This Just In: Wall Street Is Becoming America's Largest "Homeowner"
Landlord J. P Morgan, coming to a subdivision near you
Here's a new development that's right in line with the modus operandi of Finance Capitalism (as outlined elsewhere, in this tour de force of a Substack post by Stan Goff):
Robert Davis
Nov 17, 2022, 9:01 AM EST
https://www.businessinsider.com/jp-morgan-to-acquire-1-billion-of-single-family-rentals-2022-11?op=1
Wall Street has purchased hundreds of thousands of single-family homes since the Great Recession. Here’s what that means for rental prices. (Not just “rental prices.” This move has the potential to transform the foundation of the American economy.)
Published Tue, Feb 21 20239:28 AM ESTUpdated Wed, Feb 22 2023
Not that I know all the details of this new development, but that sort of thing is almost certainly what the Glass-Stegall Act of 1933 was intended to prohibit. It appears to me as if it's a situation that could only occur after the dissolving of the barrier between the investment banking and mortgage banking sectors that Glass-Stegall imposed.
I always had a hunch that the endgame of the 2008 Mortgage Crash would yield a result like this: not content with the role of “co-ownership” played by mortgage lenders in “partnership” with the monetary equity supplied by home”owners”, the banks are now squeezing the market toward reserving home ownership only for the wealthiest Americans, by entering the market as buyers (“Whale investors”, in the parlance), reaping profits by driving home prices upward and shifting the single-family housing market even further in the direction of a Rentier economy. The replacement of diverse markets and smallholders with corporate monopoly and feudalism has been underway for decades; this Wall Street move has the potential to complete the transformation of the American economy into feudalist rent-seeking. All nice and legal-like, updated for the requirements of rent-seeking Finance Capitalism, so the sharecropper serfs pay off the Lords of the Manor with cash money instead of a portion of their crops. In perpetuity, as the prospect of actual homeownership rises more and more out of reach for the vast majority of Americans. Meanwhile, wealth stratification has reached such a state in this country that the fraction of the population with a massive amount of “disposable income” retains the ability to buy houses outright in cash. Sometimes multiple houses- for their own enjoyment or to loan to others of similar wealth and social rank; as speculative investments, rather than as personal residences; and, in the case of wealthy foreign nationals, as places to park their money beyond the reach of tax authorities in their official nations of residence.
Considered as a fraction of all American households, people sufficiently wealthy to purchase housing real estate outright comprise a tiny percentage of the total. However- and this is important- considered in absolute numbers, the wealthy are quite numerous. Moreover, that cohort includes quite a disproportionate percentage of all those allowed airtime to express their views on the major news networks, either as newscasters or guests; as hosts of shows on current events and politics; as Congresspeople and Senators; as officials appointed by Presidential administrations (of both major parties); as retired generals and admirals…we aren’t even talking about business tycoons, or Wall Street venture capitalists.
To some extent, this condition is obscured by the continuing media emphasis on a handful of billionaires- (ex. Musk, Soros, Gates, Buffett, Trump, Bezos, Zuckerberg, Thiel, Schmidt, Walton…after listing 20, it gets a lot harder to name an American billionaire, no? According to Forbes magazine, as of 2021 there were 724 of them, worth a collective $4.4 trillion. We can’t see the multimillionaires for the billionaires. We can’t even name most of the billionaires. This did not used to be the case; the Plutocracy of the Gilded Age consisted of only a small number of well-known names. Now it’s a much larger number; Plutocracy has “democratized”, that “equity” has even “diversified”, and become remarkably more “inclusive.” Too bad about what’s happened to the rest of us. But for at least the last 40-odd years, all Americans have been encouraged to celebrate the expansion of that cupola of wealth in our society, as evidence of Freedom and Opportunity. As if the increase in extraordinarily wealthy people, and the skyrocketing amount of their private accumulation, were evidence of a rising tide that lifts all boats. Well, a lot of them, anyway. Some more than others.
One defense for this concentration of wealth is that “ordinary folks benefit too”, through their investments in Wall Street-linked retirement accounts, and their holdings in stocks and mutual funds. This one-sentence homily omits the fact that as of 2013, the bottom 90% of American households held only 9.1% of the stocks and mutual funds, and 34.6% of the amount of money held in pension funds. To quote from the document Who Rules America? Wealth and Power in America:
“There is a perception that a large number of Americans own stock -- through mutual funds, trusts, pensions, or direct purchase of shares. This is true to some extent: 46% of American households have direct or indirect investments in the stock market. But the top 10% of households own 81% of the total value of those investments (Wolff, 2014); the vast majority have relatively meager holdings…
That observation underscores the harsh reality that for quite some time, the Freedom and Opportunity provided to Americans has primairly consisted of the Freedom and Opportunity for a relative handful of the most advantaged Americans to transform the economy in the direction of precarity- insecurity about basic economic requirements like how to pay for medical emergencies, auto expenses, and even household upkeep- and “consumer” debt. Including expenses like credit card payments, utilities, subscription access to telecommunication “conveniences” that at their most basic level are more accurately described as utilities- and, last but not least, residential rent, for basic shelter. All of these economic activities comprise forms of “rent-seeking” except for credit card debt, which is theoretically possible to pay off, but in practical terms becomes an unending expense for anyone who’s over-borrowed, even if their borrowing was necessitated by precarity. “Rent-seeking” has an older, more traditional name, when applied all-pervasively to a population perpetually in debt for the basic necessities of their existence: Feudalism. Now the biggest players in Finance Capital are making moves to seal the Feudalist deal. Eventually, non-wealthy Americans are going to notice the problem. A lot of them are liable to get riled about it.
