Stating the Obvious : If you don't have a house you don't need no sofa


"empty home on Bloomington Ave S, Minneapolis" by Andrew Ciscel via CC

OK, so I'm not an economist. But as a venture investor in early-stage medical and technology companies I read the usual financial articles that come across my screen and I see the same statistics everybody is seeing. I listen to Obama and I watch the TV shows where pundits argue with Congressmen about the wisdom of this or that particular tax or stimulus measure to restart our sick economy. I have nothing to say about this, no statistics of my own and no fancy theory, so instead of taking sides in this particular debate I keep looking for the things that are missing.

What is missing is this: Over two million American families have now lost their homes; foreclosure figures are at an all-time high. Several million new families will be thrown into the street over the next year, no matter what happens to taxes or the stimulus. This is a given. Yet, among Washington and Wall Street experts this disaster is only reflected in the form of statistical figures they mix up and datamine alongside many other figures, where the numbers lose their special, tragic character.

It's not a very newsworthy disaster, either, so after a while it even fades from TV news: no dramatic shots of oil gushing up from a broken well or birds coated with black tar. No sense of urgency here, just a big spreading tragedy. The experts only know that the banks are off the hook: they have been given tons of new money to help with mortgages. The fact that this money sits unused and that many banks have not even appointed managers to deal with desperate homeowners does not come to their attention. My Bank of America branch won't even talk to you about mortgages - they send you to a faceless office downtown where nobody knows you.

In such complex situations, it is healthy for somebody to just state the obvious before trying to develop cute, complicated theories. You don't look smart by stating the obvious: Duh! Everybody knows that. You won't get invited on the CNBC morning show. You knew what I'm going to say all along but perhaps you hadn't thought it through.

So here is an obvious statement: if you have just lost your house you are not likely to go buy a new TV set for a while. If you just moved your family into a cheap motel, you probably don't think about ordering new drapes for the living room; and if you also lost your job (as thousands of people continue to do every day) and now live in your car in some urban park, you won't be shopping for refrigerators, sofas and camcorders for a long, long time to come.

Since nobody can find you because you don't have an address any more, the statisticians won't be asking for your opinion about the economy, which may explain the puzzling discrepancies in the mysterious tables called "consumer sentiment," a figure that is now at a five-month low. This "obvious" fact may also account for the lack of any serious recovery; or the probability that the economy will not be very robust for a while, no matter how "stimulating" the climate gets in Washington around election time; it may explain the chill over the Chinese industry, which makes all the refrigerators, the sofas, the TVs, the drapes and the camcorders you used to buy when you had a house to put them in; and the uncertainty in Europe, which makes the machines China needs to make TVs, camcorders, drapes and sofas. So that uncertainty travels around the planet in opposite direction to the Earth's rotation and comes back to hit us from the east, because we used to supply lots of goods and services to Europe to make the machines, etc.

No wonder Mr. Bernanke finds that things are "unusually uncertain." At least he still has his sofa.


  1. Capitalism has two fatal flaws.

    1) It presumes everyone alive is both willing and able to compete, and to do so equally. It fails to account for the dependants, it fails to account for the disabled, it fails to account human inequality.

    2) It requires constant expansion, just like an empire. Much as Rome’s success and failure both came from growth, so too will it be the same with capitalism.

    ~D. Walker

    1. It doesn’t just resquire constant growth – it requires constant growth that accelerates exponentially. That is why a slowing in the rate of growth is treated as tantamount to doomsday.

  2. I lost my job, new car and house since being unemployed 10 months ago.

    “The invisible hand of the marketplace” has given me a nuclear wedgie.

    I now live in a rough neighborhood and I’m much more in the market for top ramen, dollar store food and a used handgun than I am in a couch. I’m very lucky to have a cheap place to stay and if it wasn’t for family I’d be roughing it in the woods someplace. Just one more of the numerous crazy vets out there.

    If I buy anything other than food or clothes it will most likely be used.

    I do my best not to think about life to much and just live in the moment.

  3. That`s a good point, but it`s also very USA centric.

    China sells not such a big percentajge of it`s production, and Europe also exports goods and machines to South America and the rest of the world besides USA and China.

    The world does not end in Rio Bravo, and we can survive without USA. In fact, from the clothes I am wearing, the phone I am using, the cookie I am eating and the PC I am using, the only thing coming from outside Uruguay is the PC and monitor. Almost nothing in my furniture, my food, my clothes or anything surrounding me is vaguely related to USA or USA based companies. Sorry guys, but USA economy is not so so so so big and needed for us.

    Despite of this, I am really sorry for the things your country is doing himself and to the honest uninformed USA good citizen.

    1. Of course it was USA centric. I saw a couple comments that talked about the silly things people do- like buying houses they can’t afford or buying things with a high interest credit card.

      Let’s be real here:
      We’ve sold doing stupid things as the American dream and then we wonder why our economy fell apart. People live outside their means instead of saving for a rainy day, and no matter how much they make, they still live paycheck to paycheck because as soon as they make more money- they find more stuff to spend it on.

      I’ve always been poor, so it doesn’t bother me to be poor, and I have always lived paycheck to paycheck so this hasn’t been all that devastating to me. Yeah, I’d like to not be poor, but at the same time, I appreciate what I do have that much more, because I didn’t lose anything when the economy went south.

      Most people were under the impression that their jobs were secure and that they had nothing to worry about- but I know no job is secure and I plan accordingly. When I have good jobs, I save my money and I don’t waste anything because I realize that tomorrow I could have nothing.

    2. most likely the software you use, the music you listen and the movies you watch are all made in the USA

      Plus plenty of the drugs and drinks as well..

    3. Sorry, man. As long as the USD is the world’s reserve currency, our health is your health. Uruguay released tons of bonds (in USD) during the 90s and nearly defaulted. The US and other creditors absolved Uruguay of tons of debt. If the US economy weren’t doing so well at that time (late-90s), we’d have come knocking for 100% of the amount owed and Uruguay would be fscked, no matter where your cookie was baked.

