Monday, September 30, 2019

Could Pricey Urban Meccas become Crime-Ridden Ghost Towns?

As the exodus gathers momentum, all the reasons people clung so rabidly to urban meccas decay.
If there is any trend that's viewed as permanent, it's the enduring attraction of coastal urban meccas: despite the insane rents and housing costs, that's where the jobs, the opportunities and the desirable urban culture are.
Nice, but like many other things the status quo considers permanent, this could reverse very quickly, and all those pricey urban meccas could become crime-ridden ghost towns. How could such a reversal occur?
1. Those in the top 10% who can leave reach an inflection point and decide to leave. The top 1% who live in enclaves filled with politicians, celebrities and the uber-wealthy see no reason to leave, as the police make sure no human feces land on their doorstep.
It's everyone who lives outside these protected enclaves, in neighborhoods exposed to exasperating (and increasingly dangerous) decay who will reach a point where the "urban lifestyle" is no longer worth the sacrifices and costs.
It might be needles and human feces on the sidewalk, it might be petty crime such as your mail being stolen for the umpteenth time, it might be soul-crushing commutes that finally do crush your soul, or in Berkeley, California, it might be getting a $300 ticket for not bringing your bicycle to a complete stop at every empty intersection on a city bikeway. (I've personally witnessed motorcycle officers nailing dozens of bicyclists with these $300 tickets.)
It might be something that shreds the flimsy facade of safety and security complacent urban dwellers have taken for granted, something that acts as the last grain of sand on the growing pile of reasons to get the heck out that triggers the decision.
Not everyone can move, but many in the top tier can, and will. Living in a decaying situation is not a necessity for these lucky few, it's an option.
2. Those who have to leave when they lose their job. A funny thing happens in all economies, even those with central banks: credit-cycle / business-cycle recessions are inevitable, regardless of how many times financial pundits say, "the Fed has our back" and "don't fight the Fed."
As I've noted here numerous times, a great many small businesses in these pricey urban meccas are one tiny step from closing: one more rent increase, one more bad month, one more regulatory burden, one more health issue and they're gone. They will move to greener pastures for the same reason as everyone else--they can't afford to live in urban meccas.
Once enough of the top 10% leave (by choice or because they can no longer afford it), the food/beverage service industry implodes. Wait staff and bartending have been a major source of jobs in these urban meccas, and when hundreds of struggling establishments fold due to a 10% decline in their sales, thousands of these employees will lose their jobs and the prospects of getting hired elsewhere decline with every new closure.
The vast majority of these service employees are renters, paying sky-high rents that unemployment can't cover. They will hang on for a few months and then cash in their chips and move to more affordable climes.
3. Once the stock market returns to historic norms, the gargantuan capital gains that supported local tax revenues and spending dry up. WeWork is the canary in the coal mine; from a $50 billion IPO to insolvency in six weeks.
Once tax revenues plummet (no more IPOs, hundreds of restaurants closing, etc.), cities and counties will have to trim their workforces to maintain their ballooning pension payments for retirees. This will leave fewer police and social workers available to deal with everyone with little motivation (or option) to leave: thieves, those getting public services and the homeless.
4. Housing prices and rents are sticky: sellers and landlords won't believe the good times have ended, and so they will keep home prices and rents at nosebleed valuations even as vacancies soar and the market is flooded with listings.
Neighborhoods that had fewer than 100 homes for sale will suddenly have 500 and then 1,000, as sellers realize the boom has ended and they want out--but only at top-of-the-bubble prices.
Ironically, this stubborn attachment to boom-era prices for homes and rents accelerates the exodus. As incomes decline, costs remain sky-high, so the only option left is to move away, the sooner the better.
By the time sellers grudgingly reduce prices, it's too late: the market has soured. The Kubler-Ross dynamic is in full display, as sellers go through the stages of denial, anger, bargaining and acceptance: they grudgingly drop the price of the $1.2 million bungalow or flat to $1.15 million, then after much anger and anguish, to $1.1 million, but the market has imploded while they processed a reversal they didn't think possible: now sales have dried up, and prices are sub-$800,000 while they ponder dropping their asking price to $995,000.
Vacant apartments pile up, as the number of laid-off and downsized employees who can still afford high rents collapses. (Recall that tens of thousands of recent arrivals in urban meccas rely heavily on tips for their income, and as service and gig-economy business dries up, so do their tips.)
5. As the exodus gathers momentum, all the reasons people clung so rabidly to urban meccas decay: venues and cafes close, street life fades, job opportunities dry up, and yet prices for everything remain high: transport, rent, taxes, employees, etc.
Friends move away, favorite places close suddenly, streets that were safe now seem foreboding, and all the friction, crime, grime and dysfunction that was once tolerable becomes intolerable.
6. In response to deteriorating city and county finances, local government jacks up fees, tickets, permits and taxes, accelerating the exodus. How many $300 tickets, fees and penalties does it take to break the resolve to stick it out?
7. Those on the cusp cave in and abandon the mecca. Once those who had the option to leave have left, and those who can no longer afford to stay leave, the decay causes those on the cusp of bailing out to abandon ship.
Renters move out in the middle of the night, homeowners who have watched their equity vanish as prices went into freefall jingle-mail the keys to the house to the lender and small businesses that had clung on, hoping for a turn-around close their doors.
8. Each of these dynamics reinforce the others. Soaring taxes, decaying services, declining business, rising insecurity and stubbornly high costs all feed on each other.
And that's how pricey urban meccas turn into ghost towns inhabited by those who can't leave and those living on public services, i.e. those too poor to support the enormously costly infrastructure of public spending in the urban mecca.
The lifestyle you ordered is not just out of stock, the supplier closed down.
My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format.


