This Time it’s Bernanke’s Housing Bubble

“That men do not learn very much from the lessons of history is the most important of all the lessons of history.”  These are the simple, yet exceedingly relevant for our times, words of the famous English writer Aldous Huxley.

If only Federal Reserve chairman Ben Bernanke would acquaint himself with this quote.

For three years, between 2001 and 2004, in an effort to boost the economy after the 911 terrorist attacks, his predecessor at the Fed, Alan Greenspan, kept the Federal Funds Interest Rate under two percent.  As a result, cheap money and low introductory teaser rates fueled the largest housing boom in American history.  Then, like all fake boom phases, when interest rates rose it came to an end.  The necessary correction phase started and all the mal-investment of the boom phase was no longer sustainable under higher rates.  Foreclosures increased.  As housing prices fell back to earth, underwater mortgages and abandoned homes were everywhere.  Many still find themselves unemployed and destitute.

Now, instead of letting the market go through a much needed correction after the crisis began, new Federal Reserve chairman Ben Bernanke pursued a policy bent on “stabilizing” the value of assets.  Since 2008, Bernanke’s Fed has kept the Federal Funds Interest Rate close to zero percent and it has increased its balance sheet by just under three trillion dollars by purchasing Treasuries and mortgage-backed securities from member banks.

Some economists believe Chairman Bernanke’s policies have created a housing recovery.  These economists believe this because they haven’t learned from history, especially recent history.

But, according to David Stockman, the former head of the Office of Management and Budget under Reagan, what Bernanke’s policies have created is simply another housing bubble.  He sees a similar combination of artificially low interest rates and speculation producing the current housing boom just like the boom during Greenspan’s tenure.

Nationally, the median price for existing single-family homes was $178,900 in the fourth quarter of 2012, up 10 percent over the same period in 2011.  This marked the greatest year-over-year price increase since the fourth quarter of 2005.

And there are local pockets of even greater price increases in real estate going on.  There is a farmland bubble taking place in the Midwest and Mountain states with non-irrigated cropland prices increasing on average by about 18 percent.  Southern California, Silicon Valley, Washington D.C., and New York City are all experiencing huge real estate booms with prices for pre-construction condos in Manhattan increasing on a bimonthly basis.

It is ridiculous to believe that what we are seeing is anything other than another housing bubble.  Unemployment and underemployment are still very high.  Many employed middle income buyers are still reeling from the last bust.  The huge price increases we are seeing is the work of speculators fueled by Bernanke’s easy money policies.

The bust will come when rates rise, the mal-investments of the boom become unsustainable at the higher rates, and the speculators liquidate their positions leaving small investors holding the bag.  It will be 2008 all over again for many, except this time it will be Ben Bernanke’s Housing Bubble.

Article first published as This Time it’s Bernanke’s Housing Bubble on Blogcritics.

Kenn Jacobine teaches internationally and maintains a summer residence in North Carolina

Disingenuous Reporting on the Gun Issue

If there ever was a situation tailor made for Second Amendment rights it is the ongoing manhunt drama in California following the killing of three people and the injuring of another by former Los Angeles police officer Christopher Dorner.  Dorner (33) has promised in notes he left behind to perpetrate “warfare” on police officers and their families.  Desperate and heavily armed, authorities are not certain what he is capable of.  One report says residents of rural southern California towns are barricading themselves in their homes, some armed to the teeth, in the event Dorner attempts to break into their homes.

Now, you would think that the mainstream media in an effort to provide “fair and balanced” reporting would seize the opportunity and report at least this one time that this is what James Madison had in mind when he wrote the Second Amendment.  That is that people have a natural right to self-defense when a madman is on the loose.  But, this lack of reporting, as well as other examples of outright chicanery in reporting, is indicative of the MSM’s agenda when it comes to guns.

