The Collapsing Housing Market

The latest installment from the cynic's cynic, James H. Kunstler:

The latest rogue wave broke about ten days ago, when an orgy of foreclosure revealed massive irregularities in mortgage contracts and property titles, suggesting a slovenliness so arrant and broad that even the states' attorneys general woke from their narcoleptic raptures of golf to shut down transfers of distressed property. But this was only after the banks themselves declared "moratoria" in a perhaps vain attempt to forestall further discovery of their countless misdeeds. And somewhere along in there the title insurance industry had a whack attack.

During this period a new cliché issued from a million pie-holes: the rule of law. Well, as Joni once sang to we happy Boomers, "...you don't know what you got 'til it's gone...."

To systematically ignore the niggling, stodgy lawful protocols regarding contract documents - notarization, due diligence, various dotted "i"s and crossed "t"s - was easy on the way up Fraud Mountain. On the ride down, though, it turns out all those niceties comprised the braking apparatus, Now the cargo of swindles is accelerating out-of-control and breaking apart. Suddenly this cliché - the rule of law - begins to assert its meaning for this nation of slobs, morons, and grifters, to the degree that even lawyers begin to understand what's at stake (as opposed to just how much they can get paid), though the bankers may never learn.

The upshot is that the real estate industry is on ice indefinitely. Nobody dares to buy or sell property because there is no way of knowing who actually owns it, whether the chain of title is on-the-level, whether (or not) there is a document somewhere with coffee mug rings and taco sauce stains denoting the past and current owners of, say, a half acre of sawgrass scrub with an abandoned harlequin brick ranch-house full of mold feasting on damp sheet-rock in the unspeakable South Florida humidity.

The US real estate racket was already in enough trouble with the collapse of bubble pricing and then the consequent effect on untold tons of mortgage-backed securities and derivatives of them buried in the vaults of banks, insurance companies, municipal investment accounts, pension funds, and other repositories of trust. It certainly has been known for years that the value of these clever instruments is somewhere south of where they represent themselves to be - but since the crash of 2008 accounting legerdemain kept a lid on that putrid stew. The new wave of mortgage and title fraud now threatens to drive their value down to zero, that is, quite a bit lower than even the previous worst-feared estimates of mark-to-market apocalypse.

Question: I'm not bragging exactly, but how was it that I was able to see the looming 'housing bubble' burst, with all its attendant ills, several years ahead of time, when most others were oblivious to it? I think it goes to show that simple, honest observation, using honest common sense, eschewing an ideological rigidity, allows you to see things that most people can't see.