I Am Seething !!! - Did You See 'There Goes The Neighborhood' On 60 Minutes ???

[WillyT]

<snip>

And with unemployment so high, so long, many face foreclosure. If you thought your home value couldn't drop any more, have a look up and down the block. You might say, "There goes the neighborhood." The new threat from the great recession is the sudden surge in the number of abandoned houses. Vacant homes have become so ruinous to some neighborhoods that one city, Cleveland, decided it had to find a solution.

Perfectly good homes, worth 75, 100 thousand dollars or more a couple of years ago, are being ripped to splinters in Cleveland, Cuyahoga County, Ohio. Here, the great recession left one fifth of all houses vacant. The owners walked away because they couldn't or wouldn't keep paying on a mortgage debt that can be twice the value of the home. Cleveland waited four years for home values to recover and now they've decided to face facts and bury the dead.

<snip>

Link: http://www.cbsnews.com/8301-18560_162-57344513/there-goes-the-neighborhood/?tag=contentMain;cbsCarousel

Video: http://www.cbsnews.com/video/watch/?id=7392090n&tag=contentBody;storyMediaBox

[rgbecker]

1. In the great depression...

They were pouring milk out in the fields. Turns out, if people don't have any money and no way to get a loan, they can't afford shit.

[aletier_v]

6. EXACTLY. This is not a productivity problem, it is an INCOME problem.

Goddamn, how hard is that to understand if you've had two semesters of college economics?

[truedelphi]

56. Problem is, the "leaders" of our nation, and those who control our leaders

haven't had two semesters of College economics. They have had a lifetime of realizing that it is supposedly in their interests to shove ridiculous economic policies down our throats, and they seem to feel the more activities their greedy inclinations can involve themselves in, the better.

[tabatha]

2. Sad commentary on the state of humanity.

Just disgusting.

[boppers]

3. Empty homes decrease property values further.

Tearing down, and rebuilding, or greenspacing, increases jobs and property value.

Messed up, innit?

[Warpy]

11. They're most likely tearing down the ones deemed to be hazardous

that have had vandals strip the wiring and plumbing for copper and trash the rest.

Unoccupied houses soon fall into ruin. It took the banks a long time to twig to that in the Depression and find ways to get the places occupied while saving face by charging nominal rent. You'd think they'd have learned the lesson then.

It seems they have not.

[MADem]

16. My thoughts, as well. nt

[eppur_se_muova]

28. Yes, they are. Some of the houses are little more than shells.

Banks have not done much to prevent the situation from getting worse. They forclose, then don't let the house go to sheriff's auction, but just abandon it themselves.

[Igel]

34. "The banks" can learn nothing.

It's the people involved that do the learning. Or not.

Few bankers are around now that were managers when the lessons of the Great Depression were learned. The bankers around now, managers in the 40s through 60s, basically learned their lessons in the '80s through '00s.

"Institutional memory" is a difficult thing to preserve. Every group that comes along is sure that it is the end-all and be-all of the organization, with no use for the outmoded, outdated, obsolete and obsolescent "wisdom" of the previous group.

The only exceptions are the few that bother to read and study history *and* humble enough to learn from it. Most don't bother to read and study history. Few of those are actually humble enough to think that maybe they don't have the Truth when it comes to how to run their bailiwicks.

[coalition_unwilling]

46. Wish I could rec your post for its insight into

why the powers that be frequently seem so stupid, i.e., the shortage of institutional memory and the de-valuing of history.

[SoCalDem]

48. The house right next to ours is a perfect example

In 2007 it sold for $393,000...and by 2010 it had been vandalized to the point where it sold at auction for $63,200...was hastily "rehabbed" and then rented out to people who play the most obnoxiously loud music..and who NEVER cut their lawn..

At the height of "the troubles", we had SEVEN foreclosed houses on OUR small block...probably 50 or more in our immediate development.. (6 blocks long..3 blocks wide).

Our property values plummeted..

[aletier_v]

4. but if you listen to morons like Limbaugh or Gingrinch, we need "more productivity".

What a crock from guys with knee-jerk ideals.

