Jim Powell, MacArthur Fellow
Saturday August 22, 2020 - 02:51:00 PM
A summary review of: Richard A. Walker, Pictures of a Gone City: Tech and the Dark Side of Prosperity in the San Francisco Bay Area (Oakland, PM Press, 2018.)
M.L. Butler was born to a sharecropper family resident on the J.W. Jones Cotton Farm in St. Francis County, Arkansas. His father, W.M. Butler, "picked cotton by hand... sixty years after the legal end of slavery—and received no wages for his work. Instead, the owner was supposed to give him a percentage of the cotton's market value. First, though, the landowner deducted the cost of his 'tenant' farmers' seeds, fertilizer, clothing, and food. Their take-home pay was usually calculated down to zero." His son M.L. Butler migrated to Los Angeles, settled there, found a job, saved a down-payment, bought a house and spent the rest of his working life paying its mortgage, only, in the end, to lose it, purchased at auction pursuant to foreclosure of a second mortgage which he was persuaded — as a boon to his retirement years — to take out during the housing industry credit bubble that culminated in the financial debacle of 2008-2009. Thanks to the TARP legislation and banker bail-out (the joint work of both parties and two presidents), the buyer was "reimbursed" in full for the difference between the inflated value of the mortgage and the more realistic price at auction, at least doubling his money. Odds are, too, that if Mr. Butler had not been compelled by the bank credit monopoly (W.M. Butler's generation called it the "Money Trust") to pay usury ("interest") to the investors who owned his first mortgage — which over time approximately doubled his cost of shelter — his circumstances later in life would not have made him so easy a mark for the clever fellow who, for a nice percentage, convinced him that a second mortgage was a wise option for his retirement years.
These matters are conveniently shrouded in discreet mystery by California state law but the likelihood is that the buyer of Mr. Butler's foreclosed mortgage worked for a shell company intermediary with headquarters out of state — Phoenix, say — which passed the deed along to a hedge fund in New York, such as the one operated by President Trump's Treasury Secretary Steven Mnuchin, where it became one of hundreds of thousands of such properties, newly converted to rentals and thus yielding its absentee investor owners monthly returns two or three times higher than Mr. Butler's mortgage payments. This kept real estate and mortgage investment markets inflated, and Americans' cost of shelter high and rising, while millions lost their jobs as well as their homes and later were able to find employment only for reduced pay in worse conditions, often needing two jobs to get by, or doing "independent" piece work in the so-called "gig economy." Over the decade of purported "recovery" following the 2008 crash most Americans saw their actual livelihood and quality of life seriously deteriorate, while the young had a long, hard, slow start and the disproportionate "share" in the possession of the wealthy few soared to heights unseen in more than a century.
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