I’ve got a link on my page to Gregg Swann’s Bloodhound blog. Gregg is Phoenix Realtor, and from what I gather, Phoenix is one of the places in the US that had a bubble and a crash and is a template for what will happen here.
In the course of my business I get a chance to talk to Americans from time to time. If they’re from Las Vegas or Phoenix or Southern Califormia I always ask them for their views on real estate there, in order to get some perspective on what I see on the blog. These guys are generally well off, and are generally long term real estate holders, but I have yet to find one seriously concerened about the future of real estate in any of the three places I’ve mentioned.
I dropped by Gregg Swann’s place today, for the first time in a long time, and found a post that is interesting in two ways. On one level, Gregg is eying a listing that he thinks has great latent value. On another level, he links to another blog, written by Richard Nikoley, wherein he discusses a way of looking at the buy-sell process that is kind of interesting.
Whats that got to do with Vancouver real estate? Simple. This market will change. If it changes drastically downwards there will be a lot of shell shocked people. There will be no shortage of talk that real estate is a terrible investment (we’ve heard the same talk during the time that it doubled in value, after all). In fact, it will probably be a great time to buy.
The market may change in another way. Prices may stop rising, but rents may continue to grow at double the inflation rate as owners fight to improve returns. A stagnant market may also provide buying opportunities.
The point is that buying and selling is, as Nikoley points out an “exercise in total freedom and is completely independent of [anyone’s] predictions or judgments, regardless of how meritorious [sounding] they may be”. There are two sides to every trade, and a lot of times the trades are win-win scenarios.
The Best Real Estate Anywhere! 
” Prices may stop rising, but rents may continue to grow at double the inflation rate as owners fight to improve returns ” — Rob
It is not easy to increase rents when oversupply dominates the real estate market.
This boom caused by lax lending lets developers build as many as they can. Vancouver will not be short of housing in next 5 years or more.
Rob:
http://biz.yahoo.com/ap/070817/mortgage_mess.
html?.v=5
“the jumbo rates have climbed 0.75 to 1.25 percentage points above the rates for mortgages below $417,000. ”
Think about what that means – that’s like 350$ a month more for mortgage payments. Basically, the subprime crisis just caused a 1% drop in RE prices in the US over 417K.
What does that mean? It means the housing decline will be deeper and the RE death spiral is going to get worse.
The high cost of low prices. Cartoon makes a valid point.
http://tinyurl.com/26257c
TI:
You might be right. However, when I show rental properties I often have 10 groups at a showing. If we have an oversupply of housing, I haven’t seen it yet.
Should I buy sub-prime mortgage debt as a long-term investment?
“There are two sides to every trade, and a lot of times the trades are win-win scenarios.”
Don’t you mean “win-win-win” (buyer-seller-Realtor[TM])?
When housing downturn starts, many properties will still keep vacancy for sale.
After long waiting, the landlords have to change their minds for rent to cover their costs.
The supply will increase soon.
Most of the renters have weaker credit backgrounds now because lax lending encouraged and facilitated home ownership.
The recession will push up unemployment. Some may think to move back to parents’ property
These reduce the demand.
.
TI:
I’m holding out more than one possibility. Sales prices could stagnate, and rents could continue rising to catch up (they’ve lagged prices so far). I’m not sure if that will happen or if something else will.
You seem to be sticking with one prediction (and one that runs exactly counter to the current trend). Right now the vacancy rate in the Lower Mainland is tiny. Rents are increasing. The economy is strong, and unemployment is at record (low) levels. We’ve been building at breakneck speed for several years now and absorbing the supply. Demand still exceeds supply, hence the rising prices.
So, when you say that all this will change “soon”, do you have a time frame? 3 months? 6? A year?
So do we know what’s causing the rent to lag rising house prices? Because if we don’t, how would we know it’s not the house price coming down instead of rents catching up? If landlord are unable to collect more rents, isn’t that a sign of possible over supply of rental units? And if it is not a positive cash flow investment, aren’t landlords under more financial pressure and may have to sell …. perhaps that adds pressure to house price?
