Half of all mortgages will be underwater next year? Half? That hardly seems possible.

No story yet on underwater Fargo mortgages. They're really falling down.

One guy did burn down his house because he had fire insurance but no flood insurance.

I actually think that the housing market is in the beginning of a long, slow process of becoming unfucked. Unfortunately it was so fucked, that unfucking it has been (and will continue to be) really fucking fucked.

No story yet on underwater Fargo mortgages.

Fargo had an amazingly small amount of homes flooded all things considered. Also our housing market never really got as screwed up as the coasts.

A great headline can't be allowed to go unused. Surely there's at least one underwater mortgage that's been flooded.

Unfortunately it was so fucked, that unfucking it has been (and will continue to be) really fucking fucked.

I fucking concur.

It seems to me that we will be seeing cascading failures for some time to come. There will be foreclosures due to ARMs and these absurd pick-a-payment mortgages, as well as foreclosures on mortgages that aren't quite as predatory but still can't be paid due to job losses. Each step along the way will lead to bank failures, credit crunches and so on.

Don't be passive: fight back! Buy my house at the value the county assesses it for taxes.

as well as foreclosures on mortgages that aren't quite as predatory but still can't be paid due to job losses.

This is the key. You can survive with your mortgage underwater for quite a long time if you hold onto your job. I knew people in Britain in the early 90s who were in 15% negative equity, who nonetheless sold their houses at a tidy profit 10 years later. If I were Gee Twenty, I'd be concentrating on keeping people in work more than shoring up the banks.

I don't think there's anything to be done for the poor buggers with the Pick and Pay shit. Torching the cars of the people who sold them would be a good idea, pour encourager les autres, but it wouldn't help the victims.

1: The table is in thousands; that's 50,000, not fifty percent.

The bank near here is still offering ARMs. You'd think perhaps they'd have some shame?

This estimate of 8.1 million foreclosures is approximately 42% of the estimated 19 million homeowners that have been estimated will be underwater (owe more than the house is worth) by next year (David Leonhart in The New York Times, The Trouble With a Homeowner Bailout). This 19 million represents about 50% of all mortgages.

"Underwater" isn't "in trouble" here, is it? If the market's off by 5% in your area and you bought at the peak, you owe more than the house is worth but you might not be at risk of foreclosure.

Agreed. If you're in a secure (ha ha) job and you don't plan on moving, it's a little worrying, but no big deal. I suspect the authors may be scaremongering a little. Or they know something really bad about employment prospects - worse than we already know, I mean.

3 makes sense to me. 7 is funny.

Dealing with these figures using national averages is useful, I suppose on some levels, but not for actual humans. Unemployment is very variable, as is the housing market.

I'm not going to get my 2009 assessed value for my little old inside-the-Beltway house, but I expect to get within a couple percent of the 2008 figure. If it was a new house in Las Vegas, I'd be burning it down.

The bank near here is still offering ARMs. You'd think perhaps they'd have some shame?

Bailed Out Banks to Buy Toxic Assets For Resale

Bruce Wilder at Thoma's says the bank bailout only works if the homeowners are stuck in underwater mortgages. Massive firesales will lower prices and income streams, making MBS's etc worthless. So debt peonage to banks for decades is Obama's plan.

Or they know something really bad about employment prospects

I am currently buying into the optimistic foeecasts, for some recovery in the fall/winter 2009. But even under best scenarios, employment & wages lag, will keep falling theu 2010, and IIRC under Romer forecasts, we do not return to full employment until 2013 or so. If ever, could be a new equilibrium NAIRU of 6-7%.

Boomers will be working into their 80s, and with the desperate need for healthcare, will be much more dependable & immobile workers than the 20 or 30 somethings

More Rebubbling ...via hilzoy

Most depressing depression ever

Boomers will be working into their 80s

Nah, the solar storm of 2012 will do for us all regardless of age, health or status.

I don't want to restart the mudslinging between me and a certain person, but our various governing and ruling authorities have succeeded in lowering my opinion of them another notch recently, something I would never have thought possible. At times I actually hope that this is all a sinister conspiracy, because at least we wouldn't be in freefall.

I was saying six years ago that Bush wasleaving a back-loaded time-release fiscal crisis to his successor, and I wasn't even thinking specifically about the housing bubble or the other financial shenanigans. The legal, police, and paramilitary "domestic counterinsurgency" tools have been steadily beefed up for at least 30-40 years now, too. And a significant number of right wing crazies are ready for civil war.

And a significant number of right wing crazies are ready for civil war to pretend to fight a civil war while hiding behind their keyboards, but are especially ready to endulge in paranoid fantasies about the State hunting them down and persecuting them.

Fixed.

They're not all Cheetos eaters. Those are just the ones we meet on the internet. I'm thinking, for example, of relatively young guys with recent military history and fucked up lives.

I've never seen it discussed in much detail, but I've met a fair number of ex-veterans of all ages and types whose political education came mostly from the military. (And others whose political education came within the military, but against it.) What they've learned to think isn't something that could be openly taught in a HS or a college: some people are incapable of self-government, civilians shouldn't tell the military what to do, aggressive war is a legitimate instrument of policy and is basically really defensive, "it's a dangerous world out there" -- Oliver North stuff.

This stuff isn't necessarily openly or officially taught in the military either. Maybe it's oral tradition. It's what they come out believing.

Rather against the main point of my post, the Minnesota Militia people near here were exactly the kind of small-town losers and fuckups that you'd expect.