They have no concept.

[deutsey]

5. Reminds me of Steinbeck's descriptions of destroying piles of fruit when people are starving

just because the owners can't turn a greasy buck.

What a stupid fucking system.

[Starry Messenger]

22. +1

[Igel]

35. That's the producer-side.

If you produce and can't find a way of transporting it to market without losing even more money, you trash it. Yeah, people may be starving, but few are going to trash their own livelihood for anonymous people someplace else.

Now think about it from the worker's side. You're unemployed, meaning you have excess labor. The farmer would hurt himself by shipping produce at a loss, with labor costs being part of the reason for the loss. Would you work for free (or pennies) in order to make sure that the producer would at least break even if he were to ship his produce to market, providing food for those starving?

Probably not, especially when you realize that this would depress prices. This would make it harder for other producers to ship to market and cause them to have to fire workers or reduce their wages.

[deutsey]

40. Hence the problem with the system, imo

Our systems (economic, political, health, religious, etc.) need to serve basic human needs first and foremost. Idealistic of me to thinks so, perhaps, but that's what I believe. It's that "social contract" thing I learned about in school.

Also, these producers aren't going to be too happy when the "anonymous people someplace else" tear down their economic system either through violent revolution or criminal chaos because they're tired of starving and watching their children's futures grow as thin as their bellies.

[CrispyQ]

53. The social contract of a civilized society should include,

free health care, free education, free child care, & three hots & a cot.

We spend trillions of dollars a year & our citizens go without. How can anyone possibly say we are a shining example?

[Moostache]

50. But therein lies the rub....

The equation is NOT balanced in this example!

The "producer" who is not going to sell something at a loss, but would rather destroy it does so for a very simple reason - to allow the excess to be sold at cost or given away would lessen his profit % on the portion that he DOES sell. In other words, the thing being protected is not the product or its viability or even the greater viability of the "market"; but the profits of the owner and ONLY those profit margins at the expense of any and all other solutions are what must be protected.

Now, if those profits are razor thin and provide ONLY enough margin for the owner to reinvest in labor and goods to raise another crop (or make another batch or run the factory for another day) and eke out his own meager existence in the process, then fine, I will gladly accept your hypothesis and say that destruction of the excess goods is an inevitable by-product of the market system. But that's NOT the truth of the situation.

Owners do everything in their power to increase their take while decreasing their costs - the so-called free market principles that get waxed on philosophically by every talking head and pundit from whatever think tank or institute you prefer . They hire the cheapest labor - those willing to work the hardest for the least and without questioning the conditions of the workplace or the inherent dangers of the positions, they use the cheapest possible materials in their process (that still provide an acceptable level of quality in their end product without denting the precious profit margin too much) and they dispose of waste products in the cheapest manner possible. They also will "invest" untold percentages of their net incomes in lobbying efforts and in greasing politicians...why? Its certainly NOT to protect their margins or the other producers in their markets...no, they do this because with that money they are buying favorable laws and favorable treatment from the government and regulators to ensure they can continue doing as they please in pursuit of ever greater profit margins.

When the owner takes an excessive percentage of the overall profit - at the expense of ALL other considerations, including how to most humanely and advantageously handle production excesses - then the system itself is broken and does more harm than good. The REAL issue is that to give away or sell at a loss the excess goods takes away from PROFIT MARGIN and decreases the owner's percentage take. It does not recognize that the REAL take of the owner should be calculated on the TOTAL productivity and NOT on the NET or SOLD product! This is the same level of thinking that allows corporations to outsource their costs through "externalities" - the assigning of costs to the community that houses the corporation instead of to the bottom line of the corporation itself. These can be things such as waste disposal, clean up or infrastructure improvements and upkeep, but they are NOT factored into the overall cost equation and THAT is criminal!

