Pluralistic: 27 Jan 2022

Today's links

Slums. Washington, D.C., Carl Mydans, 1935, Farm Security Administration - Office of War Information Photograph Collection (Library of Congress).

As stocks tumble, wealthy speculators bid up house prices (permalink)

The Obama administration's most consequential decision was to address the Great Financial Crisis by bailing out the finance sector, rather than borrowers. It was an unforced error, directed by Goldman-Sachs bankers elevated to the ranks of finance regulators, and we are still living with its consequences.

The choice to enact quantitative easing (rather than debt relief, direct transfers to consumers, or regulation of mortgage-backed securities) triggered the foreclosure crisis, wiped out family wealth (especially Black wealth, which declined more under Obama than any other president), and produced a still-inflating asset bubble.

It also set a precedent, shifting the Overton window in a way that made the trillions that Trump pumped into the capital markets (first through massive tax-cuts, then through covid programs) seem bipartisan.

Today, the capital markets are utterly uncoupled from the real economy. The stock market's unprecedented bull run coincided with a decline in the fortunes of real businesses and real workers, and the overslosh produced bubbles in other asset classes, including some absolutely absurd ones (cryptos/NFTs, wine, art, supercars, sports collectibles, etc).

The rich have too much money, and nowhere to put it and so the economy is in metastatic, stage-four ponzi-ism.

Many asset bubbles are indirectly harmful – e.g. the climate consequences of crypto, or the way easy capital has spurred even more mergers and monopolization, with the attendant layoffs and worsening labor conditions. Asset inflation has also spurred investment in predatory enterprises like Uber and Doordash, who use investor cash to subsidize a money-losing operation that strangles real, locally owned businesses.

But there's one asset bubble that has an immediate and direct harmful effect: the housing bubble. Since the Great Financial Crisis, Wall Street has been hell-bent on acquiring single-family homes, converting them to rental property, gouging on rent, skimping on maintenance, and evicting on the flimsiest pretense.

By every metric, Wall Street investors are the worst landlords, and they're the fastest-growing class of landlord. These two facts are related. Big firms are able to buy up so much housing because they are able to borrow cheaply, issuing bonds that "securitize" the rent payments from tenants. Access to this capital is dependent on the ability to raise rents and scare tenants into silence over dangerous living conditions. In other words, Wall Street firms can only corner the market on housing if they promise their investors that they'll brutalize and beggar their tenants.

Wall Street's plan to financialize the roof over your head is a deeply corrupting project, one that involves pumping hundreds of millions in dark money into defeating tenant's rights and rent controls:

Stein's Law predicts that "If something cannot go on forever, it will stop." Bubbles can't go on forever. The stock market has been swinging like a drunkard around a lamppost for the past week. Cryptos are tumbling. Rugpulls are dominating the NFT market. I don't know about sports memorabilia, but I wouldn't be surprised if that was in trouble, too.

But the rich still have too much money, and that money is fleeing stocks and collectibles and cryptos. Where's it going? Housing.

In this interview with Saker, Michael Hudson discusses the coming tsunami of real-estate inflation, in which the suckers who lost everything to the other bubbles go bankrupt and lose their homes to "investors" who plan to securitize a stream of rents from immiserated tenants.

"Inflation" is the topic du jour, wielded primarily as a whip to drive us to austerity. Most of the time, "inflation" is code for "regular people have too much money and we need to take some of it away" – by reducing benefits and suppressing wages.

It's 100% true that asset inflation is being driven by too much money chasing too few goods – the money in this case is the capital gains of the investor class and the "goods" are productive businesses with growth potential. Thus we see investors flocking to pyramid schemes and destructive strip-miners whose "growth" comes from looting good businesses and discarding their husks.

But do regular people really have too much money? Are we all just trying to buy too many vegetables from farmers, too much paper from pulp mills, too many carbon-steel bike-frames from Chinese factories?

That proposition is a lot muddier. Sure, there are supply shocks due to covid's impact on the over-optimized, brittle supply chains the finance sector has demanded of real businesses. But there's also obvious monopolies and oligopolies, whose CEOs are openly touting their ability to raise prices under cover of the pandemic.

The more we tell the story of "too many working people's dollars chasing not enough goods," the more we empower monopolists to increase their margins and jack up prices. As Hudson says, "For meat, eggs and other farm produce, the farmers are not receiving higher prices for their crops and produce. The middlemen are gouging out more fees for themselves, thanks to the monopoly position of Cargill et al."

Not all price-gouging is created equal. Wealthy, empowered consumers are able to shop more widely, and when they catch monopolists at their profiteering, they have the ears of policy-makers. If you are a monopolist looking to really ratchet up prices, your safest bet is to pick on poor people, who have fewer retail options and less political cachet.

That's something that Jack Munroe has made clear with her new "Vimes Boot Index" (inspired by Terry Pratchett's character Sam Vimes, who ruminates on how replacing cheap boots costs more than buying one long-lasting but expensive pair, creating a tax on poverty).