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Sunday, September 29, 2019

So Sorry, Your Karma Ran Over Your Dogma

When dogmas lose their grip on believers, they collapse in spectacular fashion.
Karma covers a lot of ground, but it boils down to consequences: consequences not just from your actions but from your convictions, schemes, obsessions, and yes, dogmas.
The reason why Karma runs over Dogma is that nobody clinging to a dogma sees themselves as dogmatic. The true believer never sees their conviction as dogma, but as Revealed Truth, as self-evident, a view that is buttressed by all the other True Believers who surround the believer, reinforcing their conviction and soothing any nagging doubts by mocking, "debunking" or marginalizing heretics and critics.
In our society, the mass media serves as a soothing echo-chamber of dogmas. It must be true, the news anchor said it on TV, etc.
Dogmas generate power and profits. Trillions of dollars flow into a few pockets because people believe the dogmas that "you need a college diploma to succeed" and "America's healthcare system is the best in the world."
As evidence-based doubts seep in, those at the top of the "faith" who have the most to lose become increasingly fanatical and rabid, pushing an increasingly restrictive Orthodoxy on true believers and establishing an Inquisition to excommunicate or eliminate any heretical doubts or dissenting views.
As the increasingly detached-from-reality leadership senses their power waning, they double-down, exhorting the faithful to support the orthodoxy even as the orthodoxy reaches new heights of fanaticism.
As moderates drift away (or sneak away, loudly proclaiming their fealty to cover their escape), the leadership triples down, demanding unwavering loyalty of the remaining believers, who themselves triple-down by reassuring each other that they really are on the right track and the world is about to awaken to the correctness and righteousness of their cause.
The problem with dogmas is that they are detached from the real-world consequences of dogmatic convictions. So the dogma that a college degree is the difference between prosperity and poverty is running up against the reality that the actual difference between prosperity and poverty is the amount of student loan debt that's crushing the graduates.
This reality is so dangerous to the student-loan-money-machine that the leadership has ramped up the propaganda that a college diploma is absolutely necessary if you don't want to be homeless (an obvious falsity) and going through an Orwellian exercise of "lowering" tuition. (This is a fiction because the "lowered" tuition is nothing more than what the average student actually pays after the university's shell-game of "tuition credits" and other flim-flam.)
Military dogmas get discredited on the field of battle, often in dramatic fashion. Financial markets (unless they're manipulated, of course) also provide painful real-world feedback. Those predicting one side of the trade will eventually be proven correct or incorrect.
To an alarming degree, the U.S. is dominated by dogmas that benefit the few at the expense of the many, and by leaders who are doubling or tripling down to defend the dogma and their power. As already noted, dogmas support extractive systems that enrich the few by bamboozling the many. As the perverse consequences of dogmas start piling up, those paying the costs of loyalty/belief start wavering and then buckling under the weight of reality.
The leaders, safely protected from the consequences of their elitist dominance and fearing the loss of their wealth, power and prestige, ramp up the time-honored strategy of increasing demands for loyalty and public virtue-signaling, jacking up media propaganda in support of the orthodoxy, and moving to ban, shadow-ban, suppress, punish, discredit, demoralize, de-platform, demonetize and marginalize critics, i.e. heretics who challenge the status quo's foundational dogmas.
When dogmas lose their grip on believers, they collapse in spectacular fashion. The much-derided biplane sink the status quo battleship, the stock market's "permanent high plateau" crashes, and so on. (WeWork's path from an IPO worth $50 billion to a cancelled IPO and insolvency in a mere six weeks is a timely example.)
Dogmas collapse first in the minds of believers, when they slowly awaken to the reality that the dogma no longer serves them, it only serves to prop up the wealth, power and prestige of their increasingly fanatic leaders. Propping up a failed system doesn't actually fix what's broken; it only guarantees the banquet of consequences will include shackles: the option to escape the consequences will no longer exist.
So sorry, but your karma ran over your dogma. The consequences and costs inexorably pile up, and neither Inquisitions to silence heretics nor virtue-signaling one's loyalty will stop the trajectory over the cliff.
My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format.


