The good folks at DBR were kind enough to e-mail me a link to that story you cite in your last paragraph.

“Foreclosure Cases: Appeal court takes judge to task for ‘benevolence’ “, Daily Business Review, October 6, 2009.

As far as property rights, it is all too short of a journey from negative income tax schemes and raging against bankers and the rich to a Chavezista or Rhodesian type of property owner hell. Thankfully, the recent Fla Ct. of Appeals decision on foreclosure, cited on Doom’s sidebar today, moves in the opposite direction. Even here, in the People’s Republic of South Florida, some of the rule of law remains intact.

“West Coast Hotel” refers to West Coast Hotel v. Parrish, a Supreme Court decision under the Hughes-Brandeis court. Read about the case at your leisure…I must tend my garden.

JR – Once again, I have to ask, who was it exactly that forced the purchase of the homes/warehouses/property? Yes, oh crazy me, I’ve forgotten again that people can’t be held responsible for their own actions.

Let’s just for a minute assume that contracts are abrogated and your Utopian revolt materializes. Setting aside for a second the most insidious aspects of Marxism-Leninism (purges, outright murder, and the government-mandated forced starvation of MILLIONS), do you really think the Bolshevik Revolution worked for ANY citizens of the Soviet Union, Cuba, or North Korea besides the people in power? The simple fact is, when you work and the products of your labor are seized by the state “for the greater good,” you stop working – it’s human nature. Which is not to be confused with: If you’re lazy or stupid and you don’t want to work because you’re still getting your welfare check/extended unemployment benefits/food stamps/subsidized housing/subsidized health care, you stop working (still human nature).

Assuming for another minute that the reason for your diatribes on this board is not bourgeois commercialism, how can you be so in favor of principles that are so contrary to what has enabled the country to operate under its constitution for 222 years, namely, the abrogation of property rights?

The solution is simple, lower the prices, and people will buy, and the excess supply will go away. I plan to buy as soon as the price is close to comparable to rent, homes are still excessively overpriced where I live for anything other than a few starter homes.

This little scene is easy to explain: the gleam is the West Coast Hotel scrutiny regime raping you. The abandoned warehouses and factories are your raped body.

What do you propose to do about that?

Thank you- you made my point for me.

Bulldozing thousands of homes with genuine value (even if it is more than 50% off of peak) seems like a very poor solution to prop up home prices.

There are many properties out there however, that are “nuisance” properties- properties that should be bulldozed for safety reasons, not to prop up the prices of the others.

Now, add in the block after block of abandoned older home stock rotting in the city core, the crushed dream of urban “homesteading” reclaiming whole neighborhoods back to blight, with the ghost town new developments at absurdly remote locations Twist finds almost as disgusting as they really are, and you begin to see a pattern that looks a lot like a spoiled teenager’s relationship with a bedroom, only with far more grave consequence.
Here in the Sunshine State toxic pools, broken pool gates and overgrown lawns filled with rats and feral former pets are popping up even in locations that were millionaire fantasies a mere 4 years back. Where I bike an OCEANFRONT two story has sat for nearly two years, posted “unsafe-unfit for human occupation”. Some “owners” apparently await the next Cat 3 storm to convert their negative salvage value slum properties into insurance cash. And the civic and environmental officals just wait and watch.

Here, one side promotes “squatters rights” for our “homeless”, raising the nightmare of Chavezista or Rhodesian “solutions” to housing the poor, but really merely guaranteeing the current blight will become permanent and more widespread. On the other side we have folks whining about “sacred property rights” while ironically believing their own, often willful neglect of their own property, should be free to adversely affect the value of their neighbors’ homes. As a wise Duke might say: “A plague on both their houses”.

A bulldozer seems a practical and moderate solution, if deployed only after the minimal process due the “owner” of blighted property is provided before the blade strikes wood or stone. But, of course, that would require civic and environmental officials to do more than wait and watch. But who knows, maybe some kid will have a vacant lot to play ball in, like I did when suburbanization just began, rather than an abandoned building to play gangster dope dealer in instead.

You’re right on the money. What were doing is “liquidating liquidating liquidating” just as Andrew Mellon advised Hoover. Anyone who thinks the “stimulus” bill meant government intervention, is crazy. It was simply looting by the powerful in this country.

That is what is called “circling the wagons.” The next phase is “shoot at the Indians.” That’s us. That’s the phase where the Federal government reduces social programs. I know it won’t seem like it, especially if unemployment benefits are extended.

But it’s not just a matter of benefits. The Federal Government sanctioned credit expansion. Now it is mandating credit contraction.

The Federal Government has left the United States. Wake up.

You’re also right to talk about agriculture. Know what happens when the Federal Government starts withdrawing from the society? The supply chain starts to collapse. And it’s beginning just where it happened after 1929: agriculture.

They talk a lot about housing and commercial real estate speculation, but there was HUGE leveraged finance in agricultural land. As commodities burst, these deals will come under stress, agribusinesses will go under, and supplies will start to be interrupted.

