Homeownerlessness

Thus far, in my life, I have never owned my own home except when I’ve lived in VW vans. It’s my own fault – mortgages were easy to come by several times in my life and I chose not to invest. This will sound funny, but the prices always seemed too high. In the early-1990s … Continue reading “Homeownerlessness”

Thus far, in my life, I have never owned my own home except when I’ve lived in VW vans. It’s my own fault – mortgages were easy to come by several times in my life and I chose not to invest. This will sound funny, but the prices always seemed too high. In the early-1990s – a Staff Seargent in my Marine Corps unit suggested that a bunch of enlisted guys pool our money and start buying real estate. It was a good suggestion and none of us took it. In the mid to late 1990s, I was struggling to find my calling – if, while I had worked in radio, I had applied for a mortgage using my VA Loan – I could have bought a modest house in what is now the booming real estate market of Bellingham, Washington. In the early 2000s – I had the opportunity to purchase a small studio apartment in Honolulu for $100,000 – the price seemed pretty extreme to me and I passed. And then, the housing boom came and I was sure that the economy was heading over a cliff but mortgages were incredibly easy to come by – I chose not to seek a home loan. That was it for me – those were my opportunities. We all know what happened in 2007 with the economy and housing – as a result of that – the requirements for getting a home loan became much more stringent – in fact – in 2016 when I talked to several banks about getting a loan – they told me that my VA Guarantee was no longer worth much and that as a self-employed business owner that my reported income was too low to qualify for a home loan – both bankers suggested that I ‘find a way’ to report a higher income. Yes, I could have lied on my taxes this year. I could have taken less deductions. I could have paid more tax…but the truth is that this year with the long grey winter and the bizarre politics of 2016 – my business wasn’t sufficient to do that. We needed those deductions.

Now, the housing market is again red hot. Things like AirBnB have made housing prices soar in desirable locations. I am in the midst of closing or with any luck selling my business (I do not own the building that houses it). For the present time, my VA Home Loan Guarantee sits in a folder – worthless and unusable. I console myself by imagining that the housing market will again have a massive crash and perhaps I will be able to buy something afterwards – but I don’t really believe it. I tell myself that the banks own most of the houses that people live in – and the mortgages are simply another form of rent and home ownership is by and large an illusion anyway. We have been served an eviction notice in the house we’ve rented for the past four years because the owner wants to sell it. I am thankful that we had already been making plans to move before we got the notice, but can’t help asking myself “What if we had not?”

We currently exist in a 60 day limbo in which lies a form of homelessness that terrifies me. The landlord was apologetic and felt bad about serving the eviction because we have been great tenants – but right now is the time to sell. I don’t blame her a bit. I would have done the same thing in her position. We are 60 days away from involuntary family homelessness.

Yes, we have been making plans. Yes, I am sure we will find something. I’d be foolish, however, not to be concerned. AirBnB and the red hot housing market have driven rents sky high.

I am a person – actually, we are a family, that if you want to send a birthday card to my 5-year-old daughter, a letter to my wife, or even a bill to me – more than 60 days from now to us – we have no forwarding address.

So, once again, here I am. This time, I was ready to seize opportunity – and this time it was denied me. I am rooting for the collapse of the economy. I am rooting for the collapse of the housing bubble. I am rooting for the collapse of AirBnB and more. I would rather be cheering for the economy and housing – but this Gen-x USMC veteran has been left behind by it. I have been left out of it. I accept my responsibility in this process – but no matter how hard I try – it just doesn’t make sense that this is all my fault. And so – here we are. Here I am. Here we go.

My Last Oregon Garage Sale – God Willing

I used to love having garage sales. It was fun to let stuff go and meet who was taking it while making a little money at the same time. I think all of that changed when we moved to a small Oregon town with a depressed economy. Here, and probably in many other parts of the United States, there are a large number of people who rely on garage sales to survive – they are pensioners, unemployed, housewives, and thrift shop owners, flea marketers, ebayers, antique dealers, and still, once in a while – someone just looking for something that will make them smile that they prefer not to pay full price for. That level of necessity changes the intensity of a sale. There is a dog-eat-dog competitiveness which in some cases determines whether someone will eat or at the very least – whether their food is quality or off the McDonalds $1 menu (which is no longer a $1 menu but a $1.69 or $2 menu).

Then there are the people who shop with their phones – comparing prices on Ebay and Amazon with my prices. Things just aren’t worth very much when just about anything can be had for $20 and shipping. We are in the process of getting rid of virtually everything – and not surprisingly – it’s hard. After two days of a garage sale with decent but not great stuff – I filled our utility trailer to overflow for a dump run and have ten boxes that will go to charity. That’s stage one. Next stage is to do a total estate liquidation sale and of course to empty our shop. This last weekend was the citywide sale here in our town – there was a lot of competition to get stuff in people’s hands. After two days, my wife and I were done – we packed it all in. Unfortunately, the little town we are in makes having a sale incredibly difficult. You can’t be on commercial or industrial or dual zoned land – which we are. You can’t be a person who makes a living selling second hand goods, which I do. You have to get a permit – which due to the previous two conditions, I am unable to get for our house. And then there is the rain. This is the Oregon Coast. Everything got rained on yesterday despite a forecast of clear and sunny. Yuck.

