This interesting Alternet piece tries to imagine a different system.
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This essay in Esquire outlines a real source of generational conflict - the baby boomers are going to retire comfortably, while young adult will find themselves scrambling as a result of a drastically weakened job market and a diminished social safety net.
Explains author Stephen Marche:
"Twenty-five years ago young Americans had a chance.
In 1984, American breadwinners who were sixty-five and over made ten times as much as those under thirty-five. The year Obama took office, older Americans made almost forty-seven times as much as the younger generation.
This bleeding up of the national wealth is no accounting glitch, no anomalous negative bounce from the recent unemployment and mortgage crises, but rather the predictable outcome of thirty years of economic and social policy that has been rigged to serve the comfort and largesse of the old at the expense of the young."
Fixing Up A Foreclosure
Adam Rust is purchasing a foreclosed house and fixing it up for renters. This blog post is part of a series about that process.
Wednesday.
This time we closed.
If you remember from last time, the closing fell through because the water heater began to leak. It ruined a ceiling and a carpet. “I just want to make sure that this is a $3,000 cost and not a $13,000 cost.” Well, it turned out that a brand new water – even one from a company that has a monopoly on this particular technology – is only $1,300.
Somewhere through the second half-hour of signatures, our lawyer stopped to hold up a paper.
“This one really gets me,” he said. “These guys at HUD have insisted that you sign this document. It says that you will hold them harmless for any problem with the house, going back to the beginning of time.”
Fixing Up A Foreclosure
Adam Rust is purchasing a foreclosed house and fixing it up for renters. This blog post is part of a series about that process.
We were quietly surveying the scores of legal books on the shelves of the meeting room when my lawyer came in. He was late, and when he sat down he threw several folders stuffed with all kinds of papers on to the table.
“I cannot imagine how these guys can get away with working like this,” he said. “Here we are, thirty minutes to closing, and they need me to have you sign two new disclosure forms. And, until you do that, they won’t give me the closing documents. And until they do that, the bank won’t give you any money.”
HUD wants my signature on a document that says that I knowingly turned the water on. I can agree with their point, but the problem is timing. If they wanted to put a new contingency into the deal, it needed to happen on Friday.
I knew that things were in play after the leaking water heater ruined a carpet and the ceiling in the house. The realtor said that I would be on the hook for it. But now that it seems like we are not going to close, I see a potential fight over the water. My lawyer is mad about that, too.
“As-is is the operating word here,” he says. “I get that. But ‘as-is’ means you have a right to know what the ‘is’ is. If you can’t turn on the water, then how you can utilize your right?”
Ex-Goldman Sachs executive director Greg Smith fulfilled a dream I'm sure many people have: Blasting his former employer in an extremely public forum (the New York Times) and making the whole world sit up and say, "Hmmm, maybe there's something wrong there."
In his op-ed in the Times, Smith describes a "toxic and destructive culture" that puts profit motive ahead of clients. He writes:
"It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.
It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are."
Fixing Up A Foreclosure
Adam Rust is purchasing a foreclosed house and fixing it up for renters. This blog post is part of a series about that process.
I had a report due - something that I had been working on for way too long - when my realtor called me. “Have you been over to the house?” she said. “Or has Reneta called you?”
“No,” I said. “But what’s up? Should she have called me?”
“You didn’t hear about the water coming out of the ceiling? And there’s supposed to be a big crack?”
"I think I’ll go over there now."
"Well, good, because Reneta is there and she wanted you to see it. Just so you’d know what is going on."
* * *
The house is about six miles from my office. While it isn’t that far away, getting there involves going through an area that has yet to be developed. It feels rural. You have to drive over a railroad track, which wouldn’t seem like a disruption except that the state has never graded the road. You have to go over a berm. There is a great barbecue place on the right. At a certain point, the country goes away and the suburbs roar back to sleep. My new house is in the middle of that new suburb. They have managed to build thousands of houses on this side of town in the last 15 years. They’ve managed to do that without constructing any apartment buildings and very little in the way of retail. There is a big road to the south where there are a few grocery stores and car dealerships, but there is still a big gap between commerce and cul-de-sac.
Fixing Up A Foreclosure
Adam Rust is purchasing a foreclosed house and fixing it up for renters. This blog post is part of a series about that process.
For the first part of Adam's two-part series on the challenges of dealing with the Section 8 program, click here.
