Sigh, Another Zero "Success" ……. Rent Is Too Damned High! Another Assault On The Working Poor

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Much of the hype about our economy surrounds the fact that the housing market is increasing, somewhat.  And, to a degree, this is true.  A little history ……

When the housing market crashed there was much wailing and gnashing of the teeth.  But, it was entirely predictable, was predicted, as well as the aftermath. 

When the recession hit, people couldn’t afford to make their house payments.  The homes were entirely overvalued.  The banks were reluctant to foreclose because they wouldn’t be able to realize the loan value.  The federal government intervened with many new rules, essentially to both protect the banks with massive bailouts and whatnot, and to a smaller extent to protect the borrowers who couldn’t pay off their loans.  Still, that wasn’t enough.  I had hopes that they’d just let the market drop and in that manner, many of the working poor could afford to buy homes for the first time, because of the very low prices which would have occurred if they’d just let it go.  But, that didn’t happen. 

What did happen is that the fed reserve bank also intervened.  They started to print money.  And, what did they do with that money?  They bought all the crap notes the banks were holding.  So, now there’s money available without banks having to write off huge losses.  The purchasing price of the homes were still too high, but, now there was all of this extra capital out there.  And, it went to wealthy people and entities.  And, that’s who are buying the homes.  And, they’re renting them out.  But, not a prices for the little people, who would have greatly benefitted by cheap homes.  Now home prices are on the way back up, and thus, so are rent prices.

From zerohedge

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A record lot in fact: the median asking rent for US vacant housing units just hit an all time high of $735 per month.

Contrast the above graph with this one below………

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The net affect of these disastrous policies is to have a two class system in the US.  The “haves” and the “have-nots”.  There is no upward mobility. 

I haven’t figured out if Zero is intentionally doing this or if his advisors realize he’s simply too stupid to understand this is having the opposite affect of what he supposedly advocates. 

I would be remiss to write a post like this without tipping a hat to Jimmy McMillan. 

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h/t Lat

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53 Responses to Sigh, Another Zero "Success" ……. Rent Is Too Damned High! Another Assault On The Working Poor

  1. David Appell says:

    Uh…. your graph on rents shows they are increasing at about the same rate of the 1990s (on a percentage basis), and at a *lesser* rate than the ’00s. So what’s your point?

    • suyts says:

      Yeh, you have to relate that to what is going on with our income. It wouldn’t be so bad if jobs and income were increasing like they were in the late 90s and early 2000s. But, they’re not. It results in keeping poor people poor and without property. And, increasing the amount of poor people. Higher rent = less savings which = less ability for future home ownership. All against the backdrop of less income. We’re moving closer and closer to a two class system.

      • David Appell says:

        We’re moving closer and closer to a two class system.

        Agreed. The left has been pointing this out for years, if not decades….

        • DirkH says:

          David Appell says:
          July 31, 2013 at 3:29 pm
          “We’re moving closer and closer to a two class system.
          Agreed. The left has been pointing this out for years, if not decades….”

          Obama won. Get over it.

        • PhilJourdan says:

          No, the left has been making it so, imbecile.

      • suyts says:

        And, yet, many of the policies now pursued by the left results in exactly that. Don’t get me wrong, there are plenty on the “right” who also adhere to the same policies.

        I look at it less of a left/right issue and more of a global interests vs American interests issue. Both parties are weighted down by people more interested in a global perspective rather than centering their focus on what is good for America and Americans.

        I think rebuilding an American middle class can easily be done, but, we’d have to reverse many things which have occurred.

        • David Appell says:

          (Written without anger): What policies of the left do you think have contributed to the rise in US inequality?

        • suyts says:

          You mean other than the ones Obama pursued to rescue the housing industries huge profit margins reference above? How about the export of workers to other lands? How about the import of cheap labor from other lands, keeping the wages low? How about incentivizing poverty? The encouragement of denuclearizing a traditional family? All of these things help perpetuate poverty and lessens the ability to move upward.

          I won’t even bring up the assault on energy prices …… cash for clunkers, etc …..

        • suyts says:

          And, yes, that was without anger, these are just observations.

        • DirkH says:

          David Appell says:
          July 31, 2013 at 3:46 pm
          “(Written without anger): What policies of the left do you think have contributed to the rise in US inequality?”

          Minimum wage. Leads to disappearance of low productivity jobs; hitting the uneducated.

        • David Appell says:

          I won’t even bring up the assault on energy prices

          What assault on energy prices? (You will need to provide data.)

        • David Appell says:

          How about the export of workers to other lands?

          Obama is *exporting* workers to other countries???
          Please provide examples.

        • David Appell says:

          How about the import of cheap labor from other lands, keeping the wages low?

          The US has been doing this for at least a century. Why is it Obama gets the blame for it?

        • David Appell says:

          The encouragement of denuclearizing a traditional family?

          What?? Obama is encouraging this? The left is? How??

      • kelly liddle says:

        Well unless you want to compare your country to developing countries again you are not moving closer, you are there. https://www.cia.gov/library/publications/the-world-factbook/fields/2172.html http://www.theatlanticcities.com/jobs-and-economy/2012/10/high-inequality-us-metro-areas-compared-countries/3079/

        Don’t worry about home ownership too much because without government forcing the situation like in Singapore you can only ever get about 70% home ownership. 30% are destined to be renters for life because they can’t manage money even in the best of times.

        • David Appell says:

          Why be a homeowner? Plenty of societies get by with much lower rates of home ownership than we have — like Sweden, where it is less than 40%.

          There are lots of people who live perfectly happily without owning their home.

        • HankH says:

          One of the attractors to being a home owner is the prospect to either have the home paid off or on a fixed loan. That way, when you retire, you don’t have to worry about inflation driving rent prices above a retirement income.

  2. suyts says:

    Okay, assault on energy prices …. we’re closing coal plants, the cheapest source of electricity. https://suyts.files.wordpress.com/2012/09/image_thumb54.png?w=609&h=750 You can go here for a bit more info, such as usage being down but, rates going up because of such assault. https://suyts.wordpress.com/2013/06/26/obama-energy-proposal-and-pop-quiz/ EIA is the source. But, David, you know this stuff already. This also contributes to the export of laborers. Cheap and reliable energy is one of the few potential advantages the US would have over developing nations. The more the costs rise, the less incentive to produce here.

    As to “exporting” laborers, I wasn’t confining my comments to Obama only as being representative of the left’s advocacy alone. But, if we bring up Obama, he’s allowed the continued off-shoring, which he gives lip service against, but does nothing to fix it. Indeed, he actually advocates doing something which could possibly slow off-shoring, but, nonsensically puts conditions on this action before he’ll pursue it, to whit, simplifying the corporate tax code and reducing the rates. He won’t act on it, unless congress gives him another round of stimulus money. In the past, though, many on the left advocated increasing the corporate rate. Even his stupid “green initiatives” ensure more money flowed to China than anywhere, because he just put a bunch of money out there without preconditions on where it would be made. Fisker? Forced the sale of Chrysler to the Italians, and now, where are the parts being made?

    As to the import of cheap labor, yes, we’ve been doing this for a very long time. There was a time when it made good economic sense. Now, it does not. I don’t, btw, attach blame to Obama uniquely. But, one can’t help but notice who is pushing the “immigration reform” which does not ensure a secure border, nor will they allow an amendment to the bill which does secure our border. While there have been some Repubs sign off on this, this is from the left.

    Denuclearizing a traditional family …… how? You’ve got to be kidding me. Again, I’m not uniquely attaching the blame to Obama, in this instance, there’s been a constant assault on the traditional nuclear family from the left since before Johnson. And, it has had horrid consequences in terms of increasing the amount and depths of poverty in the US. How many decades did we simply write a check to unwed mothers for producing babies? There’s books written on this. And I can’t possibly cover all of the known advocacy of the left towards promoting poverty in this manner in just one or two comments on a blog post.

    • Latitude says:

      David is missing the point again…..Obama campaigned to correct all these past mistakes

      Just like Pelosi campaigned to lower gas prices and “the most transparent”…

      • David Appell says:

        David is missing the point again…..Obama campaigned to correct all these past mistakes.

        No he didn’t. He said the price of energy should increase (as it should).

        Real price of gasoline:
        * down 1% in Clinton’s second term
        * up 16% in Bush’s first term
        * up 56% in Bush’s second term
        * up 5% in Obama’s first term

        Source: author’s calculations, via CPI data and the EIA’s “This Week in Petroleum.”

        • suyts says:

          LOL!….. give me a bit, and I’ll dredge up the real numbers. Gas prices were what when Obama took office…. $190? Impossible if we’ve only had the CPI’s 2% inflation…… oh wait, they don’t count gas prices in their base index.

          Disagree that energy prices should increase.

        • David Appell says:

          They do include energy prices in the CPI-U.

          Gasoline prices had dipped to about $1.84/gal when Obama was inaugurated. They rose just as fast at they fell — by July 2009 they were at $2.46/gal, and by Jan 2010 at $2.71/gal.

        • suyts says:

          David, even if you use the $2.46 to $2.71 values you’re still at 10% increase. Twice the mentioned “5%”. Use the $1.84 value ….. well. And, then we can discuss what they are today.

        • David Appell says:

          David, even if you use the $2.46 to $2.71 values you’re still at 10% increase. Twice the mentioned “5%”.

          You offer no results.
          I’ve done the calculation.
          You haven’t.

          The average nominal price of gasoline in Obama’s first term was $3.09/gallon
          The real price, in current dollars: $3.24

        • suyts says:

          David, you quoted $2.46/gal and $2.71/gal. It doesn’t take a calculator to know 10% of $2.46 is 0.246. And, that 0.246 + $2.46 = $2.706/gal. I don’t know what sort of math you’re employing, but, that’s what it is. Don’t fret, other people have probs with decimals, as well.

        • Latitude says:

          David, you weaseling asswipe…..We’re talking about housing, debt, jobs

    • David Appell says:

      we’re closing coal plants, the cheapest source of electricity.

      In what way are they the “cheapest?” Coal has huge negative externalities. Are you ignoring those costs?

      Also, I’d like to see the data source on the table you linked to, showing they are closing due to EPA regulations and not a lower price on natural gas.

      • suyts says:

        David, if you looked at the other link sourced by the EIA, you’d see that nat gas in terms of BTU produced (for electricity) is twice the cost of coal. More to the point, gas can’t get any cheaper because of the cost of extraction.

        “Externalities” are ill-defined, subjective, and mostly without merit. When I see a real objective study, I’ll consider the externalities. In the meantime, I’ll note the huge increase in life expectancy in the US since use of coal for electricity, how bad can the externalities be when since the use of coal we’ve now extended life by decades?

        • David Appell says:

          David, if you looked at the other link sourced by the EIA, you’d see that nat gas in terms of BTU produced (for electricity) is twice the cost of coal.

          Actually I just did this calculation last week for something I’m working on. The results:

          oil: $18.74/mmBTU
          gas: $3.64/mmBTU
          coal: $3.25/mmBTU

          (mmBTU = 1 million BTU). Gas and coal are now near parity, with gas having less negative externalities than coal. (A *lot* less.)

        • David Appell says:

          “Externalities” are ill-defined, subjective, and mostly without merit.

          Baloney. Lots of very smart people have spent lots of time trying to define and quantify them. See, for example

          “Hidden Costs of Energy: Unpriced Consequences of Energy Producdtion and Use”
          National Academy of Sciences, 2010
          http://www.nap.edu/catalog.php?record_id=12794

        • David Appell says:

          In the meantime, I’ll note the huge increase in life expectancy in the US since use of coal for electricity, how bad can the externalities be when since the use of coal we’ve now extended life by decades?

          First, coal didn’t do nearly all of that — vaccines and public health did more.
          Second, female life expectancy is now decreasing in your neck of the woods:
          http://www.washingtonpost.com/wp-srv/special/health/us-life-expectancies/
          Third, we are now rich enough to stop using such a highly polluting fuel (unless you think it’s fair to alter the climate for the next 100,000 years, at least)

        • suyts says:

          The vaccines and public health, in the most part, made possible, by ….. yes, electricity produced by coal.

          I’ll check the numbers again on the cost per BTUs, but, artificially raising the cost of coal doesn’t make a very good argument.

          Did your calc break down the BTU’s for electric generation alone?

        • suyts says:

          EIA disagrees with your figures….. http://www.eia.gov/electricity/data.cfm#avgcost
          avg cost for coal per MMbtu is $2.36 as of May. Nat Gas …. $4.67 compared to $2.96 last year. Again, this is because it isn’t economical to retrieve nat gas from the ground at that low price. It isn’t sustainable. Nat gas, if left alone should stabelize about about $4.50/MMbut. Deepending upon if we continue to utilize coal for electric gen. If we phase it out then Nat gas will go much higher.

        • David Appell says:

          I’ll check the numbers again on the cost per BTUs, but, artificially raising the cost of coal doesn’t make a very good argument.

          It’s *energy* that made the difference, not *coal* per se.
          Coal has many negative side effects — soot, traditional air pollution (aerosols), mercury — just look at Pittsburgh in the past, or Cleveland, or many Chinese cities today.

          And that’ without considering their carbon pollution.

          No one is proposing going without *energy*, just not using fossil fuels to produce it, since they are polluting, and alter the climate for at least 100,000 years.

          Did your calc break down the BTU’s for electric generation alone?

          I just took the EPA’s numbers for energy production from the various fossil fuels:

          Click to access oda.pdf

        • David Appell says:

          EIA disagrees with your figures…..

          The price of natural gas is down since May. The price of coal varies greatly dependng on where it is mined (even within the US).

          These aren’t difficult calculations to do; it’s all a matter of assumptions.

        • suyts says:

          Yes, David, the price fluctuates….. please read what I’ve stated. The price of nat gas can not, I’ll repeat for effect, can not stay as low as what you’ve quoted. It doesn’t pay for the gas companies to extract it that cheaply. Try to understand this. If it is that low, and I don’t believe it is, there’s no way it stays that low. And, so what you’ll be doing is giving a false impression of cost.

          The drops we see from time to time is simply an over supply of gas. One can’t get it out of the ground for less than $4.00 MMbtu..There’s a cost to extracting and transport. They can’t do it cheaper than that. It isn’t sustainable.

    • David Appell says:

      This also contributes to the export of laborers.

      Do you mean the export of *labor*, or of laborers. There is a big difference. We aren’t literally shipping workers overseas, are we, as a govt policy?

      • suyts says:

        Heh, no we’re not exporting laborers. You’re right the huge difference is that the once laborers are now wards of the state.

        • David Appell says:

          You’re right the huge difference is that the once laborers are now wards of the state.

          Yes, many of them are under-educated, and so unskilled and so unemployable in decent jobs.

    • David Appell says:

      As to the import of cheap labor, yes, we’ve been doing this for a very long time. There was a time when it made good economic sense. Now, it does not.

      When did it make sense, and what is different now that it doesn’t make sense?

      • suyts says:

        When the supply of labor exceeds the demand, it makes no sense to import it. Conversely, when the demand for labor exceeds the supply of labor, it makes sense to import it. Simples. Wages are a good metric when they’re not artificially manipulated.

