRUM LENDING, and California’s AMERIQUEST, as well as all of the others, to find out what the hell is really going. Or were they too busy yelling about not getting front row tickets to the last DNC “Jefferson-Jackson Ball” so they could get a photo-opp with Bill Clinton and pretend like all’s right in Black America?
Another quest: Were our tremendous and overwhelming Black economic “financial woes” just a big election year illusion?
Did we really need My Brother’s Keeper, or is there a ‘protected status’ of low-income and economically disadvantaged Black males who are trying to keep their special status as the most broken and downtrodded for other political reasons?
“Respect the Player even if you don’t respect the Game.”
Excerpt from President Obama’s Speech to the Consumer Financial Protection Bureau – 10/17/2014
…And because of the good work of many of the people who are here today, Americans have saved millions because they’ve been protected from predatory mortgage practices. You’ve protected folks from deceptive credit card practices. You’ve set up “Know Before You Owe” to help college be a little more affordable for young people and to make sure that they know the kind of debt that they’re accruing. You’ve simplified mortgage forms so homeowners don’t get tricked in the final print. But all this work, taken together, the reason it’s important is because it’s not an abstraction; it saves people money and time and heartache.
And before you, Americans who had gotten taken advantage of often had no way of achieving some sort of compensation. Today, you’ve actually secured billions of dollars in relief for victims. You’ve helped to make people a little more whole after somebody engaged in fraudulent behavior.
Some folks in Congress fought tooth and nail to keep this agency from getting off the ground. There are some, frankly, who are still fighting to undo the rules we put in place to protect consumers. But I refuse to back down and go back to the days when mortgage lenders or financial firms could take advantage of consumers, and consumers had no recourse. We’re moving forward. America is better because of this agency and because of the rules that we’ve put in place…
PUBLIC NOTE: The opinions expressed in this article are the author's own and do not reflect the view of the Urban Intellectuals, affiliates or partners.