More food for thought from TomDispatch

July 28, 2011
Tomgram: Andrew Bacevich, Playing Ball With the Pentagon

Post-9/11, doesn’t it seem as though all American experience is blending into a single experience whose label is “your safety”?  Which means, in practical terms, you get poked, prodded, searched, and surveilled wherever you go.

The other day, I went to the ballpark to see my team, the Mets, play the Florida Marlins.  It’s always a shock these days to make your way into the team’s new stadium, Citi Field (named, charmingly enough, after one of the financial institutions that took us down in 2008 and somehow came up smelling like roses).  No more is it just tickets at the turnstile.  What’s involved now is that peek into your backpack or bag, followed by the full-scale search of you, body wand and all.

I always have the urge to shout: I’m here for a ballgame, not the Global War on Terror!  Instead, of course, I just lift my arms and let myself be wanded.  It’s like an eternal reminder that, for Americans, 9/11 did change everything -- and for the more intrusive at that.  Once inside, past all the restaurants and clubs, memorabilia shops and sports-clothing stores that now add up to the baseball (basemall?) experience, it turns out you haven’t left America’s wars behind.

In about the fourth inning of this particular humdrum game, only modestly attended on a Monday night, the looming Jumbotron in the outfield (where I was sitting) suddenly flashed a shot of an Iraq War veteran in the stands.  Caught in the camera’s eye, he stood up to wave, bringing the sparse crowd to its feet cheering.  Then, former Mets great Tom Seaver came on screen making a pitch for vets, which he concluded this way: “They’ve made their sacrifice.  Now, it’s time for us to do the same.”

And then, of course, everybody sat down, went back to hotdogs and peanuts, and the game proceeded.  As Andrew Bacevich, TomDispatch regular and author of Washington Rules: America’s Path to Permanent War, points out in a particularly striking way, it’s no mistake that pleas like Seaver’s end in mid-air on nothing whatsoever.  Like the Bud Lite being sold all over that stadium, sacrifice-lite is being sold all over America when it comes to wars that most of us are almost completely detached from (until the bills start coming in).  Sacrifice-lite turns out to have less body and isn’t filling, but nobody’s about to complain.  Not in America.  (To catch Timothy MacBain’s latest TomCast audio interview in which Bacevich discusses cheap grace and military spectacle, click  here, or download it to your iPod  here.) Tom

Comments

[warren,]

Ron Paul and Dennis Kucinich... four months old but still Relevant. Could Obama's ongoing campagne in Libya be Compared to Benito Mussolini's in Abyssinia?

http://dandelionsalad.wordpress.com/2011/04/01/dennis-kucinich-obamas-libya-attack-impeachable-offense/

[warren,]

I Read that Six to Seven Trillion Dollars Vanished from Middle Class America's Property Values after the Housing Bubble Burst.

- Incidentally, John McCain was one of the Keating Five...Remember?

Stuck in Phoenix, the Epicenter of Housing Crisis

by Barry Wood
Thursday, July 28, 2011

Commentary: It may take years for housing to bloom again in desert

More from MarketWatch.com:

• Foreclosure Rates Fall But One City Sees Big Rise

• Top 3 Most Walkable, 3 Least Walkable U.S. Cities

• The World's 10 Most Expensive Cities

In metropolitan Phoenix, two-thirds of all residential mortgages are underwater. Of these, some 200,000 are 50% larger than the current market value of the properties. Many homeowners have come to doubt whether they'll ever retrieve their lost equity.

In this city of 4 million, the 14th largest in the United States, the median home price is down 53% since the bubble peaked in 2006 to just over $120,000. Only smaller cities such as Las Vegas and Orlando have witnessed equally catastrophic drops.

Paul Hickman, the head of the Arizona Bankers Association, says for Arizona the current recession is worse than the Great Depression of the 1930s. "Then," he told Cronkite News of Arizona State University, "our economy was young and we were just barely a state." Now, he says, Arizona is suffering because it became excessively dependent on a "one-dimensional housing economy."

