Humans are experts in learning from their mistakes; and in the intent of figuring out what the mistakes were, I write this. At least it thusly could be possibly noticed by people in the future for figuring out how to do it right choices the next time; at least there is more chance of this info being available than if I had not written it down and posted it online, despite the apparently obscure location available to me.
Human civilization has been built on the value-added principle; as we chose to change from being hunter-gatherer-predators on Mother Nature's creations, we began to make lasting products of our lives, that accumulated. We shaped clay bricks, let the sun's energy dry them and then we built shelters that sometimes outlived the makers. Iron was mined and smelted and made into lasting tools with which to make other things including new kinds of shelters of wood nailed together; We planted and irrigated the life-spark seeds of plants, tending them until they provided food for our table. And we found ways to preserve the knowledge of how to do all those things, efficiently passing the knowledge and understanding on to other people and on into future generations who would then start with having abstractly learned the successful activities proved in the past, on to add more new knowledge and broader understanding of our own to the pool of knowledge and wisdom.
We currently are having attention pulled away from a major potentially significant election by the triggering of a financial crisis, from which hopefully we will learn from too.
So, here is an Aspie's view of the causes of the real estate bubble making and bursting, that brought on the start of the current financial uproar now spread worldwide: One of the basic needs of humans is that of adequate shelter, and that usually takes the form of one's residence. This need is utilized by other people to manipulate others by controlling the access to having a residence, an activity too easily becoming a game to be played by those who manipulate resources for housing that others need for supplying the basic need for shelter that is adequate for the individual's beliefs. This interplay between human needs and games being played by others to deprive & supply those needs, is the arena of the action being explored in hindsight here now.
An Aspie learns differently from non-Aspies, in that a general principle is first learned through an archetypal specific real example, and then next generalized from there; this is in contrast to the typical non-Aspie mode in school of learning the general rule first, then applying it to specific examples. And so in this case, my specific example is that of my decades of living in the Los Angeles County area.
This story will start with the background to which I hope to return to describe earlier events leading up to this starting point; anyway, it starts when the residence I had owned, having to be sold for $13,000, of which $8,000 was equity that was split two ways with my former wife whose divorce from me was the cause of having to sell my home; I was then on the street with my $4,000, doomed to life in apartments for the next 35 years, it turned out. This was 1972, a time when the Human Potential Movement was developing as a positive influence, while a negative influence was the already discovered effect that men who had lost their wife had a much lower life expectancy than did their former wife did, unless the man quickly somehow acquired a new wife or equivalent. And for an Aspie man, the need for a wife was more than non-Aspies in that it was not only the loss of the essential mating activity the woman provides, but the woman is also the social support system for an Aspie-man.
In my case, in addition to this psychological shock-grief of matelessness and loss of my social support provider, but also looking back clearly some chemical effects of only guess-able types but one seems to be a severe case of lead poisoning as one of them, at the time of the loss of my mate.
So I launched into the world of apartment life in Los Angeles in this condition, initially supported by my ongoing job as a "contract" electronic technician working at the famous Jet Propulsion Laboratory helping create a new spacecraft camera, a job which quickly dropped in performance, and in time, lost me that job's potential to become a regular employee there. So my income was soon to drop too, not all that high to start with as a mere technician category of work, even though a fairly high level technician. Financially, I quickly found that apartment rents were quite a bit more than the already strained house mortgage payments had been.
The cost of shelter, ones housing or residence, was typically the highest expenditure of a person in the LA area (Los Angeles "LA", not Louisiana state "LA") with the second expenditure being for one's car, which not only provided necessary transportation in the spread-out L.A. area but also was a bit of one's shelter that was mobile thus providing shelter function along the trip and when parked a safe repository of one's belongings to some extent, safe from both the elements and predatory people. The major amount of money was tied up in one's working-person's life in the form of providing the shelter need supply function, mostly by the stationary home yet in part by the mobile small specialized shelter provided by one's car.
The residence was part of what was more widely known as "real estate" although shared by other kinds of structures built on land, such as stores and offices and manufacturing plants. The vast majority of the spread-out Los Angeles county was occupied by people's residences, however; mostly single family dwellings, later to be sprinkled by multi-family structures, mostly apartments, of which I would live in such residences for those decades following divorce. The rental price of an apartment was set by the man-made economic law of "maximum price of what the market will bear." New construction of apartments built by speculators were a balance between the rising scarcity of housing, construction costs, and expected profit to the speculators.
I say "speculators" even though some would be actual "investors", investors per this Aspie's definition as being those who pitch in money to enable the creation of something for the fulfillment of human need; instead of just for getting profit as a result of the activity, profit that was only loosely numerically priced to its amount of filling human need.
Per the definition, "speculators" were the vast majority, who intended to charge what the market would bear rather than the value added to the system; apparently, non-Aspies cannot distinguish between the functions of "investor" and "speculator" thus one and the same to them, a loss of reality connection that ultimately led to the current "financial crisis."
