Housing Bubble

Recently I've been wondering if I would see any media coverage of the so-called housing decline looked at from the perspective of the inflation of housing prices in recent years. I wondered if perhaps it would be considered too frightening for the American people to see just how big the bubble really was and just how little it has deflated so far.
But today I came across this article on MSN Money which posts a table of not simply recent declines in home prices but also the past five years' change in many of the nation's metropolitan areas. The right hand column shows very significant positive numbers whereas most of the numbers in the other columns are negative. The positive numbers show home price increases over the past five years.
If you think of the current decline as an adjustment to compensate for the bubble, this chart shows just what I had expected might appear, that there is a long way to go before the bubble has deflated. Mind you there's an effort under foot to keep the bubble inflated. We might just as easily find the market swing back into the positive range again before the gains of the past five years have been lost. But the trend right now isn't in that direction and there's no guarantee that prices won't continue to decline for awhile.
Owning a home isn't an inexpensive proposition. Most homes require steady investment for upkeep. Homes do wear out just like any other useful product. But in addition to routine home repair costs, there are mortgage interest expenses, property tax expenses, and insurance bills to maintain. Owning a home is good in the sense that even if home prices remain constant, when it comes time to sell, the owners can at least expect to recover their investment in the home's equity. With luck, if the market has been inflating, the homeowner can also recover some of the other expenses. But for home prices to inflate at a rate great enough to give a return on all homeowner expenses, it takes a bubble like the one we have been in for the past five years. Such a bubble is not the norm.
I have felt that this bubble was an inflationary force rather than business as usual. Home prices have been inflating at a rate much higher than the overall economy's inflation rate. We tend to see this inflation as a good thing, as a way to get ahead. Homes are investments meaning we expect to see returns on our entire investment. We expect to recover not merely the principle on our mortgage payments but also the interest and we expect to see a return on our property tax expenses and home repairs as well. But that isn't the way things should be. Owning a home should cost something. If it doesn't, there's something fishy going on. We're being set up for a fall by pressures beyond anything we should think of as normal.
In the case of home prices, there has been an abnormal amount of speculation going on. It is this speculation that inflated the bubble. Just after Bush became president in 2001 there was a decline in the stock market and a mild recession. Investors were nervous, but then low-cost loans made real estate appear to be an easy way for investors to make a quick buck. Real estate looked like - and actually was - a good investment. But for the market value to increase on property that in any real terms was not becoming worth more, something had to be happening behind the scenes. And it was. The dollar was in decline. All this low-cost loan money was driving the value of the dollar down. Instead of this real estate bubble being the good thing that it appeared to be, it was actually not healthy for our economy. It was driving the value of our money down.
Eventually that negative force caught up with us. This same downward force on the value of money was showing up as an increase in our cost of oil. Just as soon as the Fed began raising interest rates and stopped pumping hot air into the balloon, we began to realize that the balloon had a big leak in it. Housing prices began to fall. The bubble began deflating. Some investors took their money out and invested elsewhere. The stock market has been struggling for some time now with investors trying to pressure the market up again and they have been somewhat successful. Other investors found a new market, though, by investing in another bubble economy, oil futures. As we all know, this has driven the cost of fuel through the roof, again with the same negative impact on the value of the US dollar. Increased fuel expenses leave Americans with less income for their home expenses and are putting further downward pressure on home prices.
How big will the bubble get in energy futures investments? Nobody knows. If that bubble breaks, what will be the effect? Will it bring investors back into the real estate market? Nobody knows. But is there room for housing prices to continue this decline? Is the housing bubble still deflating? Yes it is. Does anybody have a solution yet? I don't think so!