For instance, there was this headline in the Huffington Post on January 27, 2013, “Ronnie Chambers Death:  Mother Loses Fourth Child to Gun Violence…”  What followed was a video of the grieving mother (Shirley Chambers) and an article explaining how her fourth child was gunned down “while sitting in a car”.  The author of the piece gave no other details about the circumstances surrounding any of the shootings of her four children.  In fact, readers were left with the impression that each one was an innocent bystander.  What was inferred was that something must be done to stop wanton gun violence before more innocent children are killed – i.e. gun control.

The purpose of the piece was clearly to horrify readers’ sensibilities toward the mother’s loss, get them caught up emotionally, and bring them around to the belief that if only guns could be banned the violence on our streets would disappear.

But, upon further investigation, this observer found that Ms. Chamber’s children were anything but innocent bystanders.  Two of her children died as a result of arguments with individuals they knew.  One seemed to be a targeted killing by, perhaps, a rival gang.   And the last of her children to be gunned down, had been arrested in the past a remarkable 29 times and had four felony convictions!  This refutes the Huff Post’s inference that the victims were innocent and merely at the wrong place at the wrong time.

Also from the Huffington Post was the blog by Josh Horwitz, the Executive Director of the Coalition to Stop Gun Violence, entitled “LaPierre Reveals True Purpose Behind Assault Weapons”.  In the piece, Horwitz takes exception to NRA CEO Wayne LaPierre’s Senate testimony that the purpose of the Second Amendment was to ultimately provide Americans with the means to protect themselves from their own government.  Horwitz went so far as to label LaPierre’s position “insurrectionist”.  He accused LaPierre and others who hold the same belief that they were “ready to wage war on our government”.

Once again, emotional scare tactics were employed by a Huff Post columnist to drive home the point that guns should be banned.  The insinuation is that LaPierre and others who hold the view that Americans need guns to protect themselves from their own government are on the far fringes of society.  In fact, they are the loony tunes to be feared.

What Horwitz intentionally ignores are those that came before us, who were revered, and who held the same belief that an armed citizenry is the greatest defense against tyranny.  Thomas Jefferson said, “What country can preserve its liberties if its rulers are not warned from time to time that their people preserve the spirit of resistance? Let them take arms.”  In the Federalist Papers #46, James Madison proclaimed, “Besides the advantage of being armed, which the Americans possess over the people of almost every other nation…(where) the governments are afraid to trust the people with arms.”

Lastly, there is this quote from 20^th Century liberal Democrat and former Vice President of the United States, Hubert H. Humphrey:  “Certainly, one of the chief guarantees of freedom under any government, no matter how popular and respected, is the right of the citizen to keep and bear arms. … The right of the citizen to bear arms is just one guarantee against arbitrary government, one more safeguard against the tyranny which now appears remote in America but which historically has proven to be always possible.”

Byignoring history, Horwitz seeks to taint his readers’ understanding of the gun issue.  But he is not alone in this endeavor.  The government run schools and most of Hollywood employ the same tactics.  Their goal is to convince the public that we need more gun control.

But, for those of us that understand the true meaning of the Second Amendment, we can take solace knowing that the disingenuousness of the gun grabbers is not working because Americans have responded by setting back to back monthly records for arms sales.

Kenn Jacobine teaches internationally and maintains a summer residence in North Carolina

Highways and Roads in a Free society

As a libertarian I believe that you have a right to live your life as you see fit as long as you don’t violate somebody else’s right to do the same.  Libertarianism represents the only non-coercion political/economic philosophy in the universe.  All other political/economic philosophies, democracy, republicanism, monarchy, dictatorship, socialism, and communism employ the brute force (violence) of government to enforce compliance of one group’s wishes on another group.
Many Americans believe that libertarianism is an unworkable framework because without government to provide and enforce laws society would be in chaos.  Additionally, opponents of greater freedom question how the services currently provided by government would be handled in a free market environment.

It is understandable that many Americans hold these doubts about libertarianism.  As a society, we are socialized through the government dependent schools, universities, and mass media to accept that we need big government to protect us from the excesses of capitalism and freedom in general.  If that doesn’t get the job done, those members of society that have for a long time held statist views, and are therefore closed to thinking for themselves, ridicule those of us for believing such “nonsense” in an effort to get us to conform.  After all, normal human behavior requires that we want to be liked or at the very least not thought to be a weirdo.

