Anyone want a second scoop?

I love getting a double dip of ice cream, but I’ve never been keen on getting a double dip recession.  Unfortunately, it appears that my earlier post regarding “Our Housing Peril:  The Next Recession” is coming true. 

The MSM is finally starting to take notice.  They are finally discussing the housing glut (for both new and older homes) and how that is affecting home values negatively.   Experts in real estate and the economy are starting to go on record warning of the consequences of this ignored problem.

In Arizona, home prices fell 9.1% in Phoenix over the last year in spite of the incredibly low-interest rates.  In fact, the only major urban area in the U.S. that saw an actual increase in home values was Washington, D.C.  As I’ve said before, this is only the tip of the iceberg because there are still tons of houses that are in foreclosure or soon to be in foreclosure (my own house included).  Experts in the article at bottom are forecasting that prices will fall another 5 to 10%.  I will go a little further and predict, in some harder hit areas, Phoenix and Las Vegas for example, prices will fall as much as 15%.   All it will take is the banks dumping more of these houses onto the market.  That will be the final straw that pushes the economy back into recession. 

To add some yummy sauce to our double dip, rental prices have actually started to increase.  Why?  Mainly because no one wants to buy a house right now and so the demand to get a rental home is extremely high.   I was in the market to rent and every time a house went online that met my criteria, if I didn’t get to see it that same day and make an offer it was rented by the next business day.  I was literally having to leave work at a  moment’s notice to go see rental properties and make offers on my cell phone while driving back to work in order to even get considered.  That’s a crazy pace for home rentals.  The last time I saw such a fierce race to make an offer was during the height of the recent housing bubble, you know the one that started this entire mess.  Perhaps the rise in rental prices will provide incentive to people to stay in their homes instead of walking away.  So far, it  hasn’t worked here in Phoenix.  I was able to get a home that is 900 sq ft larger than my current home, with a full garage, in-ground pool and storage shed for $380 less per month than I am currently paying on my mortgage.  That difference was enough to allow my husband to continue to stay at home with our 6 month old son and 7-year-old daughter. 

So, yeah Amurrikans let’s focus on the deficit while we go back down into another recession.  I want to be one of the first admittedly bitter people to say, “I told you so”.  

Sources:

http://money.cnn.com/2011/03/29/real_estate/January_home_prices/index.htm?hpt=T2

The Anti-Robin Hood: AZGOP is picking our pockets

The Arizona House voted on and forwarded to the Senate a bill to change the state’s income tax rules.  The proposed bill, HB 2636, would set a flat income tax rate of 2.13% for all state residents and eliminate all deductions.  Studies indicate that the 12% of Arizonans that make over $100,000 per year will actually pay less in taxes and the rest of us–the great unwashed middle and lower classes will pay more.

The Goldwater Institute, a local conservative think tank (where very little actual thinking goes on), is supporting the bill because they believe it will stop the government from incentivizing how we spend our money.  I am not so sanguine about this reasoning and here’s why.  First, how does the government incentivize how we spend our money through taxes?  Well, if you live paycheck to paycheck, it doesn’t.  You’re spending money on your basic needs–food, shelter, transportation, health,  etc.  Things like braces for your kid have to be saved up for or it simply won’t happen.  It’s takes a lot of loose change to pay for braces and forget about paying for college for your kids.  If they don’t get scholarships, it will be loans or nothing.

Now, let’s look at people who actually have money left over after buying the necessaries and things that aren’t so necessary but sure are nice, like braces.  These kind of people can engage in discretionary spending.  Do taxes affect how they spend their money?  Absolutely.  The first thing they will be advised to do and what most people end up doing, is looking for some kind of tax sheltering.  Their initial reaction is to put that money some where that they can earn more money on it but not pay taxes.  If a person is wealthy enough, they will max out on the tax shelters available and still have money left over that needs to be put to some use, preferably making more money.  Usually they put their money into non-sheltered investments.  In most cases, money makes more money just by sitting in an account somewhere.

So what benefit does the flat tax offer these two groups?  For the wealthy, it simply means they’ll continue to invest their money but instead of tax sheltered accounts they might be more likely to invest in non-sheltered investments.  It won’t change any of the following tax systems though:  Federal income tax, state sales tax, any luxury taxes, property taxes, etc.  In essence, it gives them a tiny, little bit of room in Arizona to make different decisions.

For the poor that had no money to invest, no money to make more money, and no real choices about how to spend their money you can’t incentivize how they spend it.  The basic cost of living forces their spending habits, not choice.  Furthermore, this proposed bill would end up taking money desperately needed out of their pockets.  So the poor cannot be incentivized to spend their money differently by this bill.  Ultimately, this bill will take any choice they might have had about their spare change away from them.

This is why the argument made by the geniuses over at The Goldwater Institute is totally specious.  This flat tax bill is just another way the GOP is trying to redistribute wealth from the lower and middle classes to the wealthy and corporations.   When our country and our state is suffering from a record high deficit and an unemployment rate hovering around 9% that resulted from deregulation of the banking industry, the GOP wants to now add insult to injury.  The national GOP has reduced taxes for the wealthiest 1% nationally.  The AZ GOP has decreased corporate taxes, they’ve raised property taxes, and now they’re seeking to increase income taxes for 88% o f the population that can least afford it.  It’s just another in a long line of pocket picking by conservatives.

I would say call your state Senators to stop this travesty of a bill, but I think the die has been cast on this issue.

Sources:

http://www.abc15.com/dpp/news/state/senate-panel-oks-bill-to-flatten-arizona-income-tax

http://www.yumasun.com/opinion/tax-68602-proposed-flat.html

http://www.bensonnews-sun.com/articles/2011/03/24/opinion/letters/letter1.txt

Disaster Capitalism

Danger, Will Robinson! Danger! It’s taken us 30 years to recognize that the GOP has been using crises to consolidate power and dismantle the state. Only Rachel Maddow seems to be addressing this ugly truth on the national level.

Ironically, humans have been using this type of management since we started forming into hunting and gathering groups. The first notable historical example that comes to my mind was when Julius Caesar became “dictator for life”. Originally a “dictator” was a temporary position that lasted no more than 6 months and was created to serve a particular purpose. In those days, the title was appointed to a general to wage war. Caesar was first given the title temporarily when he entered Rome with his legions in order to restore order to the capital city and ensure continuity of the government. Caesar had to do this because his enemies (Pompey, his supporters and his troops) who had previously been in charge fled upon hearing of his approach. Once Caesar had finally defeated Pompey and his supporters in battles outside of Italy, he was appointed dictator for life.

Ultimately, Caesar was allowed to “govern during the crises” for three reasons. First, Romans were very used to having a functioning government and services unparalleled in western world at the time due to the long and succesful stability resulting from their “Republic”. Essentially, any disruption in the government created enormous anxiety in the populace. Leadership was needed, or at a bare minimum the appearance of leadership, in order to appease the people’s psychological need for it. Beyond the citizenry though, the ruling class of the Roman Republic was also to blame. The Republic was led by a very powerful Senate filled with the oldest and noblest Roman families. Once those Senators had either sided with Caesar or fled him, there was a vacuum. There was little to no middle ground to be had.¹

Second, Roman territory had been expanded into Gaul (now France) and that necessitated extending the long hand of Roman governance into the new territories to not only gather needed revenues and resources but also to hold that territory in future. Some of Caesar’s legions were left behind to maintain their control. However, no army can hold territory through an exclusively martial presence indefinitely.² Some kind of structure would have to be put in place and the Roman tradition was to overlay any existing culture with their own governing mechanisms. The people were left alone so long as they paid their taxes and gave up a certain number of young men for conscription in the Roman army.³ And the conquered people eventually became citizens and became used to Roman rule.⁴

The third reason was and continues to be ironic on many levels. The crisis existed because Caesar forced the situation. His stubborn pride, his narcissistic egomania, would not let him return to Rome without a “triumph”.   See, Caesar had conquered all of Gaul (no mean feat, actually) and like every other returning General he wanted a celebratory parade into Rome. The Senate in Rome said no, because they were afraid that he would come with his troops and declare himself king. Caesar responded with something like, “I had rather be first in a village than second at Rome.” So the standoff began and eventually it ended with Caesar calling the Senate’s bluff. He marched into Rome and Pompey fled. Once Caesar arrived in Rome, he promptly had the remaining Senators (who were all beholden to him or scared out of their minds) declare him dictator for life, i.e., king. It isn’t clear to scholars whether Caesar actually wanted to be king or not. Intentions may not have mattered because the end result was the same.

The lesson from this is to beware of those who use crisis as a form of management, be they in business or government. Ultimately it is dishonest because they will tell you they are only trying to do their duty or to do what is right in a time of crisis. When the truth is, they are either taking advantage of a crisis of their own making or a crisis created by others. It is about their egos and their desire to control you to make you do what they want. Don’t mistake the GOP’s tactics for anything less than Disaster Capitalism at its ugliest.%

Notes:
1  Sound familiar America? No middle ground…you’re either with the GOP or “yur agin em!”
2  Why does this warning make me think of Afghanistan? Hmmmm, why?
3  Anyone who didn’t follow this system were killed and/or raped and/or sold into slavery.
4 If people stayed out-of-the-way of the Romans, they would be given paved roads, aqueducts full of fresh water, defense against marauding tribes from the east out of Germany, etc.
5 If you haven’t read it or seen it, you should. “The Shock Doctrine: The Rise of Disaster Capitalism” is a 2007 book by Naomi Klein, and is the basis of a 2009 documentary by the same name.

Terrorist, Freedom Fighter or Just Plain Ignorant?

Rep. Peter King of New York House Homeland Security Committee who will soon hold hearings on American Muslim radicalization was motivated to begin these hearings because he took umbrage to an earlier report released by the Department of Homeland Security regarding the threat of right-wing terrorism in the U.S.  Rep. King spoke to MSNBC and said the Department:

“…has never put out a report talking about look out for mosques. Look out for Islamic terrorists in our country. Look out for the fact that very few Muslims come forward to cooperate with the police. If they sent out a report saying that, there would be hell to pay.”

Evidently Rep. King felt that the report on the threat from right-wing terrorists was politically motivated. However, facts tell a different story (look here, here, and here ).   In essence, if you look at the majority of civilian casualties resulting from attacks on U.S. soil the majority of them have been from individuals or groups associated with conservative and even Christian political beliefs. Indeed, threats from right-wing groups against elected public officials and government workers have increased alarmingly since Pres. Obama was elected.

Now it has come out that Rep. King was and still is a vocal supporter of the IRA in Ireland. This is an example of how one person’s “terrorist” is another person’s “freedom fighter”. There are a ton of politicians in the Northeast U.S. that had and have relationships with the IRA in Ireland. Like so many politicians, he was probably trying to appeal to the white descendants of Irish immigrants in his district. What’s truly unfortunate is that he and those descendants have forgotten their own history.

In the US, the protestant Irish started calling themselves Scotch-Irish to distinguish themselves from the Catholic Irish because there was so much prejudice but even then they were not entirely able to distinguish themselves.  Like most immigrants to the U.S., most Irish families, regardless of religion, didn’t gain acceptance until the 2nd or 3rd generation in the U.S. –mostly when they lost their identifying accents and once they’re last names became more prevalent in society.  The Irish, unlike Blacks, didn’t stand out because of their skin color.  An Irishman can be mistaken for a German and vice versa.  This, obviously, aids in integration.

However, the newly immigrated Irishman was treated little better than Blacks.  It wasn’t uncommon to see comics in the newspapers showing the Irish as lazy, drunk, and villainous….not very different from comics of black people.   In the 19th Century U.S. the term “smoked Irishman” was a slur used for Blacks but meant as an insult to both African-Americans and the Irish. Another 19th Century slur against the Irish was Wigger, or White Nigger.

Prejudice against Irish Catholics peaked in the mid-1850s with the Know Nothing Movement. Will today’s “know nothing movement”, aka the Tea Party, turn against the Irish? No, they are made up of many Irish-Americans and the acceptance of the Irish in the U.S. is complete.  However, that doesn’t mean we should forget.  I’m of Irish descent (through the surnames of families Shanahan and McMurrough) amongst European blood lines and born in Generation X.  I haven’t forgotten my history lessons, why has Rep. King?

Peter King, and anyone of Irish descent who supports him, is not only an hypocritical bigot (which by definition implies ignorance), they’re also forgetful bigots.

PS:  I’m alive, just blogging when time permits.  I promise to return to daily blogging in a week or so.

David Brooks’ Serious Proposal

Oh how the poor do make a stink and muck up the ideal world of the David Brooks and his corporatist fellows!  I always love reading about how I am a nuisance that the rich cannot and do not want to deal with. As I grow older and my health care becomes more expensive, I truly enjoy reading the following by David Brooks (I refuse to link to his shitpile of an article):

Trim from the old to invest in the young. We should adjust pension promises and reduce the amount of money spent on health care during the last months of life so we can preserve programs for those who are growing and learning the most.

Unlike Jonathan Swift, Brooks is serious and his voice is loud. His articles published by the NY Times online and in print reaches millions of readers around the world. Evidently the Times doesn’t understand how great responsibility and great power must go hand and hand or they would not allow this drivel to be produced in their name.

What Brooks and his ilk either don’t get or won’t accept is that living and dying is a messy, complicated journey that very few people escape through hard work alone. Brooks likes to think they’ve reached easy street by the sweat of their brow, when everyone knows that luck and a million other factors affect the outcome in a person’s life.   It is pure arrogance to think that luck did NOT play a a huge role when a particular sperm and a particular ovum happened to meet and produce David Brooks.  It’s presumptuous in the extreme to assume that he was destined to be born to his white parents, when he was and where he was with all the advantages that implies (and have provided to white males for the last 2 or 3,000 years–see Louis CK, Being white).  It’s haughtily simplistic to assume that all the small and large decisions made during his life were an orchestrated, mindful effort by himself and his parents that led to his current success in the American press .

This is the kind of prick that wants to advise his fellow elitists to make judgments about which of the elderly and the poor the country will invest in and which they will not!? Brooks, in his infinite, presumptuous, and tone deaf wisdom dares to propose such austerity principles to the American populace who is already suffering greatly!?

Thankfully, there are saner voices, like that of Tom Scocca of Slate who countered with extreme wit and intelligence the following:

That’s why it’s probably a bad idea to entrust solving the end-of-life problem to the sort of people who say “adjust pension promises” when they mean “cut pensions.” But it’s not surprising that the blithely plural David Brooks worked their way around to the doorstep of euthanasia. The fiscal disciplinarians are, in their own way, spiritual heirs to the eugenicists of a century ago, with their eye on the greater, collective good. The deficit and the debt bother them not so much morally as aesthetically: they are the budgetary result of the distasteful, ongoing presence of unnecessary and unproductive people.

It is pundits like Brooks in the MSM that give the veneer of moral acceptability to the inevitable decline of the American Middle Class and who contribute to the eventual banality of what history will judge to be evil suggestions for the good of the top 1% in the world.