How the Hubbers Saved America!
63and then the Rest of the World.
First, to truly grasp some of what I am about to present here you gotta check out this site. He has the best grasp of economics I have ever read, and trust me when I say that it doesn't come lightly, as I have read a ton of stuff on Economics.
So the fundamental thing I want to point out for anyone who listens to the news is this: People are not spending money because of lack of confidence. People aren't spending money because they don't have any. The real question then, is where in hell is everyone's money going.
For those of you who read my work and follow my posts probably know I worked for AIG Financial Advisors for a while. As I would meet with clients and go through their finances I noticed something, nobody had any damn money. This was very disconcerting to me, since I only got paid based on the amount of assets I managed. If no one has assets you don't get paid.
So where the hell was all of their money? I am not talking about Welfare moms and School Teachers here; I am talking about Doctors and Lawyers and such. Flat ass broke; making 250,000 a year and flat ass broke. Not a single damn asset to their names.
What I learned was almost half of their money went to taxes, and the other half went into housing and maintaining lifestyle.
What I learned from my clients that weren't Doctors, and Lawyers (yes I was one of those philanthropic types that would give as much attention to buck privates and janitors as I would executive VP's) not smart if you want to pay your own bills, but you can look at yourself in the mirror and feel pretty good.
Anyway what I learned was (Big shocker here folks) they didn't have any money either. Where was it, well the exact same place as the high income folks, about half or better went to housing and the rest to lifestyle. With nothing left over and worse ever increasing debt.
So I asked myself, self what does all this mean, well it didn't mean anything to me until I read a report the other day showing how in the 50's only about 25 percent of the household income went to housing. Now 85% of Americans pay over 50 percent of the household income on housing, this is really disturbing when you add in the fact that many households now have two income earners. Not good.
So, what conclusion have I drawn, simple housing is the root of the economic crisis.
I don't mean the defaults either, that is the BS the banks spewed in order to strong arm the taxpayer. The rest of the economy is hurt do to the fact that 51 percent of American income is going to the banks in the form of rent or mortgage payment every single month. That is a lot of damn money people.
These banks have muscled themselves into everything and collect almost all of the collective income that is available leaving nothing for all other Industries the industries that need this money in order to survive and continue to employ.
So how do the Hubbers Save America?
Simple, we form a Corporation with a Social Charter whose goal is to eradicate the Banks market share in Housing and return ownership in this Country and the rest of the world into individual hands with strict contractual rules to prevent the banks from buying it back.
How the hell do we do that TMG?
The same way you eat an elephant, one bite at a time.
We, put our money into a Corporation that takes this money and buys property for all cash no Banks, and then rents the property to tenants for only 25% of their gross monthly income.
Why will this save America and then the rest of the world; because, it gets rid of the bank simple. Banks are responsible for the ever increasing cost of housing (and every other good and service as well). We have more houses in this country than people. If that be the case then why the hell do we have homeless?
Good question, greed is the only answer. The Hubbers Corporation will not be one of greed, but one of responsibility and reasonable profit not obscene and immoral raking of everything that is available.
As we buy houses we will not have to pay interest on a loan, each payment will be straight into the coffer allowing us to buy the next house and the next. Over time we will continue to eat at the Banks market share, and by freeing more household income we will revive the economy in other areas. People can invest and save in order to buy their house. We continue an education and awareness program to discourage consumerism.
Once we have a significant number of houses and apartments and dwellings, once we have a large inventory of property, we begin a program to sell the property to the people living in the property for straight cash. This will place the property only into private individual ownership and begin to restore balance back to the people with contractual clauses preventing the bank from regaining ownership.
Most of you may think this is hard or difficult or too large a project. I say that is crap. A lot of us can give 100, 50, 40, 30, 20, 10 or 5 Dollars a month. A small amount from a lot of people is a lot of money. The money that you would waste on a candy bar can put a family in an affordable home and screw the bank at the same time.
What more could you want out of life. Even more importantly this money would represent stock ownership in the corporation, not only are you helping an individual family, and the economy at large, you are building actual capital for yourself.
There is a dangerous trend in the world in that ownership of capital is at an all time low in terms of the number of people who actually own capital. Never in history has the worlds Capital been owned by so few.
The time has come to quit talking and start doing. As a community we could hold our board meeting here. We could elect our officers and begin operations online. We could in 10 years set the world on a course that would actually reverse the trend of massive banking ownership of the worlds land.