The question of how that discontent is going to be channeled is open, however. As is the question of where the blame will be assigned. As noted above, the predominating narrative of American life still includes the reflexive defense of capitalist “free enterprise” and unquestioning acceptance of the implicit right to all of the fruits of success attained by private individuals- and the implicit corollary, that only the Government can be the source of tyranny and injustice. To note how much values this story is assigned, consider a common response to any suggestion by someone of means that taxes- including their own taxes- should rise, that the public commons should be revived and maintained, that capitalist accumulation is plundering the resources and living support network of the planet and that material accumulation needs to be put in check by an ethos of sustainability and enforceable measures to curb rapacity for short-term gains at the expense of permanent damage: any rich person publicly advocating any policy of that sort is mocked as a hypocrite. At minimum. Look at Bernie Sanders, the detractors say: he’s a multimillionaire. Hardly wealthy enough to purchase multiple houses as a cash cow in order to accrue rent income as a landlord or a speculator. Yet and still: a multimillionaire. An undeniable fact, and one that Sanders has unfortunately complicated with the unclarity of some of his rhetorical shorthand: the “millionaires” he inveighs against include himself in their number, a gaffe that can be understood as performed for the sake of brevity- a simple labeling exercise. A gaffe nonetheless, and one easily seized on by adversaries as evidence (or even “proof”) of Sanders’ inexcusable fatuity and hypocrisy. Knee-jerk defenders of GOP-style economic “principles” have leveled the same charge against Yvon Chouinard, an advocate for degrowth and socialist policies who happens to be an outright billionaire. Chouinard’s most recent offense against the sanctified wisdom of Free Market Capitalism has been to divest himself of most of his fortune, in a way that violates the cynicism of only making such a move as a superficial paper exercise for the purpose of getting a lucrative tax shelter in return.
I’m not going to get further into the details of either of those cases. The overlooked point is that they’re both ad hominem attacks. There’s no discussion about the possible merits of the policies themselves, only the people who happen to be propounding them. And the same tactic is easily applied to anyone who advocates for such policies who isn’t in the top stratum of incomes and household wealth- they’re automatically presumed to support them out of success envy, or ambitions of power and control, or some other sort of greed- a quality that’s given a pass—or even exalted—when pursued exclusively for self-interest, but which becomes a vice if there’s any way to twist it into a motive for advocating any policy that might impede the inertial workings of money power. Once again, the same logical fallacy is exploited: the details of the recommended policies remain undiscussed, on the basis of ad hominem attacks intended to shut down the discussion. Which they often succeed in doing, in my observation.
In fact, it’s arguably the case that the ad hominem fallacy comprises the predominating mode of what passes for American political discussion nowadays. With a very few exceptions, policy content takes second place to name-checking Friends and Enemies. In the broadest sense, the ad hominem fallacy is what sustains the Partisan Politics of the Two-Party System. The tactic of sticking angel wings on one side and devil horns on the other is engaged in mutually by the knee-jerk loyalists of both the Democrats and Republicans. Those simplistic framings are still widely accepted by many American voters (although by fewer and fewer of them, as the surge in Independent voters shows.) However, the lack- or absence- of clear discussion of the issues themselves persists in nurturing voter confusion. That confusion has increasingly taken the form of polarization in favor of discussions- or arguments- that revolve around Polarizing Dogmatic Absolutes. One of the most important features that gets submerged or lost entirely is that the Two Major Parties more often collaborate than they oppose each other- and not in some absurd realm of ideological victory, where one side (e.g. “RINOs or “DINOs”) capitulates to the other. It’s much more about unprincipled cynicism and chicanery, performed for unworthy purposes like “kicking the can down the road” and serving the purposes of major campaign contributors who happen to be funding both sides. Partisan narratives that cast the Republicans as existing principally to maintain White Supremacy and insinuate that a Donald Trump re-election would amount to an outright fascist coup miss this point. So do partisan narratives that cast the Democrats as “the Left” and then go on to conjure dark aspersions about Soviet cadres and a takeover by “the Woke mob” in the event of a Biden victory in 2024. Whatever the sincerity of the proponents, both narratives are fake. The predominance in American political discourse has the result of sustaining mass confusion. That isn’t healthy for the future of the country.
Sometimes the resulting Partisan Confusion gets positively obtuse.
To refer back to the continuing annexation of Main Street America by Wall Street America: President Bill Clinton continues to be the name most mentioned as responsible for the repeal of the Glass-Stegall Act. It's true that he actively supported the repeal, and his failure to veto was crucial in its passage. But the popular narrative continues to imply that the repeal was primarily his doing. Glass Stegall could not have been repealed without the prior introduction and passage of a Congressional bill to repeal it. Applying the same convention that supplies the name for Glass-Stegall, that bill is accurately termed the Gramm(R)-Leach(R)-Brierly(R) Act of 1999...yes, the sponsors were all Republicans, as was the Congressional majority vote that initially passed the Act in both Houses of Congress.
My intuition is that this fact was initially soft-pedalled at the time by "mainstream liberal" outlets of the day like the NY Times and the Washington Post, because it computes so poorly in the minds of politically naive Americans who actually believe that the labels (D) and (R) signify two opposing parties who hold entirely different views about how the economy is to be run. That conclusion held some substantial merit in 1933, when Glass-Stegall was passed. But by the time President Clinton (D) signed the Gramm-Leach-Brierly Act, that distinction was for the most part obsolete, and an illusion. But it was (and still is) a tacit imperative of the two parties and their elected leaders to uphold that facade, and the "legacy, mainstream" American continues to maintain the narrative that supports it. As does much of the Internet media, including many of the most well-known outlets at the margins.
Ironically, one of the consequences of that media misconception is that Democrat Bill Clinton is commonly thought to be the main motive force for the passage of Glass Stegall, while the role of the Republicans who wrote the bill is relatively unknown. Given the pivotal role the Gramm-Leach-Brierly act played in inflating the massive mortgage bubble that eventually collapsed in 2008, the Republicans are fine with this, of course. I'm reasonably sure I could find post-Crash statements by some Republicans insinuating that "the repeal of Glass-Stegall" was all Clinton's doing. And the same is true of NAFTA- an agreement negotiated during the Bush administration and signed by President George Bush I, Clinton's predecessor. All Bill Clinton did was to whip up the Democratic Congressional votes required for the NAFTA's passage. A critically important final step, but only the last one on a path largely built by the Republican Party "opposition."
I used to be confused by party labels, too, terribly so. Until I read the book America- What Went Wrong?, by James Barlett and James B. Steele- a duo of old-school investigative reporters who somehow retained employment at a large American daily newspaper in the 1980s and 1990s (albeit a "second-string" one- the Philadelphia Inquirier.) Portions of the book are available to read online. Enough of it to give a reader the idea. http://www.americawhatwentwrong.org/about/
But I didn't really get a clear picture of the venality and absence of vision shared by the leadership of both Democrats and Republicans until I read Roger Morris' 1996 book Partners In Power: The Clintons and their America. In particular, the three chapters in Morris' book titled "Washington". Available to read free online, as it happens:
https://archive.org/details/roger-morris-partners-in-power-the-clintons-and-their-america-1996-henry-holt-and-company-inc_202012/page/250/mode/2up
https://archive.org/details/roger-morris-partners-in-power-the-clintons-and-their-america-1996-henry-holt-and-company-inc_202012/page/292/mode/2up
https://archive.org/details/roger-morris-partners-in-power-the-clintons-and-their-america-1996-henry-holt-and-company-inc_202012/page/334/mode/2up
Anyone who reads those chapters will get an eye-opening summary of how Washington worked in the 1980s and 1990s. (Whether the reader can bring themselves to accept it is another matter. I dare anyone to offer a fact-based refutation of Morris' account, however.) The rest of the book makes for enlightening reading, as well.
Finally, as an account of Reagan/Bush era Washington by a thoroughly disillusioned insider, it's difficult to beat the 1991 book The Politics of Rich and Poor : wealth and the American electorate in the Reagan aftermath, by the Republican and one-time Nixon campaign architect, the recently departed Kevin Phillips. Also available to read for free online https://archive.org/details/politicsofrichpo1991phil
Because those books have already been published- decades ago- and the linked material is free to read, I see no point in continuing this post to offer my personal interpretation of the pages. So I’m stopping the post here. If anyone wants to have a serious adult-world idea of what I’ve been talking about, you need to read those links. I find the Philips book especially interesting, because it includes some of the most lucidly self-explanatory charts and graphs I’ve ever found on the topic of American economic history. Since archive.org allows precise linking—to the page—I’ll be hunting them up in a bit…
(01/04/4024:120am EST) Working on it. I’ll have the titles for the charts and tables listed below tomorrow. As yet, I’m not even done linking them all.
(Some graphs and charts for The Politics Of Rich and Poor are also found after the Footnotes, in Appendices A through J, beginning on page 239-254.)