Monroe's project started with a viral tweet complaining that the official UK inflation figures pegged inflation at 5%, but that this did not reflect the massive price-hikes on the very cheapest food at the supermarket.

Monroe cites triple-digit inflation on goods like pasta, rice, baked beans, peanut butter, etc. This week on the BBC's More or Less podcast, Tim Harford and Monroe take a closer look at the index:

Neither offers a theory of why price inflation is hitting the cheapest goods so much harder than the most expensive, but I think the answer lies in political economy: it's safer to abuse poor people than rich people, and monopolists know it.

(Image: Library of Congress)

A 'thin blue line' flag but instead of a blue line, you can see the top of a greasy pepperoni pizza.

Cops' imaginary fears send addicts to real jail (permalink)

Despite what you may have heard, cops have a relatively safe job. Cops are injured and killed with less frequency than roofers, truckers, fishermen, and pizza-delivery people. Cops are basically armed bureaucrats and their primary role is to file reports about crimes, not intervene in dangerous situations.

Now, you may have heard that cop deaths are way, way, way up over the past two years. That is actually true – cops have been slain in unprecedented numbers since the pandemic began. Nearly all those deaths are the result of catching covid. Naturally, police unions (which are not actually unions) are fighting tooth-and-nail against vaccine and mask requirements for cops.

(You've heard of "suicide by cop?" This is "suicide by cop union.")

The rhetoric about the dangerous life of a cop doesn't merely serve to make cops feel romantic about their form-filling and rule-enforcing. It's the foundation of the narrative that makes it okay for police officers to murder people suspected of minor crimes using overwhelming, unjustifiable force: that force is hand-waved away as the inevitable result of the daily terror of being a cop on the mean, mean streets.

The latest mutation of this mean-streets story is the nonsensical claims that police officers are in daily risk of dying because they might be touched by someone experiencing a fentanyl overdose, and, in so doing, absorb a fatal dose of fentanyl through their fingertips.

This isn't a thing. There's a reason fentanyl users snort it and inject it, rather than rubbing it between their fingers.

It's not a thing when the Sacramento Bee reports it:

It's not a thing when CNN reports it:

Now, looking at these reports, it seems that some cops actually believe they have been poisoned (either that or they're putting on quite a show). That doesn't make it real. History is full of extraordinary popular delusions, imaginary diseases spread by social contagion.

The delusional belief in fentanyl overdose by contact high doesn't just hurt impressionable cops who scare themselves into flopping around on the ground, moaning. That's because those same cops then go on to charge people who experience fentanyl overdose with assaulting an officer by means of their imaginary Opiod Death-Touch.

These additional charges are adding years to the sentences of people experiencing addiction or just those guilty of simple possession. This despite the fact that the DEA has revised its guidance and now admits that there's no serious risk of fentanyl skin absorbtion:….pdf

The myth is all-pervasive in cop circles and has spread to other first responders, with many now hesitating to resuscitate people in overdose. 80% of NYC first responders now believe in skin-penetrating fentanyl:

As Tim Cushing writes for Techdirt, this delusion is so strong because "courts and lawmakers cut cops all sorts of slack under the assumption that cops should be given every opportunity to be wrong."

It's true that cops experience some danger on the job – just not as much as the pizza-delivery person who dropped off your pepperoni pie yesterday.

(Image: Zack Middleton, CC BY-SA 2.0, modified)

This day in history (permalink)

#20yrsago John Ashcroft covers up blind justice's booby

#15yrsago Google founder regrets censoring China

#15yrsago Japan’s health minister: Women are “birth-giving machines”

#10yrsago Here’s the utterly inconsequential recording that resulted in NZ PM John Key ordering raids on the free press

#10yrsaog Chief EU ACTA sponsor quits in disgust at lack of democratic fundamentals in global copyright treaty

#10yrsago Polish MPs wear Guy Fawkes masks to protest ACTA

#10yrsago Twitter adopts country-specific censorship regime – how will that work?

#10yrsago Software piracy is vital to preservation

#10yrsago EMI VP opposes SOPA, thinks better products at better prices will solve piracy

#5yrsago 19 crooks, 7,000 false identities, 1,800 drop addresses, and $200 million in credit card fraud

#5yrsago White House confuses Theresa May, UK Prime Minister; with Teresa May, porn star

#5yrsago Immigration officers raid Good Samaritan Family Resource Center in San Francisco’s Mission District

#5yrsago US towns that pandered to anti-immigrant sentiment had to raise taxes and borrow to cover the millions in losses

#5yrsago France aggressively prosecutes citizens for “solidarity crimes”: feeding and housing migrants

#5yrsago Brexit, Chicken and Ulysses Pacts: the negotiating theory behind the UK-EU stalemate

#1yrago Goldman CEO gets $17.5m reward for $4.5b fraud

#1yrago Facebook champions (its own) privacy

#1yrago Casino mogul steals First Nation's vaccine

Colophon (permalink)

Today's top sources: Naked Capitalism (

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