Hillary Country

Josh Marshall has been a Hillary supporter over on his TPM blog. Yesterday evening he did a post titled "Upcountry" in which he maps the regions where Hillary has gotten more than 65% of the vote in the primaries. It's an interesting point he makes, but I tend to think he's leaving something out. Yes, like he says, these are racially white folks, the overall level of education is lower, we all know Appalachia as hard-working but low-income, and they certainly tend to be conservative in their Christianity. None of these factors work in Obama's favor and if he loses in November, all of these will be factors in his loss. But I tend to think there is one more factor that the media is overlooking.
If I were to pick one section in this country that most "supports the troops" this would be it. These people are hard-core pro-American militant. It seems astounding to me that any of them support Hillary since she is the one who has claimed she would pull the troops out the fastest. I think at one point she even said 60 days after taking office she would do it.
But has Hillary been going around in this region speaking against the Iraq War? Hey, I'm not down there. I don't know. I'm speculating. I'd enjoy hearing from someone who has heard her speak in these areas. Maybe I'm wrong here. But I seriously doubt that she is campaigning in this area as being against the war.
Obama is identified nationwide as the candidate who is against the war in Iraq.
Hillary is identified as the one who lies.
So Hillary's claims that she would stop the Iraq War could very well be, and probably are, lies.
I think that's why support for Hillary in this "Upcountry" region is as strong as it is. Democrats represent the underprivileged, but Hillary represents the pro-war crowd within the Democratic Party.
Correct me if I'm mistaken.

Globalization

I just came across this online article by James Poulos about globalization. Let me begin by admitting that after reading this article through one time I don't have a clue what it's about. It isn't exactly written in simple terms. But it has something to do with globalization and about how America should somehow be the overseer but not the victim of the process... I think...
Recently I've begun to wonder if maybe globalization, the word, is merely an euphemism for something a bit more sinister. "Globalization" as a word isn't as offensive as the effects it is having around the world. Globalization is a process. Some schools of thought propose that it is an ungoverned process, the results rather than the cause of changes centered on technology and trade. The changes are primarily economic but to that end, there are also political, cultural, and yes technological changes necessary to grease the ways for this economic transition.
I tend to see globalization as something not quite as recent as some suggest. We tend to think of globalization as a process that got its start around the time of Ronald Reagan's trade policy revisions. But the process that globalization represents has much deeper roots.
Certainly the British Empire was bent on world trade and on shaping the politics and culture of the world in such a way as to set England up as the hegemonic head of trade and banking. Britain's East India Company was a financial force with immense world power backed up by Britain's merchant fleet and her navy. The British Empire failed to sustain its hegemony.
Before that, there were the Spanish, the French, the Dutch, the Portuguese. All sought wealth through world hegemony. All failed to sustain it.
Even the Roman Empire sought the same goal two thousand years ago. It failed.
But all of these imperial powers sought the same goal, wealth through control of the world's trade. The legacy of this goal reaches even further back in time, further back than the Caesars of Rome and Constantinople. And this legacy has links in recent history as well. In the Twentieth Century the empires of Germany, Italy, and Japan fought the empires of Britain, the United States, and Communist Russia. Germany nearly succeeded, but it was the United States which emerged as the victor.
The Cold War masked over this victory. For decades we Americans saw ourselves as vulnerable, as the weak victim struggling to survive against the power of the Communist threat. We feared Russia. We feared China. We even feared Cuba and when it came right down to it, we feared Nicaragua. We feared that our economic hegemony, our enormous wealth, would fall into the hands of the Communist proletariat. We even feared Hollywood.
The Cold War is over now and it was that sea change that brought on the tidal wave of globalization. Suddenly the powers of finance found themselves in full control, masters of the codependent working classes. The time was at hand for the wealthy to take command. Technology had finally conquered the obstacles of time, distance, language barriers, communications, propaganda, even armed resistance. The goal of the wealthy through the ages was finally within reach.
While all of this is quite obviously true and while it is clear that the wealthy are organized, it is amazing that globalization's enablers, the workers, the scientists, the technicians, the politicians, the military forces, all continue to deny that there is indeed a hegemonic power at the top that is guiding this process. The word "globalization" is euphemistic. The real term is in its most recent negative form is "fascism."
Globalization is the managed transition from a world of nations and sovereignty, governments, religions, and cultures, to a world of open borders and enormous wealth for the few through world trade.