If you produce 1,000 apples and can sell the first 500 at a profit of $1 per apple, but in the process have to throw away the other 500 apples to protect your profit, then you are a craven capitalist and cannot understand the inherent evil of such a system. You do not account for hidden costs that are translated as your "profits"....things like the wasted resources that are consumed to make your profitable apples - fertilizer, water, labor, pesticides, machinery. The truth is that the $500 profit from those first 500 apples is a PERSONAL gain, but the total loss of the other 500 apples is a SOCIETAL loss. We all eat those costs for you! The excess materials that you use to create the excess goods you destroy are REAL costs, they are just shifted from the private to the public and everyone is supposed to go on believing this is good forever.

IT. IS. NOT.

The REAL profit margin on your goods should be $0.50 per apple (OR LESS!!!) - $1 per apple for the first 500 and $0 per apple for the next 500 (maybe even a loss of $0.25 per apple) - the overall NET is what you are entitled to as the owner, but the system allows you to claim the profits of the first 500 without accounting for the total costs of the 1000 made!

Capitalism in its pure and unrestrained form is evil incarnate! Its adherents are incapable of recognizing this without saying things like "socialism", or "communism" or some other pejorative label that really does NOTHING to address their own culpability or shortcomings and instead relies on the fear of the uninformed to protect them and to deflect the argument and obfuscate the issue.

You show me a "businessman" who is worried about his excess productivity creating a drag on the market cost of his goods and I will show you a greedy son of a bitch that IS THE PROBLEM and not just part of the problem...

[NNN0LHI]

7. I have seen this before

Town I grew up in was once a thriving suburban community called Chicago Heights. Stores, factories, theatres, banks, big halls for weddings. Pretty much had it all. Then everything began closing up during the 1980's. After it was all over damn near the entire city was torn down and paved over into one big huge parking lot. About all there is left is a hospital, a police station and a parking lot. Very few signs of life.

Watched it happen with my own two eyes in real time.

Don

[Bozita]

8. Almost as depressing as their report on homeless school kids in FL a few weeks ago.

Most of those homes shown being demolished are/were owned by the fucking banks, but the banks walked away from them.

But the banksters don't like it when the homeowner does the same to them.

[Ikonoklast]

9. If you actually believe those houses torn down were worth that much, don't fall for it.

The mortgages might have been for those amounts, but at most, those houses wouldn't have fetched 30K, tops, in a rational market, let alone now.

Just a few years ago, you could have purchased an entire city block in some Cleveland neighborhoods for the unpaid back taxes on the houses, exactly like those.

This was before the housing bubble.

Twenty grand could get every house on the block, but you would have to bring it up to code in order to rent.

Way too expensive to do so, so most got knocked down.

Almost all of it is pre- WWII housing stock in desperate need of updating.

Abandoned housing looted of all salvagable metal and derelict are essentially worthless.

[banned from Kos]

10. agree - but the remarkable part is that the county/city is spending $150 million to

demolish these houses.

[Ikonoklast]

17. The county and city will bill the owner of the house for the tear-down.

Housing Court in the city of Cleveland used to be a joke, landlords and banks that owned decrepit or abandoned housing got away with murder.

Now they aggressively pursue reimbursement for the expense...in this case, the banks that refuse to keep up the properties.

[Bozita]

18. Really? ... Going after the banks?

Cleveland and Cuyahoga County had better have large legal departments!

[Ikonoklast]

19. The property owner gets notified of the impending decision.

They can show the court proof that the property was erroneously designated as derelict, show that it was brought up to code, or, most likely, not show up at all and get a bill sent for the tear-down.

Cleveland can and will attach assets until the bill is satisfied.

[WillyT]

21. Please Clear Up The Confusion... They Will Go After The "Owners" Of The House...

Are we talking about the banks that foreclosed, or the people who used to have the mortgage payment???

[NutmegYankee]

30. Banks. nt

[Ikonoklast]

31. Whoever has their name recorded as deed holder gets the bill.

If the bank foreclosed, they get the bill.

If the property was abandoned but not foreclosed on yet, the previous owner gets the bill.

[SheilaT]

20. Very few houses in this country

are built to last very long. That's something that I never see discussed anywhere, and it's been obvious to me for at least thirty years now, maybe longer, that as time goes by there are a lot of houses simply not worth maintaining. Even without the housing bubble and collapse, this would have started being noticeable around now.

