Monday, March 26, 2012

The U.S. Prison-Cell Economy

Every month, the U.S. propaganda machine plays the same game in the housing sector. It announces “new home starts”. Then a few days later it announces “new home sales”. But it never, ever, ever talks about the two numbers in the same news item.
There is a very good reason for this: the two numbers have absolutely no connection in the real world. Month after month the U.S. government announces new home sales bouncing around a little above 300,000 units.
However, month after month, year after year; the same propaganda machine announces new home starts at 500,000 or 600,000, and now 700,000 units per month.
In other words, every month, year after year; the U.S. government announces that its home-builders have commenced construction on roughly twice as many units as they sell. This alone is proof of some massive deceit taking place. Obviously no business which builds double what it sells can remain in business. However this is only the beginning of the fraud with these statistics. It gets really interesting when we look at what the U.S. government is also saying about the inventories of new homes.
So here is the question the propaganda machine will never answer: how can U.S. home-builders be constructing twice as many homes as they sell every month, while (supposedly) inventories have plummeted lower? The answer is that there is no answer. Obviously if U.S. home-builders are building more “homes” than they sell every month then inventories can only go higher and higher.
Before the collapse of the U.S. real estate market (after the made-in-Wall Street “bubble” burst), the U.S. propaganda machine could have argued that a significant portion of this massive statistical discrepancy might have been explained by self-owned units, i.e. (small) home-builders building units for themselves (and thus they didn’t need to sell those units to anyone). However, at that time U.S. house prices were sky-high; but building material costs were relatively low. It made sense for people to build their own homes.
Today, that explanation cannot possibly account for more than a trivial portion of these phantom housing starts. Building material costs are relatively high, while house prices have collapsed. Even with the temporary lull in foreclosures, still a full third of all U.S. home sales are “distressed sales” – where buyers can purchase units at substantial discounts. It makes no sense at all to build your own home, when buyers can purchase a house for less than the cost of the land and building materials (and avoid the free labour).
We know that we are not being told the truth here. The question is how are we being lied to? The most obvious answer is that the “new home starts” statistic is just another U.S. fantasy-number, conjured out of thin air, and with no connection to the real world – just like the monthly U.S. jobs reports. However that explanation will not suffice.
Here’s the problem. With sales of new homes having plummeted by more than two-thirds (and stayed at that bottom), and with the housing-crash having been especially precipitous, this directly implies that 2/3 of all U.S. home-builders should have been forced into bankruptcy.
Yet while some smaller, regional home-builders have declared bankruptcy; none of the large, national builders have been forced out of business. They build 100’s of thousands more units than they sell – every month – and yet somehow manage to stay in business.
What if there was an easy/obvious explanation for this “somehow”? What if the two-party dictatorship which runs the U.S. had been told by their Oligarch masters to turn the U.S. economy into a prison-cell economy?
Suddenly there is a way for all of these apparently contradictory numbers to make sense. What are the only “housing units” which a home-builder could build (and get paid for) without having to make a sale after construction was complete? Prison cells. This explanation accounts for how home-builders could build 100’s of thousands of units more than they sell each month (while inventories declined). It explains how these home-builders could have avoided bankruptcy, despite losing more than 2/3 of their market.
Moreover, we have evidence all around us that the U.S. government has willingly chosen the Dickensian “social policy” of warehousing millions of their own people in prisons. Indeed, CNN’s Fareed Zakaria just referred to the U.S. as the “Incarceration Nation”.
The U.S. incarcerates about nearly six times as many people (760 per 100,000) as it's northern neighbour, Canada (131 per 100,000). It imprisons five times as many people as the UK, more than seven times as many as France, more than eight times as many as Germany, and more than twelve times as many as Japan.

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