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Pie In The Sky
"Pie In The Sky"
photo by
anna missed
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House prices in U S metropolitan areas may decline by more than 10 percent in the months and years ahead as higher borrowing costs hurt demand, a study by a Moody’s Corp. unit shows.
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The median home price in the United States next year may fall for the first time since the Great Depression, according to Gabriel Stein, chief international economist at Lombard Street Research in London.
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The housing boom lifted the US median home price by 49 percent in the five years ended in 2005, according to the Chicago-based National Association of Realtors. That added to the net worth of homeowners and creating a so-called wealth effect that spurred spending as homeowners refinanced and took on more mortgage debt.
Report sees double-digit declines in home prices
Getting worse. I speak of what I know: Geneva (city, free atmosphere, good social services, non-repressive, e.g. drugs, as compared to other places) has the worst stats. Also it is surrounded by France, and has an International airport in the only central non – EU country (visa problems, particularly for Africans and Arabs.) Also, this is an open secret, lone minors are never turned out or away (though this is now changing, and is a very complicated issue I can’t go into.) We have Kosovar street kids.
Care for the homeless is organised by the smallest territorial units, communes (that is so in all of CH) with, here, the City being the one taking the brunt, and coordinating with others. That means that arrangements will vary greatly from place to place. The commune I live in has no homeless – we simply rent appartements for them and set up illegal shops (food bank) and paper chase to get them their ‘rights’.
So far, overall, in Geneva, charitable organisations, which are very various, from the Salvation Army to the Immigrant Women Party Home (all funded by the State plus private donors) have managed to double, then triple, their capacities, in the past very few years – at most three. The Gvmt. outsources this work to others, but collaborates. E.g. it can and does open the Civil Protection centers, or any other place, for the homeless, if asked to do so. It will build infrascture such as communal baths.
The only homeless one can see in the streets are young people. They appear to ‘choose’ this life style, as did, say, tramps in 1950 in England. It is almost a socially instituted ‘thing’, a way of life. One has a dog, a favorite armchair under a bridge, one goes to rave parties, and travels without paying on the very ample public transport system. Other ‘young’ homeless are not truly homeless – they are psychiatric patients in a special program (housed at night but forced to be in the street by day. This works very well btw.) Respectable young homeless sleep in their car, have 2 cell phones, and use public wifi connections. With winter, other arrangements must be made, and the State will have to chip in. The elderly are all housed.
One can attribute this (still) relatively bearable state of affairs to the fact that CH is a very rich country; to the community spirit of its people, if one wants to be pious; to the pragmatism of e.g. church and social workers; but also to the fact that CH lives off its clean, peaceful, rich image, and any dent in it would do it great economic arm.
Rolex, whose headquarters are in a relatively poor part of the town, could not stay if there were even any hint of poverty around. This is a great talking point with many; it is impressed on these business leaders and right wingers that even three weeks without the social support necessary will see whores and junkies on every corner, more murder, and la destruction de la paix sociale. It works. And they pay. Big time.
The homeless problem is related most strongly to the lack of insertion of a growing mass of young people, the ‘no future’ generation.
Posted by: Noirette | Oct 7 2006 15:31 utc | 42
Guthman Bey wrote:
No matter how hard you try to put a negative spin on these numbers, the fact is the net budget position of all American states is a surplus, which is (sorry Doc)… positive.
Guthman why do you talk when you don’t know what you are talking about?
As I pointed out in my previous post, the net budget position of the US states has to be in surplus because they cannot issue debt to finance deficits.
Is there some aspect of this elementary fiscal principle that is eluding you?
And: the US public deficit/GDP ratio is way below the G-8 average. As is the equivalent federal debt/GDP ratio. The Germans and the French finance ministers would pop the bubbly if they had debt/GDP ratios like the US.
Is that a fact?
According to the OECD in 2004 the public debt as a percentage of GDP numbers were 67.9 for Germany, 74.7 for France, and 64% for the US. So the US is barely ahead of Germany and doing significantly better than France. The G7 average (excluding the US) btw was 89.7, but that is obviously distorted by the very high public debt numbers for Japan (which has endured over a decade of deflation) and Italy (whose public finances are in a perennial state of incipent crisis).