And I do think it's a better idea to tear down unsafe housing stock rather than let it sit and deteriorate further.

[shanti]

29. neither are cars

the US is such a throwaway society, it's sad

[SheilaT]

58. At least cars have become much, much

better built in the past several decades. Back in the 1950's and 60's anyone who could afford it got a new car every two or three years. Most odometers would only show 99,999 miles because very few cars could possibly go that far. Now we routinely expect cars to last at least 100,000 miles, very often double or triple that.

Housing construction seems largely unchanged for at least a century, and cheaply built housing stock is truly awful. I know. I've lived in some of them.

[demigoddess]

39. and very few are built to suit the climate.

Houses in Fla are not designed for that climate and hurricanes. Ones in the west are not designed for heat and dryness etc.

[SheilaT]

59. The advent of air-conditioning

has been very bad in that respect.

I live in Santa Fe, NM, without a/c. I have a very high ceiling in the main room which has a ceiling fan. And I do NOT get western sunlight in the summer time. It also helps that it almost always cools off enough overnight all summer so that I just open windows overnight, and close them in the early afternoon. Except one that faces northeast. That one stays open 24/7 from April through October, unless it's raining and the rain is blowing in that window.

[Odin2005]

12. The absurdity of Capitalism.

[mckara]

33. Exactly!

An example of Capitalism's gross inefficiencies!

[BOHICA12]

13. Refinancing - cashing out equity

A fools game played on way too many!

[msongs]

14. yes but we have trillions for our enemies in the pentagon, the squanderers of the nation's wealth n

[annabanana]

15. Yes. And there was plenty of food in Ireland during the Great Hunger...

Just none for the truly hungry..

[NutmegYankee]

23. I liked the County Official's attitude.

He said the banks could have prevented this by writing down the principle on mortgages, but they instead chose to lose it all by letting the house sit vacant. The houses getting torn down were in horrible shape and the donation of the land to neighboring homeowners does help stabilize the resale value of the neighborhood homes.

[abelenkpe]

24. There are a couple homes that have sat empty here

In my LA neighborhood where everyone thinks their 3x1 80 year old house is still worth the 1.2 million they paid for it as the bubble bubbled up. These house have been empty since late 2006. Homes around here went for 300,000 in 1999 their worth more than tripled during the bubble years.

Plenty of homeless people and those who could afford them at their 1999 price but guess it's better they sit empty?

[Kablooie]

25. I don't get it. Wouldn't the banks rather get SOME income from the house

instead of owning a vacant lot?

It seems to be the lesser loss to me.

[NutmegYankee]

32. I believe the County is taking the land from the banks

and giving it to the neighboring homeowners or creating green space. All it takes is a missed tax payment, and the county has the property.

[Ikonoklast]

37. The house would have to be brought up to code first.

In many cases, that expense is more than the house itself is worth.

[mistertrickster]

42. Two problems with that theory--

One, houses don't need to be brought up to code when they are sold--at least none of the ones I bought were.

Two, if banks don't want the expense of maintaining the homes they repo, why don't they let people stay in them and pay what they can--something is better than nothing.

[Ikonoklast]

44. Before getting an occupancy permit from the city, code violations must be rectified.

You can absolutely purchase the property with violations, you just wouldn't be able to legally live in it until it passed inspection and got a permit.

Two, same reason as above, you cannot legally rent a building for habitation without bringing the building up to code.

Would you want to rent a foreclosed house with lead paint, or no hot water heater, or massively deficient wiring?

The nightmare over liability and insurability would be insurmountable.

[mistertrickster]

54. It happens in my city everyday. nt

[MrMickeysMom]

26. Saw it... I wonder if they feel that they shouldn't occupy their homes, fuck the banksters...

I mean, I'm livid about the whole mess.

Why should anyone move from those neighborhoods, or feel they're duty bound to live by a contract when it's pretty clear that we've been handed our hat? The housing market NEVER got a single dime of our OWN funding, and none of those sons of bitches are in jail for betting against junk loans after selling off those mortgage backed securities.

