MCViewPoint

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Posts Tagged ‘hoarding’

Is the ‘Housing Shortage’ the Result of Housing-Hoarding by the Wealthy?

Posted by M. C. on April 23, 2024

Would a deep recession incentivize an increase in the number of occupants per dwelling and a corresponding decline in demand for rentals? Would a collapse of The Everything Bubble prompt some selling of hoarded housing? As painful as these might be, these dynamics would correct the destabilizing distortions wrought by the Fed’s easy-money bubble blowing and concentration of wealth in the hands of the few at the expense of the many.

https://www.oftwominds.com/blogapr24/housing-shortage4-24.html

Those seeking to buy a house as shelter for their household can’t compete with the wealthy seeking assets to snap up and hoard for appreciation.

Longtime readers know I’ve been addressing housing issues from the start of the blog in 2005. Let’s start with the general context of housing in the US, courtesy of the US Census Bureau, which tracks occupancy and the number of housing units nationally: Quarterly Residential Vacancies and Homeownership, 4th Quarter 2023

All housing units 145,967,000

Occupied 131,206,000

Owner 86,220,000 59%
Renter 44,985,000 31%

Vacant 14,761,000 10%

Non-seasonal (i.e. not second homes owned by the wealthy for their recreational use) 11,177,000

Units vacant because they’re in the process of being rented or sold:
For rent 3,224,000
For sale only 757,000
Rented or Sold 783,000

Held off Market (occasional use, temporarily occupied, other) 6,414,000

Seasonal (i.e. second homes owned by the wealthy for their recreational use) 3,583,000

TOTAL Held off Market and Seasonal / Recreational: 9,997,000

In summary: there are 14.7 million vacant dwellings in the US, of which 10 million are not available for year-round rentals or sale. Those 10 million dwellings are comparable to the total number of dwellings in entire nations, for example, Australia (11 million housing units, population of 27 million).

There are many complexities not specified or included in these statistics. For example, vacant dwellings located in rural locales with few jobs might be empty because there is little demand due to a declining population. Other dwellings may no longer be habitable without renovation or repair.

On the other side of the equation, non-permitted dwellings (granny flats, etc.) may also be uncounted as those answering Census Bureau questionnaires might hesitate to report units added without official approval. This can include everything from RVs parked alongside homes to converted garages to living rooms partitioned off and rented out as quasi-bedrooms.

The vagarities of self-reported data are potentially major factors in counting short-term vacation rentals, a.k.a. AirBnB / VRBO-type rentals. Data remains sketchy on exactly how many housing units are being “held off the market” as short-term vacation rentals. As of 2023, there were 2,459,260 available vacation rental listings in the U.S., but this may not include informal rentals, rentals listed outside of the major platforms, etc.

The Census Bureau offers several estimates of seasonal units: 3.6 million in the above link, and 4.3 million vacant seasonal units in this post: See a Vacant Home? It May Not be For Sale or Rent. These are traditionally second or third homes of wealthy households. but many such properties are now being offered as short-term vacation rentals for periods when the owners aren’t using the property.

What these statistics don’t tell us is how many housing units have been snapped up by wealthy households as investments, nominally as “second homes” but solely as safe places to park excess capital / credit, not for recreational use. The wealthy may have joined the rush to cash in on the short-term vacation rentals boom, but they don’t need positive cash flow to afford the costs of ownership; the Airbnb rental income was mostly to defray the costs of ownership.

Too Many Rich People Bought Airbnbs. Now They’re Sitting Empty

In other words, one factor in the “housing shortage” is the pressure on the wealthiest households to find places to park their excess capital and exploit their low-cost lines of credit. This can be understood as a second-order effect of the Federal Reserve’s policy of inflating asset bubbles in which 90% of the gains flowed to the top 10% households. This new wealth could then be tapped to buy real estate, a long-favored asset class of the wealthy that has risen to new heights as the wealthy compete with other wealthy households to snap up housing.