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Thursday, September 26, 2019

Pets Are Now as Unaffordable As College, Housing and Healthcare

Like so many other things that were once affordable, owning pets is increasingly pricey.
One of the few joys still available to the average household is a pet. At least this is what I thought until I read 5 money-saving tips people hate, which included the lifetime costs of caring for a pet.
It turns out Poochie and Kittie are as unaffordable as college, housing and healthcare (and pretty much everything else). Over the course of 15 years, small-dog Poochie will set the owner back an eye-watering $17,560 to $93,520, while big-dog Fido costs $22,025 to $82,929 over 12 years.
Kittie is a relative bargain at $16,800 over 15 years.
Some estimates of responsible pet ownership are considerably lower, but non-pet owners may be surprised by 1) how many options for the care of pets are now available and 2) how many medical interventions and treatments are now available, at prices that aren't much different from human healthcare.
Five-figure bills for pet surgeries and other care are not uncommon.
Unfortunately, pets aren't able to tell us they don't want any extraordinary measures taken to extend their lives, and so households may agree to procedures they really can't afford.
Here is an excerpt from the article:
The SPCA lists the cost of pets as follows:
-- Over 15 years, total costs for a small dog could run from $17,560 to upward of $93,520.
-- Over a 12-year lifetime, the costs of a large dog range from $22,025 to upward of $82,929 for folks using dog walkers.
-- All told, cost of cats will be at least $780 a year and $16,800 over its possible 15-year existence.
-- American Kennel Club: "The average lifetime cost of raising a dog is $23,410."
-- US News: "RaisingSpot.com, which provides tips on raising a dog, suggests a dog that lives 12 years might cost you anywhere between $4,620 and $32,990."
-- Pet Place: "An indoor cat's total estimated lifetime cost is $8,620 to $11,275." Note: Outdoor cats live much shorter lives and thus cost less.
There's even a pet cost calculator if you want to find the cost of your pet.
To summarize, a dog is going to cost roughly $20,000 while cats will be closer to $10,000.
Now, if you own multiple animals at the same time, not to mention several over the course of your adult lifetime, we're talking a massive amount of money.
But... "My dog/cat doesn't cost anywhere near that much. I pay $30 a month to feed him and that's it."
Uh, no it's not. Here's a list of expenses you just left out:
-- Vaccines
-- Flea/tick control
-- Heartworm prevention
-- Ear and dental care
-- Grooming
-- Food (Premium?)
-- Toys
--- House (fenced backyard? cleaning? etc.)
-- Bowls, collar, leash/harness
-- Cost of pet (if from breeder)
-- Boarding
-- Training
-- Walking (yes, some people pay walkers)
And then there's the big one: medical costs. This is where things get really pricey, especially toward the end of a pet's life.
As I said earlier, how you spend your money is your choice. You simply need to realize that two dogs throughout your 50-year adulthood will run you somewhere around $150k. That's $3,000 a year.
$3,000 a year saved and invested at 8% for 50 years equals $1.7 million.
Even if you spend 'only' half that amount, it's still costing you a fortune.
Now that you understand how much your pets cost you, you can make an informed decision about where to spend and where to save.
Like so many other things that were once affordable, owning pets is increasingly pricey.
My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format.


