This year's Children's Defense Fund report finds roughly 1.2 million public school students were homeless in 2011-2012, 73 percent more than before the recession. More than one in nine children lacked access to adequate food in 2012, a rate 23 percent higher than before the recession.
Washington Post - Much attention has been paid to the fact that the federal minimum wage has not kept pace with inflation (or with increases in worker productivity, or with the rising incomes of the 1 percent). But in a much less abstract sense, federal and local minimum wages have also failed to keep up with the rising cost of rent.
As a result, according to a new report from the National Low Income Housing Coalition, a minimum-wage worker in the District of Columbia where the wage floor is currently $8.25 an hour would need to work 137 hours a week to afford what the Department of Housing and Urban Development considers a fair market rent for a modest two-bedroom home. Put another way: A local household would need 3.4 full-time minimum-wage workers to afford such a home. Or, a single earner in that household would need to make a lot more money: $28.25 an hour to be exact.
Tech Dirt - A new report from the Justice Department's Inspector General confirms this finding. It also notes that, despite President Obama and Attorney General Eric Holder promising that cracking down on "mortgage fraud" was a top priority, the FBI has actually put it near the bottom of the list of actual priorities. Say one thing, do another. That sounds mighty familiar.
In cities across the country, mortgage fraud crimes have reached crisis proportions, Attorney General Eric H. Holder Jr. said at a mortgage fraud summit in Phoenix in 2010. But we are fighting back.
The inspector generals report, however, shows that the F.B.I. considered mortgage fraud to be its lowest-ranked national criminal priority. In several large cities, including New York and Los Angeles, F.B.I. agents either ranked mortgage fraud as a low priority or did not rank it at all.
Utne Reader -This student-designed micro home is completely self-sufficient and can be towed by your average car. This prototype for a new kind of self-sufficient mobile home was designed with reclaimed materials by an innovative group of sixteen students, members of a Renewable Energy and Ecological Desig course at Green Mountain College in Vermont. The Optimal Traveling Independent Space is a pod-shaped home with a reduced environmental footprint that is equipped with a composting toilet, a rainwater collection system to provide indoor plumbing, and 120-watt solar panels to provide electricity. The home is selling between $8,000 and $10,000.
OTIS can be towed easily by a 5-foot-by-8-foot trailer, giving the freedom to live a nomadic life to a generation that would rather reduce their carbon footprints than be tied down by mortgages. The appeal of living a more nomadic lifestyle represents a new take on the American Dream, especially among students in this millennial generation, Professor Lucas Brown, Director of the REED course, explained.
The median new house size in America has dropped ten percent in three years. . .And front porches are back
But not in Florida where high speed rubber stamping of foreclosure is underway.
WHAT A REAL STIMULUS MIGHT LOOK LIKE
- Reduce credit card interest. As one politician once put it, "I'd frankly like to see credit cards rates down. I believe that would help stimulate the consumer and get consumer confidence moving again.'' Another politician responded by offering a bill in the Senate to cap credit card interest at 14%. The Senate voted for it 74-19. The first politician was that radical president, George Bush, in 1991. The other politician was that well known progressive, Alfonze D'Amato. Why are Obama and the Democrats more conservative than Daddy Bush and D'Amato?
- Start a movement to nationalize banks. Progressives led by Robert LaFollette did this in the 1930s, giving FDR cover for his more moderate solutions. Today, all the political pressure is coming from Wall Street, which tilts policies in that direction.
- All measures must put the interest of the ordinary citizen first. Neither the GOP nor the Democrats are doing that.
- Deemphasize tax cuts. They are far less effective than many think.
- Emphasize programs that will cheer people up and where they can see things changing for the better. Among the Wall Street bailout scam's many faults was that no one could tell what was happening as a result. Good economies need optimism.
- Use revenue sharing. It's a quick way to get money down to the states and cities and to the people who live there. Sure, some of it will get corrupted but far less than is already happening with the phony stimulus packages. The upside is that citizens have a better idea of what is being done on their behalf and have some say in how it is done.
- Fund public works project that have large spin-off benefits and which will be heavy in blue collar employment. These would include new mass transit service and a massive growth of America's rail system. It would deemphasize fixing up existing systems because the spin off benefits are far less. Would it include the much discussed new energy projects? We haven't seen any serious discussion of this. What is the blue collar employment potential of such projects?
- Institute a shared equity program for homeowners in distress under which the federal government buys a portion of the mortgage, renegotiates interest rates with the lenders and then gets its part of the equity back when the house is sold. A similar program could be used for building new homes.
- Decentralize decisions and negotiations on foreclosures and real estate interest rates, using local courts and similar bodies as was done in the 1930s.
- Give the government preferred stock in companies it aids. At one point in the New Deal, the Reconstruction Finance Corporation owned bank shares that would be worth at least $20 billion today.
Americans have been slowly transferring ownership of their homes to the banking system over the last 50+ years. These figures would look much worse if the roughly 1/3 of homes owned "free and clear" (mostly by seniors) were removed from the data, but you can see the trend is toward less equity and more debt. This is not a sign of a prospering middle-class.
CLINTON-BUSH HOUSING BUBBLE BIGGEST IN A CENTURY
Sam Smith, Progressive Review - According to a study by Yale economist Robert J Shiller cited in his book, "Irrational Exuberance," between 1890 and 1990 the sale of the average existing house (not new construction) rose no more that 25% over the inflation corrected value for 1890. In the 1990s, beginning in the Clinton years, that changed dramatically. Between 1997 and 2006 the typical house doubled in value of over the 1890 average. In other words, the Clinton-Bush housing bubble was greatest in over a hundred years. The bright side is that if the average house drops by 50% we'll be right back where we were in 1997.
Throughout the preceding century, houses varied from 85-125 percent of the 1890 average value with the exception of the depression, which for housing actually began during World War I. By 1920,housing prices were down to about 65% of 1890 levels and then began to slowly rise. By 1940 they were back to the 1890 figure. In other words, housing devaluation can be a harbinger of worse to come
PRIMING THE SUBPRIME CRISIS
JAMES MCCUSKER, EVERETT HERALD, WA - In the wake of the 1929 stock market crash and the subsequent global economic depression, Congress, among other actions, passed the Glass-Steagall Act which prohibited banks from engaging in securities underwriting. There was money to be made in securities, though, and after a suitable period of penance for their contributions to the crash and depression banks began to agitate for relief from this restrictive law.
The banking industry's whining about Glass-Steagall eventually paid off. . . Few people spoke out against the idea, which was endorsed by America's top banking regulator, Federal Reserve Chairman Alan Greenspan. It is tempting to say that his enthusiasm for the idea, and Congress' action, made sense at the time, but that was not so. In fact, it made no sense then, and makes none now. . .
Banks eagerly bought up low-quality mortgage loans, packaged them up and sold them as securities -- all the while using "three-card Monte" accounting constructs to keep the transactions off their balance sheets. . .
The Federal Reserve, the president and Congress have their hands full at this time. Their first priority is damage control, and that is as it should be. Eventually, though, the economy will right itself, with or without Washington's help, and the president, the Federal Reserve and Congress will have time to consider what got us into this fix in the first place.
If we had to pick a single event that set off this economic stink bomb, it would have to be Alan Greenspan's decision to support the expansion of bank activities into securities underwriting. While the Congress has a mind of its own, it is extremely doubtful that they would have approved this expansion in the face of his objections. He was at the height of his powers then, and his support for the idea made it bullet-proof, politically.
As soon as possible, Congress should extend its damage control operations to put banking back on solid ground, and reconstruct the wall between banking and stock-market gaming.
43% OF FIRST TIME HOMEOWNERS LAST YEAR PUT NO MONEY DOWN
NOELLE KNOX, USA TODAY - As housing prices soared last year, an eye-popping 43% of first-time home buyers purchased their homes with no-money-down loans, according to a study released Tuesday by the National Association of Realtors. The trend is potentially ominous. The real estate market is cooling in some areas, and rates on adjustable-rate loans are creeping up. As a result, some no-money-down buyers could owe more than their homes are worth. The median first-time home buyer scraped together a down payment of only 2% on a $150,000 home in 2005, the NAR found. Already, home prices in many areas are declining, and the "For Sale" signs are hanging in front yards longer. There's now at least a 50% risk that prices will decline within two years in 11 major metro areas, including San Diego; Boston; Long Island, N.Y.; Los Angeles; and San Francisco, according to PMI Mortgage Insurance's latest U.S. Market Risk Index. . .
Dean Baker of the Center for Economic and Policy Research says that if housing prices fall at least 10%, it could be even more damaging than the collapse of the high-tech stock bubble in 2000. . . Baker and other economists are concerned that many lenders have pushed a series of creative but potentially dangerous loans to help more Americans afford a home.