Posted Wednesday, May 12, 2010
This week, WCPN reports connected the dots between some of the region's devastated neighborhoods and the deals that put Goldman Sachs in hot water with the Senate. In short, backing those Goldman bonds were mortgages on homes in Slavic Village. It's a reminder that Northeast Ohio is very close to the heart of the mortgage crisis. Journalist Alyssa Katz tells another side of that same story in her book: "Our Lot, How Real Estate Came to Own Us." We reprise a conversation with her, Tuesday morning at 9 on 90.3.
Economy, Facing the Mortgage Crisis, Other, Housing/Real Estate
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I’m ordering this book. In the meantime, this blog post lays out securitization quite handily:
All that said, I’m beginning to feel like a genius for renting. One of the biggest lies of omission re: home ownership is the cost of maintaining a home. Ownng a home may seem dreamy, but owning gutters, a roof, a driveway, windows, carpeting, etc. - not so much! The social stratification that makes renting seem second class is unfair. For economic reasons as well as reasons of time and convenience renting can be the better option. I would like to know where rental housing fits into remedying this financial crisis.
The majority of Americans do not know that during the top marginal tax rate in the U.S. was between 94 and 74% between 1944 and 1964, the time of the greatest economic growth in this country. The table on the web site TruthAndPolitics.org demonstrates that tax decreases for the wealthy (from 1925-1931 and from 1982 to present) precede periods of economic downturn (and the Great Depression). It was only when the taxes on the wealthy were increased was there a return to economic health. The reason is that the purpose of money is to spend--to buy goods, services and labor--and spending is what makes an economy go. Even money saved is supposed to be spent later. But when the wealthy are making obscene amounts of money every year*, they can’t spend it and it’s removed from the economy...sort of.**
*Oprah makes between $260 and $385 million dollars per year, that’s between $712,328.77 and $1.05 million per day. And with a net worth of only $2.5 billion, she’s only No. 462 on the Forbes world billionaires list. There’s a lot of money the numerous wealthy have that isn’t being spent on goods, services and labor--and that shrinks the economy, which decreases revenue for states and municipalities, who decrease their spending and increase layoffs, further damaging the economy by forcing vendors to decrease their spending and layoff employees, and on and on… (This is why I don’t see a real end to this recession until taxes are raised on the wealthy. See the table on the web site.)
Oh yeah, I keep trying to ask your guests what is the other 1/3 of the economy, since everyone admits that 2/3 of the economy are consumers. My guess is the government (at all levels)--and when they cut taxes, they are also shrinking the economy. And if the federal, state and local governments have cut taxes for years for the purpose of creating jobs, where are those jobs? And why have jobs disappeared instead? Maybe it’s because there is a direct relationship between taxes and jobs throughout the economy (more tax, more jobs) and not an inverse relationship (less tax, more jobs).
**So the wealthy “invest” all this money they can’t spend--but it’s just money making money. (Only labor through the manufacturing and sales of products and through the sales of services should make money. Mr. Potter, the banker in It’s a Wonderful Life, was a tightwad with loaning money because interest rates were minimal--as they should be--not in excess as they are now and have been for some time.) This money is loaned (not invested) to some person or company who must pay it back with interest--and the economy really doesn’t grow all that much--or at all. And much of the money isn’t invested to create new companies and create jobs--it’s used to buy other companies or merge (which results in a shrinking economy because employees are laid off and offices are closed to decrease redundancy).
All this money being loaned (instead of being spent) is the reason why the mortgage and real estate crisis, bank closures, TARP, Greece, Madoff, AIG, Goldman Sachs, health insurance crisis, college tuition increases and other economic woes exist. The average person lives in a credit economy (worldwide) that is not of their making, but is being made by those who own (often through illegal or immoral means) a majority of the resources (including money). A credit economy cannot sustain itself--it’s as simple as that (just wait until all these education loans cannot be repaid in the future because there are no jobs). Paying now with the potential income expected in the future is just gambling.
My hope is that someday Sound of Ideas will do a show on tax increases on the wealthy (pro and con), because truly, this is the real cause of our economic woes--what everyone believes to be the causes of our recession are merely symptoms. There must be a balance between income and spending for an economy to work, and when the wealthy aren’t spending trillions of dollars, everyone suffers. Parity in income would be a good thing, too.
Dan, yours is my FAVORITE show on public radio. Your interviews are well-prepared and get to the point. I love that you listen to your guests and give them a good interview, also you listen to your callers and focus the ans. to their question.