Wall Street has become the nation’s new slumlords. They are as ruthless as any in NYC.
In her feature article in the March 8th edition of the New York Times Magazine entitled “The Great Wall Street Housing Grab”, Francesca Mari documents the cruelties of Wall Street’s entry in the US housing market, a land grab rivaling the Enclosure Acts forced on farmers in 18th Century Britain. Karl Marx called it primitive accumulation. The predators are feasting again on the prey already skinned alive by the subprime debacle that exploded in 2008.
Yes, the iron logic of greed is back for another round of bloodletting. Banks too big to fail, bailed out by the taxpayer, have moved money, once ours, into the single-family housing market, scooping up distressed properties, and renting them back to once-proud homeowners. How many of us are walking this road back to serfdom? Or shall we call it new age sharecropping?
Bill Clinton got the ball rolling. In 1995 he appeared sincere as he sought to raise homeownership to 70% after a decade of decline in the Eighties. It was a noble goal. Now, in 2020, we can scratch our heads wondering why we are back at the same level as we were in 1995, 61%. The road to hell is paved with good intentions. Never give a sucker an even break.
As soon as Clinton articulated the goal, the vultures licked their chops (do they have chops?) and started to work. The story needs not repeating in detail. Fannie Mae led the way. As a quasi-government agency, they were able to relax and automate their lending in the name of increasing homeownership. Not only that, but they also bundled the mortgages into AAA-rated mortgage-backed securities after buying mortgages from banks. Banks were then free to make more risky loans knowing Fannie Mae would buy them and turn them into securities. Everybody made a killing. Getting a mortgage became so easy my dog could have gotten a loan to buy a mansion. That it saddled the middle class with unsustainable debt was not their concern, the crash, their losses, were covered by the taxpayer. Massive corporate welfare.
Fast Forward to 2020. The real estate fraud that crashed the system resulted in 6 million homes lost to foreclosure and short sale. Millions of ordinary people lost billions in asset values as their homes were taken away. Prices of homes dropped as million stood empty.
Ten years later prices have recovered. Ordinary people, however, have not gone back to their homes. Real estate investment firms, institutional landlords, have created a new market: renting those single-family homes to people who used to own them. Francesca Mari reports that Steven Schwarzman, chief executive of Blackstone, was spending $100,000,000 a week in 2012 on these homes. The companies they hired to manage these rentals are the cruelest of overseers.
Marx writes that in 1688, William of Orange encouraged the landed gentry and the rising capitalist class to steal state lands, used by farmers and shepherds to grow food and produce wool, to create a new bourgeoisie based on private ownership of these same lands, primitive accumulation, pushing the peasant farmers into landless impoverishment.
Thus began the proletariat, now, in 2020, debt slaves who own nothing. People one coronavirus away from poverty. Thank you, Wall Street.