For those who think this has merit I am sure you will comment for those of you who think I am crazy, I ask this when is the last time you went to a casino, the last time you ate out, the last time you took a drive for no real purpose, by cutting out one of those activities, and you can restore balance to the world and turn a profit at the same time. Not some will nilly speculation like buying stock from another speculator via a broker, but actually investing in a real company something very few have ever actually done.
Think about it and let me know. I know there are lawyer on HubPages, accountants, real estate and property professionals. I know for a fact all the talent that is required for success is right here in this little online Hub.
TMG
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Comments
I'm thinking. Can't brush off your ideas, especially after reading the link you sent us to.
Great idea Monet Guy. Your statistics apply in Australia too. Two incomes are needed to service the average mortgage, and after housing expenses, there is little left to live on for most people.
Mortgagees are just modern day serfs, who primp, preen, and maintain the bank's house for free while paying exorbitant sums for the privelege of living in it for 20 or 25 years.
At the end of this time, during which they have paid for the house 4 or 5 times over, they are rewarded for their loyalty by the bank giving them the house.
The whole notion of a house as appreciating asset is flawed. It's a consumable item which needs constant, expensive maintenance.
Your plan sounds great. Don't forget to allow money for repairs and upgrades to the houses :)
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The greed and disrespect to people by banks is unbelievable! I was sent off to another office when I asked for *best ideas* for investing some cash. Another time this same bank withdrew their offer to allow a youth fundraising event after agreeing ...their manners are deploreable. Removal of requiring their services would be quite a interesting project. :) great info!
I'm in. Check this out:
http://dropoutnation.blogspot.com/
If you want to participate and post this idea there too, send me your email address and I'll add you as an author. In the meantime, as soon as I get my freelance work done for today I'll write about your idea myself and include a link to this hub. ;)
The banks have become to us...what the company store was to the coal miners. Our idiot legislators let them get away with it. This is a great hub and you have an ingenious idea. Bring on the elephant? I have my fork! :)
Yeah, I did a hub awhile back where I took the CONSERVATIVE underwriting standard for mortgage lending of 30% of income and applied it to a person making $33K per year (which in the rustbelt these days is a lot--about half the people living here make less). I took what the bank would lend this person on a house and after subtracting the house payment, I started subtracting the utilities, food, etc.--just the most basic monthly expenses. The money was gone way before the end of the month, and there were still basic living expenses to meet, and this is the conservative standard. I'm not talking subprime loans or any of that.
What's more, the maximum amount (just under $100k) was less than the cost of the average U.S. home, so it's not like this imaginary buyer was going to end up with a minimansion. More likely, the person would have to buy an older home in a marginal neighborhood, so in addition to running out of money every month, my imaginary homeowner would be hit with home repair bills and so forth almost immediately.
Yet you can still find these 'rules of thumb' for how much house you can afford all over the internet. They don't apply at ALL unless you make a six figure salary, and even then they're designed to get you into debt you can't escape. But it's like talking to a wall saying this stuff. It's so frustrating.
I like your idea of a Hubbers Corporation. I've just finished watching the 2nd of the zeitgeist movies - totally sold on the idea of crushing the banks, and a few other monolithic structures that don't serve humanity.
Ah, I wish. Regrettably, a human condition is greed. That is the fly in the ointment which would destroy any scheme such as you propose.
Even in the very unlikely event of you finding an entire group of altruistic individuals who would put money into a benevolent mutual fund,without even one of them trying to profit personally, the "banks" wouldn't relinquish their stranglehold on the economy. Pressure, blackmail if you will, would immediately be put on those in power, and legislation would me made to prevent such a scheme getting off the ground.
You could undoubtedly run it, but would be taxed exorbantly on rent income, capital gains estimates, business establishment, and any other frivolous item corporate lawyers could think of. Any profit remaining would be swallowed up in prolonged and futile legal battles.
You're fighting Big Brother. Big Brother is rich, and he has every intention of staying that way.
I want to make 10K and rent a million dollar house for 2500 a year.
This is a good idea. I will be watching to see how I can participate. Thank you
MM,
Thank you for the comment. I am thinking the execs will probably have to be pro bono, but the Secretary would probably be able to draw a salary. Just a thought.
Steve,
Thank you for stopping by I appreciate you taking the time to read and comment.