Phoenix is no stranger to booms and busts. Home prices here fell in the late 1980s after the savings-and-loan debacle brought down several local developers, including the notorious Charles Keating of Keating Five fame. Now 88, Keating lives quietly in Phoenix, having served a 4½-year prison term for fraud after his Lincoln Savings and Loan collapsed in 1989.

The scope and severity of the current crisis easily eclipses that of the '80s and '90s. Phoenix's population is now 45% larger and, as new suburbs encroached ever farther into the desert, residents have been squeezed by long commutes and the sharp run up in gas prices. Housing economist and retired ASU professor Jay Butler says of the current downturn, "nobody thought it could get this bad." He foresees no significant recovery for two more years.

Some local realtors dispute that pessimistic assessment. They point to strong existing home sales in June, up 22% according to the National Association of Realtors. It was the second consecutive month of strong sales, with the June figure the strongest recorded since December 2006.

But while sales may be up, prices are not. The NAR report says the median price of a home sold in the Phoenix area in June was down 13% from the same month in 2010. Realtor Robert Holt expects prices to remain weak because distressed properties are accounting for 64% of sales. With Phoenix having an inventory of over 120,000 empty or foreclosed homes, Holt expects "a tidal wave of foreclosures" will soon hit the market. He says with "overall mortgage delinquencies double and foreclosures eight times higher than historical norms, there is not going to be any easy or quick fix to the housing crisis."

Laurie Goodman, the respected mortgage market analyst at Amherst Securities, sees a similar problem nationally. Alarmed at what she believes is a 30-month supply of distressed properties overhanging the market, she told an American Enterprise Institute conference recently, "we're not making enough progress in liquidating bad loans."

Saying that only 30% of troubled loans have been resolved, she predicts that over the next six years as many as one out of every five mortgage holders in the country could lose their homes. With the number of distressed properties coming to market not keeping pace with a mounting inventory of troubled mortgages, and prospective buyers finding it hard to get credit, Goodman says the normal supply/demand function in housing is broken.

The result, she argues, is a likely boom in rental housing as strategic defaulters and evictees gravitate to cheaper rental homes. "Rental rates are rising," she says, "because renting is the only way to absorb the overhang."

In Phoenix, that is already happening. As home prices declined over the past year, rental rates rose 9%. Nearly half of the distressed homes sold over the past year have been turned into rentals. Michael Trailor, the director of the Arizona Housing Department, says "the shift from home ownership to rentals in the Valley will continue as home ownership shrinks more."

Ironically perhaps, the shift to rentals is occurring while home affordability has improved. With home prices way down and mortgage interest rates very low, this is the best time in at least 20 years to buy. In Phoenix prices have slid back to the levels that prevailed in 1998 or 2000.

Adam Stankus, a hotel manager in Tempe, and his schoolteacher wife are in the enviable position of being prospective buyers in a buyers' market. They hope to purchase the home they currently rent in the suburb of Buckeye for under $50,000. Lucky to have savings equal to a 20% down payment, Stankus believes their monthly mortgage payment will be well below their $800 monthly rent.

The unexpectedly severe downturn over the last five years shows that nobody really knows the future direction of the housing market. Gary Shilling, a respected forecaster, is predicting that prices could fall another 20% nationally, on top of the 30% decline that has already occurred. Mark Zandi, meanwhile, of Moody's Analytics believes we're already bumping along the bottom and that prices could begin to recover next year.

Robert Holt, the north Phoenix realtor, argues persuasively that there won't be a price upturn in his market until the ingredients for a recovery are in place. These, he says, include population growth and an increase in jobs. Currently, that isn't happening. The local unemployment rate is stuck at around 8%. While below the national average, only 4,900 jobs were added in the past year. Given all that, ASU professor Butler says the "housing recovery in Phoenix is likely to improve at only a glacial pace."

Barry Wood is North American economics correspondent for RTHK radio in Hong Kong.