Friday, November 22, 2013

Vulture capitalists head to Spain for good times.

by Richard Mellor
Afscme Local 444, retired

 " Uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois (capitalist) epoch from all earlier ones. All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real conditions of life, and his relations with his kind." Karl Marx, the Communist Manifesto 1848

The private equity coupon clippers are not averse to innovation. As I have pointed out in previous commentaries, the big landlords are not overly keen on investing in single family homes as rental property; they like their victims in one place like an apartment complex.  It’s quite logical really.  if anything goes wrong you don’t have to travel very far to deal with it. A person loses their job say and can’t pay the rent on time or other bothersome details means more effort when the cash cows are miles apart and in single units.

But the Great Recession has changed all that as millions of Americans lost their homes and anyway, money is cheap.  Well, they never really lost them, their homes are still there, the bankers had the sheriffs liberate these occupants form their shelter.

The private equity firm, Blackstone has been very busy spending as much as $100 million a week buying up foreclosed homes in the US. It has spent
$7.5 billion purchasing 40,000 houses in the past two years to become the largest rental business in the US. Blackstone is headed by Stephen Schwarzman whose net worth is about $7 billion according to Forbes, he’s one of those nasty stains on humanity.

Blackstone and another coupon clipping outfit, Goldman Sachs, is taking advantage of the economic crisis abroad as well. Housing prices have dropped some 40% in Spain which means easy picking’s for deep pockets.  Blackstone just spent $173 million buying 18 apartment buildings from the City of Madrid and is competing with Goldman and foreign coupon clippers in the race to scoop up these assets that local government has to sell to close deficits; always there to help they are.

In order to attract these vulture capitalists, the Spanish government is doing its bit. Last year politicians introduced legislation that would, “....protect landlords by allowing them to raise rents above the annual inflation rate, speeding up evictions of tenants who don’t pay and reducing the length of leases, which means owners can raise prices more frequently.” Says Bloomberg BusinessWeek.

The government also abolished the tax break for homeowners forcing them in to the rental market as they are, like homeowners here in the US, often underwater or holding mortgages worth much more than their homes.  The fact that rents have declined drastically, (19% in Madrid, 24% in Barcelona) in the wake of the crash doesn’t bother the coupon clippers either, “Job insecurity, salaries that are frozen or falling, and bad experiences with mortgages and foreclosures are all going to translate into a barbaric rise in the demand for rental accommodation,”
says one CEO of a “restructuring” firm.  To restructure would appear to have the meaning of something positive for humanity.  When used by the coupon clippers it refers to finance and capital accumulation, in other words, restructuring exploitation.

A bank the state set up to handle"Soured real estate assets" which means human shelter that is no longer a profitable commodity so the state sells them off to coupon clippers at huge discount like the US government did failed S&L's, agreed to sell 1000 of these homes to a European group of coupon clippers.  It's important to read their words carefully to see how they view the world of human beings. The bank is looking to sell another bunch of distressed rental properties next year, "in response to investor demand" says BW.  Not people needing shelter and a place to live demand, but "investor demand". This surely artificially raises the price of housing as it does here preparing the ground for further crises. Such language reflects the world from the coupon clippers' point of view. And even more clearly, “This type of sale will be flavor-of-the-month in coming years,”.  So a human necessity like a roof over our heads is no different than ice cream to these people.  
Rahm Emmanuel, the former Mossad Agent and education wrecker as mayor of Chicago maintained, “You never let a serious crisis go to waste.” And the vulture capitalist are right there when the victims of the market find themselves in need of a life raft.

Freedom’s a wonderful thing.

No comments: