A moderately long article on the next coming disaster. Actual article
begins about 1/4 down the page - worth reading, I think. Some
excerpts below:
The great American housing bubble, like its obese counterparts in the
UK, Ireland, the Netherlands, Spain, and Australia, is a classical
zero-sum game. Without generating an atom of new wealth, land
inflation ruthlessly redistributes wealth from asset-seekers to
asset-holders, reinforcing divisions within as well as between social
classes. A young schoolteacher in San Diego who rents an apartment,
for example, now faces an annual housing cost ($24,000 for a
two-bedroom in a central area) equivalent to two-thirds of her
income. Conversely, an older school bus-driver who owns a modest home
in the same neighborhood may have “earned” almost as much from housing
inflation as from his unionized job.
The current housing bubble is the bastard offspring of the
stock-market bubble of the mid-1990s. Housing prices, especially on
the West Coast and in the East’s Bos-Wash corridor, began to rocket in
the second half of 1995 as dot-com profits were ploughed into real
estate. The boom has been sustained by sensationally low mortgage
rates, thanks principally to the willingness of China to buy vast
amounts of U.S. Treasury bonds despite their low or negative
yields. Beijing has been willing to subsidize American mortgage
borrowers as the price for keeping the door open to Chinese exports.
Similarly, the hottest home markets – Southern California, Las Vegas,
New York, Miami, and Washington, D.C. – have attracted voracious ant
columns of pure speculators, buying and selling homes in the gamble
that prices will continue to rise. The most successful speculator, of
course, has been George W. Bush. Rising home values have propped up a
stagnant economy and blunted criticisms of otherwise disastrous
economic policies.
The Democrats for their part have failed to address seriously the
crisis of millions of families now locked out of home-ownership. In a
bubble city like San Diego, for instance, less than 15% of the
population earns enough to finance the cost of a median-value new
home.
Read the rest of the article:
