The Recession is Not Over
Even as the market moves lower this morning due to the crash of Dubai World (those wonderful folks Bush wanted to turn all of our port management over to) The Wall Street Journal reports that one in four home owners are underwater on their mortgage.
The proportion of U.S. homeowners who owe more on their mortgages than the properties are worth has swelled to about 23%, threatening prospects for a sustained housing recovery.
Nearly 10.7 million households had negative equity in their homes in the third quarter, according to First American CoreLogic, a real-estate information company based in Santa Ana, Calif.
Why do I get the feeling that the folks in Washington and on Wall Street don’t understand that everything has changed? This is the Interregnum. The Financial Times put it well.
But though the recovery is real, so are the scars from the global recession. Some will be permanent and many will heal only very slowly. From global output on a persistently lower path than expected before the crisis, to severely weakened public finances, to the evils of long-term unemployment, to rising inequality and to a permanently altered balance of global economic power, the effects of the 2008-09 financial crisis and recession are akin to those of a war.
As you can see by the last week’s posts, I am increasingly convinced that the entropy of Establishment Washington Politics renders the National Government incapable of making the reforms needed to emerge from the interregnum. So in the next few weeks, I’m going to try to put some thoughts down about hyper-local politics and reform. These ideas go beyond the New Federalism principles I have articulated before, and try to place the locus of change in a City-State like Los Angeles–4000 square miles and 10 million citizens in LA County.
Think Globally, Act Locally.
Meta comment: I LOVE the new format and design; usability and clean, light design FTW.
Chris Weekly
November 27, 2009 at 6:51 am
My two cents:
“Why do I get the feeling that the folks in Washington and on Wall Street don’t understand that everything has changed?”
Sir, I think “they” know damn well that they are living on the surface of a bubble that is going to explode, and just assume that the blast can be put off as long as they are alive and within the kill radius, or that somehow the armor they have built for themselves will let them survive it and maybe be thrown clear of the crater.
“Apres nous, le maelstrom.”
JTMcPhee
November 27, 2009 at 8:04 am
Yup. As I’ve said before. Post-apocalyptic nightmare on the way. The Dubai-scale stories will continue to surface in the coming months until the systemic crash occurs.
The Steal It Now Party’s Fraud Society is slouching toward Bethlehem.
Dan
November 27, 2009 at 8:26 am
Why on earth would any intelligent people have put dough into a scam/mirage like Dubai? The desert cities of the US are difficult enough to deal with, but Dubai? And they’re just the first of the Arab countries to go broke. In another 50 years it will be camels, dates, and oasis time in the desert. Nice place for solar panels…
Rick Turner
November 27, 2009 at 12:11 pm
Yeah, and act very quickly. We’re walking on air and bullshitting ourselves that it’s ground of some sort. The consumer credit bubble is still there and will be worse in thirty days. The commercial real estate bubble has barely begun to pop. A true mark-to-market of investment assets and balance sheets is too scary to contemplate.
And now we have Dubai. This is basically a sovereign failure of a major world player. That’s one big stone being dropped in the pond. Those ripples are going to race around the planet.
Maybe Geithner will bail them out, too. It’ll make the Republicans happy. Less money to spend on universal health care and unicorn preservation.
Dubai cruel world.
Jim Flynn
November 27, 2009 at 2:56 pm
http://uaeinteract.com/news/default.asp?ID=231
Like this link? Does Dubai’s gov’t have this money any more?
JTMcPhee
November 27, 2009 at 4:54 pm
Great link. I’m wondering how the electricity gets to Singapore and Viet Nam (IRENA members). Plus it says that solar island goes online this year. Has that happened? Must have missed it.
I just have this nasty feeling that the still unraveling mortgage bubble, the as yet to unravel consumer credit and commercial real estate bubbles, the phony CDOs, the fraudulent CDSs and the now emergng SDD (Sovereign Debt Defaults – see Dubai) are about create a global GD II.
I wonder how much arable land Dubai has purchased around the planet? Anyway, they’re TBTF so they’ll survive.
Jim Flynn
November 27, 2009 at 6:47 pm
Dubai is the epitome of bad taste. Fake.Kish. It was bound to fall on its face. It attracted the worst individuals. It represent the end of an era of arrogance. Goodbye Dubai.
bernard
November 27, 2009 at 3:06 pm
Instead of giving money to the banks I would give all the foreclosed houses back to the owners with a moratorium of one year at no interest, compliment of uncle Sam. Hey they are empty anyway and people are sleeping in their cars ….
bernard
November 27, 2009 at 3:12 pm
The scary thing is that the fools who invested in the Great Dubai Bubble are the very ones who have been touted as the financial masters of the universe and who hold our cash in their banks. I’m thinking mattresses are a better place for dough than banks these days. A little extra Ben Franklin padding might be just the ticket.
Just think about where you put your money. Do you like what the folks there do with it? If not, then move it elsewhere.
Let’s hope this is the beginning of the end for those Castles Made of Sand in the Arabian desert.
Rick Turner
November 27, 2009 at 3:59 pm
Barry O: anti-interregnumite?
billy-bob
November 27, 2009 at 4:53 pm
Can I ask another one of my uniformed, non-economist questions?
Why is everyone calling whatever is happening now in that dissociated thing that is called “the economy” a RECOVERY? Just who is “recovering?”
Is it maybe like “Celebrity Dry-Out,” where the B and a half listers go to puke their guts and vapid emotions out and give their livers and lights a break for a couple of weeks, get some “exposure,” before going back to the same old shit while the rest of us pay to see them perform?
What freakin’ “recovery?” Dow back over 10,000, for a little while, as if that was an index of “anything real?” Real unemployment at 22+ percent? What jobs there are just “producing” more of the toxins that are killing the species?
But I’m sure I just don’t anything about the Really Important Things that are Going On.
JTMcPhee
November 27, 2009 at 5:59 pm
I think you should read this
What can small town people like me do locally to try and build a future while predatory capital seeks to rob us all blind?
Petruk
November 27, 2009 at 7:35 pm
Petruk
November 27, 2009 at 7:36 pm
The hard part is standing around the dinner table listening to people praising Palin and blaming Obama. Tell them any fact at hand and they stare back with that same angry glum look because of course, this just can’t be the fault of those who told them they had a right to live in the City On the Hill.
And I go back upstairs to work on a Christmas music video about homeless children like a man throwing water from a mason jar on a house fire.
len
November 27, 2009 at 8:34 pm
Agree Len, like the climate deniers the econo-deniers are ever so hard not to want to grab and just shake until their brains scramble.
But people like Beck are still making good money blowing smoke up reality’s skirts, and people are worrying about him being the real enemy. Posh, the real enemy is a congress that can’t wrap its collective head around the level of economic disaster that our health care system has become, greater than our wars even, and do something other than construct a good-enough-to-pass gift to insurance companies, or, worse, insist that big business is the only proper decider of our future. Since it gets them re-elected, it must be so.
And the good citizens say bah (but do nothing), or Baaaahh (and do the same old same old), and the life of the Big Myth that is America continues after a fashion. We will only respond as a nation after the true collapse.
Ken Ballweg
November 28, 2009 at 12:03 pm
“Well we’re all niggas now
With the price of war in Asia
We got no one else to blame
Yes we’re all niggas now
Republican or Democrats
Dem liar’s all the same
While the homeless line the sidewalks
But the White House is palatial
Dey’s a thousand ways to kill a man
And dey ain’t only racial
Cause we’s all niggas now
Everyone’s got a case of the blues.”
(A verse from a song that got me fired for singing it in a TP Crockmiers in 1980 dressed in black face, spats and a tuxedo with a top hat playing at a baby grand… performance art wasn’t invented by Lady Gaga. Sometimes ya gotta go on the offensive.)
len
December 1, 2009 at 11:59 am
Dubai is tecno-kish. I have no time for that.
bernard
November 28, 2009 at 7:25 pm
http://www.huffingtonpost.com/johann-hari/dubai-has-always-been-ban_b_372795.html
Babel redux…
Hope it withers into nothingness…or maybe becomes the 9th Lost Wonder of the World as another cautionary tale that all will forget in a couple of hundred years.
Rick Turner
November 28, 2009 at 8:14 pm
Ozymandias
by Percy Bysshe Shelley
I met a traveler from an antique land
Who said: Two vast and trunkless legs of stone
Stand in the desert. Near them, on the sand,
Half sunk, a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them, and the heart that fed;
And on the pedestal these words appear:
“My name is Ozymandias, king of kings:
Look upon my works, ye Mighty, and despair!”
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away.
“Pride goeth before destruction, and an haughty spirit before a fall.” — Proverbs 16:18
And remember that telling scene in Michael Moore’s “Roger & Me,” where the upper crust of Dearborn Society pays a hundred bucks a head to dress up in satin “prisioner garb” and spend a catered night in the brand new jail, about the only new construction in the area. Before the stinking detritus of Detroit moves in with the stink of sweat and fear and urine and disinfectant.
Here’s a link, if you haven’t run across this gem that so perfectly captures the “vast indifference” of wealth in the face of, well, what we are facing today. “Producer Moore captures with biting humor the indifference of the lucky few who are unaffected by the layoffs, depicting them at a lavish “Great Gatsby” party, and celebrating the opening of a new jail with a gala in which the well-to-do pay $100 to stay the night. In the face of rising hostility among the town’s residents, GM sponsors celebrity shows designed to boost morale. It is comical to watch Anita Bryant exude Florida sunshine juxtaposed against the appalling hopelessness of families evicted from their homes. “
JTMcPhee
November 29, 2009 at 12:18 pm
As an over the road truck driver, my third career, I see so many empty office and manufacturing building everywhere I go. Whole industrial divisions empty.
Al
November 29, 2009 at 4:05 pm
We need to accept reality and work towards the establishment of a strong rental society.
We have PLENTY of cash waiting in the wings to buy up properties when they are no longer artificially inflated. There a nation of landlords who saved their cash, didn’t get extended. We need to let the market reward them.
This damn thing is like removing a band-aid, and we’re not 20% of the way done. We need to finally grit our teeth, and just yank.
Morgan Warstler
November 30, 2009 at 10:41 am
What you mean “we,” White Man?
“strong rental society” — I thought rent-seeking was a BAD thing.
Gee, Morgan, glad to have you back. Things are getting so serious around here — good to have the prospect of more comic relief.
Don’t forget — the name is “Paul,” and don’t forget that like in the story you extravasated that tic from, “Paul” was not the guy who started it.
JTMcPhee
December 1, 2009 at 11:37 am
Well according to This questionnaire
USA is the last country in the world, which will come out of recession. Apparently it is based solely on people’s opinions, but the fact, that basically 75% of 100% USA citizens think, that recession is not over yet and 17% of them think, that it will not even be over until 2-3 years, is not realistic. I have no idea, whether people have serious financial problems or they just don’t think realistically.
Martin
December 14, 2009 at 5:51 am