Building demand still exceeds supply? Maybe on the lower priced end only or in your area?
A builder trying to blow out his million dollar homes in this area with no success. Listed for a million in April now down to 875k and still for sale.
“Right now the vacancy rate in the Lower Mainland is tiny”
I would assume this vacancy rate is calculated by advertisements?
A lot of people don’t advertise their rentals in main stream newspapers because they don’t want a grow op on their hands or bad tenants. Maybe that is why rents have not gone up. Actual vacancy rate is higher due to non-advertised rentals.
I should add, this rental and others I looked at were not advertised. The owners I talked to had problems with tenants in the past and are in a financial position to let their properties sit vacant if they can’t get a good tenant.
quote: “A lot of people don’t advertise their rentals in main stream newspapers because they don’t want a grow op on their hands or bad tenants. Maybe that is why rents have not gone up. Actual vacancy rate is higher due to non-advertised rentals.”
I to often wonder if the vacancy rate is calculated on “rental properties” that is properties that are primarily rental as opposed to for instance “new condo’s” being rented for the first time by many individual landlords as opposed to professional investor rental land lords. I often do a search on “yaletown” on craiglist just for my own interest and never find a shortage of rental properties.
Rob do you know if “new one off” landlord condo rentals are included, and if so where and how do they get those stats?
Here’s the first hit from my Google search on “vacancy rate” “calculation”:
http://www.canequity.com/mortgage-news/archive/2001/2001-11-26_CMHC-canada_rental_vacancy_rate_declines.stm
The relevant quote is:
“CMHC’s Rental Market Survey is conducted yearly in October, to provide vacancy rate and rent information on privately initiated structures of three or more units.”
Mind you, this a 6 year old story so the methodology may haved changed since.
Strataman – I think everyone knows now that Craigslist is not the place to find rentals… overpriced garbage mostly, lots of the listings on Craigslist are re-posts, same property posted over and over again. $1800 to live in Port Moody? $1700 for a 400 sq foot bachelor pad in Yaletown… Craigslist used to be good & there is the odd legit (read reasonable) add on there but mostly its realtors, scam artists and amateur landlords fishing for suckers.
mk-kids
Yes I agree with you as to the quality but wonder nevertheless why there are so many. Still doesn’t answer my question as to how anyone knows what the current vacancy rate is in this city. ObserverX shows thru the old link he supplies that maybe it (the rental vacancy) is strictly calculated on rental “buildings” as opposed to individual rental units owned by individuals. I sometimes think in my daily excursions thru various condo developments in the Westend that there is a large quantity of rentals. Nother words if there was one rental building with 5% vacancy and one strata condo unit building with 20% vacancy in my imaginary city, the official rental vacancy would be 5%!
Do you guys realize how many asians live in Vancouver and how many of them have rental suites listed in the chinese news papers?
Do you know how much cheaper rents are from primarily chinese people.
Got to tell you they prefer renting to some who they can speak the same dialect but even still the rent is very reasonable 🙂
Current Real Estate average list prices in Vancouver:
http://www.iunknown.ca/BCRealEstate.htm
“In the course of my business I get a chance to talk to Americans from time to time. If they’re from Las Vegas or Phoenix or Southern Califormia I always ask them for their views on real estate there, in order to get some perspective on what I see on the blog. These guys are generally well off, and are generally long term real estate holders, but I have yet to find one seriously concerened about the future of real estate in any of the three places I’ve mentioned.”
Rob,
This information is likely worthless. The sample of people you talk to is likely highly biased towards people who have an strong belief in the soundness of RE “investing”. Your sample, then, has a strong sample bias. [see: http://en.wikipedia.org/wiki/Biased_sample%5D
This makes your stat: “100% of the people I’ve talked to are not concerned about RE in …” worth next to nothing.