TMG
Eric,
Yes the Mortgagee is the modern Serf. No ifs, ands, or buts. Thank you for stopping by. I will be putting more into this both here and on Pgrundy's blog
http://dropoutnation.blogspot.com/
Thank you
TMG
Pam,
Thank you I would love to contribute.
My email is
gwest36@yahoo.com
(918)360-5546
Anyway I can help.
TMG
Thank you Jewels.
TMG
TOF,
I have been a fan or yours for a while so I know you are of the Kiwi variety.
Anyway you are absolutely right on the dificulties of such a project. If I were still licensed as a securities professional I could be fined and lose my license for suggesting that Non-Accredited investors invest in such a corporation.
In the US we have a law that prevents any licensed attorney, investment professional from mentioning or enabling people who make less than 250,000 a year or have less than a million dollars net worth from participating in such a corporation.
That alone makes raising capital for such a company a huge task. The second place to get the money after private investors is Investment banks. Trust me when I say I would get laughed out the door if I went in there and said I want you to buy a company that only expects to make 2 to 3 percent profit by design.
So yes this would take a huge effort.
Yes then would come the attack of the laws.
The only protection we would have against that would be sheer numbers there would have to be enough people participating to make this a public relations nightmare to attack us.
Thank TOF, you have to have a guy on the payroll whose only job is to worry when there is nothing to worry about.
TMG
nicomp,
If we are succesful, there will be very few Million Dollars houses, as the inflation created by the bank is reversed home prices will return to the normal wage adjusted value.
TMG
Great work, TMG - over 50% of income is ridiculous. It is the way that it is all hidden behind layers and layers of lies that is particularly insidious. You could do what should have been done already - move needy families into the swathes of derelict foreclosure homes :)
In Greece, we missed the worst effects of the property bubble because most people inherit houses, and banks would not give a mortgage at more than the golden 3x annual income. Tight regulations discouraged speculation and kept property as what it should be - a home before an investment.
I am not sure how I can help the movement, but if you need anything just holler - I am quite happy to write a couple of articles, if it helps. Glad to have you onboard for Pam's blog - there is an extremely talented line-up of writers, and it is becoming a veritable Hubstock :)
TMG, Of course I was just kidding about being an obscenely paid exec:-). But count me in. Love this idea. MM
Sufi,
The crazy thing is Sufi even at keeping it at 3 times the income which will hold houses to a constant level charging a modest interest rate, the bank still makes an obscene amount of money. The dirtiest trick in the layers is the mortgage itself.
The name mortgage is derived from the word amortize. It is a tricky little piece of math that puts most of the interest over the lifetime of the loan in the first 10 years of payments. Knowing most homes will sell or turnover in that time period, it means that all of your work and all of your payments paid interest that hasn't actually accrued.
Before such geniuses created these things loans were done on the simple interest basis. Essentially a loan was calculated by the amount you borrowed say 100,000 and then you divided it by 360 that would be the monthly principle to pay off a 30 year loan. Then interest would be calculated and compounded on a quarterly or yearly basis. and then divided for the payments that period. Quarterly being the most popular, monthly being the most fair.
So essential after the compound period your payment would actually decrease since you had paid back some of the principle.
This was too straight forward so that system has been scrapped and many different schemes used to base the compounding of interest. The Mortgage being the most insidious of them all.
Thanks for stopping by 2009 the summer of Hub!!!!!!!!!
TMG
I think this is a great idea and I agree housing cost are out of control not only in this country, but across the world.
I would be interested in this corporation if it came along.
Nikki
Thank you Nikki,
I will keep you posted.
TMG
Hey there , I dont understand business at all , but I do understand when Im being ripped off . I hate banks now. It used to be just the trading banks that were super greedy and clinical but now its most of them. Kiwibank (back home) www.kiwibank.co.nz started up very slowly ,and the cynics were quick to laugh at their initatives but they quickly grew and removed fees and all the fluff (trappings). Larger banks (most of them with headquarters offshore felt the sting of competition as people closed their accounts steadliy and defiantly. Kiwibank is now up there with the big boys and 'still for the people'
Now I am with Bank Of America, I thought we were going to be great friends ,silly me!!! , so, hell show me the dotted line .......
Eaglekiwi,
I am pumping out the paper now. LOL
TMG
I'll have my people get in touch with your people..ahahaha..( god im so sick of the rah-de-rah rah)...all power to ya!!
OK, the link is one of the best economic articles I have read in sometime and this hub is inspiring.