I was talking to a fellow who is intimately involved with the low end of the housing market around here. He spoke to a consultant from back east who said that the East Side of St. Paul (traditionally a conservative white working class area) was worse than the neighborhood in Cleveland profiled in that Times piece the other day. E.g. there are many, many blocks where there's only one owner-occupied house left, and perhaps two occupied rental properties, and everything else is boarded up.

The thing that freaks me out is our insane governor and his ridiculous austerity measures (and his ilk throughout the country). If there's one thing the economy needs right now it's more people with an absolutely secure, state-funded job who can keep paying their mortgage and car payments and buying TVs and iPods. Putting state workers on the unemployment line is going to really screw things up.

If there's one thing I learned during my time in the financial industry, it's that you always have to account for the worst case scenario. Lots of other folx in finance don't (or didn't) figure that out, to their eventual dismay.

Anyone want to get gay married in Iowa?

You can buy a house in the genuinely scary part of Sacramento for $25,000. That's an order of magnitude lower than I'm used to. I know a couple who were ready to buy but didn't want to live together, so they bought houses across the street from each other for $55,000 each.

Wobegon housing seems solid. Last year two houses sold on my block within about three months of going on the market. It may be that we're on some kind of time lag and that we'll be hit in a year or so, or maybe we're too low down for speculators to have bothered with. And a lot of people here have the peasant's terror of debt.

There may be exceptions -- there are a certain number of new, suburban-style, fresh-looking but shoddily-constructed retirement homes around. They look very strange in an area where most houses are old and many rather minimalist.

Iowa is less exciting than Wobegon but probably more exciting than North Dakota.

I'd pegged the NC housing market as fairly stable because it hadn't seen the enormous run-up in prices a lot of the rest of the country had, but now that we have the fourth-worst unemployment rate in the country (10.7%), I'm less confident in that assessment.

Hey! I'm at the new server! Hi everybody!

One other thing that strikes me, and I'm not sure exactly what the best interpretation is: I get a biweekly spam email from a realtor with all the houses on the market in an MLS that match a certain set of criteria. The current spread is 25,000 to 139,900. Now, of course some of that difference is reliably linked to intrinsic value, but I'm guessing that a lot of it isn't, because we're seeing everything from owner-occupied, just-testing-the-waters listings, down through more desperate sales by occupants or landlords, through short sales and down to foreclosed, stripped houses that have been on the market for a year or whatever, and all of these seem to be existing at every price level. The market is a long, long way from being rationalized, even if we magically went back to 2000 levels of house-buying and construction. As in the Cleveland article, some people see this and think "Aha! Arbitrage potential." But I think many of those people are going to wind up deeply disappointed.

If there's one thing the economy needs right now it's more people with an absolutely secure, state-funded job who can keep paying their mortgage and car payments and buying TVs and iPods.

Try as I might, I can't square this with your comments about the G20 protests. I suppose the easy answer is that you're disentangling the economy from society, right? So the economy needs rampant consumption, but society would be much better off if we'd all become ascetics?

And since we're on the internet, let me be clear: I'm not playing Tim-Russert-style gotcha. I was actually quite interested in your earlier comment re. the protests, as I've been struck, given the global economic meltdown, by how little useful criticism of capitalism I've been seeing from the left. But this latest comment recasts what you were saying then. And now I'm just confused. That's not your fault, of course. Confused is my default setting.

We sold our house two weeks ago, and didn't have to bring any money to the closing. (However, we didn't leave with any, either.) People congratulate you like you just beat cancer or something.

Welcome, Heebie. Becks is looking for your bottom.

32: Oh, I'm sitting on it.

I'm sure its value will rebound, heebie.

28: Good. Go to the Overclock thread and mock Brock.

Heebie, you were supposed to Laplace transform BOTH OF US.

Brock

Just as long as there aren't further shocks to the market which would have an additive or multiplier effect.

30: I'm painfully aware of the contradiction. Here's the thing: I don't like compulsory, state-controlled public education either, but I'm certainly not going to throw my lot in with the charlatans and mountebanks who want to make the government pay for parochial schools. Like public schools, libraries, public hospitals and social security, affordable mortgages/home-ownership is a working-class institution that is under attack by the ruling class. Yes, I'd like to see a world where we replaced "property" with some kind of collective, democratic method of apportioning out wealth, but I don't think we're going to get there if regular folx can't embody the same level of solidarity that the bosses have. If I help someone resist foreclosure, I suppose I'm shoring up the idea of property in some infinitesimal way, but I'm also resisting the ultimate power of property over our daily lives. Likewise, if I stand with state workers against austerity measures, sure it helps the power of the state in one sense, but it also empowers people to resist the order to immiserate themselves for the benefit of the capitalist class. This isn't a game of absolutes, sometimes I'm probably making the wrong decision. But overall, I believe things that increase solidarity, democracy, autonomy and collective direct action are going to benefit the anarchist tendency more than they might hurt it in some short-term analysis.

Does that make sense? It's not what I believed when I was 18, I'll tell you that! And who knows, maybe when I'm 50 I'll have a more nuanced (not to say 'compromised') view yet.

37: I note that heebie has been very quiet about the possibility of a cramdown.

I'm here! I'm here!

Totally different thing that just popped into my head: When we think about inflation, mostly we're thinking gasoline, health-care costs, houses, that kind of thing. But there's some weird discrepancies when you look at the low-end of the marketplace. Take those little cans of tomato sauce. Within the last decade, I can remember them being about $.25 at the grocery store and maybe $.39 at the convenience store. Now it's about $.79 and $.99 respectively. Meanwhile, a 10-pack of the cheapest kind of Bic (or generic) ballpoint pens seems to have been hovering around $1 for 15 or 20 years now. The doughnoughts at a local gas station chain used to be $.49 or 3/$1 on special. Now it's $.79 or 2/$1.39. Yet the price of a pair of cheap work gloves there stays between $.99 and $1.29 for years and years. So how much can we really trust the CPI as an effective tool for guaging inflation? As the economy crumbles (Yay anarchy!), it seems like inflation or deflation on these micro-commodities is going to be increasingly important to a larger number of people.

affordable mortgages/home-ownership is a working-class institution

I keep forgetting how young you are. A fine old tradition that began to emerge about the same time as the Beatles. The working class used to rent. When they started taking equity in bricks and mortar, they found they had something to lose other than their chains, and the solidarity began to unwind.

Not saying it was a bad thing. Just saying.

Woo! Me too, LB.

Nobody's going to come here any more, it's getting too crowded.

the genuinely scary part of Sacramento

Near the legislature?

I note that heebie has been very quiet about the possibility of a cramdown.

I'm trying my best to avoid ARMs.

re: 41

Official inflation figures never bear any relationship to cost of living as far as I can tell. Our energy costs have more than doubled in the last year, food is up by a lot, etc.

Lucy Mangan had a comment piece in the Guardian a year or so back mocking the official inflation figures.

http://www.guardian.co.uk/lifeandstyle/2008/jul/17/inflation.business

42: That's certainly true over there, but here it goes back a bit further. The New Deal set the stage, and post-WWII VA loans put a lot of people in houses in the 1940s and early 1950s. We can't neglect the race aspect of it either -- even before the Depression, a lot of white working class people owned houses in the US, which did, as you point out, allow them to buy in to a system that ultimately wasn't working for their best interests. Anyway, my point was not that working-class institutions were utopian, quite the contrary, they're a starting point to build a better society from, and ideally would be working towards their own irrelevancy.

There's renewed talk about a major CPI overhaul, but it's unclear to me whether it would make it more responsive to quotidian inflations, or if its effects would be entirely big-picture.

FWIW, I've noticed some things quite similar to minne. Although I think a lot of it is long-delayed price jumps caused/excused by the energy spike last year. Thanks to Walmart*, price-sensitivity became the #1 fact** of the retail world in the 90s, esp. in food - the local grocery is chock full of signage advertising goods whose prices have dropped relative to last year. But at some point you've got to catch up, and the gas spike was good cover.

Anyway, the environment is quasi-deflationary at the moment; we'll see what happens in event of recovery.

* Both as an unethical competitor and as a hyper-efficient retailer

** IANAR

47: That was pretty good, alright.

That's certainly true over there, but here it goes back a bit further. The New Deal set the stage, and post-WWII VA loans put a lot of people in houses in the 1940s and early 1950s.

And stuff like the Homestead Act, which takes us back to 1862.

And stuff like the Homestead Act, which takes us back to 1862.

The peasantry is not the working class. Not even the better off peasantry.

Wait, is a freeholder* a peasant?

* Using this correctly? A farmer who owns his farm, which is large enough to produce income (which is always owed to the bank for seed, but that's a separate issue)

5: I think OFE is wrong, partly because American farmers aren't peasants (they've been free and part of the global market forever, even before the Revolutionary War).

I just recently read something explaining that Roosevelt's success in rescuing some of the farmers created a new, Republican kind of farmer (specifically, Farm Bureau farmers). My home area is a striking instance; it's Republican/Blue Dog now, but it was militantly radical in 1935.

As far as I can tell, the best farm policy has been able to do has been to soften the impact of historical change on farmers, and to slow the pace of the exit from farming. That's a very good thing, though; if you can keep a farmer in business until his kids are grown, educated, and working in factories, that's a lot better than evicting them all from their home 20 years earlier would have been.

Not to open old wounds, but that's exactly the kind of point [many] economists tend to miss. Buffering change and slowing it down can be a very wonderful thing. They tend to say "Why delay? In the long run things will be all the same".

Around 1936 Aaron Copland , a gay, communist-sympathizing New York Jew, went to a Communist picnic in N. Minnesota. He described the local Communists as "peasants", but was delighted with that. (I'm about 100% sure they were Finns). "I'm sure I seemed as strange to them as they did to me", he said. This was the beginning of his populist phase ("Appalachian Spring", etc,) which unfortunately I've never liked much.

BTW, Now that I'm here and everything seems to have settled in (even RSS):

Thanks, Ben/neb.

Wait, is a freeholder* a peasant?

No. A small farmer is closer to yeoman than to peasant.

Has there ever been a real peasantry in America?

Maybe sharecroppers and some indentured farm workers. Sharecroppers don't own their land at all, even nominally. But even they are free to leave. And indenturing wasn't life-long or hereditary.

I love Minneapolitan, but he sometimes makes me sad. I was pretty much an anarchist 35 or 40 years ago. **Sigh**

Has there ever been a real peasantry in America?

Grad students.

They may be Kulaks, they're still peasants. The phenomenon of the free peasant (freemen, goodmen, franklins) was one of the key strengths of mediaeval English society (not to mention its longbowmen). They weren't mostly freeholders, but they were copyholders which gave them almost as much security, and they sold their own stuff at market and they were fucking hard. You don't think the people who followed Wat Tyler in the peasants' revolt were mostly serfs do you?

But they weren't a working class. Nor were 19th century American homesteaders.

If you insist on defining peasants as unfree, then of course there was never an American peasantry. But I've honestly never encoountered such a definition before this moment.

61: OK, interesting perspective. In my mind, peasant =/= property owner. Regardless, I agree that "working class," especially in Marxist terms, excludes farmers & homesteaders. It's probably not a coincidence that the Farmer-Labor Party and all its antecedents never fulfilled the promise of its name.

57: Has there ever been a real peasantry in America?

Well, Southern tenant farmers were pretty darn close. That was kinda my point about race, pace J. Sakai in Settlers (and to 51 above), that white immigrants never really formed a European-style working class, because during the big waves of European immigration you, a white immigrant, could homestead land (160 acres per person, right? So a husband and wife could homestead 320 acres, if they could prove to have made "improvements" on some portion of it after a certain period of time) and never really have to be "working class." At least not in a Gorbals sense of the term. Meanwhile, Chinese people were legally prohibited from owning land, African-Americans were often dispossessed by force, Mexican-Americans made a little progress in the Southwest, but the land really didn't support homesteading, and by the 1920s, immigration quotas were keeping out most people who weren't northwestern Europeans anyway.

So when I say "home-ownership is a working-class institution", I really am talking about the past 60-70 years for the most part (and even then, with red-lining, African-American working class people were frozen out of that institution to a large degree.)

Gradstudents are more copymakers than copyholders.

Seeing 62, and to expand a bit: it's not the freedom, it's the owning 100 acres or more. Peasant to me is much more aligned with sharecropper and/or subsistence farmer - either growing cash crops for someone else (who pays you a pittance), or growing nearly enough to live on, but no more. Someone owning 100 acres free and clear, with cash from crops going towards things like modern farm equipment and education for his children, is a world away from what I think of as a peasant.

If you insist on defining peasants as unfree, then of course there was never an American peasantry.

Uh....

I think that the Homestead Act was pretty continuous with the later homeownership way of giving the masses a "stake in society". The Jeffersonian smallholder ideal, later transplanted to the city with some adaptations, and at the beginning an (not terribly unsuccessful) alternative to domination by landlords and finance, and in the later period an alternative to socialism.

The homeownership panacea is really pervasive in the US. It's interlocked with educational policy ("good schools" raise home values), tax structure (nationally, and disastrously in California), electoral politics, and (as we now see, and as I wouldn't have guessed).

Not surprisingly, I hate homeownership as much as I hate relationships. They're almost the same thing, really, or two aspects or phases of the same thing.

S/B: (as we now see, and as I wouldn't have guessed), international finance.

Just read the Wikip. entry on the Homestead Act of 1862. I think it could stand to be expanded somewhat (the entry, not the Act.)

One of the things I only learned about recently was that industrialized agriculture was a pretty big deal here in the upper Midwest in the late 19th century. I'd sort of had an idea of it before, based on my readings of You Can't Win and Heed The Thunder, but there was a public TV program that really brough it together. Apparently there were some huge farms in Minnesota and the Dakotas in the 1870s and 1880s -- multi-thousand acre spreads owned by corporations that were worked by hired seasonal workers and big combines. They petered out due to financial crises and other factors, but it bears thinking about given our current situation that the progress of consolidation and embiggening is not always assured.

(160 acres per person, right? So a husband and wife could homestead 320 acres,

No. A married woman could not stake a claim unless she had been deserted by her husband (or her husband was in jail, or incapacitated by serious illness or something). A widow could stake a claim in her own right, of course.

But I take your point about Southern tenant farmers.

I think the most salient facts for the US were brought up by Minnie in 48. Contemporary working class home ownership is a product of 50s coordinated government action, not just VA loans, but the interstate highway system, the GI education bill, and everything that made the suburbs.

I'd be interested to hear more about the UK version of this experience. Was it delayed until the sixties because of the dire economic shape of Europe immediately post WWII? Was there government action driving it?

affordable mortgages/home-ownership is a working-class institution that is under attack by the ruling class

As a matter of rhetoric, this really doesn't seem to have been true; the ruling class nearly unanimously agreed that home-ownership was as American as apple pie. Now this also ties in with conservative goals and the enrichment of finance, but the biggest obstacle to "affordable home-ownership" has been existing home-owners, who like their property values to go up.

A married woman could not stake a claim unless she had been deserted by her husband (or her husband was in jail, or incapacitated by serious illness or something)

Let it go, MC. I know you always wanted your own farm, and I'm really sorry it didn't work out, but you need to go on with your life.

The farms Minny mentioned were called "Bonanza farms". I recently read a local-history memoir by someone who was born on one of them; I think that the enormous manor house still exists. IIRC there's some kind of study explaining why family farming was competitive against the bonanza farms, but I can't remember any details.

41: Are we ever going to see deflation for staple foods like little cans of tomato paste? It seems like most of the deflation we are seeing is driven by the collapse of the market for luxury goods, while demand for basic goods in every sector is going up.

I'd love some deflation on staple foods. Yesterday I spent $75 for three bags of groceries from Nature's Bucket, the local health food store.

Some European traveller, maybe Levi-Strauss, called American farms "open air factories". They were market and production oriented, but still owner-operated.

I think that the idea that the Populists were backward-looking traditionalists, in the Midwest and West at least, is seriously weakened by the fact that many Populists were farming new land in areas where there was no local tradition, and many of them were also recent immigrants who had abandoned their born tradition. And almost all were producing for the international market.

Rauchway's book is good on this, though I need to reread it now after I've done a lot of other reading.

Rutabagas: still cheap and delicious!

No. A married woman could not stake a claim unless she had been deserted by her husband (or her husband was in jail, or incapacitated by serious illness or something).

What if he was just too lazy to farm?

You know, like an Irishman or something?

The "stake in society" idea strikes me as bogus. If all you have is equity in the home you live in, you really have almost nothing even at best. Most people leave in homes worth about 2-4 years income*, which is better than nothing but doesn't make you secure, much less well off. And what do they pay for their equity, over the years? Mostly it's interest payments.

*That's my guess. Facts are welcome.

but the biggest obstacle to "affordable home-ownership" appears to be that, no matter what policies are in place*, you're stuck somewhere in the low 60s, percentage-wise. Homeownership isn't for everyone.

* at the margins, anyway. But the range has been remarkably narrow for decades. You'd have to introduce radical changes to budge the rate more than ±5%

IIRC there's some kind of study explaining why family farming was competitive against the bonanza farms, but I can't remember any details.

Presumably neither the growing tech nor the management tech were sufficient to really get your economies of scale. Combine that with the (presumptive) superior productivity of an owner/farmer (with farmhands who aren't treated as wage salves/migrants), and I suspect there's your answer.

Or maybe it's something totally esoteric. But I'd think the above would approximately account for it. It took ~20 years plus the internet for desktop computers to meaningfully impact the productivity of the average office worker - lots of revolutions take awhile to make an impact, and these Bonanza farms appear to have been ahead of their time.

It took ~20 years plus the internet for desktop computers to meaningfully impact the productivity of the average office worker

But now, with youtube, blogging and twitter, we can safely say that the desktop computer has completely destroyed the productivity of the average office worker.

41: Are we ever going to see deflation for staple foods like little cans of tomato paste?

If you mean deflation, I don't understand well enough to guess. If you mean, "will the cost of those go down", my answer is no.

So far as I can tell, oil and chemical inputs were subsitutes for farm labor. As oil and fertilizers/pesticides become scarce, farming is going to have to shift back into labor; that can only be more expensive.

Two other inputs, soil and water have been extensively mined and the annual safe yields will be declining. I can see a slight plateau of vegetable costs while the inputs that now sustain meat production are transferred to direct human food consumption, but even that will be overwhelmed by increasing human food demand.

Barring free energy unicorns or huge genetic modification of food crops, I don't think food prices will ever come down again.

(I just saw a piece that said that world food consumption was higher than world food production for the last eight years in a row. I hadn't known that.)

The "stake in society" idea strikes me as bogus.

Probably a leftover conception from the days of real, live anarchists and communists in the streets (no offense, minne). Someone in Jurgis' situation was presumably a realistic target for recruitment by radicals, but would be less so as a homeowner (there are certainly practical ties in homeownership that are lacking in renting). Nowadays, I think Americans are staked to their society mostly by comfort and consumer pleasures.

I know we've hashed it over here before, but I'm a pretty firm believer in the narrower "stake in the community" idea. Some people act as community anchors even as renters, and some homeowners are isolationists, but, from what I've seen firsthand, homeownership matters at the margin (even, or especially, little shit like the landlord next door who replaced the front yard with plastic and mulch. We've now had at least 3 consecutive renters who want to tear it out, but none of them have committed, as they don't know how long they'll stay; and so one more house on the block stays semi-shitty).

82: What are you talking about? I get good Internet access at work.

(I just saw a piece that said that world food consumption was higher than world food production for the last eight years in a row. I hadn't known that.)

How much grain could possibly have been stored away 9 years ago?

I'd be interested to hear more about the UK version of this experience. Was it delayed until the sixties because of the dire economic shape of Europe immediately post WWII? Was there government action driving it?

It did get started well before the 60s. It was aspirational for working class people to own their own place all through the 20th century, and many of them did. But not enough to completely change the nature of the working class. I partly grew up in what most Brits would regard as a typical 30s suburb, and the neighbour on one side was a milkman and on the other a retired butcher. But at that date most workers worked in factories, and they didn't have mortgages.

Also, there was a culture of long cheap leases on unfurnished property, which has completely disappeared. The knock out blow was the introduction of tax relief on mortgage payments in 1969, but the change had really happened before that. I think Britain was still basically paying for the war until the 60s.

Heebie, when I write unfree, I don't mean chattel slavery, I mean debt bondage, serfdom, peonage, that sort of thing.

Twice as much port is certainly drunk in England in a year as is grown in Portugal.

Here's the piece; the graph about stored grain is on page 7. I guess storage is measured in days of food for the world, and we've halved the stored supply in eight years. (120 days to 57 days.) Australia going offline (likely permanently) was a big factor.

Mostly unrelated, but I just went to Youtuibe to watch the old opening to "All In The Family." Wow, that's some reactionary commentary. Not surprising, really, but sad nonetheless.

84: With all due respect, you might have used a less nimby example.

A lot of people with those dinky little "stakes in society" start thinking "we propertyowners" and voting that way too. The same is true of people who "play the stockmarket".

