The Bottom Half of Our Economy has Fallen Out.
Can you call an economic system a success if 40 million people make under $15.00 an hour, oh and also, they are mostly unemployed?
Podcast Transcript, Never Too Late To The Game’s Monday Morning Real Estate Update, August 24, 2020.
The proverbial “A Tale of Two Cities” continues when it comes to our economy. These really are the best and worst of time, as the week before last, unemployment claims were 965,000. This number was celebrated because it was under a million — but then this past week the claims were 1,100,000 — and in response, the stock market rallied.
We have a system that was already not working for 1/3rd of the workforce even before Cvd19: Oxfam America reports that 41.7 million people (that’s 31.3% of the workforce) earns under $12.00 an hour. If you add just $3 more per hour, that adds another 16.6 million and then we have $58.3 million people making under $15.00 per hour.
The above statistics have always been presented in an odd way. For clarity, let’s focus on the very bottom, where 41.7 million are (were) making under $12.00 per hour. When we talk about raising the minimum wage, we are talking about helping 41.7 million people to be lifted economically and with only an additional $120 per week (based on a 40 hour per week job). Yeah, we can do this and a whole lot more.
EVICTIONS & FORECLSURES
According to MarketWatch, up to 40 million people are at risk of being kicked out of their homes. The Los Angeles’ Sheriff’s office is reporting a backlog of 1,000 evictions to be served. By the end of the year, Los Angeles could be looking at 400,000 homeless due to evictions and foreclosures.
Where is Washington? Where is the Second Relief Package?
The chart on the left is a side-by-side comparison of the relief acts proposed by the House and Senate. There are stark differences. It should be noted that the HEROES Act was passed mid-MAY 2020.
McConnell sat on the Heroes Act (as he does with 98% of the bills that are presented to him).
McConnell refuses to bring the bill to the floor for a vote. In fact, he shirked his sworn constitutional responsibility and passed off negotiations to Mark Meadows and Steve Mnuchin (two people who were never elected and should not be front-line negotiators).
So let it suffice to say that the issue has been made partisan / politicized. Meanwhile 40 million Americans are suffering… but hey, the stock market and Tesla are doing fabulous.
Any system that willfully neglects 30% of its workforce, is an abject failure. We are a failure as a society and as presiders over the economy. Any system that allows for a handful of people to control as much wealth as the entire lower half of a country, is an abject failure. An economy must be balanced in order to work and offer as equal an opportunity as possible to everyone.
Our country was built on democratic socialism and part of DS is having active unions. Unions are particularly effective at helping to regulate capitalism. Democratic Socialism combined with Regulated Capitalism is the only way forward for the United States, if we are to remain a democracy. It’s not going to be easy — those of us that understand have a lot of teaching to do.
REAL ESTATE TRENDS: TOWN & COUNTRY LIVING IN THE ERA OF CVD19
You may have already heard that wealthy people have fled the big cities to take refuge at their second homes, either their summer and/or winter homes. If you could too, wouldn’t you?
The secondary home markets, in addition to first-time homebuyer’s urban-2-suburban flight, are booming. In San Francisco, people are flocking to Marin County, where living can be described as Genteel Country Living.
Most second homes were never built to be multifunctional, meaning they weren’t intended to be equipped with kitchens that were heavily used or offer work space or optimized to offer extras space that could function as a school room or exercise studio — and that’s why construction is up in secondary home markets.
People are expanding and modernizing kitchens, renovating and adding bathrooms and adding on rooms.
Prior pandemics teach is that they tend to hang around for a few years — so we are looking at at least another 18–24 months of some form of shelter in place.
IS NEW YORK CITY DOOMED?
You can’t measure what’s happened in New York simply by stating how many apartment’s are available, which was 16,000 as of last week. No, you have to look deeper and that’s exactly what author, James Altucher has done in an article he wrote in the New York Post this past week, called, New York City Is Dead Forever.
Altucher is a former hedge-fund manager and popular author.
Altucher paints a pretty bleak picture of post Cvd19 life in New York. He talks about the myriad of restaurants that have gone out of business, many of which only had a few week’s operating cash on-hand. By the time PPP was approved, it couldn’t even get to them fast enough. There needed to be an early moratorium of evictions of all types.