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Wednesday, September 25, 2019

Here's How We Are Silenced by Big Tech

This is how they silence us: your content has been secretly flagged as being "unsafe," i.e. "guilty of anti-Soviet thoughts;" poof, you're gone.
Big Tech claims it isn't silencing skeptics, dissenters and critics of the status quo, but it is silencing us. Here's how it's done. Let's start with Twitter. Twitter claims it doesn't shadow ban (Setting the record straight on shadow banning), which it defines as deliberately making someone's content undiscoverable to everyone except the person who posted it, unbeknownst to the original poster.
Nice, but what do we call labeling legitimate websites "unsafe" and banning Twitter users from retweeting links to posts on those sites? This is what's happening to oftwominds.com-- Twitter has labeled this site "unsafe" due to unspecified violations of the Twitter User Agreement, which I have reviewed and can categorically state the oftwominds.com site and posts have never violated the terms of the Agreement or the Twitter Rules, except if posting several tweets that contain the URL of my current post somehow violates the Rules. (If bloggers can't list the URL of their original content more than once a day, then the Twitter Rules are prejudicial and should be amended.)
Note that Twitter doesn't identify or provide the user with evidence of the violation of its User Agreement that justifies the "unsafe/can't retweet" shadow-banning. The process of contesting such arbitrary and opaque censorship is absurdly unsatisfactory. There is no form for content owners/Twitter users to contest being tossed in the "unsafe/can't retweet" gulag; users must click through a bunch of "contact us" screens, none of which have an option for contesting being tossed in the "unsafe/can't retweet" gulag.
When you give up and just send Twitter Support a "report on spam," i.e. that your own site is wrongly being labeled spam, you get (of course) an automated response in which Twitter promises to do nothing and tell you nothing.
If original content that is obviously not violating the Terms of Service/User Agreement can be arbitrarily banned from being retweeted without any evidence or due process, how is this not censorship? This is straight out of Kafka: an unaccountable, all-powerful, completely opaque bureaucracy arbitrarily bans your Twitter followers from retweeting a link to your original, copyrighted content.How is that not flat-out censorship (by a privately owned and operated entity with extra-legal powers)?
This is exactly like the Soviet Union, where citizens were routinely tossed in the gulag for having "anti-Soviet thoughts." Twitter, Facebook and Google routinely hold the equivalent of extra-legal administrative "trials" in which those accused of violating open-to-interpretation ("anti-Soviet thoughts") Terms of Service are not presented with evidence of their "crimes" nor are they given a chance in a transparent, fairly administered process to contest their "guilty" verdict.
As for Facebook: direct links from Facebook users to oftwominds.com dropped by 90% last year over the course of a few days. What could have caused this sudden collapse? The only possible cause is Facebook limiting the number of people who could see my posts on their feeds. If this isn't shadow-banning, then what do we call it, other than censorship?
As for Google--who knows how your rankings in search are jiggered? We do know that having "anti-Soviet thoughts" will get you de-platformed from YouTube, which not only silences you but also demonetizes your content, so not only are you thrown into the censorship gulag, you're stripped of your livelihood as well.
I have long suspected that the root of oftwominds.com being censored by the Big Tech platforms is my "false arrest for sedition" via the scurrilously fabricated PropOrNot list that was gleefully promoted by the odious propaganda organ Washington Post-- promoted, we should note, without any journalistic investigation or even rudimentary fact-checking.
Having been put on a list of sites deemed "guilty of anti-Soviet thoughts" by propagandists purporting to reveal propaganda, I've been shadow-banned and censored without any recourse or opportunity to contest my sentence in the Big Tech gulag. This is how Big Tech silences us, quietly, without any evidence, without any hearing, without any recourse, in secret extra-legal proceedings where we are refused the opportunity to question our accuser and contest the "evidence," if any.
Big Tech is a privately owned and operated gulag straight out of Kafka. As I have argued before, the only way to dismantle this privately owned and operated gulag, whose sole purpose is to maximize profits from adverts and selling user data, is to turn their services into public utilities that cannot collect any data and cannot target adverts.
This is how they silence us: your content has been secretly flagged as being "unsafe," i.e. "guilty of anti-Soviet thoughts;" poof, you're gone.
My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com. New benefit for subscribers/patrons: a monthly Q&A where I respond to your questions/topics.