      Sucks, but we’ve designed it so that we’re too big to fail.

    4. The point is not that Jacques is explaining global circumstances, but those he knows. If you want a global perspective, go find it and then satisfy your lack of interest in the American economy there.

  4. Except that for the vast majority of people, “losing your home” equates moving out of the McMansion you’ve been living in for the past 3 years back into a rental apartment where you lived for the past 10.

    A friend of mine got suckered into buying a house she couldn’t afford, truly believing housing prices would never go down (“they aren’t making any more land!”). When she finished the foreclosure process, it was a weight off of her shoulders – and she immediately went out and bought a couch and TV for her new apartment.

    She did so on a high-interest credit card, using the same financial acumen that got her into the foreclosure mess in the first place, but that’s another story…

    1. Actually it is the same story, as the credit card crunch is going to be the next econopolyse.

  5. people need to just stay in their homes!! .. f the banks, they don’t control the law of the land. — why leave voluntarily?

    the financial system has wrought on america what no bomb could do – make people willingly leave their turf because of some paperwork. of course the banks don’t care about the value of the asset because they’ve either been bailed out for that amount or recouped the original “principal” already based on the outrageous interest payments..

    people need to stay forcibly

    1. “people need to just stay in their homes!! .. f the banks, they don’t control the law of the land. — why leave voluntarily?… of course the banks don’t care about the value of the asset because they’ve either been bailed out for that amount or recouped the original “principal” already based on the outrageous interest payments..“

      The rush for repossession/foreclosure in the States is truly mind-boggoling. When streets are full of empty houses, the value of the occupied houses goes down, so the repossessed houses end up being sold at a loss. This means the book value of those houses decreases and the banks end up even more in the red.

      In Britain the banks seem to have understood that keeping people in their homes is in their best interests, perhaps because there are fewer, larger banks here who know they would be cutting off their own noses. Or maybe it’s because several of them have been nationalised…

    2. yes,get crowds and media,so americans can see the mess their govmnt put them in.and use civil disobedience,refuse to move and pay what you can.

  6. In the country Hungary, you buy a house and pay a one-time tax. After that, you never pay tax again on the house. In the worst of times, when you lose your job as is happening here, you are in better shape there than here. You can disconnect your utilities, and all you have to do is come up with enough food to keep yourself alive. But you won’t lose your home, because you can get it to cost you nothing to stay in it. In this country, if you don’t pay the taxes, the government (meaning “the people”), take it away from you. It’s a nice touch, booting you out when you are down, eh? This country is NOT the best place to be anymore.

    1. Property taxes are very hard things to stomach, especially for poor and/or elderly people. We never really own anything in the US any more.

    2. I don’t really think property taxes are the problem here. What’s screwing everything up for most people is the combination of mortgages and job loss.

    3. Think you could provide a source on that “one-time house property tax” Silverer? I googled “hungary property tax” and came up with a few sites that list rates of property tax per year per square meter. (

      One-time property tax sounded a little too-good-to-be-true to me, and it appears it is. This is usually the most reliable tax that can be collected for states, since income is easy to lie about or obfuscate, and while sales tax is easy to collect too, it can’t be too high since it ends up affecting the poor of that state more than the rich. Taxing people in the homes is a pretty good base for providing civil services like firemen, police, and such since property owners inherently benefit from these services..

    4. “This country is NOT the best place to be anymore.”

      And it was no different when/if it was “the best place to be anymore.”

      The difference is that most places in the world have sailed right past us, while rich conservatives have actually dragged us backwards to the Great Depression.

      “It’s a nice touch, booting you out when you are down, eh?” Check it out … read “Grapes of Wrath” by John Steinbeck. Hey, if nothing else, we’re consistent.

  7. very poignant and well said, and I don’t think it’s all that obvious unless you work in the housing industry. I agree with the idea that this needs to be broadcast far and wide. We have a huge number of “invisible homeless” right now – families who have no homes, but you don’t see them on the streets because they are doubled up with other families or living in friends’ garages, and other similar situations. They are just as homeless as others, but they go largely unnoticed.

    @johnnyaction: on a side note, if you are a disabled veteran, you might check with your local VA about a new program called the Veterans Affairs Supported Housing (VASH) program. Not all areas have it, but if yours does, it might be worth your time to see if it can give you some help. My heart goes out to you.

  8. This is truth.
    But good luck waiting for the people in power to get a clue. They have a clue, they just don’t want to do anything about it.
    Stop waiting for their permission and start taking back what’s ours. Take Back The Land.

  9. It’s great that you have stated the obvious.

    Now please tell me what you are doing behind the scenes politically to help.

    Being a VC means you have money. And you are probably still sending it to the companies that are in your portfolio. But are you also funding groups that are working to stop relief?

    Do you support lobbyists that are screaming about the deficit? Have you supported groups that have worked Congress to pass bills that let our corporations send jobs overseas and get tax benefits for it? Do you believe in fair markets or in fake “free markets”? Is your first concern your “global competitiveness” or in the ability of American’s to buy sofas with a living wage. Maybe you tell yourself that you have to look out for your business first, but then do you donate money to groups who make it easier for capital to chase cheap labor around the globe?

    I’ve worked with VCs and Silicon Valley companies for years and I know that when the VCs suggest something, things happen. Because they represent money. But they don’t just spend that money on their companies, they donate money to groups that have worked hard to make this “obvious situation” happen. They are groups actively working against the people whose fate you bemoan.