    • David Appell says:

      Denuclearizing a traditional family …… how? You’ve got to be kidding me. Again, I’m not uniquely attaching the blame to Obama

      So this has nothing to do with Obama?

      in this instance, there’s been a constant assault on the traditional nuclear family from the left since before Johnson.

      What “assault?” You’re merely claiming it, not proving it.

      How many decades did we simply write a check to unwed mothers for producing babies?

      So you would prefer those babies go hungry?
      That married couples be *forced* to stay married, against their will?
      Then what?

  3. suyts says:

    I didn’t say I had a great solution, but, it needs to be acknowledged what happened as a result. We condemned millions to live in squalor and poverty.

    Of course, the Christian-Judeo ethos did provide a bit of resistance to such actions, but, that’s been pretty much demonized by the left. Weird, right?

    • David Appell says:

      We condemned millions to live in squalor and poverty.

      Who is this “we?”

      Of course, the Christian-Judeo ethos did provide a bit of resistance to such actions, but, that’s been pretty much demonized by the left. Weird, right?

      I see the Christian left resisting this far more than the Christian right. The latter is mostly holding seminars on how wealth doesn’t violate Christian ethics (when it obviously does).

      • suyts says:

        Well, I give you points for acknowledging there is a Christian left. Wealth, again, is a relative term. I doubt that God wants his children to live in poverty. Indeed, it’s difficult to provide for the widows and orphans if you have none to provide.

        • David Appell says:

          Well, I give you points for acknowledging there is a Christian left. Wealth, again, is a relative term. I doubt that God wants his children to live in poverty. Indeed, it’s difficult to provide for the widows and orphans if you have none to provide.

          Please don’t make me list all the extreme phonies on the Christian right who spend all their time trying to bilk nice old ladies out of their pension money, who preach that “God” wants you to be rich, and all that crap.

        • DirkH says:

          ” who preach that “God” wants you to be rich”

          Well what we do know is that Marx wanted us all to own nothing at all.

  4. PhilJourdan says:

    Couple of Items. I will allow the imbecile to make a fool of himself.

    While the housing market sales have picked up, it is not new homes. It is basically people trading (up and down). Home ownership is still at historic lows. So Realtors are making commissions, but there is no real wealth transfer as people are trading one asset for another.

    Rent is a function of supply and demand. Since ownership is down, demand for rentals are up. And that puts landlords in the drivers seat. There is no conspiracy or surprise there.

    All of this is due to the policies of the left. Obama is succeeding in his quest to stratify the country into 2 classes – the rich (his friends) and the poor (everyone else). But being totally economically stupid, he does not realize that model is unsustainable (he thinks that government will take care of the poor – but there will be no middle class to fund the government).

    It is due to the policies of this administration that we went from a housing bubble bust but no recovery. People are trading assets, not investing in new ones. Wealth is declining along with income since inflation (regardless of the imaginary numbers being foisted on the American public by the administration) is bad. Basic necessities – food and fuel – have skyrocketed.

    Which brings about another magical number by the administration. They are trying to pretend there is growth. But there is not. Growth is not keeping up with inflation (real inflation). And that is even with the fake numbers being used now.

    They can lie about the numbers, fake and bake them. But they cannot hide the results. Because the results are based on reality. And with Obamacare kicking in next year (costing $18,667/per person per year), even the magic numbers will not materialize.

    • suyts says:

      Exactly. Shifting money around doesn’t create wealth. At best, it creates money. Which, without wealth creation, is simply devaluation.

  5. sth_txs says:

    Neither party has done damn thing for the working stiffs. Even if yo make a $40k something income, that is still minimum wage after taxes before and after your check are extracted. God help you if you live in state with an income tax. Both parties like the poverty created; if the Republicans were really serious about cutting taxes or cutting government, that would have actually happened.

    Even in TX, the governor blow dry and a Republican comptroller extorted Amazon to collect sales taxes. Now there will be a sales on drinks at a bar already on top of the ridiculous taxes.

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