Thanks to Robin Trower’s Too Rolling Stoned for the title of today’s post. The lyrics are true today as they were then. A fool and his money do both seem to find real good friends. While the economy has been in a massive upheaval due to the pandemic, wars and other previously unthinkable occurrences, the old adages remain tried and true.
Looking at the obvious signs of economic insanity that has occurred over the last twenty two years or so, we can see from the Enron to the current Housing market/Crypto/NFT insanity that people will place their faith in absolutely meaningless objects over reasoned and continued progress.
The housing squeeze seems to be driven by a lot of untraceable investment financiers. The market is too hot to handle and removing the dream of home ownership from the next generation so fast that it is driving people to become renters without equity.
That is not a desirable outcome for a just society. If we want to have a nation where people care for and seek to improve their communities, we need to have people invested within their own community, not serfs of same feudal investor. Home ownership should not become some crazed party where everyone seeks to outbid and overpay for property. It should be an investment within the community for its residents.
I have been saying for some time that the Texas system of Robinhood is an anathema to the idea of local property tax valuations as the ideas of stealing the locally paid taxes to pay for extravagant facilities for smaller schools while preventing the local taxes staying local is an economic theft designed to destroy the services that people pay for within the city. It is an unjust and unfair system that allows some districts to build swim theme parks, while other districts had to create bake sales and other stupidity to fund their district activities for children. It is a quid pro quo, evidence of corrupt handling of taxes in exchange for the culture war voters to blame and bite the hands that feed in the form of political extortion.
As the prices of homes go ever higher, the insanity of taking the tax base away from its creators (the employed earning populace) to give to the willfully ignorant who are actively taking same creates an undeniable rift with reality. It makes the people who are earning resent those who are taking and it makes the takers resent those who are earning, believing that the earners owe them. It is not a sustainable civil society in this fashion. We can’t mend fences until we understand reality.
Property valuations are increasingly false, driven on the idea of “there will be no downturn” which history has shown us is not true. It will happen and it will be painful. I’d venture to say that it will location driven, and many will suffer. My advice would be to have no mortgage now -and never take a flexible rate mortgage at all. That causes a crush that will drive your out of your equity investment.
As for Crypto and NFTs – yeah, that’s going to be a shitshow. Some schemes will make their founders wealthy, but by and large, most will lose. When everyone is rushing to put their money into it, it has a red flashing warning sign that the person who exits first wins. When the values get ‘high enough’ for a substantial exit – it will crash. Those left holding the bag will feel the pinch of having lost their money.
I can’t tell you where to invest, but I would advise us that the future must be about building a sustainable world or we will be living underground as the planet surface boils away. I’d prefer children to have a chance, peace to grow, and people to actually understand that freedom takes work. Your ideas end at the tip of your nose. No one has the right to take away the freedom of others, through stupidity, legislation or just outright hatred.
Till next time, I’ll be eating popcorn and watching people stumble all over themselves with some really dumb ideas. I remember that Men In Black had it right : A person is smart. People are dumb, panicky dangerous animals and you know it.
Yes, yes I do know it. Have a nice day, Don’t worry, be happy!