There’s not much in the pockets of the bottom 50% to compete with the top 5% for housing: we can expand this to say there isn’t enough in the pockets of the bottom 90% to compete with the top 10% who collected 90% of the gains of the Fed’s credit-asset bubbles:

See the rest here

Be seeing you

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Preventing Liberty from Becoming a Coronavirus Fatality – The Future of Freedom Foundation

Posted by M. C. on April 1, 2020

Given the historical record of how previous emergencies spawned corrosive policies that continue to menace basic freedoms years or decades later, it is urgent to seek effective curbs on the growing abuses of power in the current crisis.

https://www.fff.org/explore-freedom/article/preventing-liberty-from-becoming-a-coronavirus-fatality/

by

Public attitudes about the coronavirus outbreak increasingly exhibit features of a collective panic. That development creates the danger that government measures designed to deal with a very real public health problem may lead to enormous collateral damage both to the economy and the freedoms that Americans take for granted.

Given the historical record of how previous emergencies spawned corrosive policies that continue to menace basic freedoms years or decades later, it is urgent to seek effective curbs on the growing abuses of power in the current crisis. We must resist being stampeded into endorsing whatever policies self-interested officials insist are necessary.
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Governments at all levels have taken ever more extreme (even outrageous) actions in an effort to stem the outbreak. The governors of New York, California, and other states have issued orders closing most private businesses and requiring residents not engaged in “essential” activities to remain in their homes.  Nevada’s governor greatly restricted doctors from prescribing an anti-malaria drug that Trump administration experts suggested held promise for treating coronavirus, because in the governor’s opinion, such prescriptions might lead to hoarding.  U.S. Justice Department officials secretly asked Congress to give the executive branch the authority to seek orders from federal judges to detain indefinitely any individual during the current emergency or any future one.

Although appalling, such attempted eviscerations of constitutional liberties should not be surprising.  Governments invariably exploit crises to expand their powers—often to a dangerous degree. That certainly has been the track record in the United States throughout our history.  Worse, a significant residue of expanded powers always persists after the crisis recedes and life supposedly returns to normal.

Most, but not all, of the abuses and unhealthy expansions of power have occurred during wartime. World War I led to statutes and executive orders that still haunt us more than a century later.  For example, various administrations have used the Espionage Act of 1917 to punish whistleblowers and intimidate investigative journalists. Barack Obama’s administration even waged a campaign to harass and intimidate journalists who published leaked material. Officials conducted electronic surveillance of both New York Times reporter James Risen and Fox News correspondent James Rosen in an effort to identify their sources.  The government named Rosen as an “unindicted co-conspirator” in an espionage case brought against his source.  The administration asserted that it had the right to prosecute Risen, even though it chose not to take that step.

Later presidents used other laws passed during World War I in ways the legislators who enacted them never contemplated.  For example, in August 1971 Richard Nixon declared a national emergency under the Trading with the Enemy Act of 1917 to impose import tariffs, close the gold window for international payments, and establish domestic wage and price controls.

World War II produced additional abuses and dangerous precedents. The most alarming example was President Franklin D. Roosevelt’s executive order putting Japanese Americans in “relocation centers” (concentration camps).  In an especially shameful ruling, the U.S. Supreme Court upheld the legality of his action.  That decision is not just a matter of academic or historical interest.  Later administrations developed contingency plans along the lines of FDR’s infamous executive order.  In the aftermath of the 9-11 terrorist attacks, suggestions surfaced that Muslim aliens (and even Muslim-American citizens) should be subjected to internment measures as part of the war on terror.

During the Korean War, President Harry Truman expanded the number and scope of executive orders, further enlarging the power of the presidency—a power surge that already had reached troubling levels under Woodrow Wilson and FDR.  Truman’s most flagrant initiative was his attempt to seize control of the nation’s steel mills as a wartime measure.  Fortunately, on that occasion the Supreme Court fulfilled its constitutional duty and struck down his dangerous executive power grab.

More recently, the policy responses to the 9-11 terrorist attacks included that 2001 Authorization for the Use of Military Force (AUMF), ostensibly to wage war against Al Qaida and its allies.  However, the AUMF became a veritable blank check for presidents to wage wars anytime, anywhere, for any reasons those presidents deemed appropriate.  Domestically, the response to 9-11 included the so-called Patriot Act and its legendary erosions of the 4th Amendment’s protections against unreasonable searches and seizures, as well as the weakening of other substantive and due process rights guaranteed in the Constitution.  That measure was a crucial building block in the growth of the current pervasive surveillance state.

Wars and other “national emergencies” produced an array of lesser, but still undesirable, expansions of governmental power and the narrowing of individual rights.  For example, the federal government’s response to the economic and financial dislocations of the Great Depression included Roosevelt’s executive order banning the private ownership of gold.  That annoying limitation continued until the mid-1970s.