I hardly see that this is anything to crow about since red blooded American capitalists are constantly using Germany and France as textbook examples of the kind of fiscal malaise that will afflict America should it ever contemplate a forbiden flirtation with communistic ideas like public medicine. In this context the fact the US hardly beats out Germany, even after the huge drain of unification on German finances, should be positively a point of embarassement.
Now as for deficit to GDP ratios, the G7 average is -3.27 (-3.68 for Germany and -3.65 for France), compared to -4.72 for the US. In other words, contrary to what you assert above, France and Germany actually have smaller deficits as a percentage of their economic output than the US does. Although you’re smart enough to figure this out for yourself I’ll just mention that this means the US’ more favorable debt position as a percentage of GDP is actually deteriorating relative to these countries.
Debt and deficit only tell part of the story however. To truly appreciate all the reasons for concerns about America’s fiscal health it helps to look at a couple of other numbers, for example:
Household Savings Rate (2004)
Percent of GDP
G7 excluding US: 8.4%
US: 1.8%
Current Account Balance of Payments (2004)
Percent of GDP
G7 excluding US: 1.0%
US: -5.7%
And this last one, which is not directly tied to fiscal health but ultimately could have the most significant impact on socio economic stability in the US relative to the rest of the G8:
Social Expenditure (2004)
Percent of GDP
G7 excluding US: 22.8%
US: 14.7%
Which btw is why all the conservative talk about how the poor Europeans are taxed to death is absolute nonsense. Yes Europeans (and Canadians and Japanese) pay more taxes, but they also receive far more of their tax dollars back from government in the form of social spending.
Conclusion: you are reading too much bullshit by people like bonddad (a Democratic campaign consultant he is, and only marginally more credible on the economy than Bush is on Iraq).
Funny you should mention that, because it seems to me most of the ideas you have expounded here are not your own but ones you have picked up at second hand from economic cornucopians, that segment of the punditocracy that is perpetually trying to sell people on the idea that the clouds others claim to see gathering on the economic horizon are merely mirages and that future we face is not one of uncertainty and possible hardship but rather of boundless plenty. Constantly they assure us that the only ones who need fear regret are those who lack the conviction to jump in and chase after the pot of gold that surely lies just beyond the horizon.
The reason I’m quite convinced of this btw is that it is clear you don’t have a great deal of faith in your grasp of the very arguments you have made here – for example you completely ignored the questions I raised about the relationship between offshore accounts and unrepatriated profits and the balance of trade, or the feasibility and desireability of counting capital gains as “savings”, that I raised in my previous post.
The sophistry of economic cornucopianism is enduring and beguiling for two reasons: first, people tend to be predisposed toward optimism, and they also tend to find arguments -even ones they only understand imperfectly- congenial that validate their optimism. Conversely, they tend to resist arguments that challenge it.
Second, optimism is what generates wealth for Wall Street. When people feel good about the future they are much more likely to make speculative investment decisions, and make them more often, then when they are pessimistic. Speculation is what makes people rich on Wall Street. Granted, it’s usually the insiders who make off like bandits while small investors lose their shirts, but that’s all the more reason for the insiders to hype the optimistic scenarios, isn’t it? Kind of like they did in the runup to the tech bubble collapse of 2000.
Now some of us see a lot of parallels between what happened in the tech sector in the late 90s and what has happened in housing in the last few years. Once again the people with their heads screwed on straight are warning that the rise in housing prices are not sustainable. Once again they are being shouted down by the realtors, the brokers, the insurers, the bankers, and anyone else with a finger in the pie. Just like with the tech bubble (and every other bubble in the history of the world) those with a vested interest in believing that the good times will never end have found a million reasons to convince themselves, and anyone else who will listen, that it won’t end, not this time, not like every other time. Because this time everything is different.
Here’s the thing though -it’s never different. As much as the self interested insiders will dream up a million reasons why things are different this time, every bubble has it’s begining, middle and end firmly rooted in exactly one thing, and that’s human psychology. Anyone with an iota of historical sensibility can see this clear as day.
Unfortunately that includes almost no one on Wall Street, or at the Commerce Department, or in the White House.
And just for the record I have no idea who Bonddad is.
Posted by: Lexington | Oct 9 2006 8:23 utc | 78
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