GSSD on FaceBookJames Howard Kunstler talks about the Fed’s attempt to stimulate “the housing market recovery” with QE3, and in typical fashion doesn’t mince words. In his own way, it’s similar to the Strong Towns message (in my opinion).
“Virtually nobody else out there in blog-and-pundit land will tell you what this so-called “housing market” is, so I will. It basically refers to suburban sprawl, which I have previously defined in two ways: 1) the greatest misallocation of resources in the history of the world, and 2) a living arrangement with no future. The first proposition is obviously a function of the second.”
As he explains, this false economy of building sprawl is directly tied to the huge growth of the financial industry and mortgage bond market.
“Among the many tragic ramifications of the dynamic is that the final blowout of sprawl-building which ran roughly from the early 1990s to 2007 – and peaked, you may notice, with the final blowout of cheap oil ($11 a barrel in 1999) – became one of two intertwined activities that propped up the US economy. The other was, of course, the expansion of the financial “industry” to about 40 percent of all economic activity, largely based on fraud in mortgage issuance and the repackaging of that debt in booby-trapped bundles of MBS, CDOs, and other instruments that have been destroying banks, governments, retirement funds, and individual investment accounts like a long-running hemorrhagic fever. The results of that orgy can be seen now an over-supply of suburban buildings of all kinds (houses, strip malls, box stores) that will continue to lose value, and a banking system disabled by ruined balance sheets.”
The choice seems to be ours. Either STOP our post WWII development patterns now, or it will be stopped for us by crisis.