My amateur benchmark for wealth is how long you could live without working. If a guy has two kids, and $100,000 in equity / stocks, the answer is something like "four years at survival level". That's still poor, propertywise; he's really dependent on his job.

88. In that case it's not Port. It's "Port-style" or something. Port doesn't just have to come from Portugal, it has to come from the designated Alto Douro region. That's the law, at least in Europe.

The most beautifully designed graph ever.

Are we ever going to see deflation for staple foods like little cans of tomato paste?

If you mean deflation, I don't understand well enough to guess. If you mean, "will the cost of those go down", my answer is no.

I did mean deflation, and by that all I meant was prices going down. I thought that feature of depression economics was that deflation was more of a threat than inflation and that deflation was a threat because it means that putting money is your mattress literally becomes a good investment (as one commenter here put it.)

Further, I thought that we were close to seeing real deflation now. This site says that US prices are basically stable now, and inflation has been low for a while now.

I know that peak oil concerns and the unsustainability of industrial farming point to rising food prices, but I wasn't sure how that interacted with the financial meltdown.

Oh. That part I don't know how to make guesses about.

Half of all mortgages will be underwater next year? Half? That hardly seems possible.

it's not possible nationally -- they must have been talking about a particular state (California?). Right now, 20 percent of mortgages are underwater nationally, 30 percent in California, 40 percent in Michigan, and an amazing 55 percent in Nevada.

You have to remember the measurement includes your secondary liens like home equity loans. A lot of people bought cheap a long time ago but turned the increase in their valuations into cash right away.

92: those laws may not have been in place in the late 18th century, when Lichtenberg was writing.

94: talking about inflation or deflation in certain market subsegements, like cans of tomato paste, or more generally "food", is useful if you care abuot what's happening to the price of cans of tomato pasts, or food, but not as useful for making financial investment decisions like whether to stuff money in a mattress (unless an unusally high proportion of your income is spent on cans of tomato paste, or food), nor do they drive interest rates. It's perfectly possible to have food prices going up while the economy overall is experiencing "deflation"--which just means that prices are, on average, falling. (The food price increases would be working against that trend, but other prices could be falling enough to compensate.) In any economy we always have some prices going up and others going down--headline numbers are all about the averages. (Prices in the technology sector, for example (computers, cell phones, etc.), have been falling steadily and rapidly for decades, even in periods when the economy overall was experiencing moderate inflation.)

97. Oh, certainly not. British port was a fine old tradition, drunk by old ladies in pubs mixed with brandy, or by slightly younger ones mixed with lemonade.

On its own, it tasted like the better class of cough linctus, with a little gin it in.

There was an actual point I intended to write at the end of 98, but I've forgotten what it was.

94:Of course most indexes do not include asset inflation or deflation. Mish of Global Economic Whatever has been screaming that we are in a massive deflation, wealth reduction on a depressionary scale.

Wealth, or future expected earnings, is critical to spending and investment. The apple may still cost a nickel, but you won't have anyone to pay you that nickel.

Bubbles produce "real" money, and popped bubbles destroy "real" wealth. A drillpress doesn't have real value without an economy, a mass psychology that makes it valuable.

Reading about John Law. Maybe he caused the Revolution.

89: Interesting, semi-alarming stuff. Two semi-niggling comments:

Future animal consumption in the developed world: based on the cereal/other numbers, they're not assuming big population growth in the developed world; nor are they assuming big animal-consumption increases in the developed world. But, as they say, if something is unsustainable, it will stop. It's hardly unimaginable that developed world consumption of meat in the starving world of 2050 will fall to 1989 levels, which would lop ~15% off their estimate. Not a huge change, but it's an obviously-available source of slack.

They're predicting massive amounts of biofuel, and big costs associated with it. A year ago, those predictions looked good; now, not so much. Food crop biofuels are looking to me likely to be somewhere between a dead end and a distraction. When a steak costs $30, Americans aren't really going to be down with gov't subsidies for ethanol.

It's perfectly possible to have food prices going up while the economy overall is experiencing "deflation"--which just means that prices are, on average, falling.

I understand that, which is why I asked the question.

Also, I'm not deciding whether to stuff money in my mattress. I don't have any to stuff. I was just grumbling about the price of food.

100: I think the point may have been that headline inflation rates are often the "core" rate, which strips out food/energy price changes (since prices in those sectors are more volatile than in most other sectors of the economy).

No, it was something else...

That whatever $500 trillion in derivatives that may now be down to $300 trillion. Besides paying vig to hedgers, it would be nice to know what that paper was doing, what the paper meant. "Nothing" is not an answer.

I am not worried about Peak Oil or Global Warming. Process liberals and technocrats worry about that stuff.

Pessimists understand that future certain scarcity causes present population declines on a macro scale.

The one billion survivors will figure it out.

With all due respect, you might have used a less nimby example.

Fair enough; I've just had the discussion with 2 of those renters in the last 2 weeks, so it leapt to mind. The one renter wants to plant vegetables, which would be awesome.

But you know, it's stupid, little shit like that that makes urban communities livable. Another neighbor, a homeowner, picks up the trash on our block once a week or so; I can't imagine how much trash would be on our street without her (we have neither public trash cans nor street cleaning). Other blocks around here that don't get cleaned up look like a movie set for NYC in the '70s.

We've got a new privately-run school going up across the street; we had a dozen meetings about it, and it will be both a better building and a better neighbor because of those meetings. The renters were invited, but they never showed up.