In addition to restaurants, Altucher talked about closed museums, out of work actors, service workers and entertainers. The support staff have all moved on.
New York has taken on an eerie feel — with with closed stores, quiet streets and moving trucks.
Altucher believes, as the title indicates, that New York is not coming back. At least not any time soon. I agree with Altucher.
Remote work is the wave of the future and so why live in a city where there is no nightlife, no restaurants, no artists, no art-openings, no art to buy on street corners, no performances, closed museums or even a hot dog stand? All this and not to mention that New York is second only to San Francisco when it comes to the cost of housing.
People are saying, thanks but no thanks — or life is too short to wait for New York to come back around. It’s like waiting for the high-speed rail in the US.
BLOCKCHAIN & REAL ESTATE
I did a search for blockchain to find an image for the article and what came up was mostly Bitcoin and a little Ripple (another cryptocurrency). The only image I could find was the one to the left.
This is really just more evidence that people don’t yet understand the technology. That’s okay, because more people like me are here to explain it, in hopefully, a non-technical way. My motivation? Blockchain Technology is going to revolutionize the Real Estate Business. So, get ready.
Blockchain 101:
Blockchain is a decentralized ledger, where entries are made in what are known as blocks. When an entry is made, it is registered on participating machines that exist, well, all over the world (and maybe even off-world on Satellites). This decentralized ledger makes it near impossible to hack.
Don’t confuse blockchain technology with cryptocurrency.
Blockchain is the technology that allows cryptocurrency to function and exist safely. But keep in mind that other technologies can and do exist on blockchain, like smart contracts. Think about your computer’s operating system. When you run software it sits on top of your operating system. Well, Cryptocurrencies (like Bitcoin or Ripple) sit on top of Blockchain. Like Cryptocurrencies, Smart Contracts also sit on top of Blockchain technology
THE DIFFERENCE BETWEEN DIGITAL CURRENCY & CRYPTOCURRENCY
All cryptocurrencies are digital and sit on blockchain (thus far), but not all digital currencies sit on blockchain and not all are necessarily considered cryptocurrencies.
Last week Forbes reported that the Federal Reserve has revealed research plans for a digital dollar.
Yes folks, this is the beginning of the end of cash. I know this frightens a lot of people — including some banks, gangsters, paranoid conspiracy theorists and others but… the reality of all things is that they often don’t turn out as bad or the way we think they will.
The Fed is calling it CBDC or Central Bank Digital Currency. Yes, I read that too, it sounds like The Fed is attempting to centralize the digital dollar…and really, how could they not, they are the government and want to track everything.
The CBDC (they will need a new name) is a currency backed by the government, which is the opposite of the highly speculative Bitcoin and other cryptocurrencies that are backed by what boils down to belief or the solving of complex puzzles, more commonly known as mining.
The Fed’s announcement is more evidence that we are heading in the direction of digital currencies and, well, they don’t want to be anymore left behind than they already are.
My guess is that one day, the government will track every single penny of its currency… but that there will also be other currencies that exist alongside, like Bitcoin, that will be less easy to track.
From what I’ve read, questions about cryptocurrency will be front and center for the 2020 IRS Tax forms. Something to look forward to in 2021!
THE SAN FRANCISCO MARKET
As you can see from the above chart, there was a slight bump in sales and signed leases last week. However, there was also an increase in inventory across the board.
With inventory holding steady, it being an election year coupled with Cvd19, and the approach of Autumn, we may be looking at a further cooling off of the real estate market. Generally, Autumn is a busy time for real estate, especially with the return of students. Universities have gone virtual for most classes and events through December 2020.
Prices are also holding steady, for now. Stay Tuned.
STAY POSITIVE & KEEP HOPE ALIVE
Together we will get through this time, together we will co-create a better world, a better community and a better economy that does not leave people behind.
If you would like to hear my Podcast of this article, please visit Never Too Late To The Game’s Monday Morning Real Estate Update for August 24, 2020. You can also find me on Spotify, Google or Apple Podcasts.