Try sampling people randomly at the border. I’ll bet you’d get a different result.
Regards,
YWM
YWM:
Thanks for pointing out that the sample is biased (I disclosed that, right?) I think you’re missing the point. The idea is simply that there are two sides to every deal because different people have different view points on things. The story about the clients I speak to isn’t an attempt to establish, scientifically, that everything is fine and dandy. Its just an example that confirms Nikoley’s point that different people have different opinions – I think that if you read the post and take a look at Nikoley’s article it becomes pretty obvious. I also don’t think its something you can actually disagree with.
To establish the relative worth of something, you have to give it a little thought. Its like the old saying “You can’t drive to the store in your refrigerator”; its 100% true, but it doesn’t mean the fridge is worthless.
I had a business class which a guest speaker told us Real Estate always money in the long term. The ones who are successful at it, are the ones that can weather out the storm. I guess the key thing is to not over extend yourself and have an emergency fund.
If Everyone’s Selling, Whose Buying?… Easy, dumb money.
Coco/strataman/mkkids:
I use craigslist a lot. Its a great resource. I use it regardless of the property type. I’m getting line ups at most proeprties. At re-rent time I’m often bumping rents $200/$300, and I’m not getting much market resistance (before anyone screams, remember, things will change. Just give it time. Additionally, many will argue that even at higher rents renting is a deal in Vancouver). I may be renting over-priced stuff to suckers an a scam basis, but they sure look like regular people to me. (Btw, I just rented a main floor in PM for $1200, MK, and there are a lot of people who really like that area).
New construction is selling at a pretty good pace over a wide area. Not just low priced, and remember, my area is pretty large. You may have an Abby builder who can’t sell a $million dollar home, but look at some MR listings where builders are increasing prices. Look at the wider volume of new stuff that is getting sold. That adds up to demand exceeding supply for me.
I believe CMHC has gotten more realistic about vacancy rates by including privately owned single units, but I don’t know how they do it. To be honest, I calculate vacancy rate anecdotally – the more line ups and less market resistance I have, the lower the rate. I’ve never put a lot of store in CMHC’s version.
Can people actually afford their rent? Forget whether they’re currently willing to pay it, because in any mania the insane becomes sane. We pay a million bucks for a tulip bulb or $400 bucks for a beanie baby. That doesn’t mean sustainable or functional.
I know middle class people who are subsidizing their rent using lines of credit for groceries or teensy dog collars or whatever the hell, because “this is just the way it is”. If there’s more consumption than income, there’s a problem in the long term, much greater than just a problem in real estate – the reason why ye olde ‘25% to rent’ thing worked was because the economy likes people to spend money on someone other than their landlords, grocers, and doctors. Now there’s more like 40% to rent, or you can move to the boonies and pay 25% to rent and then subsidize your cheaper rent in excess transportation costs. Which are growing steeper and steeper. That takes money out of the rest of the economy.
Credit party ends sometime. From what I could tell from the Holt Renfrew spokesperson on CBC, they’re aware that many customers are buying on credit because they can’t “really” afford it; although he was confused by the interviewer’s question. This suggests you’ve got a lot of rich people selling stuff to the middle class and poor, and who have no real clue what it’s like to live on less and really like to believe the poor have All This Money. And the poor, in turn, don’t understand quite anymore that just because the rich are telling them they CAN afford 65% of their income to rent and get a Wii besides, that they truly can’t.
Yeah, right now the poor have “money”. Question is, is it real money that someone is actually backing with work? And how much is work worth, these days, compared to asset classes?
I can get butt-loads more credit than is reasonable for someone in my financial situation.
From my experience people can afford their rent. Again, not too scientific, but I evict fewer people nowadays than I have during tougher economic times.
