Rants

Every week it's the same. The news reports on the latest financial developments. Their sources are "The Experts".

There are many indexes of the financial system. Commonly referenced ones are things like "Interest Rates" and "Unemployment". Other indexes include the cost of living, real estate, consumer confidence. The list goes on.

But what all of them attempt to do is reassure us that things are not really, really, as bad as they seem.

Every week the newspapers run a report on the real estate market in and around the Calgary area. Prices of homes, how long it takes for them to sell, how many are on the market, etc. They consult with "The Experts" and write up articles that advise people that while things are bad, they are not really as bad as they seem. Things will get better.

"The Experts" in this instance are usually comprised of somebody from the Calgary Real Estate Board and an informed mortgage broker. Or, to simplify things somewhat, a banker.

Now it's odd we consult these experts, because none of them saw the bank collapse in the US coming. None of them foresaw the recession we're in. Or none went on record as seeing it coming. Which is odd, because even a blind person with a remedial knowledge of money and economics could have seen it coming. What I think it's likely that a great many of them were indeed idiots and didn't see it coming, I think it's more likely that many of them did see it coming but couldn't pull themselves away from the trough that was easy money for long enough to warn anyone.

Now there are a few reasons for this. The first of which would be greed. Nobody wants to get off a free ride. And, truth be told, the consequences of greed would only be borne by the greedy in small measure. Realtors now making double, threefold what they were a decade ago aren't likely to advise you you're overpaying. Bankers making money lending to buyers aren't likely to advise you to wait until prices drop so you can carry only half the mortgage. If, like some, you saw it coming you would simply lie a bit aside, and at the time this was brewing there was lots to be laid aside. Maybe move it offshore, or invest it in gold. You can profit from crisis if you know how to play the game. The second reason might be loyalty, anyone who warned that the "Boom" was a bubble was subject to cruel censure and scathing public ridicule. Many fine examples can be seen here (Peter Schiff enduring the informed opinions of his expert collegues). If you came clean with a reasonable assessment or prediction of where the economy was heading and worked for a bank or Real Estate Board, you'd be unemployed. And the third reason is that to give bad news in this instance has a strong element of self fulfilling prophecy about it. If, for example, you warned that house prices were ridiculously high and would soon be dropping, that people had better sell now if they hoped to realize any sort of profit or minimize their losses, then of course there would be panic in the market, people would rush to sell their houses, and prices would plummet.

Nobody likes bad news. People who stretched themselves far beyond their means don't want to hear that their investment is losing value at a rate of $1000.00 per week.

SO armed with this information the media still consults with the Oracles of Finance and issues summary reports about the state of the nation.

"Things are bad now, but will pick up soon...." is the message. Occasionally at the end of an article they will append a short fact list which directly contradicts their predictions. Phrases like "Slow housing starts" and "Market Adjustments" conceal the truth, imply that things will improve. Meanwhile unemployment rates jump by 2, 3, 4%. Realize that when unemployment rises, so do consumer bankruptcies. That when house prices drop, consumer bankruptcies increase. If you're not working chances are EI isn't going to pay you enough to carry a $400, 000+ mortgage. Chances are if you're carrying a $400, 000 mortgage and prices drop to $300, 000 you might rethink carrying your mortgage and simply walk away from the debt.

And when people realize this there will begin the domino effect, more bankruptcies = more foreclosures, more foreclosures = more houses on the market, more houses on the market = lower prices, lower prices = more bankruptcies (*see above; as people walk away from higher mortgages), and the cycle continues until prices reflect a "Fair Market Value".

By "Fair Market Value" I mean that direct correlation between the costs of materials and labour and the price of the final product.

In the past 10 years that relationship has been lost. "Fair Market Value", in the understanding of realtors, means "What are you willing to pay?" or "How much can you possibly borrow?".

The phrase "Fair Market Value" scares the shit out of bankers and realtors. Realtors, because it implies the end to a boom that made many of them millionaires. Not bad for a job that requires only a few months training. Bankers because they lent money they can never hope to recover against properties that were appraised grossly above "Fair Market Value".

Still the media approaches the Oracles of Finance for their monthly assessments. Despite knowing that it's against their interests to even slightly tell the truth, that their interests run contrary to the truth and facts, that the truth will crush them, they ask them their opinion.

Despite knowing that their greedy lending strategies and skewed prognostications are in no small measure responsible for this mess they are consulted, their opinion, in this instance, is invaluable.

They are, after all, "The Experts".

Don't trust the experts.

Details: Category: Rants; Created: 09 February 2009

I have a meeting, it's in the suburbs, mid-morning, and having checked the transit schedules discover there are not buses to this neighborhood. Not at this hour. There's an express that saves people from it, but only during peak hours. That's OK, it's not so so far away, and I set out on foot.

