A weekend topic starting with WPTV in Florida. “Genide Nazaire has been house hunting for two years. The latest figures show mortgage rates have hit a 20-year high, forcing Nazaire to stay put. ‘We have just renewed our lease, which we did not plan on doing two years ago,’ said Nazaire. ‘Everything is so high. So, homes that were initially going for like 250 to $300,000 back in 2018/2017 are now 5 to $600,000. We may be kicked out of Palm Beach. We may have to consider moving elsewhere.’”
From KXNET. “‘For first time home buyers, it’s been fairly aggressive,’ said Brandon Dettlaff, Director of Homeownership Division at the North Dakota Housing Finance Agency. ‘We have seen one of the largest interest hikes in history,’ said Bill Dean, a local realtor. ‘So, what’s happening is we came from all-time low interest rates, which allowed people who normally wouldn’t buy houses buy houses.’”
The Journal News in Ohio. “Home sales in Butler and Warren counties are changing as the average national interest rate on 30-year, fixed-rate mortgages rise to their highest level in over a decade. As a result, Warren County Auditor Matt Nolan is expecting his county’s housing market to continually change more than it already has. Nolan said Warren County properties are beginning to sit on the market for longer than they had when interest rates were low and the seller’s market was booming.”
“‘For a while there, [prospective home buyers] would have to bid on a property, pay above list price, and there would be 15 people bidding on it,’ Nolan said. ‘That’s not happening right now. Houses are sitting on the market again for a little longer, people are looking at them closer.’”
From NBC News. “Home buyers feeling financially squeezed by higher interest rates are increasingly being steered by real estate agents and mortgage brokers to potentially riskier types of mortgages, similar to those seen ahead of the 2008 financial crisis. Among the loans being promoted to home buyers are adjustable rate mortgages. ‘You have to sit down and really make a hard, rational, nonemotional evaluation of your circumstances, and act accordingly,’ said James Gaines, a research economist at the Texas Real Estate Research Center at Texas A&M University. ‘Or just admit to yourself you’re taking a big gamble and go for it.’”
Fox 5 in Nevada. “A worker at a Las Vegas moving company says high interest rates are having a negative impact on the business and his ability to earn a living. According to Steven Bradshaw, business has been plummeting because interest rates are so high. ‘The self-generated computer leads that we would normally get are just diving,’ said Bradshaw. ‘I went from getting five appointments a day to getting five in a week.’ Bradshaw said people are looking to cut corners to compensate for the high interest rates. ‘I am noticing a lot of haggling,’ Bradshaw said. ‘A lot more of can you give me this for free or if I get rid of this piece of furniture, can I get lower price?’”
“Bradshaw said he’s been left with no choice but to take on another job. ‘I have to drive for Lyft now. I get up about 3 o’clock in the morning and drive everyone to the airport or get them to work. Then I do my job and as soon as I get off, I have to start driving again to keep the money coming that I had been used to.’”
South Boston Online in Massachusetts. “‘Some things even surprised me,’ said long-time South Boston realtor Jackie Rooney. ‘The big change is the number of sales is down 30%.’ Rooney warned that there are storm clouds ahead. ‘When we look at current inventory, days on the market have gone up … 81 percent from 22 to 38 days, and we see quite a few price drops.’”
The Boston Herald in Massachusetts. “The Boston Public Health Commission and other Mass-and-Cass-area institutions are giving out pipes for smoking crack and meth in addition to an array of other paraphernalia. Domingos DaRosa, who’s worked with kids in the area and picked up needles in the Mass and Cass area for years, said all of these items just end up strewn everywhere. He said that one of the kids he coaches got pricked with a needle at practice just a few days ago and now is on the cocktail of drugs that’s needed to fend off any diseases he might have caught.”
“‘It’s part of the ‘harm reduction,’ but it’s causing more harm than anything,’ he said, adding that he’s found various broken crack pipes in parks there. ‘Kids are finding these things in the parks and playgrounds. And not just finding them – there’s still product in them. We’re just giving people the tools to get high,’ he continued. ‘It’s not designed to reduce the population on the street here.’”