On the other side of the coin I had to give a raise to an employee. She told me that she simply couldn’t make it on what I was paying. We looked at her numbers and I had to agree, so I bumped her wages. That’s how it goes, right? You pretty much have to assume that you’re going to get give and take in the market place. And if I have to pay $15/hour for what I once paid $7.50, you can imagine what I’ll do when someone says “Why don’t you cut your commission?”
If anyone reading this is paying their rent or groceries with their line of credit, as aetakeo indicates, stop now. You’re living beyond your means and it can’t continue. If you know someone doing it, tell them to stop, or increase their income. Lest this sound like aetakeo’s story about rich people not undertanding the challenges that poor people face, think of it instead as someone outside the pot telling the frogs inside “Hey, someone just turned on the stove. Get out now”.
I echo aetakeo’s observation about ease of getting credit. I tell every new buyer that they have to do a serious budget evaluation for themselves, because lenders will give them more than they should probably take.
“If anyone reading this is paying their rent or groceries with their line of credit, as aetakeo indicates, stop now. You’re living beyond your means and it can’t continue. If you know someone doing it, tell them to stop, or increase their income.”
That I agree with completely. Do you have Bernanke’s phone number? By the way your house is guaranteed by him. The Canadian dollar should rise rapidly soon, as the worthless greenback deteriorates. Maybe your place wil be worth 10 million US in five years! 🙂
Strataman:
Nobody forces you to borrow. Nobody forces you to forget about living within your means. Nobody forces you to not do the numbers. Its great to be able to blame our situation on someone else, but that is simply finger pointing. That’s fun, until the music stops. Then, you’re homeless, or you’ve got bad credit.
Inflation will do what its going to do. Being in debt with lots of inflation is great….if you can service the debt. If you’re actually funding day to day expenses on credit its unlikely you have staying power. Anyone in that position is probably in denial. Better to end it sooner than later.
Rob, I think the problem is that for a lot of people, “it’s different this time”. They trust that the banks and the economists and Mastercard (and Rob Chipman) understand them better than they do: I had an acquaintance say, “Well, if it was too much for me they wouldn’t have given it to me, right?” Sure, we can sneer at him if we want to, but I imagine his level of financial illiteracy is pretty common, if not epidemic. Otherwise bubbles wouldn’t happen.
The fact that unblinkingly we say a 3 bedroom is now worth $1500 to $2500 — well, yeah. Life is expensive and credit is cheap for your median Vancouver family, and everyone below them, and if they have greater than one dependent it’s a grind.
But smart people say, “oh no, it’s fine, people are fine with the cost of rent”, which leads other people to believe it’s just them struggling. And you’re not supposed to be struggling. For many people, that’s not just admitting economic reality, it’s “Admitting you’re a failure”.
You’re supposed to give your kids nutritious food and something under the tree or you’re a bad parent, and you’re supposed to have the updated wardrobe or you’re not dressing for success, etc. So you pull out the plastic. Eventually, you decide that’s okay, everyone does it, it’s not struggling. It’s the new economy. Advertising works to create need.
Sure, we can sneer; but that’s the majority, or ad budgets wouldn’t be quite so huge.
That’s one reason why bears finding other bears become zealots: we’re all running the numbers and saying, hold on a sec. It’s not just “that easy” that housing is inflating by $200 or $300 bucks on new rentals, and that property values are that high, because everybody’s just got that lying around. Something, somewhere, has got to give. Most bears dig their heels in and say, “no, I’m not going to spend that”, and the most common insult to bears is that we’re “not making it”. Too rich for our blood. Like somehow, that is an insult. That’s all part of the same psychology.
(That’s not pointed at you, Rob. You’ve never done such a thing: it’s just a common flame.)
Housing comes first, and then food, and many rental buildings are condo buildings now, and many condo owners seem to think $3000 for a 700 sq. foot two bedroom is fair. They’re making $1800 for the same look like a deal. It’s not.
