Midas Plague

Those of us who are fanatical Science Fiction readers might remember one of Frederik Pohl's more famous stories from the early 50s, during which period Americans experienced for the first time truly incredible affluence- remember the saying "you can't starve in America"?  The Midas Plague projects a society so affluent and so awash in consumer goods of every description that you are forced by government edict to consume as much as possible, and your socio-economic status is measured by your relative freedom from forced consumption; as you ascend the ladder you are required to consume less, not more.

Pohl doesn't show the flip side of the story, which is a society  broke and resource-depleted and burdened with towering debt to make and pay for this crap, to the point where many people are walking away from houses and apartments stuffed with decent, usable belongings simply because they can no longer pay the cost of housing them all and carrying them around. This is where our wealth and a major chunk of irreplaceable natural resources have gone, and we won't be able to reconstitute it into food, money in the bank, or the fossil fuels that made this incredible superfluity possible.I think about this story a lot when I contemplate the devolution of the country into a massive coast-to-coast resale store, as people buried under mountains of unwanted possessions and the debt they accumulated acquiring them, try to unload all the outdated clothing fads, obsolete electronics, multiple sets of china and stemware and turkey fryers and chocolate fountains and smoothie makers and yoga mats and kiddie pools and bric-a-brac and spare tires and multiple sets of tools and hobby kits and old kitchen cabinets and lawn furniture and whatever else they have stuffed into houses and garages and storage lockers, to buy food and pay rent.

 It evokes revulsion, this seemingly uncontrollable urge to acquire and accumulate past any consideration of need or even visible benefit or pleasure that so many Americans seem to have, especially when it's financed by equity-stripping your house and running up credit card bills equal to four times your income. The phenomenon has become so prevalent in rich Western societies that it has triggered a reaction formation known as Minimalism, the paring of possessions to the most basic essentials and an aesthetic of utter simplicity.

In our condemnation of the "materialism" and "consumerism" we think we perceive in the compulsive shoppers and packrats of this country, we forget that the incredible abundance of Western countries in the past 100 years is anomalous in human history, and that for the 10,000 years preceding this period, it was all most humans could do to keep a few pieces of shabby clothing on their backs and acquire the rudimentary necessities of daily life. For most of the world, it still is. That's why status and achievement have usually been measured by how much and what kind of possessions a person acquires. Our urge to accumulate evolved in response to extreme and chronic scarcity that lasted until we learned how to harness the power of fossil fuels, and it is essential to our survival under normal conditions... and the conditions of extreme abundance under which we of the Western world have lived in the past century and half are not normal.

That's just the problem with so many of our basic "instincts". The behaviors we evolved in the long ages of hardscrabble existence that enabled us to thrive and build a base on which to build our civilizations have been rendered obsolete by civilization and are mostly more a threat to our existence than an aid. We once needed to reproduce endlessly because most children in pre-modern times didn't survive past the age of five, but in our present context, a large family is only so many more mouths to feed, and a major drain on the finances and energy of the parents. We once needed to hunt and fight endlessly just to maintain a hold on our territories and stave off predators both human and animal, but now our dominator urge could lead to wars that end up extinguishing the species. And until quite recently, most people needed to amass stores of food and other goods to survive through the long periods of shortages, the crop failures, and the scarcity of almost everything, in periods where nearly everything was made laboriously by hand and you had to settle for what was available to you in your own back yard because of the difficulty of travel and shipping.

We might still need the traits that seem so inimical to survival now, but which will could mean the difference between living and dying in a world of resource scarcity and vicious contests over the scraps of industrial civilization. The acquisitive urge is basically constructive, but we need to learn to channel it constructively, toward accumulation of things that are genuinely useful (like a large savings account, for example) and possibly will be essential as the affluence of the last century fades and the consumerist ethos with it. Unfortunately, we're still wed to that ethos, and haven't gotten past the idea that the best way to achieve prosperity is to buy and fill our houses with "luxuries" of no utility and little lasting pleasure that trick us into believing ourselves wealthy while the bills stack up,  our bank accounts are empty, and we are more dependent than ever on fragile systems for delivery of essentials that could fail quickly and catastrophically. Our economists still believe that the best way to repair our economy is to stimulate spending, and borrowing to spend, on the things that are not only making our houses uninhabitable but are depleting the resources we can never replace and will badly need just to live in basic comfort, at the expense of the savings and investment in the ndustries and systems we will need to provide basic technological amenities and comforts in a future of permanent resource scarcity.