The Daily World. “Home buyers in Grays Harbor County and in Western Washington may finally have some relief from the booming housing prices of the last few years. Several factors spiked home buying during the pandemic — not only in Grays Harbor County but across the country. ‘I’ve never seen real estate prices climb as fast as they did in the last three years,’ said Dan Lindgren, Grays Harbor County Assessor. But inventory has finally had a chance to equalize the market. The number of active listings in September for residences in Grays Harbor was significantly higher than a year ago, growing by almost 90% in both Aberdeen and Hoquiam and by roughly 60% in Ocean Shores, where 144 homes were listed, the most of any town in the county.”
“One indication of the slowing market, said Travis Jevolich, owner of Windermere Real Estate, Aberdeen and Ocean Shores offices, is seller behavior at the time of initial listing. September sellers were more ‘tuned in’ to market listing prices as opposed to setting initial listings at abnormally high marks. ‘The days of throwing it on the market and hoping you get something close to it, those are done. Buyers are a lot more tuned in with what’s going on and they’re not going to overpay,’ Jelovich said.”
KING 5 in Washington. “Trash bags are piled up on the sidewalk of 35th Avenue Northeast in Lake City. There are bikes with missing tires next to the line of RVs that line the busy Avenue. Neighbors have been reaching out to city officials, councilmembers and lawmakers looking for help in cleaning up the encampment, but they’ve gotten nowhere.”
“‘It is really disappointing and it’s not the Seattle I knew growing up,’ said Lily Crawford who grew up in Lake City and came back to Seattle after twenty years to raise her family. ‘It gets very volatile there, especially in the evenings,’ said Crawford. Her kids aren’t allowed to roam the neighborhood like she did as a child. ‘And we have to explain things to kids that are uncomfortable like why people are having fires there, why the police are always there, why trash bags are there, why people are putting needles into their bellybuttons.’”
NBC Bay Area in California. “A drop in housing prices by about 7% translates to more than a $100,000 in savings on a typical Bay Area home. For many, especially young buyers, the drop in housing prices is still not down far enough. ‘If I do well in my job, I can save up and eventually buy a house,’ San Jose resident Julien Chairez said. ‘But in this economy, and in this market in this area, I still don’t think it’s possible.’”
“San Francisco resident Samantha Styles told NBC Bay Area that her family is now on a month-to-month lease. Styles said her issue isn’t prices but the quality of life. ‘The reason that we want to leave is because the drugs are everywhere. I’m here with my daughter. We love San Francisco because we get to walk everywhere. Like that’s why I love this city. Now, I don’t carry a purse anymore. I put my wallet in my pocket. I don’t feel safe,’ she said.”
The New York Post. “Earlier this month, old-fashioned Xeroxed copies of a newspaper article appeared across the Mid-Market neighborhood in Downtown San Francisco. The article, from the San Francisco Chronicle, featured the headline: “S.F. D.A. Brooke Jenkins says she’ll consider murder charges for fentanyl dealers.” The article was taped to walls on neighborhood corners regularly frequented by drug dealers. At least one of those Xerox copies had the headline translated into Spanish — all the better for the dealers in question, most of whom are Honduran nationals, to get the message.”
“Strange as it might sound to most non-San Franciscans, the kind of overt political opposition to open drug dealing that Dorsey and Jenkins represent is a challenge to the city’s political establishment. San Francisco is governed by a leadership that is so enamored of the city’s progressive, humanitarian self-image that the idea of enforcing basic laws — even ones that save people’s lives like controlling drug sales and consumption — has come to be regarded as reactionary. But conditions in the city have gotten so bad that San Francisco’s voters have begun to revolt. Living in a city whose downtown doubles as an outdoor drug den is becoming intolerable even for many notoriously tolerant San Franciscans.”
“‘Open drug use has been normalized to the point there are blocks where the entire sidewalk is filled with people passed out or getting high,’ said Kevin Lee, a San Francisco resident who is in recovery himself. ‘There is not enough emphasis on creating access to treatment.’”
From CBC News in Canada. “Walk, drive or cycle through Toronto on any given day and you’re bound to come across examples of public infrastructure or amenities not working as they should. Construction debris littered across a sidewalk. A pothole-filled road. A broken garbage bin stuffed to the brim. A drinking fountain that doesn’t spout water. A locked washroom in a public park. A bike lane that abruptly ends.”
