Tuesday, June 26, 2012
Tuesday, June 26, 2012 2 comments
Retail home prices are up, building starts are up, new building permits are higher than in 2008. This is all good news in the segment of the economy that has been holding back the recovery. The only problem with this is that one quarter of the new sales have been from foreign buyers snapping up choice properties. They see these selling for a fraction of what similar investments cost back home. Still there is money changing hands, and this is a good thing.
Why do foreigners have money to spend, and Americans don’t? It could have something to do with the top 1% in this country capturing all of the income growth since 1980 (they saw growth in the hundreds of percent) and the rest of us have actually declined. For a big chunk of America it has been an actual descent into poverty.
Prior to Ronald Reagan we were the most upwardly mobile country in the world, after 30 years of doing things his way we now rank at the bottom of the developed countries in class mobility. There are third world countries where a poor person has a better chance of getting ahead. In America you can expect your kids will as adults be worse off than you are.
Another factor in the influx of foreign cash is that there are trillions of USDs in circulation worldwide from the all the outsourcing, and even more so from the tax dodging by so-called US corporations. There is over $3 trillion in un-invested corporate cash overseas, plus who knows how much concealed by rich Romney-ens in their secret bank accounts. All of this money is subject to US taxes, but past Republican Presidents de-criminalized this sort of tax evasion.
Efforts by the IRS to tax Romney-ens under Obama have produced little fruit, and they aren’t even allowed to tax the corporate money as long as it remains stashed in foreign banks. This “hot” money produces real-estate bubbles overseas as the banks there need to put it into something, anything. So now it begins to trickle back into this country buying up assets here. This is as close as “trickle down” economics ever gets to actually working.
This isn’t new of course, it’s been going on for 40 years, but really took off under Reagan. Foreign interests own the bulk of US mining assets, as well as entire so-called US companies. China has been shy about investing in the US but has shelled out for a major Texas oil field. Mostly the Communists prefer to buy up copper mines and such in other countries. But they also build infrastructure projects and factories that benefit their trading partners.
The Chinese are rapidly becoming as respected in the rest of the world as Americans think we are. Then again, their country is run by people who want to build China into a super-power, where as we are ruled by a collection of Romney-en pirates, and Darrel Issa like mob arsonists who will burn it all down for a quick buck. We must either learn Alexander Hamilton progressive economics, or Mandarin Chinese. www.prairie2.com