The historical record also demonstrates that “temporary” measures enacted to deal with a specific crisis frequently prove to be anything but temporary.  One insidiously corrosive “temporary” change was the establishment of the withholding provision to the federal income tax during World War II.  That temporary measure is still with us, and the effect has been revolutionary.  Paying the tax in installments that show up as nothing more than an entry on an employee’s paycheck stub disguises the extent of the actual tax burden on that individual and reduces the emotional impact.

The fundamental lesson from these historical episodes is that Americans need to resist the casual expansion of arbitrary governmental power in response to the current coronavirus crisis.  New local and state governmental assaults on civil liberties came early and already are disturbingly plentiful. In early March, authorities around the United States ordered schools to close and ether prohibited large-scale public events or pressured the sponsors to take such action.  A growing number of jurisdictions soon went further. San Francisco ordered residents to “shelter in place,” barring them from engaging in any “nonessential” activity outside their own homes.  All of this occurred before California Governor Gavin Newsom and New York Governor Andrew Cuomo set a new, even more intrusive pattern by ordering statewide lockdowns.

Beyond the trampling of property rights and other crucial liberties, the coronavirus episode has led to worrisome erosions of the democratic political process.  Louisiana and Georgia were the first states to cancel primary elections, citing the danger of contagion among polling place crowds. Other states, including Ohio and Maryland, soon followed

Both the nature and scope of the expanding restrictions should alarm all defenders of liberty.  In mid-March, North Carolina went beyond shutting down individual enterprises or even types of businesses; authorities there placed most of the Outer Banks off limits to tourists and other outsiders.  Police established checkpoints to examine identifications and required special permits for access.  There is more than a small echo in that measure of the ubiquitous police or military checkpoints and “show your papers” demands that countries in the old Soviet bloc implemented, and various dictatorships around the world require today. It’s an ominous policy and image.

Sentiments in favor of comprehensive lockdowns to halt the spread of the virus reflect understandable emotions, but panic is always a poor basis for policy decisions.  The economic costs of such radical responses to the coronavirus outbreak are enormous, and the damage to basic liberties ultimately may prove even worse. Ugly, potentially dangerous precedents are being set left and right.  In virtually every case, officials imposed restrictions without any provisions for appeal—or even public comment. Worse, they did not seem to recognize any limits to their power with respect to a health crisis. The steps taken to date go far beyond the longstanding authority of local governments to impose quarantines on individuals or families diagnosed with certain highly contagious diseases.  Entire cities and states are now being put on similar lockdowns, even though the overwhelming majority of residents show no signs of coronavirus

Worries about expansive government diktats and precedents are especially warranted if the coronavirus outbreak is neither unique nor a crisis of short duration.  Originally, there was a pervasive assumption that the emergency would last only a few weeks, and then life in America (as well as other countries) would return to normal.  But in Trump’s March 16 press conference, both the president and his health policy advisers indicated that the outbreak might last until July or August.  Some experts in Britain fear that it could last until spring 2021.

That possibility creates some very serious concerns. There is no realistic way that a complex, inter-connected market economy can operate effectively for an extended period of time with a country—or even major portions of it–on lockdown.  A similar problem arises if the coronavirus does not prove to be a one-time visitor, but resembles influenza outbreaks that ebb and flow each year. In addition to the adverse economic consequences, forcibly cocooned populations will have every justification to become furious if arbitrary bureaucratic edicts repeatedly uproot their lives.

There is an imperative reason to monitor and curb some of policy precedents being set.  Future overcautious or egotistical public officials will be tempted to impose drastic measures even in response to lesser health or other emergencies.  Government orders closing private businesses fundamentally alter the relationship between individuals and the state in a dangerous fashion. Travel restrictions that confine people to their homes or bar them from specific areas are further cause for alarm.  Such restrictions always have been a hallmark of authoritarian political systems. Likewise, the postponement of elections is unsettling. Giving incumbent officials such authority creates an obvious potential for abuse—especially if the incumbents face the prospect of electoral defeat.  Perhaps worst of all is the possibility of the federal government being able to seek the indefinite detention of people based on nothing more than a Justice Department request and a compliant judge’s order.

Given the historical record of how previous emergencies spawned corrosive policies that continue to menace basic freedoms years or decades later, it is urgent to seek effective curbs on the growing abuses of power in the current crisis. We must resist being stampeded into endorsing whatever policies self-interested officials insist are necessary. Benjamin Franklin observed that “those who would give up essential liberty, to purchase a little temporary safety, deserve neither liberty nor safety.”  Americans must keep that wise admonition in mind during and after the coronavirus crisis.