These things aren't coincidence. As I say, some renters commit to their communities, but it's the exception, and it is more or less definitionally transient.

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6 shot, 41 hostages at an immigration center in Binghamton:

http://www.washingtonpost.com/wp-dyn/content/article/2009/04/03/AR2009040301735.html?hpid=artslot

People are assholes.

|>

108: Holy shit.

it is more or less definitionally transient.

Less, rather than more. My mother's been in the same rented apartment for thirty years. That's a long time even to live in a house you own.

The point fo core inflation is to measure how much paper inflation there is; that is, how much inflation is caused by credit creation/federal reserve actions.

Friedman would say that inflation is always caused by the banks and the reserve and that everything else is a change in real prices, which is kind of tautological, but makes sense from a certain point of view.

At any rate, I wouldn't expect food prices to fall, since food isn't moving through the ports, and 'local' farming (American farming) has various subsidies and prices supports. Those are supposed to keep prices low in an inflationary economy, but when deflation hits, those prices don't change while everything else goes down. And the farmers, they want their money.

The low (that is, high) inflation rate reported for 4Q08 looks artifacty to me. Possibly because retailers, rather than officially cut prices, went to deep discounting to dump their inventories. So the effective price (on things such as books, for instance) headed for the floor, while the official price stayed right where it was.

On the original topic, mortgages that are underwater are going to stay underwater for a real long long time. If they're going to force everyone through bankruptcy (or force them to take on extra debtload) to keep the banks alive, it's going to take a long time (3 years) before typical mobility is restored.

max
['Which is why that's really a dumb fucking idea.']

BTW, speaking of NIMBY, I must have mentioned it at the time, but the funny thing about the school is that all of us neighbors who will be most affected were all in favor of it, and mostly wanted to make sure it was done well, while people a block away on the other side, who at worst will get a bit of ancillary traffic*, were all up in arms. More of a NIYBY situation.

* And I really think not even that, given the specifics

111: The point fo core inflation is to measure how much paper inflation there is; that is, how much inflation is caused by credit creation/federal reserve actions.

Could you explain that? I've never heard that, and furthermore am not even sure how it would work (i.e., how the "core" number gets you there). Wikipedia:

"The CPI is presented monthly in the US by the Bureau of Labor Statistics. This index tends to change more on a month to month basis than does "core inflation". This is because core inflation eliminates products that can have temporary price shocks (i.e. energy, food products). Core inflation is thus intended to be an indicator and predictor of underlying long-term inflation."

110: Varies greatly with location. I was actually going to say something up above about the vast gulf between purpose-built apartments and houses subdivided into rental units. The former are professionally-managed by companies whose profits depend on creating a desirable environment around the building(s)*; the latter tend overwhelmingly to be owned by individuals or small-time companies that operate at the edge of their capacities (the guy on the other side of me is big enough that he has a panel van full of maintenance equipment, but the lawn is mowed sporadically at best**, and more than once genuine life/safety hazards have persisted for weeks). The former type of rental is, IME, much more likely to be occupied by long-term renters. With the exception of one couple who live in an upstairs apt. of an owner-occupied house, the turnover of renters on my street has been at least 150% over the past ~6 years.

* or on tenement-style slumlordery
** as is mine! I'm not judgmental about lawns! They're just really noticeable evidence of professional maintenance or lack thereof

LB may have been nitpicking the word "definitionally", just to note that exceptions exist. Which of course they do. But turnover in rental units is significantly higher than turnover of real estate, a fact that doesn't vary greatly with location.

I don't worry about the CPI or core or whatever. Third level symptom ot something.

Now Mish is a bit of a goldbug, but he is about the only one I see really thinking about credit contraction as a micro indicator.

Deflation ...Mish

Remember: Inflation is a net expansion of money and credit while deflation is a next contraction of money and credit. See Inflation: What the heck is it? if you need a refresher course.

Inflation ...Mish

Inflation is when the banker will give you mortgage or a business expansion loan. Deflation is when you don't bother to ask.

This doesn't make me a monetarist like DeLong, just throwing money out there to the banks does not increase credit. Credit is "animal spirits" and "marginal propensity to consume" and is a psychosocial phenomenon. You have to provide consumers and producers at least medium-term security via gov't guarantees.

114: Well, and there's a self-fulfilling prophecy element. In the US, stable people buy because buying is the socially favored thing to do, and renters are unstable types because if they weren't unstable types they'd do the normal, stable thing. In a society where renting was less disfavored, more stable people would rent. (And of course part of the effect is real -- more transient people are going to rent rather than buy -- I just don't think it's caused by renting.)

LB was just hoping someone would say, "But doesn't your mom live in NYC? Everyone knows that NYC is completely different." And thus would the new Unfogged be christened.

I have a "How many Fargo mortgages are now underwater?" post up. Don't bother, there's no content. I just hate to see good headlines wasted.

The way "Di Dies" was wasted. Or the way "Stick a fork in him, he's done" is wasted every time an athlete dies of sunstroke.

Don't bother, there's no content.

They are now predicting a second crest mid April that is supposed to be as bad or worse than the crest we just had so there is still time.

It snowed here two days ago and it's half melted already. We're about 30 miles from the watershed, though.

JRoth, are you talking about that charter school inside the gigantic abandoned synagogue? Is that where you live?

Oh, I see that's been a charter school for some time now. My mistake.