    And I’ll go a step further, if you aren’t supporting these right wing groups are you supporting the groups that are FIGHTING these groups? Are you supporting anyone who is effectively fighting the right wing think tanks? Are you donating money for fighting a right wing noise machine that constantly pushes a economic world view that is failing? Or do you think that what they say on Fox, and talk radio is irrelevant? Are you supporting groups that are fighting Grover Norquest’s Club for Growth? That are fighting Freedom Works? Because those, like the Center for Media and Democracy and Media Matters need money.

    Norquest and his friends can promise a great ROI. A few million here and lower taxes there. But what can other groups promise you for ROI? Is it all about ROI or do you have a sense of duty to the American people who might buy your products?

    No rich VC was willing to fund me when I was fighting the right wing radio hosts and their calls to hang journalists, liberals and murder millions of Muslims. They had the standard conservative economic views that have lead to this 22 percent real unemployment. I and a handful of bloggers cost the right wing media millions, but we didn’t generate revenue, so that means that it wasn’t a valuable exercise in our ROI world.

    I’m glad I did what I did but I paid the price of getting involved with “Politics” in Silicon Valley by pushing against a conservative viewpoint that is shared by many very rich people in the valley. Maybe I should have just focusing on helping people with messaging and ROI, because I’ve helped some SV companies make billions.

    I know the power of VCs, it’s not just your public pronouncements, it’s your private views and where your money goes when it’s not flowing into companies that counts.

    If you would like to tell us what you are doing in that space I would like to hear. I would like to know if you ask your fellow VCs the same question. What are they doing behind the scenes? Are they supporting people who want to keep the Bush tax cuts? Are they supporting rules for keeping estate taxes low – do they call them “death taxes”? Have they demanded real financial regulations or are they all afraid to piss off Wall Street for when they need them for an IPO? (Wall Street Bankers are the one group that I’ve seen VCs worry about pleasing during road shows.)
    If you can’t bear to tell your tax accountants not to create shell companies in the Caymans to cut taxes on your company, can you at least support the regulations that will eventually make it illegal or hard to do that? I know it seems odd, but your fiduciary responsibility might force you to reduce taxes, but your moral responsibility isn’t the same as your fiduciary responsibility to one of your companies.

    I don’t doubt your sincerity here, what I want to know if you are following through on your views backstage where it really counts these days.

    1. Let’s hear it for Spocko. His comment is as good as – if not better – than the original piece.

      To an outside observer, it seems that America’s conservatism is one of it’s biggest problems. I would not want to live in a country where the media is so vile, nor where the politics of the country allow for such laws as the discriminatory Arizona race laws. And yet, it seems there is no effective opposition for ordinary people to get behind.

      1. Uhh…dude, it’s the ordinary people who are the biggest supporters of the laws like the one in Arizona, or the vile media, etc, etc.

        The guys who don’t like that? They’re the opposition.

    2. I think this comment of spocko’s is essential reading. Thank you for posting it spocko, and I hope we hear a response from the post author too.

  10. Housing is the one cost of modern life that you can’t dial down when times get tough. You can cut back on food, you can wear your clothes out, you can stop driving and you can stop cutting your hair, but you have to pay the mortgage/rent or your life is ruined.

    There needs to be a low-cost option — a diet of ramen equivalent — for people who either can’t or don’t want to spend $10k or more on housing each year.

    1. There are low cost rentals, in pretty much every city. At the same time as I was paying $880 + utilities for a big 1-bedroom apartment, a friend was paying $430 with utilities included for a studio in a decent neighborhood. Now, it was around 300-400 square feet and had a murphy bed, but it was comfortable, safe, efficient, and *very* cheap.

      There are also a lot of slumlords out there, though, so the tenants do not always end up ahead in that situation. But eating ramen is not exactly living large, so it’s pretty equivalent.

    2. You so can dial down your housing expenses.

      When the economy went sour, I did not lose my house. I didn’t have one. I already was a renter.

      I lost the ability to afford rent anywhere near where my business is.

      I still own the business, but revenue is way down, and thus is my pay, which is viciously inconsistent. I am still working 60+ hours per week.

      I live in my truck, and don’t see this coming to an end anytime soon.

  11. Jacque great points all around.

    I think the true criminals in this whole situation are those who gave out home loans to people who 40 years ago would have been laughed away from the banks and told to come back when they had a good enough job to be able to afford it, but instead were suckered into signing on the dotted line to push product. When houses started to be treated like any other commodity such as stocks, oil, gold, and not the like the life long investment that they traditionally have been – that’s when the shit started to hit the fan. Not everyone is entitled to own a home, it’s not a ‘Right’. When politics, money, and Wall Street meet it’s never going to end well.

    This situation is far from over and is only going to get worse. Since the public has the attention span of a 5-year old this story has long ago been swept under the carpet.

    Still don’t feel sorry for every poor sap who gives you a sob story about losing their homes. There are those who live way beyond their means, borrow on houses already paid off, fail to pay back loan after loan. Take the money to Vegas and gamble, drink, and whore it all away. I saw it happen to a life long friend. I felt sorry for his wife and kids, not for him. He deserved to lose that house.

    I’m thankful for my house every day. Saying that I’m going to go into my backyard and read for a few hours.

  12. Just want to point out, I think stating there are homes and there are homeless people may be misleading minds to think there’s a simple solution (i.e. put the homeless into foreclosed homes)

    most people do not see that the problems we face are part of our economic / political system and the solution lies in fixing our the system, everything else you see are symptoms.

    There are people without food in the 3rd world and there are food surplus in other parts of the world. most economist will tell you that’s b/c there are problem in the economics / political system of food producing countries. In fact , they send food aid to some places, but that never solves the underlying problem.

    It could be said that the growth (jobs / housing) and decline in the economy (unemployment / homelessness) are just functions of our current system. if you want a system with less lows, you may need to redesign the system to be more sustainable and fault tolerant.

    Since we’re culturally trained and prefer free market , growth , capitalism and afraid of change, unless we hit the very bottom (think food lines, violence in the streets), we will not learn to change our ways.