Be seeing you

 

 

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Managing a Disaster – LewRockwell

Posted by M. C. on April 1, 2020

Many of the problems associated with a disaster would be eliminated if people’s buying behavior were the same as it was before the disaster. To get people to behave nicely and consider their neighbors is the ultimate challenge. I think rising prices are the best and most dependable way to get people to be considerate of their fellow man.

https://www.lewrockwell.com/2020/04/walter-e-williams/managing-a-disaster/

By

I’m not sure whether COVID-19, first identified in Wuhan, China, in the U.S. qualifies as a true disaster. Putting the disease in perspective, we might look at current influenza illnesses. According to Centers for Disease Control estimates, between Oct. 1, 2019, and March 14, 2020, there have been 390,000 to 710,000 hospitalizations as a result of the flu, 38,000,000 to 54,000,000 flu illnesses and 23,000 to 59,000 flu deaths. That’s compared with, as of March 27, a total of 85,356 cases of COVID-19 resulting in the deaths of 1,246 people.

But let’s agree that COVID-19 is a disaster and ask what the appropriate steps that are to deal with it. One of the first observations about any disaster is that the quantity demanded of many goods greatly exceeds the supply. There is a shortage. The natural market response when there is a shortage is for prices to rise. Rising prices produce several beneficial effects. They reduce the incentive for people to hoard while suppliers, motivated by the prospect of higher profits, are incentivized to produce more of the good in short supply.

Thirty-four states and the District of Columbia have anti-price gouging laws that prohibit “excessive and unjustified” increases in prices of essential consumer goods and services during a federal, state or local declared emergency. Price gouging is legally defined as charging 10 to 25% more for something than you charged for it during the month before an emergency. Sellers convicted of price gouging face stiff fines and perhaps prison terms.

But what about hoarding? Often, hoarding creates the shortage. In uncertain times, people may purchase three dozen eggs instead of one dozen. They may want to maintain stockpiles of canned goods and buy up large quantities of cleaners, paper towels and toilet paper. This kind of behavior has left some with overflowing freezers, shelves of sanitizers and garages full of toilet paper while their neighbors are left either wanting for the same items or paying what some call “excessive and unjustified” prices.

While it’s difficult to get beyond emotions, the fact is that consumers are not forced to buy products for the higher (gouged) price. If they pay, it is likely because they see themselves as being better off acquiring the good than the alternative – keeping their money in their pocket. Higher prices charged have a couple of unappreciated benefits. First, they get people to economize on the use of the good whose price has risen. That is higher prices reduce demand and encourage conservation. That helps with the disaster.

With higher prices, profit-seeking suppliers know that they can make more money by bringing additional quantities of the goods to the market. This increases the supply of goods, which helps to drive prices back down. Anti-price gouging laws disrupt these two very important functions of the marketplace and enhance and prolong a disaster. In other words, in a disaster, we want people to economize their use of goods and services and we want suppliers of these goods and services to produce more. Rising prices encourage these actions. Anti-price gouging laws stymy those incentives and create the pretense that a disaster does not exist.

Some people might reluctantly agree that allowing prices to rise during a disaster helps allocate resources. But they’ll complain that’s not the intention of greedy sellers who are out to profit. I say, so what? It’s not sellers’ intentions that count but what their actions accomplish that’s important — namely, getting people to conserve more and suppliers to produce more.

Many of the problems associated with a disaster would be eliminated if people’s buying behavior were the same as it was before the disaster. To get people to behave nicely and consider their neighbors is the ultimate challenge. I think rising prices are the best and most dependable way to get people to be considerate of their fellow man.

Be seeing you

 

 

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IRS Warns Against Keeping IRA Funds In Gold At Home | Zero Hedge

Posted by M. C. on February 26, 2020

What the heck is a windfall profit anyway?

As far as I can tell, it’s whatever politicians decide it is. It’s completely arbitrary. There are no objective measures to define it.

In short, a windfall profit is simply a profit politicians don’t like. The whole concept is a scam—a word trick to camouflage and sanitize legalized theft.

Gold-harder to steal than a digital bank account. Gold-It screams independence. The government like neither.