Its expression was in the rising rents I was forced to pay; sometimes I had to move to a cheaper apartment, but also as a technician's job would typically last about 2 years in the electronics industry there, moving to a different apartment was also necessitated to be within practical driving distance to the new company job was located. And each apartment move was an opportunity for apartment owners to raise the monthly rental price. Up and up the apartment rental prices went over the years, doubling over and over again while the income salary increased at a far lower rate.
Most apartment dwellers were composed of families, however, often both husband and wife worked at jobs and thus contributed to paying of the rent, and it was to these the lure of getting out of the apartment rent trap was to "buy a house" which would suddenly change their condition to that of paying only a little more for housing cost, in the form of mortgage primarily; and in return was the promise of living in the relatively spacious and luxurious shelter of an owned-home, for a few years, then sell the house for a huge profit, thus not only living for free all those years but also making a big "profit" at its sale time. This was in contrast to the alternative of living in a much smaller and sleazy apartment those years, and having nothing whatsoever to remain of those moneys spent. By "owning a house" one became, instead of an endless loser from rent money, to a winner in the non-earned moneys from rising prices of real estate. Nearly always, the rising price of homes, of real estate, being set by "what the market would bear", would not be accompanied by any improvement in the actual property; the house at best would be maintained by painting and plumbing repairs while lived in by the owners, thus when sold for far more than purchased, the difference between the purchase price and the selling price, was all profit made without accompanying value added to the property's functionality and condition. More rarely, some improvements would be made, such as remodeling a kitchen or adding on a bedroom; and these were normally reflected in the selling price's increase as well.
Now the problem for those folks who bought a home and lived it for years and sold it for far more than they bought it for and thus saved the money they would have paid for apartment rent for nothing to remain for the money, that upon the sale of their home real estate, would also have to buy a new home in the area which had also increased in price over those years. Since the mortgage lenders, normally banks, were in on this easy money scheme, normally owned the vast majority of the part of the overall money involved in the residence, an increasingly huge amount of the money was merely in increase of cost without significant improvement in value added to the property. It was much like the old "pyramid game" except played including a placeholder, the house and its land, which stayed the same while the price ballooned, and everybody who got out of the game had big money in their pockets, much as did the "pyramid game" players; yet this kind of game is one that depends of gullible future players who are willing to buy into it; yet those with a wider perspective would usually realize that eventually the field of prospective new ones to buy into the "pyramid game" was shrinking and at some point people would stop buying into it and at that point the latest group of people who had paid to get into the game were the ones who lost out essentially, as they thus were the providers of all the money made by the previous players who were in on the huge scam.
Although eventually the classical "pyramid game" became well known for what it was and thus ceased to happen, the real estate version of it, based by a placeholder along with the "pyramid game" price component, continued to roll along, even though in the L.A. California area there were occasional whisperings of "when the bubble bursts" it would be like the losers in the old pyramid-game activity.
But it was also a choice of paying rent money, which was money lost forever, to the paying of mortgage money for a significantly higher standard of living home, was also a lure in the game. And, as pointed out at the beginning, this was in fulfillment of a basic human need, that of adequate shelter. Housing costs increased enormously over those decades I lived in the Los Angeles area; yet the housing quality if anything got worse. In other words, I was getting far less for my money, and that extra increase was going in to feed those who were playing the real estate pyramid-game-with-placeholder easy money with no work involved, just cleverness and game playing abilities, adding no value to the system, powered by "what the market will bear" and as in all monopolies driven by desire for easy money, depended on there being a limited resource of which was necessary for the conduct of human life, they could force the extraction of money from those humans who had no choice but to pay to the holders of the aggregate sum of the finite resource base, in this case, the commute-reachable land real estate area of the Los Angeles county area, which became linked increasingly to neighboring counties to the south and east, less so to the north where mountain ranges became commute energy and time obstacles.
For example, when I gout out of the Los Angeles area, driven by increasing apartment rent in quite low grade housing and spending six hours a day commuting on the city mass transit bus system to do my part time and volunteer work, a commute that carried me thorough a mountain range; it was the edge of commute, only affordable due to my social security retirement enabling me to do useful work yet not be paid to do it, a full time job was not available to one my age usually. The rising rent and the losing struggle to live in a ratty tiny apartment in a slum area, was ever slowly crushing my life toward unsustainability when I was offered the opportunity, at the price of leaving my familiar and cherished Los Angeles area home range, to live in a distant north desolate desert area; yet with a house I would "own" along with the mortgage holder of course, yet doing so at a monthly mortgage plus homeowner costs a bit less than the rent I had been paying. Overall my quality of life is somewhat better, I think; although the prospects of obtaining the Aspie-man-essential wife-or-equivalent are turning out to be even less that was possible back in the L.A. area.