Maybe a lottery club would help ,who knows a megamillion dollar jackpot would definitely help.I have a question though can a non profit corporation buy lottery tickets?
sowk: In NZ lottery winnings are tax free, as are the winnings from gambling. Of course any interest that the winnings earn is subject to normal taxation. However, If a person is deemed a professional gambler, that is, if it's considered that a substantial part of his/her income comes from gambling, that income attracts tax. A large lottery club would probably be classed as a business and taxed accordingly.
However as TheMoneyGuy will no doubt point out a lottery club is in the long run a hiding to nowhere. Only a pre-calculated percentage of any lottery goes in profit, so over time you can expect to get only that amount of your' investment back. If it pays 50% (For instance) for every $100 invested, $50 would be returned. Taken that you're probably also taxed on that return it would be far simpler and a better return to just burn half the cash as it arrives and to keep the rest in an old sock.
Running lotteries however will make money, even after tax. In these hard times gambling is a growth industry, as the desperate spend what little they have trying to get enough to get by on, (And failing) Be prepared however to have to pay most of your profits as backhanders to remain in business, some to the Fat Cats through legalised extortion -(Licences, inspections), and some to more honest stand over merchants - (such as the Friends of Sicilian Orphans.)
Great hub TMG - I didn't know that you couldn't invest in such a corporation if you make less than $250k. Sounds like old-world aristocracy to me . . . hmm, I wonder who introduced that bill, and then passed it!
Oh, and one more note - we should get rid of property taxes - you never own your own house with that around your neck, even if you own it outright. Palin got rid of property taxes in Alaska. If it weren't so dang cold up there I'd consider a move.
Anyway, count me in.
Madame,
Yes, it is true; it was apart of the financial laws passed in the wake of the 1929 market crash. It passed in 1933 with a whole bunch of hideous rules designed to protect those who don't know any better. Read, the poor.
Yes, the government here place people in 2 classes from an investment standpoint.
Accredited are those who have more than 1 million in Net asset value and make more than 250K per year with likelihood to make that amount the next 2 years.
They are actually allowed to invest, that is they can buy initial offering, private placement, and LLC.
Everyone else can only speculate, you can buy from the (Secondary market) Stock exchanges through brokers, after the accredited folks have taken their gain and dumped the stock. You can buy shares in mutual funds and money market. But, you cannot invest.
It is very old world Aristocracy and very few people in this country realize the implications of these restrictions on their ability to break free from the bonds of servitude.
TMG
So true! I know of a plastic surgeon in La Jolla who lost his home to foreclosure. And it wasn't exactly the most expensive property either! Or at least it didn't look like expensive property.
You know, I'm glad some of the foreclosed homes are selling for half the original price! That's the way it should be, in my opinion. Why should homes be "that expensive?" Unless they were bigger like they were decades before.
There was a report recently, you know, which stated that the banks were in worse condition than they informed the Obama administration. I don't know whether to believe that, but they claim that was the reason why they aren't lending out money. What's your take? Kind of hard to believe when the CEOs are renting homes to throw lavish parties!
I so agree that housing is the root of the economic crisis. But eventually, it is no longer worth it to people to pile into an asset that doesn't always go up in value. Eventually it gets too expensive to play the game and people become liquid for a time. I hope that this savings and capital preservation will continue for a long while. We need to disinflate these overpriced assets.
Oh, and the banks have no real money to lend because they know tougher capital requirements are on the way.
Houses aren't the problem. The banking system is the problem. Banks don't want you to pay out right cash for the homes and would never let that happen. Also there is not enough wealth in circulation that isn't already owed to a bank to pay outright cash for every home, its not possible since most wealth ie digital or paper money was actually created at a bank. only about 5% of digital or paper money was created by the government.
Mighty Mom says:
6 months ago
Amazing. I started reading your hub, clicked on the link to learn a valuable (and disturbing) lesson in economics, came back, and am still the first one to comment. Wow. I'm fired up, yessire!
Well, TMG, I am constantly amazed when erstwhile "financial" people show themselves to have both conscience and courage. Yours is a wonderful idea and I will be very, very interested to read other people's reactions.
In the meantime, count me in for the new Hubbers Corporation. Oh, btw, since i am the first to sign up, I assume that means I will be one of those $30 million paycheck execs. You don't have a problem with that, do you? I mean, come on. I've been a worker/producer long enough. Time to cash in on that old redistribution practice.
Good to see you. As always, MM