Check out the street view, if street view works on your computer. I can't see it. Quite the imposing charter school.

122: No. I'm talking about the brand-new building going up right now, about 3 blocks south of there.

It's actually pretty awesome - a refresher course for me, an education for Iris, and a distraction for Kai (although I really wish he were a few months older - it's activity, but he's not yet aware of machinery as teh awesome).

I just heard the other day that they put the principal's office right in the middle of the sanctuary, thus screwing up the sense of space. Alas, but better than demolition or abandonment. Did you know that that synagogue was designed by the architect of Rodef Shalom, CMU, and Soldiers & Sailors? He really did something different there, to his great credit.

Since I abjured using a transition, let me clarify that 124.3 is in reference to the building Ned's talking about.

I think I'll rent in JRoth's neighborhood and fill my front yard with found artifacts from dumpsters.

||

Since we're talking about the street mentioned in the article, I'll link here:

This is a strange story, partly, I'll confess, because the gender roles are unexpected. But mostly because a cop who assaulted another cop 15 years ago, losing a $115k jury verdict over it, did the same thing again.

|>

I usually sit on my couch on the front porch, but on the occasions when I've had reason to move it out onto the front lawn, sitting there felt even better.

126: You should see my back yard, Emerson. For 5 years we had an old-fashioned bedspring up as a trellis, until AB finally convinced me to ditch it. The only reason the front's never been bad is that I would worry about people taking stuff.

Are you taunting me, JRoth?

I saw a bedspring with tealight candles wired into it as a garden piece and quite liked it. You shoulda got some candles.

Usually when we take our porch furniture out of the basement, we wash it in the front yard. We'd sit out there, but it slopes.

For 11 months we had 2 boxes and one big dropcloth full of construction debris on our front porch (which we use every day from April to October). Finally found an available neighborhood dumpster to borrow. Right neighborly.

130: What are you gonna do, John? Move? Real estate here is probably 5X Elgin prices - you could never swing it.

131: That sounds lovely. Part of AB's problem was that we never did anything to dress it up; it never even got a dense covering of vines (partly because she never wanted it, so we didn't try very hard). Now that the yard is semi-cleaned up, it might do better, but when the backyard was Appalachian (we had an old washboard washing machine out there for a few months), it was just more junk.

I'll rent. I can handle first and last months' rent.

I collect classic washers, dryers, water heaters, and the like.

Oh, I know all about Henry Hornbostel, from watching WQED.

"Sandwiches You Will Like"

Peasant = pre-19th century farmer.

Pre-19th century non-US farmer, I should have said.

But also a lot of third world farmers even today, I think. Many are not landowners and I think that many are not free.

But America's policy has been to change that, if only by driving them to the shantytowns.

Long ago I read he report of a speech by a NAFTA booster where, in response to a question, he said "I really don't see any place for the Indians on Mexico's future."

He wasn't talking genocide, he was just talking about a lot of special legal statuses Indians have there. But it was still pretty cold-blooded.

"Indians" is much more strictly defined in Mexico than it is here, and there are still a lot more of them (20%). A lot of (USA) American Indians (Native Americans) would count as mestizos in Mexico.

More detailed (and perhaps more accurate) information is hereby requested.

I'm sorry, what I meant was that peasant just mean farmer from olden days. No one talks about 14th century farmers.

"Sandwiches You Will Like"

I got the book for Christmas!

I collect classic washers, dryers, water heaters, and the like.

We held on to that washer for awhile. In fact, we tried to use it to dye some fabric, but when we plugged it in, the motor burned out (and seriously reeked up the basement). The house also came with a super-awesome Westinghouse dryer that looked like you could take it to the moon, and got clothes so hot it hurt to touch them. Then it stopped heating at all. We used a clothesline all summer, but, come winter (or, more likely, rainy fall), we had to upgrade. We paid extra for the efficient model.

We have a salt & pepper set shaped like the Westinghouse.

I was actually going to say something up above about the vast gulf between purpose-built apartments and houses subdivided into rental units.

75% of the rental units in the greater Los Angeles area are between 5 and 15 units. Mostly mom and pop type operations, with probably about 20% of these smaller operators owning multiple units- say two to three 5 unit buildings. Larger apartments (over 50 units) are owned by corporations, and are professionally managed. The ones to watch out for are those smaller properties that are owned by guys who have hundreds of units. They will nickle and dime the tenant to death.

"Is this a Westinghouse?" asked the wabbit in the wefwigewator.

"Yes", the man answered.

"Well, I'm westing", the wabbit said.

********

"The wadishes should bepithy", said the wabbit. "I just pithed on them yestewday.

******
From my grandmother, b. 1880, pbuh.

I have no proem believing that 50% of mortgages will be for more than the value of the house next year. I'm sure ours wil be for a while: already I'm seeing much "nicer" houses priced at or lower than the one we just bought. But Mr. B isn't likely to lee his job so hey.

We were offered one of those pick-a-payment loans a couple years ago when we first started thinking about buying. At that time it would have been the only way to buy a house the size of ours now (and no way would it have been a cute Spanish revival), and Mr. B was making about 140% of the local median wage.

@ 83:

Barring free energy unicorns or huge genetic modification of food crops, I don't think food prices will ever come down again.

I believe that we are within 20 to 50 years of being able to manufacture food in factories, rather than grow it on farms. My wild-ass guess is that food prices will eventually be less than 10% of what they are now.

The survival of our society may well depend on something like this actually happening.