Rob; You missed my point I think. I agree for cryin out loud. This is the first time in my life I don’t own a car, I have one but I financed it. Was an expensive hybrid. Always owned them lock stock before. Three houses also owned (owned not rented from bank) and sold. Now I have stocks owned, car I’m paying rent to the bank, and condo I’m paying rent to a landlord. The car bugs me cause I gotta pay interest. 🙂 All I was saying is the US Fed is not following your advice, they cannot service their debt.
Strataman:
Sorry! You gotta phone me first and explain the joke next time…I’m slow that way 🙂
Aetakeao:
I can see where you’re coming from, and I sympathize, but you’re not making an argument. You’re expressing frustration.
I hesitate to give parenting advice (there’s a lotta downside there 🙂 ) Be a good parent, absolutely. Teach your kids how to win this game called life with the tools that they have. You’ll do that better by improving your own toolbox, obviously. It will help if you get a workable definition of “win”. But life has always been a struggle, and it always will be. Its all based on moving goalposts. Consumerism and advertising and the struggle for the almighty buck aren’t going anywhere. Its always going to cost a lot to buy a house in Vancouver. Those challenges are going to exist regardless of your opinion of them.
Money deals aren’t subjective. If I bump rent $300 and get takers, its because the investment has to pay, and the market (renters and owners) recognize it. Call the $3,000/month and the $1,800 per month bad deals, but where do you plan to put your kids’ Christmas tree? We’re all in this together, and none of us is likley to settle for less (Have CUPE and CoV settled yet? But it’s not about money, right?)
I could go on and on. The point is, if you wanna fight the Man you gotta drop the gloves and it starts with you. Spend less, earn more, and buy your freedom instead of a flat screen TV. If renting makes sense to you now, after evaluating the big picture, keep doing it. Personally, I’d recommend renting as a step to owning, and I’d argue that owning always beats renting, but that you have to pick your spot. I would (and did) sacrifice to own. Paying rent so that you can live on the Westside, have nice clothes, a nice car and nice presents under the tree sounds like a bad plan for me, but hey, its just one man’s opinion and I could be completely wrong.
Rob, you make a crummy psychologist. This isn’t about me or frustration. I make sacrifices to stay within my means and work for my personal goals and I’m not particularly frustrated with my choices. Just like you. My choices do not include real estate, but that’s okay: y’all have interested me because you’re where the action is.
I have used examples people may relate to both personal and media related, but I’m making a larger observation than “my personal situation”. It’s interesting, though, because you sort of proved my pudding: by making it about me, you contributed to the dialogue of me making it. Sort of meta, that.
Here’s me for real: when I started reading housing blogs, it was because I watched the market take off and wondered what that meant about me. Now, I’m reading because we’re living in “interesting times”. I think recession is a storm a looming, and I’m watching it to see if I should bring the chickens in.
I thought this was a rather more interesting conversation, and was suggesting that looking at the current cultural dialogue about money and credit can give a rather larger scale picture about how people are valuing purchase decisions. Market forces as, in part, an aggregate of individual consumer psychologies.
Unfortunately, money deals are often subjective to the players. Different cultures play games for money differently. There are numerous behavioral studies on game theory, asymmetrical and otherwise, which show different strategies based on different logical paradigms and different constructions of win.
In other words, whether or not you or I agree on what “winning” is, there are a myriad of definitions. The economy is rocked by popular movements and fads. I’m suggesting that “no one’s being evicted” means very little in a culture where groceries on line of credit is increasingly accepted, because there is fundamentally a different understanding going on from anything I or you or our grandparents would have accepted.
Let’s pretend, for a second, that there’s a possibility that I’m right; that the middle and lower classes are using credit more extravagantly (because people keep offering it). To buy groceries, say. Regardless of whether or not you or I think they should, or that’s the right idea: it’s accessible, there’s more than they can afford and people keep telling them it’s “cheap”, they’re being okayed up the wazoo, and they’re believing a certain amount of consumerism is expected.