 

One of the biggest questions raised against a totally free society is, who would build roads and regulate their use?  Where would we be without government provided speed limits, traffic signals, and road construction?

Well, in the early 1800s, America actually had a huge network of private roads and highways.  According to Thomas J. DiLorenzo, hundreds of private road building companies invested over $11 million in turnpikes in New York, $6.5 million in New England, and over $4.5 million in Pennsylvania.  By 1840, this resulted in the private production and operation of about 3,750 miles of road in New England, 4000 miles in New York, and 2400 miles in Pennsylvania.  In fact, in real dollar terms, this production exceeded the interstate highway program financed and run by the federal government after World War II.

And we still have private roads in America today.  Besides examples like the Reedy Creek Improvement District and Dulles Greenway, the National Bridge Inventory, which is a database compiled by the Federal Highway Administration lists approximately 2200 privately owned highway bridges in forty-one states!  Many of these thruways charge tolls which are fairer because they are user fees.  All are proof that government is not necessarily needed to build and maintain roadways in America.

Okay, well, what about local roads in residential and business districts?  In a libertarian society all land would be owned privately.  Thus, roads would no longer be public, but private property with certain deed restrictions for easements and right of way privileges.  The land would be owned by business proprietors and homeowners.  They would have an incentive to maintain it as a right of way because otherwise the value of their property would decrease or in the case of a business, sales would plummet.  Freeing property owners from paying property taxes eliminates the middleman (inefficient bureaucracy), and frees up more money to go directly into road repair.  If you don’t think property owners would maintain their right of ways, think of the endless number of them who pave their own driveways and then seal them each year.

In my own case, my house is located in a rural part of North Carolina on the side of a mountain.  The properties of my neighbors and me extend into our street. Consequently, I own a portion of street which is allocated as a right of way.  Even though I pay property tax to the county, it does not maintain this right of way.  Instead, the property owners on our street must maintain it.  Every year, I spend about $300 as my contribution to maintaining the road.  That’s a small price to pay if I didn’t have to pay the larger county tax amount.  Now, it is true that some folks on the street do not contribute anything to road maintenance.  But I am no worse off with that than I am with paying taxes for public schools in the county that I will never use.

As to what would happen if we didn’t have government provided speed limits, stop signs, and traffic signals?  There is a misconception that a libertarian society would be devoid of rules.  Of course, you could still have speed limits, stop signs, and traffic signals on your road, otherwise for safety reasons motorists might not traverse it.  Again, if you were a homeowner this would decrease your property value and also provide an unsafe circumstance for your own property including your house and vehicles.  Unsafe business districts would be littered with the shattered dreams of bankrupt enterprises.

In the last century how many Americans have attended local city council meetings to petition their local municipality to install stop signs or traffic signals at busy intersections?  How many homeowners with children or pets have requested that speed limits in their neighborhoods be reduced?  When there is a need people react.  It is naive to believe that people who have a stake in their communities and a financial interest thereof would not fill the void left by government relinquishing its responsibility over roads.

Lastly, we have built the roads and instituted rules for the same.  How would those rules be enforced?  I suppose local police agencies could still have jurisdiction.  But what is more likely is for homeowner and business associations to hire private security companies to handle patrolling and enforcement of the property rights of land owners.  After all, if someone litters on my property it is a violation of my property rights not a crime against society.  Thus, violators could be apprehended either physically or through identifying perpetrators to a local magistrate for the administration of justice.

At the end of the day, no libertarian believes their ideas for society would be perfect.  But we do believe they would be possible and better than what we have now.  Private ownership of all material things is always better.  It has been proven that the freer a society is the more prosperous it is.  One need only to look at the history of America.  We have more government restrictions on our freedom now than ever before and our decline is imminent.  What is needed is an intellectual awakening in America.  This awakening must open our minds and seek to question the tired mantras of statist institutions like schools and the mass media.

Article first published as Highways and Roads in a Free Society on Blogcritics.