Two important pieces of news to consider this afternoon. The first, reported by the Seattle Times, is that the median for single-family-home prices in Seattle has reached an astounding $777,000. That is an increase of $20,000 from the last peak, which was reached in January. As for the Eastside, the median cost is almost $1 million. As expected, the explanation provided for these ever-rising prices is not speculation, but a hot jobs market.
From Seattle Times:
The hyper job market in the Pacific Northwest continues to outpace almost every metro area in the nation, and thus our housing market is booming; for now, there is no end in sight,” Mike Grady, president and COO at Coldwell Banker Bain, said in a statement.
The reporter, Mike Rosenberg, felt that the opinion of this Bain banker settled the matter. Rosenberg did, however, mention that while incomes are rising in the Seattle area, home prices are "still increasing much faster."
Meanwhile in Washington, D.C., several Dems in alliance with lots of Republicans are preparing to remove significant rules that were imposed on the banking industry after it destroyed the global economy in 2008. These rules are a part of the Dodd–Frank Wall Street Reform and Consumer Protection Act. They were designed to prevent another massive and costly financial crisis; there has been relative peace in the economy since they went into effect in 2010. (This period has been defined by Hyman Minksy as the “hedge financing” moment in the stages leading to a crash.) The reason given for dismantling this act is not even inspired or poetic like the image of all boats rising on a huge wave. The lawmakers are simply saying that the banks who have bought them want to make more money.
One of the main changes, as outlined by Washington Post, involves, of course, freedom from aggressive monitoring and stress tests. Under Dodd-Frank act, banks with $50 billion in assets were considered "too big to fail" (meaning, they were privatized national institutions), and therefore their activities were regularly scrutinized by public servants. Under the new legislation, $250 billion in assets will be considered a national concern. This means, massive banks can again return to the shadows and cook up the kind of toxic financial products that banks like WaMu originated, packaged, and sold around the world. No one saw the collapse of WaMu and other huge banks coming because no public servants were looking at their shit.
What links all the proposed changes is simply this: banks and financial institutions can take more risks (Minksy's "speculative" stage.) This lowering of capital requirements, decreasing of consumer and deposit protections, and reduction in information about financial activities will make investors brave again. And as the British saying goes: those who dare, win. But if there is all of this fear of punishment from the public, the men and women in the financial sector will never be anything more than mice nibbling at low yields.
And so we are to return to exactly the kind of economic program that has only resulted in crashes, massive capital strikes by rich, and the socialization of losses. Nothing new here.
The real shocking thing about the current sequence of deregulation is, precisely, how unoriginal it is. There is nothing in it that wasn't done before, and did not produce exactly the same results. Our whole economy is stuck in this bad groove. The rich have no other ideas for making tons of money other than the fictitious inflation of asset values. After the crash of 2008, asset prices were inflated by the wizardry of quantitative easing, then by the wonder of corporate buybacks, and now by the wand of public cash from tax cuts. The deregulation of the financial markets marks that point in the near future when money can only be made in the shadows. This is Hyman Minsky's Ponzi moment. This dark age will predictably come to an end with the terrific blaze of a financial crisis.