Is this a problem to the greater economy or no?
Is this a problem in the dialogue around money and credit or no?
Very well to say it’s an individual’s choice, but the house is laying down the rules in legislation and taxation and talk. I’m not someone who believes in hand wringing while the economy goes into the toilet.
If people are maximize to win on stuff (house tv and christmas) rather than on value, and if it’s happening on a massive, massive scale, I’m suggesting that could be a Really. Big. Issue. to the economy.
Ok, so here is a question for the economists out there. Bernanke raises the US fed rate by 1/2 a point and central banks everywhere are providing liquidity like crazy. So if its so easy to just grease the wheels of the financial system and goose the economy, why don’t central banks just get real loose with the money supply all the time (in fact, havn’t some suggested that is what Greenspan was up to all those years). Isn’t this what South American central banks did all the time, with the result being hyperinflation? Isn’t this a risk in the US? Curious.
sorry, I meant to say “Bernanke lowers the US fed rate”
Its late 🙂
aetakeo:
Thanks for the response. I’m not trying to be a psychologist. Maybe we’re both not hearing each other.
I’ll try to be clearer. If you’re doing what you want to do because you want it, I’m supportive of you. If you’re doing what some salesman or corporation wants you to do, then I think you’re doing the wrong thing for the wrong reasons. We both know that each of us defines our own win. Its not a case of he who dies with the most toys wins. Great bumper sticker. Bad life plan.
But when you give credence to the excuse that “you’re supposed to do this or that”, and that’s why someone is in debt that they can’t support, I see a white flag going up. Whether you act that way yourself, or simply watch people you know do it, doesn’t matter to me. At the root of things, I think you and I probably have different ideas about free will 🙂
Anyway, I’m not implying that you’re not a winner. Tell me you’re doing what you want because you want it after looking at the big picture and bingo, you’re a winner in my books.
It is about you to the the extent that I understood that you actually spoke to people who are paying day to day expenses on credit. If that’s the case I maintain that you should advise those people to stop. That’s the extent of my criticism of you. If you’re just making up an example, then forget the criticism. Its not valid.
As a hypothesis, the idea that people are funding day to day consumerism on credit concerns me, but not overly. I don’t think we’re seeing any long term culture change. Debts have to be paid. You can’t pay your Mastercard off with your Visa. It doesn’t work.
I’m standing firm: the money of deals aren’t subjective. I think you’re confusing other issues there, and I base that on you saying “…many condo owners seem to think $3000 for a 700 sq. foot two bedroom is fair. They’re making $1800 for the same look like a deal. It’s not”. If the numbers work, they work. Period. But they have to work for each side. Its like the Nikoley article where he says there are two sides to every purchase. People do confuse the money aspect with the subjective aspect, but its worth learning to separate the two. The renter can say “Sorry, neither $3,000 nor $1,800 work for me. You eat your paper equity gain, slumlord specuvestor, because I’m taking my dollars and leaving Yaletown. Fair enough?”
SO, I’d argue that whether you think $1,800 is a deal because other people are paying $3,000 for the same thing is just opinion. Do you think coffee or bottled water should cost more than gas? It does, because people think its fair.
I don’t evict people nowadays because the economy is strong. I don’t think its because of a culture shift. Unsupportable credit doesn’t last that long. Which came first, strong economy, or credit? Or, more to the point, does credit mask a weakness in the economy? Judging from the amount of actual work being done, I don;t think so.
“If that’s the case I maintain that you should advise those people to stop.”
Yes. I have. I can’t reach all those the Holt Renfrew spokesperson was speaking of, however.
“You can’t pay your Mastercard off with your Visa. It doesn’t work.”
Indeed, it doesn’t. It’s a stalling tactic used by some; and the HELOC makes the stalling window go longer.
“At the root of things, I think you and I probably have different ideas about free will.”
