A few weeks ago we examined the intervention of big US corporations in the housing market, buying up much of the available supply and renting it out at the highest rates the market will bear. A few days later, we noted that those corporations and their media allies were mounting a propaganda offensive to persuade Americans that renting was better than buying your own home. If you haven't read those earlier articles, I suggest that you do so before continuing with this one. They provide essential background information.
Tom Luongo, whom we've met in these pages on several occasions, argues that there's a hidden agenda in this situation. I think he makes a convincing case.
Vandals are in charge in D.C.
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Everyone on both sides of the residential debt divide is staring at a step-function reset of their cash flow when the eviction moratorium ends and that step-function will be a doozy, down.
Then when you think through what it is that Davos is trying to do with the Great Reset, which they have stated forthrightly, it is very clear why this moratorium has been extended until this summer, far beyond when it should have been … It has a lot to do with forcing both landlords and debtors into bankruptcy simultaneously, and do so when the bulk of the next round of government spending can be doled out to those closest to the Washington laundromat … bankrupting the middle class is their raison d’etre.
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Once you can’t hold back the “stay in your homes until XXX” narrative anymore you lift the moratorium … There is little to no incentive to go back to work for even $12/hour when the government will pay you more than 2/3rds of that to stay at home … Now all those people have more than a year of back payments to make, which they can’t. The landlords need the money now to keep from being foreclosed on by the bank. And guess who gets to swoop in and buy up all those single-family homes and apartment buildings with newly-minted USG ‘infrastructure’ spending money?
You guessed it…. Blackrock. That story made it out into the world in April with a piece by the Wall Street Journal.
If you think we’ve seen the peak of Blackrock’s takeover of the economy, just wait until people have to pay their mortgages again.
You really will own nothing and like it or else. But wait, there’s more.
Blackrock will buy those houses at pennies on the dollar. They will wipe out hundreds of billions in mortgage debt but, more importantly, they will force a massive reassessment of housing prices across the country. And … Blackrock et.al. don’t even have to buy indiscriminately to have maximal effect.
They’ll just buy up the properties in red and purple districts to flip the electoral map. Under Obama it was called zip code targeting. And it’ll be accelerating once the eviction moratorium ends sometime soon.
Who do you think they’ll move in there? Well, go ask the people in places like Minneapolis.
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And what will that do to the price of your home? You who worked through COVID, who did things right, who paid their mortgage? Oh right, you’ll now be upside down on that place you just bought in Florida or Tennessee to get away from the lunatics in California and New York.
Hamster meet wheel.
This is why you get out of debt in the face of a crisis. Don’t always assume they want endless inflation. Deflation of specific assets is always how they consolidate power. First they’ll make you feel rich through the boom and then they’ll take it away with an inexplicable policy error from the Fed (sound familiar?) and there’s trillions in zero-cost money to help get out from underneath all that stress.
All you have to do is embrace extreme minimalism.
There is no recovery story now. There is only liquidation of the middle class and the destruction of even the veneer of civility granted by the suburbs.
There's more at the link.
Read for yourself how Blackrock is intimately involved with the Federal Reserve and the Biden administration in implementing their policies. To say it's "in bed" with them is a massive understatement. The Federal Reserve literally could not implement its policies without someone like Blackrock enabling it to do so. That results in three outcomes, all of which I think are negative.
- Blackrock (and/or any company like it) gains enormous influence with the powers that be, so much so that it can arguably create and/or direct national policy in some areas.
- Blackrock (ditto) makes a monumental amount of money out of that relationship through fees, administrative "expenses", etc. (we're talking potentially hundreds of billions of dollars over time).
- Blackrock (ditto) can now use those profits to fund its purchase of thousands of US homes, converting them into rental units and setting itself up for an ongoing and massive revenue stream from housing. Effectively, US taxpayer dollars are subsidizing such companies as they buy our homes and remove them from private circulation.
If that doesn't make you worry like hell, I don't know what will…
Of course, one can't blame Blackrock for taking advantage of government policies like this. They're doing what any corporation would do - making as much money as possible off policies that they can influence, even write from scratch, to their benefit. You or I would probably be irresistibly tempted to do the same, if we were in their shoes. However, understanding that doesn't make it right, or ethical, or moral (depending on what, if any, moral standards people observe these days). It also doesn't mean that those who will suffer under their "make hay while the sun shines" policies are going to be any less bitter, resentful and angry about the fact that they aren't making any hay at all - in fact, they're being deprived of what little hay they have left.
Think of entire suburbs, presently relatively safe and secure places to live, transformed into inner-city combat zones such as we've seen over the past eighteen months in Minneapolis, Chicago, Seattle, Portland… you get the idea. That's what happens when people no longer have pride of ownership in the places they live. If they don't own it, why should they take care of it? That's the landlord's problem! And if the landlord couldn't be bothered to spend money on that sort of thing, because he/she/they want to maximize their income and minimize their expenditure, well, that's just too bad for those who live there, isn't it? And if the landlord is in bed with the powers that be, who's going to force it to fix those problems? That's right - nobody.
What will be the end result of that vicious circle? Try this, for a start:
According to the Gun Violence Archive (GVA) … the Fourth of July weekend was the most violent weekend in the United States so far this year.
Roughly 233 people were killed in the U.S. and hundreds more injured from 5 p.m. Friday through Monday, according to the GVA data. The organization reported numbers exceeding 600 injuries as of Tuesday morning and is still finalizing numbers collected from police, media and government sources in real time.
Would you care to venture a guess as to how many of those shootings took place in residential suburbs where most people own their homes, and take pride in them? How many, do you think, took place in suburbs where most people rent, and/or are dependent on government housing assistance, and/or don't own much of anything of any value at all? I'm sure I don't need to tell you what sorts of areas attracted most of those crimes.
If people have no investment in the place they live, they won't care about it, and they'll devalue it rather than adding value to it. That's got nothing to do with race, or creed, or any other social factor. It's simple human dynamics. Deprive people, crowd them together, treat them like things or animals rather than human beings, and they'll start to behave as such. Read the results of the "behavioral sink" and "Rat Park" experiments, and you'll find many elements that I suggest can be identified in our urban society today.
Our housing situation is turning into precisely that sort of vicious circle. I can't help but think we're going to see it "up close and personal" in far too many of our cities over the next decade or two.