  13. I’m going to start this by saying I don’t know what political anything I fall into….

    But I agree 100%. And the picture makes an ever more explicit point. We have families loosing their home for various reasons, we now have houses sitting vacant because no one is going to buy them (or has the means to buy them). What comes of this? The families are placed under tremendous stress and undue burden, the houses begin to decay.

    If growing up watching things like Star Trek taught me anything it’s that our “culture” is jacked. Freedom is a wonderful thing, but when you (meaning on levels from personal to national government) sit on your laurels and wait for the economy to right itself you are helping no one. I think of America and to some degree the world as a big starship if you will. What I do can and does affect other people. So when you have people who need help, and there are resources that are being wasted because no one is willing to take charge or do what is needed, then we are failing each other.

    What I am not saying is give free hand outs to everyone. That’s a shit plan and will fail faster than closing your eyes and praying it is all over with. Some people are willing to put a lot back into the system if it is willing to help them. Those are the people that we need to help, those who are willing to be grateful that others are taking a chance on them.

    I don’t see things changing anytime soon, but when that time comes I fear it will bring chaos and much violence with it.

  14. You know what would have been a great reform program, for everyone?

    The government buying abandoned or foreclosed low-value properties from banks desperate to offload them, at greatly discounted prices, then reselling them to people who were still working but had lost their homes, at low, reasonable interest rates.

    Lots of people just short of being able to own a home become able to own a modest one, a price-depressing glut of supply in the real estate market has a bite taken out of it, and banks receive some immediate income… yet have to actually give something up in exchange for it.

  15. That Crashing Sound
    is the deliberate and systematic destruction of the American middle class. Or maybe it’s just me.

  16. Well, there’s a major catch-22 here. Empty houses that banks own (and will never sell) means banks will be loosing even more money on their “investments”. More homeless and jobless means less consumption that stimulates economy, but without stimulating the economy, there are no jobs for these poor people.
    I picked a terrible time to start a company, I can’t get funding for a company that WILL stimulate the economy and create jobs! Why? Because VC’s are waiting to see what happens with the economy before they decide to invest. It’s ridiculous. I’ve given up pretty much everything and gone back to waiting tables in a restaurant. Hey, I have to make ends meet somehow! I think the major issue here is that unless there is some positive action (with risk involved) there will be no “stimulus” and the global economy will decay further. Capitalism will not survive if there is no money being spent…plain and simple. The big question is, how do we spend money we don’t have? If we could take a giant mulligan and roll the clocks back to the Clinton Administration, I think it’s obvious, credit should not be extended to people who can’t afford it (regardless of credit score). That would have saved us from the housing bubble and the credit crunch…and there would be more consumers still out there spending CASH on things rather than trying to keep up with six cards and a mortgage all at over 30%. Being that we CAN’T roll the clocks back, short of revolution, how DO we stimulate the economy in a country that is over a trillion dollars in debt and government is facing the same harsh reality consumers have been facing for a few years now? If those who have money aren’t willing to spend it to better the economy for everyone, even THEY will eventually loose their wealth as well and there will be a massive entropy of global economy. If you’ve got money and you’re reading this…spend it on worthy causes, invest in worthy ideas, and know that the “butterfly-effect” is in full-swing. For every dollar you spend, you will be effecting the economy around the world.

  17. I live two blocks away from Bloomington Ave. S in Minneapolis (14th Ave.) and I bought my house around the time when that picture was taken.

    Although I agree with some sentiments in your piece, I think your economic argument is off.

    I bought my house for about 20% of the last sale price in 2006. This means that me and the friends I live with have much lower housing costs than we did when we were renting, and of course much lower than the family that rented this property before. Those of us with regular jobs have more money, and those without have more time than we did before the econopocalypse.

    The horror of the housing bubble was on both sides, with vastly inflated housing prices before it and loss of credit and homelessness afterwards. But the only path to a functional economy is through.

  18. Why can’t we just change the tax structure to allow for every adult to register for a tax-free portion of land? Owning more land than the base amount will result in taxes, perhaps higher taxes to offset it. Having children will allow you to register for 1/4 additional amount of land per child. Exceptions apply for farming, and maybe other stuff.

  19. This article presents a false argument: that the only alternative to owning a house is living on the street.

    It completely overlooks the low-cost housing solution that’s worked for millions of Americans before, during, and after the housing “bubble”: RENTING.

    1. Problem, #27: landlords check credit and income and these days use roughly the same standards as mortgage lenders. So if you can’t afford a house, you probably can’t get accepted for a rental either. Rents aren’t cheap, the landlord probably has just as nasty an adjustable-rate mortgage on his hands and is probably having trouble keeping it paid. I’m sorry but these days renting isn’t a low-cost option like it was in the past.

      The basic problem is that most properties aren’t worth anywhere near what they’re currently valued at by the one measure that matters: what a buyer who’s interested in them can afford to pay for them. The problems with the housing market won’t be corrected until that discrepancy gets corrected.

      1. Todd,

        Here in Los Angeles, you could find affordable rents even during the bubble years. And “bad” credit, while certainly not helpful, is not necessarily a dealbreaker to all landlords. (Many of whom have owned their rentals long before the bubble and so aren’t upside-down as you suggest.)

        If you’ve got proof of income that covers the rent, and were otherwise responsible with your money/credit, you should be able to find a decent rental.

        But if you are a total financial screw-up, you were going to have a hard time even before the current crisis…

  20. It just sounds like you’re throwing up your hands and saying “gosh darnit! those politicians keep squabbling instead of helping!” instead of looking deeper into the squabbles and who in Washington is blocking what. Or suggesting policy ideas of your own. Or cheering on the good ones that aren’t getting enough air time.

    “Not taking sides” is a convenient rhetorical device to not offend anyone. So, all this post does is, as advertised, state the obvious. Yes, the economy sucks. We get it. Now, why does it continue to suck, and what can be done about it? Those are the interesting questions.

    I would offer up my own answers, but, oh no, politics!

  21. Which reminds me, my city has few empty homes so far, and it has a housing authority. I need to talk to city hall about taking these homes by eminent domain and renting them out.

  22. Without a job, the car was lost.
    Without a car, the house was lost.
    Without a house, the family was lost.

    Get people back to work, allow them to pay their bills, and there will be a lot more certainty.

  23. My wife and I are giving up our house (short sale and then deed in lieu of foreclosure if we can get the mortgage company to agree.) My father just bought a house outright for little more than we paid five years ago that’s close to the beach and twice the size. We’re paying local tile installers, plumbers and carpenters to fix it up and we’ll be spending some of our hard earned cash for furnishings and the lot. Once that’s done we’ll have a home for the cost of insurance and taxes which are relatively low in Florida on your primary residence. The mortgage company will write off the difference between what we owe and what they sell for and I will have freed up almost half of my income to “invest” in the State and National economy going forward. This is how the recovery will happen.

  24. First, thanks to Jacques. All too often, the obvious really does need to be stated. And, I’d like to join the chorus of those asking M. Vallee what he has done so far to remedy the situation. That may not be fair Jacques but, you did bring the subject up and also identified yourself as a venture capitalist.

    There are so many bold and effective ways the government could approach this problem. The most obvious is to use local, state and federal condemnation powers to extract abandoned homes from the banks. Then resell them to the current owners at market prices with low interest mortgages.

    The irony is that it looks like we are about to put back into power the very same criminals who got us here in the first place.

    The stimulus didn’t work? How come when there was an $8,000 incentive home buying increased? And, how come when the incentive went away, people stopped buying homes?

    Oh, and now we’re supposed to worry about the “awful” national debt? Which was created mostly by these same criminals.

    The current mess points to the most fundamental flaws in both our political and economic systems. On the political side, the right has demonstrated brilliantly Goebbel’s point that if you lie big enough and loud enough, people will believe you. On the economic side the basic flaw is that unregulated capitalism’s goal of profits are not enough to build any kind o0f social system. Note that I said “unregulated”.

    Finally, it is a shame that Obama promised 6 million new jobs with the stimulus. That was never even a remote possibility. Had he used his huge political capital, he would have been able to push through the stimulus package without any Republican help. Also, he failed to really level with the American people by telling them that it had taken us nearly 30 years (starting with Reagan) to get here and it was going to take along time to get over this.

  25. Thank you for stating what so many of the foot-soldiers of policy (Public health workers, social workers, etc) have been worrying about for five years now. When your whole voting/counting/input system is based on people having a fixed address, it’s hard for the formal system to reach them for ANYTHING (questions, surveys, offering aid).
    The smartest groups are actually focusing on reaching folks at the check-out at the dollar stores and Walmart these days.
    Also troubling is the fact that the very helpers trained to reach out to these folks, like the teachers, social workers and public health folks, are ALSO losing their jobs. So just as there are more people in need, there’s less people available to help them.

  26. There are lot’s empty homes and lot’s of homeless people.

    There are food surpluses and food shortage.

    There’s lot to be learn and lots of ignorant people.

    There are many things that need to be done (teachers, doctors, nurses, road workers, city builders, engineers and scientist) and many who don’t have jobs.

    What do all of the above have in common?
    They are things we need (not things we want).
    During economic boom, most people have the things they need, and are busy working to get things they want (latest goods, gadgets, etc).

    They were happy with their unregulated capitalism, which by definition, there are winners and losers. The losers will not be able to afford their wants nor their needs.

    Perhaps our needs need to fall under the purview of government. If you agree, you’ll be labeled as a socialists or communist in the US.

    1. Yeah, even my own father looks at me with a snubbed nose when I talk adversely about his beloved capitalism. There is so much land that isn’t being used, every single homeless person could make their own farm, but hardly anybody with land wants to see the homeless surviving and being happy. Maybe I’ll ask the government for some of that land. They give it to the Hmongs here in California, something partially about farming being their religion. Well, damn, it’s not a religion so much as the largest necessity possible. I could live in a tent as long as I had land and water for bathing, washing and growing my food, until someone with a gun and cuffs tries to give the good life the bad boot.

  27. Interested to see you posting again. We haven’t seen you since the end of last month, when you posted a 4th part of your series on crop circles. Sadly, I missed that post, and was unable to once again request that you answer the 3 simple questions I previously asked about your sources.

    Nevertheless, I shall once again make the request. You seem to have entirely stopped responding to comments, which is a shame, but we live in hope, still.

    The questions, for benefit of innocent bystanders, remain the following:

    1) What was the title of the “Stanford presentation” given on August 8, 1990, whose speaker you introduced?

    2) What is the name of the department at Stanford that sponsored the presentation?

    3) What is the name of the “French lab” whose results were presented?

    For the sake of your intellectual integrity, and out of respect for your readers, I urge you to respond, even if only to say that you can recall no further details about the event.

    Thank you for your time.

    1. Jesse Weinstein,

      Six out of your eight comments on BB are demands for answers to the same questions. Stop.

      1. OK. I did notice I was sounding rather one-note. As it’s clear that there’s little more to be gained in persisting on this topic, I’m glad to drop it. And. considering how religiously I read BB, I’ll see if I can join in with some more varied comments.

  28. Nice post. This recession has hit a lot of people incredibly hard, and I don’t think we hear about it through the media or blogosphere nearly enough.

    For me, the key point here is the disparity between what the U.S. Treasury and Federal Reserve have done for investors and Wall Street vs. what they’ve done for people who’ve lost their homes and the unemployed. Mother Jones tallies it up at about $14 trillion that the Fed and Treasury Dept. have done for Wall Street (BoingBoing brought this to our attention last Dec.):

    vs. about $700 billion for the American Investment and Recovery Act of 2009.

    The Fed has purchased $1.25 trillion in toxic mortgage-backed securities:

    How much for people losing or who’ve lost their homes?

    Taxpayers are on the hook for this, in many cases, the same taxpayers who’ve received no help in this crisis will be paying for the Financial Sector Bailout years down the road. Isn’t it fair to ask why bailouts for homeowners haven’t been commensurate with bailouts for Wall Street?

  29. Here are the facts that no one wants to hear:

    1-Everyone whose personal, or company name is on one of those “toxic mortgages” is fiscally responsible. The bank for not vetting the loan, the broker for predatory lending (and lying on the paperwork) and the people who took out the loans for failing to do due diligence. They may have been ignorant and under-informed, but last I checked, no court has ever accepted “ignorant and greedy” as a legal reason to waive a contract.

    2-The only “innocents” in this crisis are the people who lost their jobs and homes in the financial crisis caused by the parties above.

    3- Home ownership is good for communities…but not necessary for good citizenship. And it is not a “right”.

    4- We as individuals and as a country have been spending far more than we bring in for years. We have ceased to be “producers” and become “consumers” who believe all the credit card commercials that sell us “free money” to buy things we don’t need and can’t really afford. We have a HUGE entitlement problem.

    These facts can’t be ignored any more than we can ignore the fact of gravity. But we DID ignore them, and now, all of us are paying the price.

  30. There are many reasons that people lose their homes. My husband and I are losing ours due to four major illnesses in two years. We never recovered financially. Then we both lost our jobs. The only silver lining is that we both are getting our social security. You know, the social security that both the dems and repubs want to cut. You know, the social security that didn’t have anything to do with the deficit.

    Hand in hand both parties are destroying this country. The Citizens United Supreme Ct decision is the very reason why. Corporations have taken over.

    VC money could help restart part of the economy.

  31. I don’t know how this will fall in this conversation, but,

    I’ve just bought a home in KY, after quite a bit of a strggle.
    I was lucky enough to have friends & family fight for me, & I qualified for a very low interest rate government lone .(Rural Development)

    What caught my attention though the whole process, was to have a state REP admit to me that there was very little housing available to low-income house holds. Which is why some in the department agreed to allow me a mortgage, eventually.

    The market does not allow for fair housing. No fair market. there are more homeless than the government knows how to deal with. that number will continue to grow, because that is how the market grows. Disenfranchise most to benefit few.
    It is a cliche, but it really seems like a cancer.
    I feel so blessed to have security, but heart broken after the close-up view of the systemic sickness.

    JUST SAY NO. That is how our bureaucrats are trained.

    It all seems so broken. There is no representation to peoples real interest.

    1. You are right. Look at any older neighborhood. You will see a mix of old farmhouses, two and three story colonials, as well as bungalows, in-law suites, and smaller “starter houses”. One time, people could save up and pay cash for a first house. Now, all you see are very large McMansions on big lots, that require a mortgage for any but the very wealthy to purchase. Big houses bring more profit to the builders because the transaction cost is less. The net effect being that smaller, affordable housing is hard to come by, and usually substandard.

  32. Off topic: I second Jesse Weinstein’s call for answers.

    On topic: I have no house, but a sofa, and though i plan to some day own both house and sofa, my next abode will be a bigger appartment, with a bigger sofa.
    While i share JV’s criticism of the once and future capitalism, the implied chain of causation in JV’s post i resent. Whether the ‘homeowners’ pay ‘rent’ in form of interest for a house or actual rent for an appartment does not a diference make.

  33. “OK, so I’m not an economist. … I listen to Obama and I watch the TV shows where pundits argue with Congressmen about the wisdom of this or that particular tax or stimulus measure to restart our sick economy. I have nothing to say about this, no statistics of my own and no fancy theory, so instead of taking sides in this particular debate I keep looking for the things that are missing.”

    A basic education is missing.

    The powerful are taking the riches of the nation for themselves. The political parties do not represent you, although you vaguely assume they must.

    You do not pay them. Others do. Ergo, they represent the others who are placing them in office.

    Not you.

  34. Comment 1: You so can dial down your housing expenses.

    Comment 2: …for the vast majority of people, “losing your home” equates to moving out of the McMansion you’ve been living in for the past 3 years back into a rental apartment where you lived for the past 10.

    Comment 3: There are low cost rentals, in pretty much every city. At the same time as I was paying $880 + utilities for a big 1-bedroom apartment, a friend was paying $430 with utilities included for a studio in a decent neighborhood.

    It’s amazing to me how people over generalize in their comments. They act as if it’s one size fits all — as if everyone fits in their simplistic category or can take their simplistic advice when it’s much more complicated than that.

    Not everyone owns a McMansion. Lord, that’s so obvious I can’t believe anyone wrote it in the first place.

    Second, you need first month’s rent, last month’s rent and a deposit to get an apartment. Even a really cheap $700 a month apartment then has an up-front cost of $2,000 or more PLUS moving costs. And as someone already said, landlords are doing background checks and checking credit scores, meaning that if you’ve had some financial problems, you may not be accepted, even if you can someone get the $2,000.

    Third, not all cities have $400-$500 a month apartments that are anything but tenements. I dare you to find one for that price in, oh, San Francisco or Santa Barbara.

    And not everyone can live in a 400-square-foot space. Some families have several small human beings in them — you know, kids.

    Come on, people. Quite acting like everyone is exactly like you or your buddy. Like people with housing problems are all the same.

    1. Why the fuck do struggling people need to live in San Francisco or Santa Barbara? If there’s no affordable housing there, why do they live there? That seems even more obvious to me than the ridiculous claim that every human is some sort of unique flower that can’t possibly fit into a 400sf apartment. Do you have any idea how enormous that seems to a family living in the slums outside Delhi? First world problems of a self absorbed people.

      Being unable to afford a large house in one of the most desirable and costly cities in the world is not cause to claim that the housing market is impossibly loaded against the poor. Even the minimum wage workers in the US have more physical mobility than the vast majority of the citizens of the world.

      1. “Why the fuck do struggling people need to live in San Francisco or Santa Barbara?”
        I’ve lived in London, and that attitude is what’s causing “desirable and costly cities” to slowly mutate into zones of inhuman weirdness.
        Once almost every labourer and skilled tradesman is commuting miles to and from jobs in the city, once teaching and childcare roles in some districts start to be filled almost exclusively by the young and old, because those with families cannot afford a family home anywhere nearby, once the price pressure forces families out of the remaining 3-4 bed houses and whole districts suddenly re-densify as those houses are redeveloped as 3 studio flats apiece, putting huge pressure on the transport links, shops, sewerage and amenities so that nothing works properly anymore but no one is really incentivised to fix it because most people are renting and planning to leave soon and haven’t registered to vote in that area anyway….Once that happens and more besides, that’s when you realise that there has to be affordable housing, not just for the sake of the “struggling”, but for society’s sake as a whole, if we’re not to end up like Calcutta or 1980s Brazil.

        1. Thank you 5ynic! I’ve worked in SF and commuted in for the last five years. Your comment perfectly summed up what had been nagging in the back of my mind for quite a while.

          This whole issue resonates with me as my wife and I are supposedly “middle class”. We bought a small condo that we could afford comfortably (at the time) because we’d been raise to believe that renting was a “waste of money”. We had not intention of living there long term and just wanted a starter home for our family. We are now thoroughly stuck. As long as the adjustable rate on our home stays low, we can make payments but can afford to save little. As long as we make payments, the bank doesn’t want to talk to us. We’ve had our home on the market for quite a while and are deeply in short sale territory but we still can’t compete with units in our building that have foreclosed. Even if we did get a good offer, I’m skeptical the bank will take the deal. We are now left contemplating deed in lieu (unlikely for the bank to agree to) or foreclosure.

          I can accept being punished for financial mistakes I make but I truly feel like I’m being punished for others errors in judgement and greed.

  35. welcome to the failure of capitalism.
    Last years bailouts was just the official death certificate of a bogus system.

    Thing will not get better until corporations are put in their place.

    You VC’s are the heart of the problem. What do you fund? More of the same crap that got us in this mess. Why aren’t you funding the end of corporations, i.e. the Washington and Jefferson and Franklin knew they had to be curtailed, before that scab Lincoln set them free again.

    1. Y’know what you get if you get rid of the corporations? Individuals who act just the same way.

  36. Jacques,

    The headline caught my eye, oddly enough, because this week I tried to donate an armoire to the Salvation Army and was rejected. They said it “had a scuff mark.” After my double-take, I started to think about why the Salvation Army would be so picky about donation quality.

    I was wrong. The question should be “how” they can be so picky. My thinking is, so many people have left their homes for whatever reason that the donation centers are flooded. They can afford to be picky.

    This situation is obviously not good. Example: Why would I buy a new lawn trimmer if I can get a descent quality one used?

    The economy has waaaaaaaaay to much slack in it to rebound anytime soon.


  37. I honestly think many of those high-risk loans would have worked out IF the home buyers had been honestly steered toward smaller, economical houses they COULD afford. Instead, builders, realtors, and mortgage brokers pushed anyone and everyone to McMansions with the promise of rising values and just gave up on “adequate” housing. What we need is adequate housing that people with almost-adequate credit and almost-adequate jobs can hope to someday own free and clear. What they were sold was a get-rich-quick scheme that was labeled a mortgage.

    1. I honestly think many of those high-risk loans would have worked out IF the home buyers had been honestly steered toward smaller, economical houses they COULD afford

      Those were overpriced, too.

  38. “IF the home buyers had been honestly steered toward smaller, economical houses”

    Got that right. I grew up in a Chicago bungalow, 950 square feet shared by four people on a 25 foot wide lot, and I NEVER felt poor in any way. My parents burned the mortgage when I was twelve, and I can’t remember them ever having been happier.

  39. Frankly, I think the first step to recover is to get over the housing fetish. We need to value houses for what they are actually worth. To this fucking day, people talk about houses as “investments”. When you think of a house as an “investment”, you start to inflate the value.

    Rent. It is cheaper by far. Not only is it cheaper, but you can rapidly downgrade (or upgrade) or move if you need to. In fact, if you don’t have kids, rent and get roommates if you are scrapping for money. I know that having a massive illiquid asset that can ruin you if its price changes by a few percent and getting a huge loan to pay for it sounds like fun, but it really isn’t.

    Yeah, shady shit went on in terms of mortgages, but it wouldn’t have been a big deal if people had just used a little common sense and prioritized their finances. If in your financial planning you know you wont survive an econopocalypse, you are doing it wrong.

  40. The solution is to let housing prices fall to the point where people can afford to buy them.

    Right now the government, doesn’t want that to happen, because it will put more people underwater, and worsen the banks balance sheets.

    So it has been trying to keep housing prices from falling further by pushing the banks to loosen loan terms and givign tax credits for buying houses.

    But in the long run, letting market prices fall is a saner place to be economically. Instead of fewer people owning houses that are over valued and borrowing more money to pay for them, you have more people affording homes with smaller loans.

    It just means that the banks have to take another hit financially, and that’s what the government is afraid of.

  41. FYI if Jacques Vallee is interesting in commenting on my comment he can do it here, or in the thread over at FireDoglake where it is currently on the front page. Thanks to Peter and John Greg who complimented it, I turned it into a post of my own.