Well, I can prove social psychology, mob mentality, game theory, and the fact that demand can be manufactured. I also believe that if you want to, you can examine what direction you’re flocking in and wander a different path, which I think is what all our great people have done, and is the very essence of greatness and freedom, usually at personal social cost but well worth it.
But I can show “flocking” as a powerful force in decision making. That’s not belief but science.
For an easy example, 100 years ago it was an accepted truth in some places that certain people were morally justified in owning other people; those who stepped outside the flock could exercise free and independent will, but many who were going along with it simply accepted it/didn’t think about it because it just was.
I don’t believe this: “Oh, well. People choose to value things differently, and we’re individually choosing that slavery is bad now in the main (because we’re nicer or smarter or more educated than our great-grandparents?), and we’re probably not making similarly large mistakes as they were.”
Is that what you mean by my different “opinion” on free will?
——————————————
However, I understand and accept that you don’t think the cliff is coming, that this isn’t a particular culture of ownership over savings, that money being a psychological flash point for things (how we value) is something we needn’t think about in culture because hey! the flock is going there! (water more expensive gas is) – although I assume you make some sort of nod to the fact that advertising works – and that credit isn’t being abused.
I can accept that you don’t think that cliff is coming.
Your second argument is subtextual, and I may be getting it wrong. Otherwise I would ask you to think on your true commitment to it. I am hearing this: “If credit is being widely abused, even if it is systemic, the problem still lies primarily with the individual.”
I would question your commitment to blame the individual and not our rules of engagement. Because economic depression would effect us all; and total destabilization leads to a very different way of constructing society. One which is very much more Darwinian. Desperate times, desperate measures.
This economy is just the way we’re currently agreeing to live together, and it is not guaranteed. If there were an issue with credit, where the majority or a substantial minority of individuals in a game were unable to follow the rules of the game in a way that meant the game descends to chaos, then the game was not constructed with the humans in mind and is fundamentally flawed.
Whoa there!
I’m not discounting herd mentality. You don’t need to tell me its science. I get that. You don’t need to prove to me that demand can be manufactured. I get that too. I understand that flocking is considered to be a powerful force in decision making. We both know and accept that.
And I understand that you can’t get to all the people that a big advertiser does, and you can’t influence them all.
But you can influence somebody. And I’d recommend that you do what you can instead of worry about what you can’t. (Yeah, I could be wrong and lacking in faith). That’s what draws me to real estate.
What I don’t buy is the idea that we’re going to change the rules of the big game, or that we’re going to adjust the game so that the flaws don’t cause us pain.
I think you can imagine that I don’t apportion responsibility to anyone for the abuse of credit. I really don’t even spend much time thinking of it as abuse. People have money they want to lend, and people want to borrow it. They’re going to do it. That’s freedom. It can be dangerous. What’s the point of blaming anyone?
But, if you don’t want to suffer the consequences, as an individual, you better take control of your situation, because if you let someone else make your decision for you (or let flocking control your decision), they may as well stick a fork in you and turn you over.
That is, perhaps where you and I aren’t seeing quite eye to eye. I can’t see much point in talking about fundamental flaws in the game, because I don’t think it was ever designed or constructed. Our rules of engagement change (some would say “continually evolve”) all the time, which is why I said that the goalposts are always getting moved. But they do so almost organically (which might be my way of saying I can’t decipher a larger hand guiding the operation).
In other words, you seem to be criticising the brains behind the operation.
I’m not certain its a brains operation, period.
I agree that the economy is in large measure an agreed upon fiction, and not gauranteed. I don’t believe there is a wizard behind the curtain. But I like your thinking.
Okay, I’ve got you.
I think there are brains behind the curtain, but not by way of conspiracy. There are thinkers, philosophers, scientists, artists, activists and economists, and each group has called varying tunes. We’re still talking Locke, after all.
I am a theorist, by nature, and I tend to assume everyone’s interrogating the philosophy behind the curtain. That’s what’s so interesting, if we’re at a crux point where the philosophy is cracking, because we can learn from it.