Anyway, that was step one. It was hopefully, the last garage sale I will have in Oregon. Our next sales will be store liquidation and then total estate liquidation – these tend to be better because they are indoors and you can command higher prices and sell a better quality of items. This weekend’s sale was enough to pay off a credit card bill – and we got rid of a lot of crap we didn’t need – so it was a success. Thank God.

What I’m Reading: The Ascent of Money by Niall Ferguson

My quest to understand the world we live in continues to focus on capital and finance with The Ascent of Money by Niall Ferguson, like another book I recently read and reviewed, Money – this was written on the eve of a major financial catastrophe – though Ferguson, to his credit, is much more aware of the systemic instability he is writing in than Robertson was. And, unlike the Great Depression, the onset of the Great Recession had already begun at the time of Ferguson’s writing and by the time he wrote the revised conclusion of the paperback version – the major effects had already been felt and dealt with and the recovery efforts were well underway.

This was a good book and offered a wealth of information about the transition of money from hard currency to fancifully re-packaged imaginary money based on money that was loaned but which never actually existed and then even to the most chimeric form of capital yet – the hedge fund. Ferguson’s telling of the birth of banks, stock companies, paper currency, debt markets, and derivatives was both entertaining and informative. I’d recommend this book to anyone who wants to understand capitalism and money.

That being said, Ferguson is a cheerleader of capitalism and an enthusiastic supporter of the positive benefits of money. For Ferguson, there seems to be no possibility of imagining a world in which unfettered capitalism, collecting interest, and central governmental oversight of monetary instruments could possibly exist. There is a palpable admiration present in his tales of swindlers, con-men, and thieves enriching themselves at the expense of honest workers and virtually no empathy present as he ignores the human toll that the financial escapades of men and governments wreak upon five centuries of humanity. He is a gifted storyteller and a talented teacher of economic principles and history – but ultimately, it is clear that he is a capitalist and not a humanitarian.

Still, the book is a must-read as these several notable passages illustrate:

..there were few mourners when the last meaningful vestige of it {the gold standard} were removed on August 15, 1971, the day that President Nixon closed the so called ‘gold window’ through which, under certain restricted circumstances, dollars could still be exchanged for gold. From that day onward, the centuries old link between money and precious metal was broken.

In his chapter about financial bubbles, Ferguson tells the colorful tale of John Law, a murderer fleeing justice in his native Scotland, who managed to take complete control of the French Royal Bank and essentially destroyed the treasury of France (and her citizens) through selling shares in the Mississippi company which was responsible for leaving France bankrupt and in need of the capital that selling the Louisiana Purchase to the fledgling United States brought. According to Ferguson, Law was single-handedly responsible for the founding of New Orleans and the ascent of Britain over France. I would love to see a movie about Law, but I’m glad to have not been one of his direct victims.

And finally, this quote struck me as incredibly powerful. It’s worth holding onto and thinking about deeply.

Longer life is good news for individuals, but it is bad news for the welfare state and the politicians who have to persuade voters to reform it.

And that, is perhaps the most powerful, though unintended message of this book – what is good for the individual is not necessarily good for the capitalist or the capitalist state. Buyer beware indeed.

The Joy of an Ebay Auction

I’m watching an auction right now….it’s something I want, but don’t need yet, but will need eventually, so I’ve been watching a few auctions. Most of them have gone for way too much – this one though – the price is right – at the moment, but there are 27 minutes left, so that can change in a bit. I’ve learned that bidding too soon is a mistake and only drives the price higher, but so has everyone else. The price just went up by $10…. 16 minutes left. We are all only waiting for the last five minutes and ideally the last minute…if it hasn’t gone past my limit by the last minute, I’ll punch in my highest price and hope that no one else goes higher…but they might…that’s the risk I take, but then, I know what the most I want to pay is, and I only give myself time for one bid – if the pre-last-minute-bids exceed my maximum, than I will watch another auction. And wait…and of course, the rule of whatever that is…oh, Murphy’s Law…says that just before I punch in my last minute winning bid, the internet will cut out, there will be a household emergency, or the power will go off…it happens all the time, or at least we notice when it happens and when it doesn’t we don’t notice but this time, we will all be aware of it – you and me that is….down to 11 minutes now…me and the six people waiting for the last minute are on the edge of our seats for 10 minutes – this is really living – and it’s not like a live auction where a last minute bidder can steal it from you – ebay runs on time, not energy – so we have all learned that if you wait until the end – you might get a bargain but if you bid early, you are screwed and only screwing yourself further…it’s gone up $30 since I started this post…oh, the agony of waiting but the orgasmic thrill of actually being alive every moment as the seconds tick down…this is life (as we know it) this is living (as we know it) this is the thrill of the hunt (as we know it). It’s hard to contain myself, to keep myself for premature ebidulation, I am so excited, oh my goodness….the last time I did this, I got distracted and punched in my final bid two seconds too late and missed the deal of the century…(is my tongue too firmly in my cheek as I write this) but wait, here we are at five minutes and I still have a chance…should I bid now, no wait, wait. Hold back man….these are either real professional masters of self control or maybe I’m the only one watching in this heightened state of excitement….how can they not be bidding? How can I? It’s at the point where I need to just go watch the clock now…you will have to wonder if I won or not…(but the price went up by 300% in the last minute!)