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Tuesday, September 24, 2019

Financial Storm Clouds Gather

The price of this "solution"--the undermining of the financial system--will eventually be paid in full.
The financial storm clouds are gathering, and no, I'm not talking about impeachment or the Fed and repo troubles--I'm talking about much more serious structural issues, issues that cannot possibly be fixed within the existing financial system.
Yes, I'm talking about the cost structure of our society: earned income has stagnated while costs have soared, and households have filled the widening gap with debt they cannot afford to service once the long-delayed recession grabs the economy by the throat.
Everywhere we look, we find households, enterprises and local governments barely able to keep their heads above water--in the longest expansion in recent history. This is as good as it gets, and we're only able to pay our bills by borrowing more, draining rainy-day funds or playing accounting tricks.
So what happens when earned income and tax revenues sag? Households, enterprises and local governments will be unable to pay their bills, and borrowing more will become difficult as the financial markets awaken to the re-emergence of risk: as shocking as it may be in the era of Central Bank Omnipotence, borrowers can still default and lenders can be destroyed by the resulting losses.
The era of Central Bank Omnipotence has been characterized by two things:
1. A disconnect between risk and return. Since "central banks have our backs," risk has been vanquished, and since central banks socialize losses by bailing out corporations and banks who gambled and lost, then the financial Oligarchs have been free to ignore risk since the Federal Reserve has implicitly guaranteed returns will always be secured by Fed backstops, market interventions, etc.
2. Costs have been ignored because "we're all getting richer" via asset bubbles. Your healthcare insurance just doubled in a couple of years? Forget it, Pal, that's chump change compared to the big-time gains in the value of your house and 401K stock holdings. This is the wealth effect: even as rising costs consume earned income, we ignore this financial erosion and borrow and spend more because we feel richer when we look at our home and stock valuations.
In other words, the wealth effect has been deployed to paper over the enormous structural gap between income and expenses. The wealth effect doesn't just affect households: rising real estate valuations have boosted local government tax revenues, and small businesses have been buoyed by the spending of the top 20% who own 93% of the stocks owned by households and who have seen their homes soar in value. (Note that the top 5% own 71% of the stocks; the top 10% own 84%.)
But asset bubbles always pop, and once they do, the wealth effect reverses and people feel poorer as the value of their homes and portfolios decline. They borrow and spend less, and all the capital gains that boosted local tax revenues dry up, too.
Here's reality: wages haven't kept up with expenses. This chart displays healthcare costs, but rent, higher education, childcare, etc. have similar asymmetries.
Not to pick on these households, but they are representative of the enormous asymmetry between stagnant income and rising costs, and of the "solution": debt, and lots of it.
I was surprised to find such an honest account in the mainstream (i.e. cheerleader of "good news") Wall Street Journal:
Families Go Deep in Debt to Stay in the Middle Class
Wages stalled but costs haven't, so people increasingly rent or finance what their parents might have owned outright Median household income in the U.S. was $61,372 at the end of 2017, according to the Census Bureau. When inflation is taken into account, that is just above the 1999 level. How households earning $61,000 can acquire cars costing half their gross income is a story of the financialization of the economy.
More accurately: financialization is the result of the cost structure pulling away from our ability to pay our expenses with earned income. The only way to enable costs to continue soaring far above our ability to pay them is to financialize the economy, making debt the core mechanism to pay the bills, and asset bubbles the core mechanism to create phantom collateral to support the skyrocketing debt.
Here's the problem with reducing the cost structure to levels we can actually afford: all the fat in our system is screaming that it's bone. The slightest reductions trigger titanic lobbying by whatever group of insiders or vested interests will bear the brunt of the cuts.
This leaves politicians with one easy way out: borrow enough money to satisfy the demands of every constituency, every clique of insiders and every vested interest. Rather than re-aligning costs with our ability to pay, we're going to use debt to keep all the constituencies happy.
The price of this "solution"--the undermining of the financial system--will eventually be paid in full to the detriment of everyone, including all the layers of productivity-killing fat that proclaimed themselves essential bone.


Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 ebook, $12 print, $13.08 audiobook): Read the first section for free in PDF format.


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My book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com. New benefit for subscribers/patrons: a monthly Q&A where I respond to your questions/topics.

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