Wait and see.

The only credible alternative regime is one which stresses maintenance of important facts, and enforces that through vastly expanded individually enforceable rights.

Just EXACTLY as I said in The Eminent Domain Revolt 3 years ago.

Too bad the road to the New Bill of Rights is paved with dead bodies. It seems the road to every new individually enforceable right, is paved with dead bodies.

That’s just the way humanity does business.

Remind me again who higher housing prices are good for?

Promise the Chuck Ponzi unlimited funds at 3% rates promised by the Obama plan and I’ll take care of ALL vacant property in the US. Won’t cost the country a dime because I’ll have 10 yr treauries to back it up.

Of course, I get to keep all of the winnings.

Chuck

Igor says “scary”

If we really want to get serious, we need to take a page from the Chinese in their massive investment in infrastructure.

http://multifamilyinvestor.com/hammer-time-former-labor-secretary-hits-nail-on-head/

Should we use bulldozers to handle falling prices on everything?

(John R, I know, this is a should, not a will)

Should we also bulldoze crops when prices fall? (Yes, I know we already do this in one sense and willingly let people starve to death in other countries)

Should we bulldoze SUVs when they are too costly (think cash for clunkers)

Should we also bulldoze Computer Factories when computers become so cheap that existing manufacturers cannot produce without losing money?

Should we bulldoze Microsoft because they give away free browsers?

Should we also bulldoze the homes and offices of open-source software?

Shit, this line of thinking is getting ridiculous! We shouldn’t abandon free markets completely just ’cause we did it last year in a fitful spat of idiocy. It is still the most efficient method of allocating capital (or so we’re told). It’s not that it’s perfect, but that it’s better than the alternative. And, property rights are a slippery slope. That’s why eminent domain is hotly contested. Private capital will flow to locations with sufficient property rights protections.

Meanwhile, we could be bulldozing houses in Victorville while the house-poor are still buying 800K shitboxes just 50 miles away! Seriously… if after a decade we still haven’t reallocated these domiciles, then we can start talking about efficient utilization of land, but until that time, let’s actually let the bubble unwind.

Any intervention at this point is just going to make the problem worse.

Igor says “sad”. I agree

Chuck Ponzi

You may think you’re a tough commenter, but you’ve got nothing on Mike

Two words: price discovery

Capitalism ended a bit over a year ago, specifically in the afternoon and evening of September 18, 2008, and even after a further year of looting the world’s middle class the big institutions are still hopelessly insolvent. Their accountants would have to announce this and close down if anyone was silly enough to do something to properly value all the mortgage paper on their books. A similar scam is the FDIC specifying that the increased deposit insurance fees don’t have to be “recognized” under some pretense that they’re not an increase, but an “advance.” So smaller banks that had been on the edge and are now insolvent because of the higher fees are allowed to pretend they’re not. Isn’t GAAP wonderful?

RE: greggparadiddle’ #6 –

For more on this please refer to Greg’s guest post “Constructive Foreclosure” (August 17, 2009)

Old Mike (#1) -

Great to see you posting again (Doomers, we had some amazing flame wars on similar issues years ago, and obviously the questions we wrestled with are still largely open.)

Gee, this sounds like it could have been written by that creepy John Ryskamp. You know, that guy who has no sense of moral hazard?

He said it would come to this. Gee I hate people who predict accurately.

Have you read his creepy book, The Eminent Domain Revolt? It reads like Mein Kampf. What does he mean when he says that housing enjoys only “minimum scrutiny?” What does he mean when he talks about “important” facts?

People who talk like that should be put in Gitmo. Or rather, they should be bulldozed!

Now listen, I’m a petit bourgeois idiot who never learns any and doesn’t WANT to learn anything. But I know a commie when I see one.

Cordially yours,
John Ryskamp

I doubt banks really are harboring any hope that prices will rise. They are probably holding out for the more likely hope that the government will believe that they are too critical to fail and purchase the loans at face value- or close to it.

I agree. If banks aren’t required to take their lumps they will continue to make loans that can’t be paid back.

I agree that there is something wrong about record vacant homes and increasing homelessness. We can’t sell the homes to the homeless, and it creates problems when they move in without heat or adequate sanitation.

There are neighborhoods that were built far from city centers in anticipation of perpetual growth. I suspect some of those are candidates for bulldozing- they are too far from jobs and services to be practical for anyone. I also suspect that there are single foreclosures in closer in neighborhoods that for various reasons are poor candidates for affordable housing programs. If they have no useful purpose, isn’t it better to tear it down? Many cities that face declining populations [Dayton, OH is one] have lists of “nuisance houses” that are destroyed on an ongoing basis.

There are undoubtedly homes though[or better yet, apartment complexes] that would be great candidates for affordable rentals/shelters.

That still means the solution is not to sell homes to people who can’t afford them. It means providing breaks to nonprofits or other opportunities to convert them into something useeful.