And for the second time in as many weeks I rediscover the complete lack of pedestrian access in Calgary. Things are fine until Sarcee Trail, but crossing it I find myself walking long distances across lumpy ice covered berms and roadsides. There are no sidewalks here. You are not meant to walk. If you really needed to be here, you would have driven...

The message is implicit, but obvious. Calgary is a city built for cars, not people.

Jumping fences and cutting through backyards I find myself in the suburbs, and there's still a long way to go. At least when you get into the neighborhood there are sidewalks, I note, but getting into these neighborhoods is next to impossible.

And the neighborhoods, here I stand corrected. For they are not neighborhoods, nor likely ever will be. They are the stockyards of consumerism. Rows of uniform 1 and 2 story bungalows, entirely homogenous, 2 car garages, sidewalk on one side of the street only. Walking is not encouraged. No variation as far as the eye can see apart from the curve of the street. A vision of upper-class communist Russia, as concieved by developers - the cheap replication of souless, manufactured lives. Who, I wonder, would consent to live in these? What sort of Faustian bargain did they strike? Were they so worried their neighbors might "ruin" the neighborhood with thoughts of architecture or ornament they signed this bargain? What justification could there be? And not even a Faustian bargain, Faust sold his soul to the devil, a bad bargain but he was paid, here people paid, and handsomely, to live in these monotonous salmon-colored bungalows. They waived all rights to individuality, to creativity, to pride in ownership. It is a wasteland. A purgatory of the soul.

I know the justifications. It's not the developers dream, for it was this ugly in the blueprints, in the flyers and drafts sold to the public. No amount of rendered trees and shrubbery could conceal the insipid vinyl siding, the cheap and mundane rubber-stamped homes.

Evenly spaced, each bungalow 3 feet from it's neighbors, enough room to stand a rake, or shelter your lawnmower. Lawns sheared to the required inch and a half demanded by their association. Watering in the evenings only. Flowers should not detract from the overall "look" of the street or there will be complaints. Identical blinds shade identical lives. People here live in fear, fear of their neighbors, fear that someone would threaten the value of their neighborhood, their property, their investment, by doing something different. That someone might ruin the "Aesthetic" of the neighborhood by painting their house green. Or purple. Maybe even putting up a birdhouse. They want the guarantee of having neighbors just like them, just as wealthy, regular and uninspired. They believe they are living the dream.

They are idiots. This is the dream of conservatives, communists and fools. Nothing could ruin the "Aesthetic" of this neighborhood. Not a front yard full of newspapers, beer cans or dog shit. It's ugly through to the bone.

From neighborhood to neighborhood I walk, occasionally jumping fences, fences meant to keep pedestrians, people like me, out. If you must visit the community and developers association would prefer you drove. Ideally a Lexus or a Saturn, choose from any of these 5 colors, access points are off of Strathcona Blvd, because that's the kind of people we are.

And I want to stay out, I have no desire to intrude, but there's an appointment I have to get to.

There is a sense of Deja-vu as I pick my way through them, not just the dull repetition of colors, shapes and yards, but the remembrance of panic filled dreams, nightmares of being lost in these neighborhoods and unable to find my way out, forever searching for an exit from cul-de-sacs looping into cul-de-sacs....

Each neighborhood is a slight variation on the previous, here the developers have allowed a 3 part color harmony, naples yellow, slate siding or faux brick. But you still must have a 2 car garage. And this neighborhood gives you 2 stories of the dream, should you want it, in shades of steel grey or blue. Mosques and minarets conceal cell phone towers. You will need them when you realize what has happened and go to call for help...

They are spreading. Faster than I can pick my way through them. Like cancer you see them on the outskirts of the city, Billboards advertising the spiritual cul-de-sacs of fearful and failed imaginations. "The Exclusive lifestyle choice for the lifeless and uninspired..." Words like "Prestige", "Executive" and "Community" are debased and corrupted, twisted by the admen and developers to herd, corral and shear the stupid.

I cover my children's eyes when we drive out of the city, there is something about these suburbs, these cookie-cutter dreams of success that is both frightening and shameful. And I don't tell them, but maybe they know. They terrify me.

Details: Category: Rants; Created: 07 February 2009

This in the Calgary Herald:

"Despite interest relief from the Bank of Canada, at least two of the country's big banks are increasing the borrowing cost for customers who tap into their lines of credit, and one is charging a new fee for those who don't use it."

The Culprits? Toronto Dominion and the Bank of Montreal.

But seriously, why shouldn't you be expected to pay to NOT use their service?

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Damning the suburbs

Damned if you do, ...

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