Retail Finance’s Final Boss: Suburbia

It’s hip and trendy or something to rag on suburbs these days so I’ve got to get my piece in.

This house could be anywhere in the ‘developed’ world and it would fit right in. I hate it. Yet this mundane, overcomplicated piece of soon to be garbage is a load bearing support/vehicle of our global financial system and ‘generational wealth’. What a desirable dream location we’ve all been pumped up to lust for and pay 30+% of our income for…

Dear reader, have you noticed that your society can never seem to pay its bills? How costs seem like a never-ending vortex to fall into? That’s on purpose.

The decaying barrel full of holes:

Note that the Y axis is in millions of dollars. Government numbers are always out of date when they matter it seems.

Road/highway maintenance and work alone is swamping the United States in debt. These massive structures cannot pay for themselves even in the best of times due largely to our choice of low density suburban development. There is an essential and rarely looked upon link between cost of living spiraling, financial speculation and loss of “blue collar” workers to build these structures that will be describe later. This creates another major feedback cost loop in itself where construction of any kind becomes cost prohibitive as the society only possesses a ‘skeleton crew’ of literal boots on the ground. Demand for skilled electricians, carpenters, machinist and truckers has grown consistently while the actual workforce shrinks. Suburbia builds a bizarre debt structure instead of paying its obligations now because it simply can’t.

Finance and real estate goons went hand in hand to sell houses and mortgages (which became the now famous mortgage backed security). The reality is that the short term capital costs of building apartments is shifted onto larger society via building low density housing that requires heavily subsided infrastructure via great explosive bursts of credit and expansion into new lands, domestic and foreign. The US Financial system has repeatedly blown up international currencies and markets with this boom-bust scheme. It’s fascinating in a way too, that America has exported this way of development hand in hand with our technology/cultural developments as well. The car, the ‘nuclear family’, all sorts of baffling rituals like mowing grass, you get the point. People actually think that when people owned horses, they used them just like cars. That would be a Zen koan in another universe. Sitcoms get a little less cheery when one sees them as the visible sickness of atomized people; an inevitability of the process.

Not to go on too long of a tangent, but Seinfeld is the most depressing TV show I’ve ever watched, and that’s not just because I was on an absurd dose of psychedelics while I realized that George had ‘lesbian energy’ and Jerry was nothing but a spineless bad comedian as the mushrooms ravaged my poor mind. The characters are all sterile (literally most of the time and figuratively) as well as stagnant, you never see them interact in what could ever be considered a healthy manner. The constant word games reduce everyone involved to children, petulant when they don’t get their way.

These word tricks are omnipresent and are fundamentally based on the idea that if the right combination of words are said, anything the characters want can be obtained. This neurosis is not how a functional person with boundaries and grace works or understands the world; a real person should know to give leniency and provide tangible boundaries that will not be so easily surpassed. Every moment is spent psychotically analyzing situations in advance and retrospect. The Sitcom mindset has proliferated like the plague.

Rarely do sitcoms really deviate from the standards set here; characters are always pathetic, scheming and conniving, usually remarking in Marvel voice at things whenever possible. The media put in front of us naturally upholds the boring routines and effeminate deferment towards power. The idea of grabbing the reigns, of seizing a different vision are blocked off, sandbag by sandbag through education, media, suppression and more. The way you, and everyone else speaks and thinks has been directly adjusted through media. You become a message, part of the medium, a warning of what not to become should you embrace it. Oh to be a childless, single, aging serf in New York city, amiright fellow peasants?

Oh to be childless and stuck in New York City, amiright fellow peasants?

Anyways, back onto topic. To patch over these ever growing and multiple holes in the US requires increasingly vast bailouts and an insistence that this is the only way to do things. Most can’t even dream of a future that isn’t 90s-00s suburbia, forever. It’s very ironic that the vast majority of nostalgic media (because we don’t make new media anymore, culture is born of leisure, not debt slavery) consumed portrays the major US cities but completely sanitized, even from the problems of the old times. Systemic Inertia is a bitch. The tremendously important and powerful real estate industry drives the modern economy through one way or another.
You, reader, have to understand how intricately cut and wove debt (usury) is, into every single layer of the development and consumption process. Falling or stagnant wages encourage increased debt burden, requiring lower interest rates eventually to stave off collapse which by nature will cause inflation and literal time deformation due to credit creation. From the planning process to the final days as a slum, a suburb will create vast, untold quantities of debt to sustain and expand the greater ecosystem, from contractors’ wages, rental equipment, tools and hardware to cars, then payday, subprime loans and Buy Now Pay Later.

You didn’t think the debt was actually ever going to get paid back, did you?

The physical separation and social control of the arrangement torpedo any attempts or dreams of an alternative for most. Vast amount of prime land are made infertile with cookie cutter houses and turf lawns. Good luck having a garden or animals and God forbid, make your overpriced land productive in any way, especially when a parcel stamp of a lot with a McMansion costs over 400,000$. I feel obligated to include another reminder: the smaller houses do not have the margins; their construction have been made incompatible with many builders’ need for income. Children are nowhere near their parents’ work, social groups are sometimes a hundred mile radius and generally vast amounts of personal time are spent commuting around, usually by car. Every imaginable cost and origin is hidden from the public by creative accounting and PR. Demand for ‘location’ combined with zoning causes absurd pricing inelasticity driven mad by endless cheap capital. City centers are hollowed out by aggressively parasitic commercial and residential landlords, laying vacant for years as unrealized losses. This drives the creation of alternative city centers, usually in the obnoxious form of some kind of ‘auto mall” or “open air mall” which is little more than corporate filled strip malls, parking lots and big box stores. Current zoning laws generally prevent these from ever becoming really built up so the sprawl just continues until the limit of about 1 1/2 to 2 hour commutes become standard.
This all spells out a clear need for exponential growth, as has been said many times. The next step is realizing that fiat currency’s original sin dooms this whole arrangement. Upon their creation, all of these loans are owed back, plus interest. That interest money must also be loaned into existence, or obtained from someone else loaning it into existence and so on. The distortion caused by this process makes measuring things like GDP almost superfluous, regions blessed with fertile grounds for credit creation grow to be different societies than those less fortunate. Consider the Bay Area of California versus the Upper Peninsula of Michigan perhaps; I shouldn’t have to go into detail. There is a kind of ‘hillbilly’ business that only works when values and densities are low and the people are basically poor; they cover the cracks that big corpos won’t waste their energy on. Financing and interest costs rapidly devour any margins or income increases in ‘prosperous’ or ‘affluent’ areas, look at NYC or SF, the downtowns cannot sustain anything but banking, super luxury apartments and crime (nothing else has the margins to survive). This creeping weight of debt will come for all of us eventually.
Anyways, that’s about it for me. Commercial Real Estate is another big target I’ve got my eye on, especially given how much it was invoked in this segment and the madness taking place in the CRE markets.

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