Pander Bare

Look, the Empress has no clothes!
It's not easy thinking up models of behavior that can explain the Hillary Clinton campaign these days. There was the bickering over NAFTA where Clinton opposes strongly from the beginning that which she and her husband strongly supported while he was President. There was the "elitist" claim against Obama for his suggestion that people are not very trustful of Washington politics. There was the Jeremiah Wright issue where Hillary, the Methodist, and not Obama, the "Black church" faithful, had the true American religion. Of course there was the Bosnia incident where she repeatedly told the same lie - op! I mean "misspoke" - to her own constituents to prove her worthiness under fire. Now it's the gas tax issue.
What on earth is going on with her? What flavor of Kool-Aid has she been drinking the past month or two?
The gas tax thing I think has one more layer that hasn't yet been revealed. Eventually Obama will appear as the one opposed to a bi-partisan solution to high gas prices. Hillary hasn't to my knowledge hit Obama yet with that punch, but no doubt she will to counter Obama's claim of being the one reaching across the aisle to solve America's problems. Not that dropping the gas tax will solve any problems, mind you, unless the gasoline prices have been artificially inflated for the specific purpose of defeating the national gasoline tax, but that is a conspiracy theory and we all know America in not run by conspiracy.
Obama is the one with the valid point. If highway users don't pay their fair share for using the highway, then who will pay for highway maintenance? Hillary says the oil companies should pay, as if that won't drive up the price of oil! McCain, I guess, thinks we should fund highway repairs with deficit spending. Let the Chinese come up with our highway maintenance money. Exchange treasury bonds for bridges and let future generations dig their way out from under the debt.
But here's the thing that gets me about all this Kool-Aid. In all of these controversies, Obama comes across as the thinking man. Hillary and McCain come across as real dumb-asses. It's like a competition to see which one can have the greatest dumb-appeal. One thing George W. Bush taught us as a nation is that dumb appeal wins a whole bunch of votes in America these days. Americans aren't looking for a thinking man to be their leader.
Hillary hasn't always had this appeal to the Bush-type supporter. She used to have the reputation as a thinking person. But recently she morphed into this mindless political giant using any form of logic and fallacy that might work to defeat her opponent. She morphed into a Karl Rovian form of candidate. She accused her opponent of thinking too much and being an elitist while she, the true elitist, became what she believed the voters were looking for, stupid.
Obama thinks the voters are thinking people. Clinton and McCain think they are stupid. That's what this game is all about. Obama won't let his intelligence be used to belittle the voters. Clinton and McCain are perfectly content to appeal to the voters' dumber side. And just like Obama says, we all have a dumber side that surfaces when we don't think our leaders are using their brains.

Stumbling on Reality

John McCain is in the news today. It isn't likely that anyone is listening, but he is there. McCain's supporters seem to be those folks who are so tired of hearing reality in the news that they have stopped listening to reality and have attached themselves to John McCain instead, and probably gone back to their infotainment on Fox News.
But meanwhile, a couple of issues arose yesterday. McCain is responding to a Moveon.org advertisement about the idea of a 100-year war in Iraq. Also he snarled himself up with a comment that the Iraq War had something to do with oil. Heaven forbid that a Republican wishing to inherit George W. Bush's seat would say something like that, so he is backpedaling to get out from under that statement.
There seems to be a conflict here between the "Straight Talk Express" that McCain prides himself with and the need to keep reality in the dark, keep it away from being discussed in an open forum like the election process. We all know the war was about oil and America's dependence on Middle East oil. At the very least, it was about preventing all our money that we spend in the Middle East from going toward anti-American or anti-Israeli military capabilities. We didn't want Iraq strong so we took them out. Some would speculate that there was more to it than that, that there was the need to fit Iraq in with respect to Globalization. Iraq wasn't playing the game very well. That may seem like a new idea to you, my readers, but Bush has been talking about this all along.
McCain said as much with his Friday comment, but then the puppeteers told him, oh no, the war was about WMDs, remember? So McCain had to backpedal and somehow explain away his comment that with his energy plan we wouldn't ever need to send our troops back in to the Middle East.
So much for straight talk. Now nobody knows what he was saying.
And the 100 year war? He certainly made that comment, that we could be there for 100 years. But now he's saying that's after we win the war. He's not saying how long he would be willing to fight to win the war. He seems to be denying that we would be willing to fight for 100 years if that's what it took. He's actually denying that idea. So it would appear that McCain is saying we would win the war rather quickly, that success is just around the bend, so to speak.
But the thing is, Bush promised us on day one that the troops would come home as soon as the job was done and not one day longer. So according to this McCain plan, the job isn't winning the war. The job is winning and then maintaining the peace as long as America has energy interests in the Middle East.
Or is it?
Where is the straight talk when you need it? Nobody, and I do mean nobody, knows what McCain is saying. I guess that's how you win the Republican vote. Maybe that's how you win the independents too?