“A city spokesperson says these are mostly isolated, temporary issues that quickly get fixed and that Toronto is generally in ‘very good shape.’ But for some residents, it feels like the place they call home is falling into a state of disrepair. ‘You walk … in New York City years ago and it was disgusting. Now we are looking the same way,’ Alistair Francois told CBC Toronto in an interview outside city hall last week. ‘We used to be the city that people admired worldwide; now we’re not.’”
The Toronto Sun. “There’s an adage that ‘inflation is too many dollars chasing too few goods.’ If there are too many consumers and not enough goods or services to go around, prices go up. And up. Now consider another fact: According to Bank of Canada numbers, the money supply (the number of dollars in circulation in Canada) grew by more than 22% between the start of the pandemic and spring this year. That means more than one in five dollars currently in circulation in Canada didn’t exist pre-pandemic. When you think about it, that’s a staggering amount.”
“As the Trudeau government kept spending (and spending and spending) on pandemic related ‘relief’ programs, the Bank of Canada kept pumping out more and more new money to cover this orgy of government expenditure. While the Trudeau government and the Bank of Canada have spent more than a year denying any blame for inflation, the truth of the matter is the biggest single cause of Canada’s inflation is the tsunami of extra cash the government and the bank pumped into the economy.”
“That money is mostly still sloshing around out there. It’s also one of the biggest reasons housing prices have skyrocketed: There are hundreds of billions of dollars on the market and a limited supply of housing. The Trudeau Liberals spent almost $400 billion on pandemic subsidies – by far the most, per capita, in the developed world. They didn’t have an extra $400 billion to spend. They didn’t tax an extra $400 billion from Canadians. What they did was issue bonds in that amount (a form of borrowing) and because there weren’t enough private or institutional investors interested, the Bank of Canada chipped in and created enough new money to cover Justin Trudeau’s massive overspending.”
“Even though the bank claimed repeatedly that it wasn’t responsible for inflation, surely its staff had to know that all this extra money flooding the economy would lead to waaaay too much money chasing goods.”
From Market Watch. “The Nobel Memorial Prize awarded to Ben Bernanke, Douglas Diamond and Philip Dybvig is controversial, to say the least. Mainstream economists are generally delighted that the Nobel Committee has at last honored research into banks and their fragility. But heterodox economists who have spent years trying to change prevailing beliefs about banking and finance are spitting blood. This time, I am firmly on the side of the heterodox economists. I do not think this prize is deserved. No, I would go further. I think it is actively harmful. It confers authority on models that misrepresent how banks actually work, and makes it much harder for heterodox economists — including the brave researchers at the Bank of England who have done so much to advance understanding of modern monetary economics — to counter the pervasive myths about banking and finance that have too often led to damaging policy errors.”
“Diamond and Dybvig’s paper on bank runs spawned an entire literature on financial frictions. Bernanke’s work draws on theirs and adds insights into the link between credit and economic performance, though only for economic downturns — he largely ignores credit booms, with, as we shall see, unfortunate consequences.”
“But all their work relies on the ‘pure intermediary’ model of banking. And we now know that this model of banking is dangerously wrong. It omits the leveraging effect of bank credit creation. This is the key feature of the credit booms that always precede disastrous collapses like the Great Depression and Great Recession. Models that ignore bank credit creation, or worse, omit banks completely — as Bernanke’s paper with Gertler and Gilchrist on how credit markets propagate shocks through the economy does — cannot possibly explain how financial crises happen and why they are so devastating.”
“Belief that banks merely ‘channel’ savings to borrowers, rather than actively creating purchasing power through lending, led central bankers to ignore the build-up of leverage prior to the Great Financial Crisis. And it also led central bankers and governments to mishandle the recovery. Instead of supporting households and businesses, they threw money at banks. I regard this as one of the greatest policy errors of all time.”
“We now know that QE works not by stimulating bank lending, but by supporting asset prices. In the immediate aftermath of the Great Financial Crisis, this short-circuited a disastrous debt deflationary spiral and probably did prevent a second Great Depression. As a result, Bernanke has been credited with ‘saving the world.’ But this was more by accident than design. What he was actually trying to do was blow up another credit bubble. We know this, because it’s what his academic work recommends. The work for which he has been given a Nobel prize.”
“Uncontrolled bank lending such as that which preceded the Great Financial Crisis isn’t normal. Central banks shouldn’t encourage it. And economists shouldn’t get Nobel prizes for recommending it.”