I showed my house to thirty or forty voucher holders. Four signed a lease. Every time, their contract fell through because of a hold-up from the Housing Authority. I began to realize that there was a big problem with the program.
Neither of the narratives on the left nor the right of the political spectrum square with what I experienced.
Conservatives might agree with the idea of market-based vouchers, but the architects of right-wing opinion still don’t show much love for Section 8. It is a “no-strings-attached welfare program,” according to Howard Husock from the Manhattan Institute, “[through which] urban liberal Democrats waft benefits to their constituents … [resulting in] increased dependency and the undermining of neighborhoods.” Some attacks are more ad hominem: the right-leaning critics will say that voucher holders are a bunch of shiftless welfare moms armed with the privilege of a voucher and a careless disregard for other people’s property.
The idea that landlords were prejudiced against voucher holders was off, too. This is the narrative from the left. People will tell you that landlords prejudicially refuse to accept vouchers because of prejudice. Many will assume that taking a voucher means over-charging for rents and putting off repairs. Whenever land-lording comes up during coffee with one of my environmentalist friends, he always tells me about the house on his street with eight cars parked on the lawn and people sleeping outside during the day in the summer. I imagine that he feels very safe to voice this perspective, as he is on the Chapel Hill Town Council.
Charles Murray has recently written a book that goes into great detail about the two Americas. To paraphrase one of his points, he says that we have archipelagos of the richest and the most-well educated surrounded by vast stretches of physical space made up of neighborhoods full of people struggling to make ends meet. Whereas most rich people used to live in mixed-income areas, now there are thousands of neighborhoods where every home costs four or five times more than the median price in the country. Ultimately, what is lost is any social engagement between the two groups. Well-off youngsters co-mingle at Brown and Berkeley when they are young and in clusters of McMansions in their adult years. This social history came across in the advice I got from my well-off non-landlord friends. “Be sure to check their credit,” some said. “Don’t just decide you like someone.”
My landlord friends differed. “Ask for a copy of their credit score? Why? So you can see the same 580 to 620 number again and again? Credit score is meaningless. Don’t even waste their money. Go see if they kept their place in shape.”
Fixing Up A Foreclosure
Adam Rust is purchasing a foreclosed house and fixing it up for renters. This blog post is part of a series about that process.
During my conversation with my home inspectors last week, the topic of Section 8 came up. Some people may not know what Section 8 is, so I thought I might take advantage of a lull in the process of buying a foreclosure to talk about this program.
Section 8 is a federal housing program that pays rents for low-income households. More officially known as the “Housing Choice Voucher Program,” Section 8 is administered by local housing authorities but governed by the U.S. Department of Housing and Urban Development. The way it works is straightforward: private landlords contract with the local Housing Authority to rent to a person with a Section 8 voucher. The voucher holder picks their home, which should mean that landlords are forced to keep their homes in shape. There is a systematic check in place to make sure this happens. If a lease is signed, the housing authority sends out an inspector. If your house passes, then the lease is recognized and the tenant moves in. The amount of the voucher is factored by the income of the tenant that holds it, but the general rule is that the tenant is expected to contribute one-third of his or her income to their overall housing costs. The landlord collects a portion of the rent from the tenant and the rest is direct deposited from HUD on the 1st day of the month.
In theory, Section 8 should work out to everyone’s satisfaction. When I bought my first rental home, my entire focus was based on finding a voucher holder. My contractor was unequivocal: “Get that government money. It hits your account, rain or shine, every month.”
Understand that I lean progressive. I work for a non-profit organization that advocates for people to get a decent mortgage. I did not intend to gouge anyone. You get what you give. Make a nice house for someone and then you can expect to be treated fairly. I put a fair amount of money into a three-bedroom ranch. I doubled the size of the kitchen, I added carpet and tile, I refinished the hardwoods, and I put in lots of insulation.
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Fixing Up A Foreclosure
I am hoping that I can get an answer to one of the big problems with the foreclosed property that I am buying today.
HUD was clear that something is wrong with the water. They hire people to inspect each home before they sell it and then they publish the results. HUD says that the pipes will not hold pressure. They are willing to escrow $550 against the problem. That does not help me, though, because investors can’t qualify for that money. Besides, the inspection might be optimistic. There is always the chance that water will spill out inside the walls and I will have to tear down sheetrock and replace not just pipes but wiring and insulation.
