inheriting the future
So, why the economic destruction? Good question.
Let's talk about economics. Economics is a method by which wealth is distributed--notice the last word. In economics, we DISTRIBUTE wealth. You can expect, then, that if wealth isn't distributed then the economic system is going to collapse. Really, conceptually, economics is an attempt to transfer power from the dying to the living, generation by generation, except that it no longer requires the physical tranfer of possession from one to the next on a death bed. In theory, trickle down ought to work, give to the elder generation wealth and they will pass it on to the next generation--but this only works through a limited understanding of economics.
A much more complex understanding of economics acknowledges that wealth was never more than work. Money stores up work the way a spring stores up force. Thus the money you have in your pocket represents work that others are requried to do for you. Except, note, that most of the "work" you need done for you is no longer performed by the next generation. The older generation has farmed out these positions--essentially destroying the futures of their children and buying out the children of other countries (essentially the next generation is over there, kidnapped, and bought off with a substandard allowance). I've heard tale that corporate definition adds to this, but I don't buy it. Though a corporation is essentially a person who does not die (and therefore, never gives up their wealth), in the real world, the corporation is owned and that wealth is passed. Corporations complicate matters but they change nothing really.
Now of course, the older generation does not see their wealth as a function of economics so on top of everything else, they've artificially inflated the system. Between 1975 and now we've experienced 305% inflation, roughly 3x. If you buy a house for 50,000 in 1975, it's worth 150,000 now. See the problem? When you ask for $350,000 for the house (a not too outlandish price), you're asking for 700% inflation. Wow! As long as it stays in the housing market though, right? Well, it doesn't. It seeps out through distribution (see noqthe importance of that defintion). The homeowner, having sold their house moves off into the world with their deflated dollar ruining the economic base of the non-homeowner world. Simmultaneously, as economics is this system for passing the wealth on to the next generation, the economic system fails because the next generation cannot purchase a house with their correctly valued money. The older generation wants too much money and have destroyed the younger generations capacity to get ANY money. In the last election, they were calling people who make $250,000 a year middle class. That's makes just about anyone who is my age or younger lower class. Have they just shifted the bar? Partly, but not really. The middle class traditionally own houses. If you don't make somewhere in that neighborhood, it doesn't matter what car you drive, you can't afford to buy a house.
Now, the whole subprime thing is interesting, but not for the reasons we're being told. Subprime loans allowed people who couldn't afford houses (and who would have been able to had the economy been healthy) to buy houses thus creating the illusion that there is nothing wrong--that wealth is being distributed just as it should be.
The fallout from all this is, unfortunately, that an economic system will right itself one way or another. My generation will get those houses one way or another. I don't expect that the baby boomers will come down in price. They will accept nothing less than 600-700% profits off of their initial investments, but eventually, fate or illness will force them to vacate. Of course, given the propensity for economic collapse to elevate a minority, we may see a few people in possession of those houses and revert to the spread of a renting lower class. So, you'll get to live in the house you grew up in, you just won't own it.
Let's talk about economics. Economics is a method by which wealth is distributed--notice the last word. In economics, we DISTRIBUTE wealth. You can expect, then, that if wealth isn't distributed then the economic system is going to collapse. Really, conceptually, economics is an attempt to transfer power from the dying to the living, generation by generation, except that it no longer requires the physical tranfer of possession from one to the next on a death bed. In theory, trickle down ought to work, give to the elder generation wealth and they will pass it on to the next generation--but this only works through a limited understanding of economics.
A much more complex understanding of economics acknowledges that wealth was never more than work. Money stores up work the way a spring stores up force. Thus the money you have in your pocket represents work that others are requried to do for you. Except, note, that most of the "work" you need done for you is no longer performed by the next generation. The older generation has farmed out these positions--essentially destroying the futures of their children and buying out the children of other countries (essentially the next generation is over there, kidnapped, and bought off with a substandard allowance). I've heard tale that corporate definition adds to this, but I don't buy it. Though a corporation is essentially a person who does not die (and therefore, never gives up their wealth), in the real world, the corporation is owned and that wealth is passed. Corporations complicate matters but they change nothing really.
Now of course, the older generation does not see their wealth as a function of economics so on top of everything else, they've artificially inflated the system. Between 1975 and now we've experienced 305% inflation, roughly 3x. If you buy a house for 50,000 in 1975, it's worth 150,000 now. See the problem? When you ask for $350,000 for the house (a not too outlandish price), you're asking for 700% inflation. Wow! As long as it stays in the housing market though, right? Well, it doesn't. It seeps out through distribution (see noqthe importance of that defintion). The homeowner, having sold their house moves off into the world with their deflated dollar ruining the economic base of the non-homeowner world. Simmultaneously, as economics is this system for passing the wealth on to the next generation, the economic system fails because the next generation cannot purchase a house with their correctly valued money. The older generation wants too much money and have destroyed the younger generations capacity to get ANY money. In the last election, they were calling people who make $250,000 a year middle class. That's makes just about anyone who is my age or younger lower class. Have they just shifted the bar? Partly, but not really. The middle class traditionally own houses. If you don't make somewhere in that neighborhood, it doesn't matter what car you drive, you can't afford to buy a house.
Now, the whole subprime thing is interesting, but not for the reasons we're being told. Subprime loans allowed people who couldn't afford houses (and who would have been able to had the economy been healthy) to buy houses thus creating the illusion that there is nothing wrong--that wealth is being distributed just as it should be.
The fallout from all this is, unfortunately, that an economic system will right itself one way or another. My generation will get those houses one way or another. I don't expect that the baby boomers will come down in price. They will accept nothing less than 600-700% profits off of their initial investments, but eventually, fate or illness will force them to vacate. Of course, given the propensity for economic collapse to elevate a minority, we may see a few people in possession of those houses and revert to the spread of a renting lower class. So, you'll get to live in the house you grew up in, you just won't own it.
posted by Monstro D. Whale at
7:04 AM
1 Comments:
There is, however, some good news. If a married couple makes less than $50,000 per year, they are considered to have 'low' income by the government. With 'low' income, they can qualify for something called a Rural Development Loan. It is currently the only first-time homebuyer loan that requires absolutely no downpayment. However, the house you can buy depends on the federal funding allocated to the particular county you want to reside in for this program. Considering that your income is under $50,000, you may not qualify for much of a home loan. My wife and I were perfectly in the bracket and managed to qualify.
Our income was sufficient to buy a $129,000 house in a small rural town. It's a pretty good two bedroom house on a tenth of an acre lot. However, it would still be considered a fixer-upper due to several things that need work.
Unfortunately, if your income is too low, you can't get enough of a loan to buy a house at all. There are of course several other stipulations, such as manufactured houses aren't even considered acceptable, etc...
Of course, the real question is if we'll be able to pay the house off before we die.
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