Never use a safety deposit box. If legal troubles find you the box gets a lock for which you are not allowed a key. If the bank gets in trouble-same.

If you bank is like Wells Fargo the contents of your box are up for grabs.

https://www.zerohedge.com/news/2016-09-07/irs-warns-against-keeping-ira-funds-gold-home

 

The Internal Revenue Service isn’t too keen on the recent advertisements suggesting retirement savers store their tax-free individual retirement account funds in gold at their house or in safety-deposit boxes, the Wall Street Journal writes.

Storing Gold at Home: Legal, But with Caveats

The statement from the IRS comes in response to a number of ads online and on the radio, such as one from Hartford Gold Group, suggesting investors can avoid stock market turbulence by investing IRA accounts in gold coins and bullion they can store where they like, including their home, according to the Journal.

 

But the law on such practices is cloudy, the publication writes.

 

For example, IRA assets can’t be stored in collectibles such as antiques, gems, artworks or wine, according to the Journal. On the other hand, it’s legal to keep IRA investments in coins and bullion-quality bars in metals such as gold, silver and platinum, the publication writes.

 

But few IRA investment providers offer the option — Vanguard and Charles Schwab don’t allows their clients to invest IRAs in physical metals, according to the Journal.

 

The IRS may be taking issue with just how difficult and expensive investing in physical gold could end up for the investor. Fidelity, which allows IRA investing in some coins and bullion, charges up to 2.9% to buy and 2% to sell the assets, and a further 0.125% quarterly storage fee, the publication writes.

 

And keeping the gold at home is not an option: out of tax compliance considerations, Fidelity requires physical metals to be stored at a qualified facility and doesn’t let IRA investors take the gold out or even view it without notification from the IRA custodian, the Journal writes.

 

Proponents of store-at-home gold say that IRA owners can legally keep their gold in a safe-deposit box or at home if they are the owners and managers of a limited-liability company that uses the funds from the IRA to obtain the gold, according to the publication.

 

Some attorney says this structure would allow investors to store coins owned by the LLC at home — but for bullion, they would still have to store it in an LLC-owned safety-deposit box, the Journal writes.

 

Home storage can get pricy, too: one professional whose company provides paperwork for at-home storage of IRA gold charges $400 to $1,200 to set up such an LLC, according to the publication.

 

And because the issue of LLC ownership by IRA has no legal precedent, companies advertising home storage of IRA gold are careful to note that they don’t provide legal advice, the Journal writes.

*  *  *

Amid the increasingly mainstream “war on cash” and ‘hoarding’ across the globe, the timing of the IRS’ warning about keeping gold in your IRA seems highly coincidental at best and more than worrisome at least as the “different this time” confiscation methods shift attitudes from concerns to actions…

The government blatantly stole wealth from the American people before.

Many worry the U.S. government might confiscate gold again if it becomes desperate enough. I don’t think those fears are unfounded. The U.S. government’s abysmal financial situation is only getting worse.

But would it really do a 1933-style grab again?

I don’t think it will. However, there is another growing threat to your gold.

More Likely Than Outright Confiscation

Today, only a tiny fraction of the U.S. population owns gold. Heck, I’d bet most Americans have never even seen a gold coin, much less appreciate its value.

This wasn’t the case in 1933, when the U.S. was still on a variation of the gold standard. That’s why the government probably won’t repeat the 1933 rip-off. It’s simply not worth the effort.

If the government wants to confiscate wealth, it’s far more likely to go for the easy option… steadily debasing the currency by printing money. It’s a stealthy way to confiscate from savers.

That doesn’t mean gold owners are in the clear.

I think the government will try a new scam: taxing windfall profits on gold. This would make it much easier for the government to accomplish something similar to its 1933 heist.

There’s precedence for it, too. In 1980, Congress passed the Crude Oil Windfall Profit Tax Act, which taxed up to 70% of “windfall profits” of domestic oil producers.

What the heck is a windfall profit anyway?

As far as I can tell, it’s whatever politicians decide it is. It’s completely arbitrary. There are no objective measures to define it.

In short, a windfall profit is simply a profit politicians don’t like. The whole concept is a scam—a word trick to camouflage and sanitize legalized theft.

If the price of gold explodes, I wouldn’t be surprised if Congress passes a Fair Share Gold Windfall Profit Tax Act levying a tax of 80%, 90%, or more on gold profits.

Be seeing you

Bernie

 

 

 

 

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