I know that there is some risk involved with what I am doing. You have to buy these houses “as is.” Some of them are a wreck. Sometimes people do awful things before they get kicked out of their home. Things like pouring gasoline down the sink drain, or putting a wrench in the disposal, or taking a sledgehammer to a few walls. This home has its appliances still intact. Most people take them before they leave. Often they rip them out of the wall.
When my wife told one of our friends that we were going to buy a home with the intent of renting it out, she said “Oh, so you want to be a slumlord?” I am afraid that her opinion is not that exceptional. Lots of people seem to think that there is something suspect about being a landlord.
Fixing Up A Foreclosure
When you unlock the front door of a foreclosure, you never know what you are going to see.
I know that my hyperactive son wants to run in headfirst, but I hold him back because sometimes things are not right. The door turns out to be ajar – never a good sign – and so it turns out that knowing the key code does not matter.
This home is nice. Nice because there is no smell. Nice because nothing is broken. Nice because I think I would live here myself. This home has been empty for at least four months. No one has broken into it.
I know what is not nice. Not nice is when people take a sledgehammer to a wall. Not nice is when carpets are riddled with awful stains. Not nice isn’t just an old appliance. Not nice is when the dishwasher is missing and so are the toilets. Last month, I went to a not nice house where homeless people had been living. The floor was covered with needles, human excrement, and diapers. The graffiti on the kitchen cabinets offered a warning: “Don’t cook here, fool.”
I often yearn for three day weekends. For me, the 32 hour work week would be just about perfect. My basic feeling is that we spent too much time working, and that people neglect their families and friends because they're so concerned about their jobs.
Now, much to my delight, someone is making the case for working less. And not just a little bit less - the New Economics Foundation is advocating for a 21 hour workweek. This would be even better than a 32 hour work week, in my opinion.
According to a post examining the benefits of a 21 hour workweek at fastcoexist.com, "The New Economics Foundation (NEF) says there is nothing natural or inevitable about what’s considered a 'normal' 40-hour work week today. In its wake, many people are caught in a vicious cycle of work and consumption. They live to work, work to earn, and earn to consume things. Missing from that equation is an important fact that researchers have discovered about most material consumption in wealthy societies: so much of the pleasure and satisfaction we gain from buying is temporary, ephemeral, and largely relative to those around us (who strive to consume still more, in a self-perpetuating spiral).
The NEF argues to achieve more satisfying lives we need to challenge social norms and reset the industrial clock in our heads. It sees the 21-hour week as integral to this for two reasons: it will redistribute paid work, offering the hope of a more equal society (right now too many are overworked, or underemployed). At the same time, it would give us all time for the things we value but rarely have time to do well such as care for our family, travel, read or continue learning (as opposed to merely consuming)."
I have one basic question, involving wages. Would a 21 hour work week cut my salary in half? Because that wouldn't be good at all. But if there's a way to ensure a basic quality of life, and have everyone work less, I'm all for it.
The New Economics Foundation is a think tank with a slogan that I really like: "Economics As If People and the Planet Mattered." We need more of that kind of economics!
Banks are actually making pay cuts.
Click here to learn more.
Chatter about the shrinking middle class and rising poverty is more than just a bunch of crazy talk.
According to the latest Census data, one in two Americans are poor or low-income.
Reports the Associated Press:
"The latest census data depict a middle class that's shrinking as unemployment stays high and the government's safety net frays. The new numbers follow years of stagnating wages for the middle class that have hurt millions of workers and families.
'Safety net programs such as food stamps and tax credits kept poverty from rising even higher in 2010, but for many low-income families with work-related and medical expenses, they are considered too 'rich' to qualify,' said Sheldon Danziger, a University of Michigan public policy professor who specializes in poverty.
'The reality is that prospects for the poor and the near poor are dismal,; he said. 'If Congress and the states make further cuts, we can expect the number of poor and low-income families to rise for the next several years.'"
In related news, six members of the Walton family (the original owners of Wal-Mart) have more wealth than the bottom 30 percent of Americans.
Bloomberg did a bang-up job with today's report on the bank bailout.
The first four paragraphs are enough to make your blood boil. Here they are:
"The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.
The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.
Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse.
A fresh narrative of the financial crisis of 2007 to 2009 emerges from 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions. While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger."
Click here to read the whole thing.