[Dewey Finn]

27. K & R

Thanks for sharing this.

[Sen. Walter Sobchak]

36. Cleveland has lost half is population in fifty years

What do you propose do with properties that will never be occupied again?

[Fla_Democrat]

38. Looks like a steam shovel ready job to me

[frazzled]

41. The city paid $150 million to tear these places down

It seems to me that, in the absence of the banks doing anything (a separate story is needed here), the city could have created a program and used that money to keep the people in their homes. What a waste.

I don't blame them for tearing them down at this point. It was explained that within hours of people moving out, thieves came and stripped the siding, copper plumbing parts, etc. from these houses, which then became not only value-less but dangerous. But once they saw this was happening, why didn't they say: "hey, maybe it would behoove us to create our own grant/lending program to keep people in these homes to prevent neighborhood blight, and to prevent a huge cost in eventually having to remove these homes.

I blame the cities as much as the banks in this case. Really stupid and wasteful.

[mistertrickster]

43. If you live in a house and don't maintain it, you get fined.

But if a bank owns the house, then it can just let it rot.

One set of laws for us, and another set for the banksters.

[bvar22]

45. This is exactly WHY Bailing Out the Banks during the "Troubled Assets" crisis....

...was the WRONG (180 degrees WRONG) thing to do.

Had that money been injected at the bottom,
allowing PEOPLE to protect their assets,
and then spend that money at the retail level,
the Crisis would have been averted,
these properties would have been saved,
AND the Banks would have STILL gotten their money from the Home Owners.

TARP WAS "Trickle Down",
and Trickle Down has NEVER worked.
.
.
.
Well, it DOES work to increase the Wealth of the Top 1%,
but our "representatives" already KNOW that.

[font size=5]
Now THIS is Bi-Partisanship!!![/font]



You will know them by their WORKS,
not by their excuses.
[font size=5 color=green][center]Solidarity99![/font][font size=2 color=green]
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[HughBeaumont]

47. And later on in the telecast, they featured Meryl Streep in her new movie about Margaret Thatcher.

Fitting - a story highlighting suburban Foreclose-O-rama, a result of the same Reaganomics Thatcher and "her boyfriend" foisted on the unwilling populations of the US and the UK for 30 years.

This is what happens when wages aren't keeping up with the cost of living and too much power and liquid cash transfers to the upper 1%.

[dmosh42]

49. I think what they failed to mention is the banks didn't lose a dime on those foreclosures....

because all those mortgages were tied up in those derivatives, which were bundles of pieces of mortgages that were sold and insured by AIG. At least I believe that's how it works! And WE paid the banks for those instruments at 100% of what they were valued at 'originally'. (Thanks to Geitner) If the banks did it the old way, they would have been stuck with the properties, having to pay taxes and upkeep, and you can believe they would have stopped the looting! But this way, we get fucked again, and the Dodd-Franks bill didn't tackle any of this, as far as I know.

[AZ Progressive]

51. Housing is nothing more than something to make money from in their eyes

If it doesn't sell then its not worth anything more, even if it could've housed so many people.

Tony Benn, a politician in Britain said that money dehumanizes the poor because only customers are valued and you can't be a customer if you don't have money. In American Capitalism, if you don't have ENOUGH money you don't deserve anything.

And yes, Capitalism is INCREDIBLY INEFFICIENT. Rich have much more than they need while the poor starve and the long term unemployed are left to die, when if everything was apportioned efficiently everyone would have their needs met. Capitalism is very efficient at making money but very inefficient at meeting the needs of the people as a whole.

[hunter]

52. When China relocates entire cities, towns, and villages we proclaim we are better than that...

When our financial system destroys entire cities, towns, and villages, and leaves the people NOTHING -- no jobs, no homes, no food -- well that's okay because the "invisible hand of the market" did it, God praise the almighty dollar.

[Trillo]

55. "Disposable".

People don't often think of homes as disposables.

[Fire Walk With Me]

57. HOUSE THE HOMELESS

VETERANS MOST ESPECIALLY INCLUDED