So, when we're tempted to buy another toy or another overpriced trendy garment, or trade up to a bigger apartment to accommodate the swelling horde of consumer "stuff" we've maxed our cards to buy, we should take a look at our possessions and bank accounts, and ask ourselves the following questions: Would this money I'm spending on this item be better spent paying down a bill? Do I even really want this nonessential frill? Could I get this item for free or next-to-free off Craigsllist or Ebay? Do I have the stuff I really need, like a six-month supply of non perishable food and personal supplies for everyone in this house, and necessary emergency equipment like an electric generator and ample warm clothing and bedding on hand?  Would it be better to pay off my mortgage than leverage myself into a bigger house I wouldn't need if I didn't have so much useless junk sitting around? Do I have enough money in my savings account? Is my retirement adequately funded? Would I be better off just getting rid of about half the stuff I have and stop spending money storing it and hauling it from one dwelling to another?

Our core urges and drives aren't corrupt or obsolete, just misdirected because we have not yet learned to deal with the incredible affluence of the modern era in our privileged country, nor do we yet grasp how fleeting this abundance may be. We will have to learn once more how to live with less, and make our resources serve our real needs instead of being diverted into useless consumption and the manufacture of billions of items that will spend the next few thousand years in landfills, the resources that were squandered making them lost to us forever. We'll have to relearn to make truly beautiful, durable things that can be passed down through four generations instead of stuff that breaks or obsolesces in two years. In short, we'll have to revert to the frugality that most people had to practice in the past just to live, while learning to conserve rather than waste.

Chicago is in the Top Twenty Cities for Foreclosures and REOs: No Shortage of Affordable Housing

Illinois is one of the top ten "scam" states for mortgage fraud and Chicago is among the top twenty cities as ranked by percentage of home sales that are "distressed" sales. Distress sales comprise more than 30% of all home sales in the Chicago area at this time. Click on chart below to blow it up.

So it looks like the rollback in house prices is not over. Rogers Park and other far north neighborhoods are extremely hard hit by foreclosures, in direct proportion to the rash of condo conversions. According to the 2008 report compiled by Lakeside Community Development in 2008, over 3, 600 Rogers Park rentals were converted to condominiums.

Many of these units, which are frankly less than luxurious, are being offered at prices below $50,000, even though financing is not available on many of them and many others are uninhabitable, or are in buildings that are vacant and in boards. Many will be purchased by investors for cash below the prices offered, and fitted for rental. Others will be sold to buyers looking for a bargain-priced dwelling they can afford to invest money and love in without living on Raman Noodles for the next five years. On the city's poverty-stricken south side, the carnage is still more widespread, with many hundreds of beautiful 6 and 8 flats standing empty and in boards, and available to cash buyers for as little as $5000 a unit?

So why are we spending as much a $400,000 a unit for publicly funded "affordable" housing? I have personally counted over 40 units on the multilist in zip codes 60640, 60660, 60659, 60626, and 60645 that are available for less than $40,000 and could easily be made habitable and comfortable for another $20,000. Moreover, I discovered that behind every unit listed lurks a "shadow inventory" or "market overhang" of about 20 units that don't appear on the multilist but sit empty and in default. I personally can't put my finger on the precise number of vacant units, but my rough calculations tell me that we have at least 300 units that are "shadow inventory" between these five areas.

And why are we subsidizing more bad mortgages through FHA mortgage guarantees? Clearly, home ownership is not for everyone, especially in a period of falling incomes and unstable employment, and the government's efforts to re-inflate the housing bubble have so far not prevented prices from falling but have produced another bumper crop of bad mortgages: FHA is now the major subprime lender and recent-vintage FHA mortgages have a combined delinquency and "serious delinquent" or loans-in-default rate of nearly 20%, a really good indication that we're headed for another monster bailout in a couple of years. Bill Zeilinski of Mortgaged Future writes;

 Once again, thousands of borrowers are getting loans they do not stand a chance of repaying. Only now, unlike in the subprime meltdown, Congress would have to bail out the lenders if the FHA cannot make good on guarantees from its existing reserves.

Given the continued high rate of default, high unemployment rates and dropping incomes, and huge inventory of unsold housing, does it make sense to force the taxpayers to back yet another wave of soon-to-default mortgages made to unqualified buyers at prices they can't afford?

And given the massive glut of unsold inventory, much of which is available for less that $40,000 a unit and could be made habitable and comfortable for less than $25,000 a unit, does it make sense to drive honest low-to-middle income homeowners, who bought their places honestly, out of their homes by confiscatory property taxes in order to divert tax money to construct more luxury condos in a glutted market and subsidized "affordable" rentals that cost $400,000 or more a unit to build? 

This is really not about the "rich" folks vs. the "poor" folks, or even the taxpayers vs everyone who wants a gift at their expense. What this is really about is the massive misallocation of resources and money that will be very scarce in the near future, as fossil fuel resources continue down the other side of the slope. The money diverted to wasteful projects designed to sustain the unsustainable, in this case an inflated housing market and tax-funded boondoggles  designed to enrich politician's cronies, is money taken away from the systems and industries we will desperately need to maintain our cities at a reasonable level of amenity and comfort, let alone safety and sanitation, and to have an economy that enable the creation of new industries and jobs. It isn't just our money or our houses at stake here,it's our lives.