And I very much believe, to paraphrase Mead, that a small group of committed individuals are the only thing that has ever made change.
Apologies for the distraction.
The distraction is enjoyable.
I was reading that George Bush believes that great men influence the course of history, and he takes strength from that as he surveys the cluster*&%! that is Iraq. There’s something to be said for that idea. Change Bush and Iraq to Churchill and Great Britain in 1940 and you can spin the great man idea more positively.
The same article pointed out that Leo Tolstoy dismissed the influence of the great man Napoleon as inconsequential when faced with the herd that was the Russian populace.
I’m not sure which is the right interpretation.
I’m sure that groups of people try to improve our systems, be they economic, legal or whatever. and I’m sure that they have a positive effect, overall (even with the road to Hell paved with good intentions effect taken into account). But I think they’re starting with a living, seething mass of everything from soup to nuts, and encompassing both good and evil. I think that they are small, disparate groups with different motives and agendas, and I don’t think there are blueprints.
Is there always a philosophy behind the curtain to interrogate? That’s an interesting question.
“Is there always a philosophy behind the curtain to interrogate? That’s an interesting question.”
There has to be some valuing: ie, there’s always some construction of life that is shared reality. (Which is why culture shock can be so strong.) So there’s some underlying cohesive social philosophy – even no philosophy is philosophical, because it means a certain amount of tolerance for the crazy person next door. (Why “they hate our freedom” has any meaning in our context.)
I imagine that you’re right: setting out to influence the populace isn’t necessarily going to go off the way you choose it to, and that the culture has to have momentum in the direction you’re pointing it.
It’d be really hard to change our concept of property to the Vietnamese concept (which would look to us like utilitarian squatters rights), because we’re so far away, for example. (On the other hand, given enough discontent massive, massive social change can happen pretty quickly.)
Napoleon may very well have been less powerful than the Russian populace, especially to Tolstoy, and quite possibly was just a reaction to the French populace: I doubt very much George Bush is influencing hearts and minds the way he intends, although he’s certainly changed things pretty extremely in the dialogue about what we value. I think very often politicians have very little cultural effect: they’re uncool. They’re symptoms, not the disease. We vote for who appears least crazy given a particular cultural understanding: the Yogic Flyers didn’t have the majority. Even in totalitarian systems, the only thing generally preventing mass uprising is fear of the populace balance with just enough propaganda to keep things going.
But the fringes introduce ideas that make their way into the mainstream, especially with effective marketing. If you couldn’t direct public attention, then advertising would be a lost cause. Granted, there are better and worse marketers and less and more effective ad campaigns. Sometimes your “ad” might be Repent Sinner stickers all over Vancouver, and sometimes they’re lifestyle ads – hippies, Goths, and punks, for example, all had underlying philosophies of being, and advertised through their members. A brand, I suppose.
Some of it stuns me that it’s effective given how outside the dialogue it looks (Scientology I find quite remarkable and goes much farther than anything I can construct), but there’s a critical mass of acceptance that makes something no longer “crazy talk”. The very presence of Scientology changes the dialogue about faith to everyone else on the block – bringing a new religion to the party that is based on concepts of self-realization or -actualization suddenly makes those things spiritual concepts, not just secular, psychological ones. That will eventually affect the dialogue of Baptists and Catholics, even if they just get more communitarian and old-school
Interestingly, both Scientology and the Austrian school, philosophies of the individual, got really influential through the 80s. I wonder if the panic of the cold war constructed distrust of heroes and ideology. There’s a neat thesis. Although the 60s were obviously already moving us that direction, on the fringe.
In capitalist terms, the best anyone can do is decide and work and speak, and let the “intellectual marketplace” decide. But everyone is buying something, and I think it’s worthwhile to examine what’s being bought. It helps us be clearer on what why we have a given… “brand loyalty”.