    If Jacques Vallee wants to go there it is at

  42. #52, I understand completely. And I’m sorry I didn’t add that under the “innocents” category.
    What happened to you is so incredibly unfair- and it happens to more people than our corporate-toadying Congress and Senate like to admit.
    (I spent most of my 20s and 30s severely ill (mercury poisoning from “safe” dental amalgams) and the medical bills left me with nothing in reserves.)
    Financially and emotionally stable families are the building block of any society, and providing health care that’s affordable for everyone is a vital step towards a stable economy.
    No family should have all their reserves wiped out because of an illness. And while the recent health bills aren’t anywhere near what we need, it’s a start. We just have to start chipping away at it bit by bit until the law requires insurance companies to sell health insurance to EVERYONE on a sliding scale according to income.
    And social security should stay funded, because we created the social safety net for situations just like yours. I WOULD like to make it stronger by more actively weeding out those who don’t really need it, though. Like the rich who use it to pay greens fees at the golf course or non-citizens who managed to wangle it for one reason or another.
    BTW- I am not a xenophobe, and I don’t have a problem with the rich- I just believe we have an obligation to take care of the truly needy and the citizens who actually paid into the system FIRST. Acting like our pooled government resources are limitless is part of what got us into the present crisis, and it risks weakening the system to the point where it won’t be there for anyone.

  43. . . . we can survive without USA.

    I think a lot of Americans have no concept of the fact that the USA is not the center of the universe.

    What I find most distressing about this whole situation is that conservatives in America continue to press for financial deregulation while the meltdown is still fresh in our minds. They are so wrapped up in their partisan worldview that they cannot admit or even consider that allowing the modern-day equivalent of “junk bonds” was the major cause of all this mess. The financial markets will survive with regulation, in the same what I can still get to work despite all the traffic lights (maybe I could get to work quicker without them, but how safe would that be?)

    But what do you expect from a group who, when they don’t like the facts, simply create their own, a la “Conservapedia?” And so millions of American middle class conservatives lose their jobs and homes, and rather than blaming Wall Street and the politicians who empowered it to gouge us all, they blame. . . immigrants.

    God forbid we should live in the socialist nightmare of . . . Europe.

  44. Poverty is a choice, we as a society make. There are plenty of resources to go around to give everyone a place to live and something to eat. The problem is unequal distribution.

    Wealth in our nation is based more on risk than value. People get wealthy by taking on risk rather than providing value. The problem with this is that the more money you have the less risky risk is and the greater the disparity in our society becomes. The biggest problem is that people are reward and nothing of real value is produced.

    This is part of the problem behind the mortgage crisis, banks take on risk by making loans, people get low interest loans and purchase homes, which over time slowly inflates the price of homes creating a bubble. Now nobody can afford to buy a home without a loan. There is no more saving up to buy a house, but there is saving up to make a big enough down payment on a house to get a loan.

    This is the real crisis, people got rich by providing these loans, without providing anything of real value. Now the price of homes are beyond the reach of most people and the people who have a home are slaves to their mortgage.

    This wealth disparity not only ultimately stifles our economy, it stifles our society as well. The mere mention of wealth redistribution causes uproar, but the upside of it is a better society for all of us, and all we really need is for a few of us to give up excess. I once heard a proposal to increase the marginal tax rate to 100% above 14 million dollars. Why not start there, sounds like plenty of money to live on to me.

  45. I have read through many of these, and so far, no one has argued the premise that awhile ago, manufacturing was relocated from North America to Mexico, and then overseas..
    I remember thinking at the tme, when it was rampant (1970’s), that US consumers would have a helluva time paying for all these consumer goods when they were out of isn’t fun being precsient..
    Now that the Japanese and Chinese factory systems are disintegrating under their own weighty overproduction, we have a chance, albeit a slim one, to get back our manufacturing (on a small scale) and eventually, put our own citizens back to work creating the goods we need right’s past time to think that a job at a Honda branch plant is gonna be the answer to your prayers..
    The second and most important thing that needs to happen is (in the US, at least) for the government to pry that bailout money out of the bankers’ cold, dead hands…and start circulating it, possibly in the form of government subsidized works, such as repairing/replacing the rotting infrastructure of many populated areas..
    Get public transportation (a la Los Angeles) going- create jobs, less pollution, more mobility to live and work outside business cores..
    It has to happen, before a full scale Depression takes away anyone’s incentive..
    How to pay for it all? Get the hell out of Afganistan and Iraq..gone are the days when war profiteers ‘boosted’ the economy..

  46. So here is an obvious statement: if you have just lost your house you are not likely to go buy a new TV set for a while.

    Here is another obvious statement: we need jobs.

    To get jobs, businesses need to grow.
    To grow, businesses need to be able to take out loans from a bank.

    Even in a depression, some business somewhere is booming, but the banks are making so much money in the pseudoeconomy of derivatives and stock trading that financing growing businesses doesn’t seem like a smart investment.

    If we cut off the access to these profitable dark markets, we can (perhaps) improve the economy, as banks look for places to invest, and find ready,willing, and able successful businesses.

    I’m kind of convinced this needs to happen locally, first though.

    Dear Any BB Reader Whose Business Is Growing: take out a loan from your local bank, start up a new facility somewhere, hire some people, and contribute to this things already.

  47. Lack of a sane healthcare policy is also a major factor in foreclosures. Half on bankruptcies are caused by medical expenses. The giant government subsidy just enacted for private insurance companies is not going to do anything to address this.

    The whole system of foreclosures, insurance costs and job loss is trickle-up economics. I would think most VCs are in favour of this. They’re certainly not doing anything to stop it.

  48. So here’s the other problem: you see a little bit of it with the graffiti on that house. Now imagine that whoever left (or maybe whoever came after them) took out all the plumbing and electrical fixtures. And peed on the rug. And left a window open in the rain. It doesn’t take that long to turn an empty house into something that people will have to pay tens of thousands of dollar to demolish and cart away.

    So even while people are looking for places to live, lots of other housing stock is being destroyed by neglect and abuse.

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