United Liberty
The Housing Bubble and the Environment: Unintended Consequences
Tue, 03/17/2009 - 6:37am | posted by Dr. Charles Kennedy
An article in the Sunday, March 15 edition of The Birmingham News, entitled “Lots crumble and mud flows”, discusses some of the complications resulting from the plethora of unfinished housing projects that have been put on hold in the current economic crisis. The problems include excessive runoff and mud flows, crumbling roads without a final seal coat, empty houses in various stages of construction, construction debris posing safety hazards, and other various forms of pollution. Curiously, nowhere in the article does its author acknowledge that most of these housing construction projects are the result of a housing bubble. That is to say, too many houses have been built or contracted to be built, and with a combination of excessively high prices and the lack of demand for houses, these unfinished new developments are causing all kinds of unintended consequences to the environment and to the well-being of nearby property owners.
Our supposedly “progressive”, forwarding-thinking leaders in Washington want to stimulate the building of even more housing, and continue the vicious cycle of more inflation and more bubbles. It seems to me, though, that progressives who care about the environment and land conservation should be showing not only a concern for the toll these projects are having on the environment, but also should be considering the positive benefits of a true, free-market approach to housing on the environment.
We first have to call to mind that we do not have a true free-market economy in our country. What we have is a market economy that is distorted by the creation of credit out of thin air by a central bank, which of course is the Federal Reserve. The creation of money and credit out of thin air (as opposed to responsible use of credit through a reliance on savings and proper capital investment), leading to excessively low interest rates, always leads to distortions in the economy that are referred to as bubbles. We are coming out of such a bubble, known to us as the housing bubble. If we had a true, free-market economy without the distortions of a central bank creating credit out of thin air, we would not be having these bubbles. Likewise, we would be suffering a lot less of the kinds of environmental problems and pollution associated with these unfinished projects cited in the Birmingham News article.
You bring up a good point.
And basically everything the current administration is doing was supposedly what caused this mess in the first place.
But I think everyone in America is either an idiot or just can not do math.
The banks losing money on mortgages is the biggest lie ever, ever, ever told.
The math!
The bank loans money at about 5%.
The bank borrow money at about 1%.
If two people borrow 200k they will have to pay 10k each in interest and about 2k in priciple for a total of 12k each for the first year. Using a 30 year loan.
The bank will have to pay for each loan about 2k in interest and about 2k in principle for each loan.
So for two loans the bank has to pay 8k total to borrow
$400,000.00 in a one year period. This is not exact but most Americans are too stupid to use a calculator and a mortgage model so I will not waste the electrons. But it gets the point across.
Each person has to pay $12,000.00 to the bank. So if both people pay the bank gets $24,000.00. If one person goes into forclosure, never pays a dime, does not pay nothing to get the loan, burns the house to the ground, Aig does not pay the pmi insurance, the federal government does not allow the right off.
Guess what the bank still made $4,000.00 for doing nothing but entering a few numbers into a computer and opening the mail once a month or look at a computer screen for direct deposit while on vacation!!!!
So what should this tell all the stupid Americans. The banks are making tons and tons, and tons of money on all mortgages!!! We are no were near 50% foreclosure. We are not even near 10% foreclosure!
There has never ever ever been a housing bubble in the urban areas of the country!!!!
In the urban areas of the country the 2-3 bedroom homes since the 60’s have cost less to buy then it has cost to build them. There has never been a bubble. What we have currently is a housing crater were it cost less than 10% to buy a home in an urban area then it would to actually build the home. Actually in most areas it costs less than 1%.
So what really is going on is the fact that Americans do not have jobs! They can not afford to buy the homes.
So why are the banks losing money? What really is going on is that corporations both American and China and India have borrowed all the money and bought everything in America not nailed down, materials(remember the world trade center steel), technology, factories, companies and they are all being taken to India and China the two biggest population countries in the world with economic progress that dwarfs America. And India and China are using the greed of wall Street to pay for all this and India and China now are defaulting on all the loans! They knowingly took the money, stole everything in American with it and knew they were not going to repay the loans.
Now the greedy wall street with there politicians in there pocket are asking the taxpayer to pay the loans and continue paying the bonus’s of the greedy wall street idiots who did this.
India and China is laughing all the way to the newest factories, best technology centers, best military hardware, best space agencies and Americans by the millions are losing there jobs, there homes and there cars and next year will be in the streets starving!
The real story is the greed of wall street, the brains of India and China towards a long term goal, and the dismantling of the biggest industrial powerhouse, America, that the world has ever known. All done by loaning money to corporations who used that money in another country to make them a powerhouse and steal the wealth of the once mighty USA!
It can be stopped but people need to start doing the math real quick!
No money should leave the US.
Nobody should be without a job on Unemployment or welfare. If you are going to pay not to work why not pay to work.
No money should leave the US for energy. We have enough in the US and we should use it.
The Tarp is a lie.
Fixing everything is about math.
Stop all foreclosures 1k *12months* 1mill= 12 billion
Put everyone to work 30k*5million= 150 billion
Buy all hybrids 15 million * 20k = 300 billion
So 462 billion can stop all foreclosures put everyone to work and put a stop to foriegn oil. Printing trillions of dollars and loaning more to India and China will put more people out of homes, more people out of work and well probably everyone will start walking.
Thanks for reading if anyone can actually do math besides kids in school it seems like all the politicians and media are on crack or something!
Not sure where you’re getting your figures there..
From what I’ve heard, the average home in the US cost 3.5x average annual income. That of course was in 2006-2007. That’s pretty high, since the post-war standard has been 2.5x average annual income.**
Can you cite a source that claims the cost of building a home is greater than it’s value? Not in the city I live in. I had to move 30 miles away out into the suburbs because a comparable home would have cost around 750K in the urban areas. Only in the outer areas did even average homes approach reasonable costs.
Also, looking at your list at the end there, 30K a year is not a livable wage in most cities in America. Not enough to support a family on, and I’m not convinced that 5 million jobs will do the trick. There are after all 300 Million of us. So your 15 million hybrids is like… .05% of population. (gosh I hate math).
Can you explain?
Thanks.
** From the book “The New Golden Age: The Coming Revolution against Political Corruption and Economic Chaos”
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