Now, expanding the view to the larger time frame, a last point here is what about back when I was a homeowner in the Los Angeles county: my rather unique house there was gotten when my then-wife said she had always wanted to live in a certain area known as Topanga Canyon, ever since when was a child; so she went to see what was available up there and dealt with the real estate folks with her non-Aspie impressive social skills; I was then taken up with her to view the potential low-end properties, and we chose the lowest priced one, which was a small cabin type house in the original Topanga Townsite, which had been added on to by handymen over the decades since the area was only accessible on horseback, and had become a rental to those who failed to pay or keep up the property and we bought it as a repossession, thus was in quite a mess and its bridge connecting to the highway remained only in the form of bare abutments from a prior bridge; recent occupants had always used the bridge of a neighbor ... that would lead into a longer story here maybe colorful and interesting but for the purpose of this dissertation, let's return to point out that I bought the house for $13,000, we lived in it for 6 1/2 years and I spent nights and weekends working on the property including putting a new bridge in where the old one had been - a 40 foot long bridge 13 feet high which would carry a car, with a center span of 26 feet - and the house was also severely damaged by a landslide and I rebuilt solidly for a couple years to recover from that event - but then the wife left for greener pastures and the house had to be sold to give her half of its price as part of the divorce settlement - I won't dwell on that she did not work those years to help pay for the house she was getting half of its worth now - the house sold for $18,000 of which $8,000 was our equity so I got $4,000 for my share of its sale. The property was sold in an as-is condition, as it was when I bought the home. A few years later I briefly returned to the area, accompanied by a friend who had long been curious about the area too; she as a non-Aspie was able to go talk to the people then at the house, and it turned out that the house and property was almost just as I had left it in my despair years ago, even to the mural of the Monterey Pines still hanging on the wall, they only had put carpeting in on the ground floor as the only improvement; and the new owners just then moving in as we visited briefly, had paid $110,000 for the house. So the ones who bought it from me for $18,000 four years before, had lived there for free and made a profit of $92,000 as a bonus, while I had been paying high apartment rents at total loss in the same years in the area.
So that was the kind of thing that was the lure for the folks in the real estate game, what a difference in the money and lifestyle of the homeowner vs. that of the renter. And a few years ago, I was told that the value of the Topanga property was way over a million dollars; the bridge I but had new decking and side rails put on it but had not been repaired with the 8 steel pre-stressed cables I had put underneath as an inverted king-post structure, but still able to carry a car's weight however; they also had built some onto the house, although there was not much room on which to build, in that notch at the base of the mountain near bottom of the valley, on the opposite side of the canyon from where the road was that provided access to the area.
In summary, before the "real estate bubble burst" there, the house and property which I had rescued with my years of construction and mortgage payments back in time centered on 1969, through the "what the market will bear" had added most of the over a million dollars, minus the sale price of $18,000 in 1972, essentially was a million dollars of increased cost without comparable value-added; mine had been the major value-added to the property and I only got $4,000 for my efforts which sometimes were life-risking too, particularly during the building of the bridge. Anyway, the amount of about a million dollars was the amount of money without comparable value-added that was involved in just that one piece of real estate, now part of the "burst-bubble" that triggered the collapse of the house-of-cards financial system now being ouched by us all.
It seems to my Aspie-thinking that the whole problem was in the non-Aspies getting caught up in playing a game of gambling on squeezing peoples lives for money by controlling a limited resource, that of the real estate which provided a survival function in their lives, demanding extra money far above and beyond the value-added between buying and re-selling the items.
In other words, taking money for giving nothing in return; only the placeholder real estate physical self was the only actually worth-money items involved, and it did not have significant value added. To my Aspie-mind, that looks a lot like more generic forms of taking money without giving in return, made possible by being bamboozled by the fact a piece of real stuff, the house and land, was also being exchanged for a small part of the money. Done repeatedly and over a wide enough area, the amount of vapor-cost mushroomed incredibly huge; and now, as in the old pyramid-game, the fantasy balloon has burst and the current holders lost their gamble ... and want the government to compensate for their gambling losses yet.
Sure all those folks deserve an adequate home to live in and a useful job to work at and be paid for doing.
Will the pyramid-game-with-placeholder game be resumed, or will a system more directly tied into value-added price increasing, instead of the "what the market will bear" trick being the rule in the next go around? Most likely, the non-Aspies will just resume their old ways. After all, it is easier to set pricing to what the market will bear and to hoard the goodies to raise the price to there, than to figure out a fair value-added pricing system. And with this writing, more of the non-Aspies will essentially do the big fist in my face thing while saying "they are boss here, not me, and don't forget it" kind of thing, will most likely continue. I have read that there are 250 non-Aspies for every Aspie; and in my experience, the non-Aspies apparently prefer that there be no Aspies at all.
