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Our Era in a Word: Greediocy   (February 9, 2006)


My good pal and most excellent Ka'a'awa blogger Ian Lind coined a new word last week which justly describes our sad state of affairs: greediocy. To quote from Ian's February 1 entry:
Greediocy: The foolish decisions made pursuing promises of easy riches.

For example, lured by our real estate bubble (yes, I believe in the bubble theory), someone bought the lot next to the Kaaawa Post Office and built two homes within feet of each other, each looking squarely into the other. Greediocy.

Or the realtor who is trying to leverage profits by finding homes sitting on lots just barely over 10,000 feet and then subdividing into barely legal properties to be sold separately. So although this part of Kaaawa was designed for "country" living with large lots, the whole feel that has made it a desirable area is being eroded by this thoughtless and overly aggressive real estate style.

Greediocy. It's a word that will cover a lot of ground.
What's so refreshing about Ian's new word is that it speaks to the disturbing and ultimately destructive mindset at the foundation of the housing "boom"/bubble: build it quick, build it cheap and flip it fast. While the developer/homeowner is anxiously calculating their return on investment, or gloating over yet another 15% rise in real estate values, the built environment--that is, all the buildings which have been tossed up in the frenzy--will still be here long after the euphoria has faded. The community at large will be stuck with the consequences, even as the over-leveraged developers and homeowners are filing for bankruptcy and the lenders are nailing up "for sale" signs by the score and ordering more by the truckload.

Think it can't happen? It appears it's already happening:
The Star-Telegram newspaper (Texas) reports that "Home foreclosures continue to climb. The number of homes slated for foreclosure continues to rise in Tarrant County, with 1,101 headed to auction next month. That is a 17-year high, according to Foreclosure Listing Service. That total is up 27.6 percent from a year ago."
You may think such visions are absurd, but I recommend you read a bit of history before you reject the possibility of severe declines in real estate. The last era in which borrowing, debt and greediocy rose to such heights was the late 1920s, a period of excessive speculation and debt which led to the Great Depression.

At the height of the Depression (which was plumbed not in 1929, but years later in 1936-7), a glorious New York highrise was sold for the cost of its elevators. Yes, a $5 million building constructed in the late 1920s was sold for $100,000 at the bottom. Now that's what we call depreciation.

To quote Jackson Brown: "Don't think it won't happen just because it hasn't happened yet."

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copyright © 2006 Charles Hugh Smith. All rights reserved in all media.

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