What I’m Reading: Money by D.H. Robertson Cambridge Economic Handbooks

I’ve always had an intellectual fascination with money and when I saw an old book on a shelf called “Money by D.H. Robertson“, my hope was that it would be a book about the origins and social dynamics of money through the ages – I have not yet found such a book and this looked like a possible candidate – but once again I was disappointed. Disappointed in not finding what I was looking for but delighted with what I found.

This incredibly readable and interesting little book edited by the famous economist John Maynard Keynes (arguably one of the the most influential economic policy makers of the 20th century – father of Keynesian Economics!) and written by D.H. Robertson is a textbook on (essentially) world banking practices written just prior to the stockmarket crash which led to the worldwide Great Depression and during the hieght of the recovery from what Robertson calls The Great Muddle – which was the confusion of banking practices and economic chaos that led to and followed up upon World War I. This little book was written prior to chaotic events of the Depression and World War II.

The chapters of this seemingly dull book about banking practices are each led off with a quote from Lewis Carrol’s Alice in Wonderland and Through the Looking-glass – which pretty well convinced me that what was to follow would be trip down the rabbit hole. I was not disappointed. The opening chapters were as close as I was to get to my desired study of the origins of money in that we are given a definition “anything which is accepted inthe payment of goods or in the discharge of other kinds of business obligations” – Robertson makes a good argument that the best argument for money is that it allows manufacturers the ability to acquire raw materials without having to trade their finished product for the materials – which the raw material producers may not need or have a use for. So, essentially, it simplifies things. He argues that for the consumer, it allows a freedom of choice and eliminates a large degree of waste which would follow from payment in kind. Finally, (and this is where this becomes more of a text about banking) the existence of money makes it possible for there to be loans and debts.

Later in the chapter, Robertson talks about how a downturn affects the businessman – how demand dries, then prices drop, then they drop below the level of profitability and then, and this is interesting how businessmen at different levels deal with a recession:

If he is old and wily and has made his pile he retires from business for a season and goes for a sea voyage or into the House of Commons or Congress. If he is young and ambitious or idealistic he keeps the ball rolling and the flag flying as best he can. If he is an average sort of manufacturerhe explains that while he adheres to his previous opinion that the finances of his business is no concern of the working classes, yet just so much financial knowledge as to see the absurdity of the existing trade-union rate is a thing which any workman should possess. In any case, early or late, he bows to his fate .. and restricts in greater or less degree the output of his product and two things happen…the world adopts a lower standard of comfort cutting off its nose, as it were, to spite its face. And men trained and willing to work find no work to do, and tramp about the streets with the parrot-cries of journalists about increased output ringing in their ears and growing rancor in their hearts.

“Thus money, which is a source of so many blessings to mankind, becomes also, unless we can control it, a source of peril and confusion.”

And with that the book dives into monetary policy, most of which has not been applicable since the gold and silver standards were abandoned and most of the world’s currency became fiat, that is money based on debt but without any actual source of backing. This is interesting reading, written in a lyrical style that is sometimes hard to correlate with economic policy. The chapter about economic policy during “The Great Muddle” is fascinating – looking at the root economic causes of the first world war from an economic rather than a political perspective is enlightening. The following chapter which delves into economic cycles is equally compelling as it most likely is the root of the entire Keynesian school of economic thought – before the events of the depression and World War II had solidified the theories.

Overall, an enjoyable journey down a dry and abandoned rabbit hole which expanded my understanding of economic policy and banking without boring me to tears.

The Looming Financial Crisis – Navient Student Loans

Here is what the base of the next big financial crisis will be…it will be students like me who borrowed $30k and then graduated at the start of the great recession – and then were encouraged to use forbearance on their student loans while they struggled to find their feet under them, start families, and pay for modern requirements like cell phones, internet, insurance (car and health and home), and deal with the seemingly invisible (to the government) steeply rising cost of living in virtually every area. Personally, my debt has grown by nearly 20K through forbearance, since I have used forbearance I will not be eligible for debt forgiveness, and my income has never reached a level where debt repayment is a realistic option – so I will continue to use forbearance until companies like Navient say that I no longer can and then I will probably be forced to default or refinance with a different company which will start the same cycle. Meanwhile Navient uses their debt like cash and that imaginary money (which will probably never be repaid) boosts the stagnant economy enough that people don’t see we are in a very perilous situation. And then – it bursts – and it is too late.

https://www.bloomberg.com/news/articles/2017-04-03/student-debt-giant-navient-to-borrowers-you-re-on-your-own