If those buildings are “useless”, how is the developer going to make money on it?
>Build for $1 mil.
>"This building is worth $2 mil! Give me a loan with it as collateral."
>Use the $2 mil to invest in something else.
Rinse and repeat. This is also the reason why CRE valuations have hardly fallen despite WFH et al. Everyone involved understands that valuations cannot fall, because more than the value of the buildings in question hangs in the balance.
I don’t think you thought this through. The building is only worth $2 mil if there are people paying rents for the cumulative similar units.
A bank will absolutely not give you a loan for $2 mil on a regular residential building unless there is supporting evidence for the market bearing in that. It’s far too much of a risk for the bank otherwise.
I think the gap in your mental model is that you think banks agree to owner valuations and fork money over without a second thought.
I think the gap in your mental model is that you think that these businesses have any scruples whatsoever. Banks will absolutely agree to improper valuations if it's to their strategic advantage. Realize that collateral has to keep its value over the length of the loan, but banks are lending based on the current/projected value of that collateral during the time that they expect to hold the loan. If they can clear the loan from their books before the collateral value drops, their risk is low; they will make that loan.
And I just explained how the risk is "low". The loan is not upside down when they sell it; they have nominal proof that it's "worth" $2 million (through dubious valuations, because it's in everyone's interests to pretend that that that valuation is solid (this is where scruples come in).
You also do not have to take my word for it since I cited one example of many where this actually happened.
Update your previously inaccurate world view, please.
The entity purchasing it has to think they can get the asking price for it.
The bank will not take the risk acquiring it unless they think they can actually sell it for that.
So if the bank thinks they can actually sell it for $2 million and it is selling for $2 million, you’ve just described a $2 million property.
What I’m telling you is that those buyers disappear at any large scale because buyers of buildings like that need ROI. It’s only in really hot markets where deep wallet flippers will tolerate taking a bet on a building that cannot generate revenue to support the note.
What you linked to is a rare case. It doesn’t happen at scale because the system doesn’t close.
I think this has more to do with the ownership/residence situation. There was a study done of a redlined neighborhood, mid-century, that was slated for razing as part of an urban renewal initiative. The residents were all working-class black families. The houses that were owned by the residents were well-maintained; the ones that were owned by landlords and rented out were of a condition stereotypically associated with urban decay.
This makes sense. Owners, even poor ones, will do their best to maintain their housing; less wealthy owners especially would know that they're likely stuck with their unit and should do their best to keep it comfortable. Renters have no incentive to (it might even be illegal for them to make improvements), and landlords are unlikely to cut into their profits if they can avoid it.
I would say that policy which encourages long-term renting - per-property, as well as per-renter - is deleterious to the socioeconomic fabric. The majority of a housing unit's life should be spent inhabited by its owners, and the majority of a person's life should be spent in a house owned by themselves or their family.
this is really dependent of the type of housing. midlife is when you start needing to replace things and the downsides of the housing become way more apparent.
To give the example, brownstones became unpopular as it became apparent their designs resulted in high heating and AC bills since they were pretty drafty and poorly insulated. Only when they blossomed into being "historic" did people start valuing them enough to start fixing the problems and restoring them.
Sumo wrestlers kind of fascinate me in this regard. It's very rare to find a professional who is diabetic, even though they eat one big carb-heavy meal a day and are morbidly obese. IIRC, this is explained by their low visceral fat levels, which are driven by high adiponectin levels that are themselves driven by their intense workouts and consistent sleep habits. Their high subcutaneous fat proportion is actually thought to be protective. T2D catches up to them after they retire and stop exercising and sleeping well.
Their experience touches on 3 factors:
>Exercise volume (which, according to newer research, should be spread out over the course of the day)
>Diet (which should be focused not just on maintaining steady, low blood sugar levels, but on dietary factors that encourage subcutaneous rather than visceral fat deposition)
>Sleep quality
The last, I think, is extremely undervalued. My father developed T2 in his 30s, and it progressed consistently until he was diagnosed with sleep apnea and received treatment. Around the same time, his work schedule finally became more reasonable after a career of early mornings and late nights. This is someone who had to pass annual physical fitness exams for his job, cooked and ate relatively healthily, etc. I'm convinced it was the years of poor sleep that set him up for insulin resistance.
>Let's define the term "jerk" here as someone who is both intentionally, and obnoxiously aggressive. Aggressive in their enforcement of their own opinions and dismissive of others'. Obnoxious in the frequency of unnecessary negative interactions with them. Intentional in that they understand their behavior is aggressive, and choose not to adjust it.
Intent is impossible to prove (or so I've been told). He uses the implicit heuristic of, "They keep doing it." However, it (obnoxiously aggressive behavior) is in the eye of the beholder (or, often, in the appearance of the accused). What is "frequent" and "unnecessary"? By who's metric? What's the line between "opinionated" and "browbeater"? Does it shift depending on the identity of the individual? (Yes.)
>Ultimately, you know you're dealing with someone who is acting like a jerk by how you feel after interacting with them.
This criteria is just asking to be abused by people who hold prejudice. Some people are irrational or traumatized, and it's okay to sympathize with their take on an individual while also understanding that they're not being reasonable. Likewise, it's possible for a charismatic and energetic individual's behavior to be deleterious; coworkers don't necessarily walk away feeling overtly attacked, but their tendency to self-police to the bully's desire might be raised. Such jerks often also zero-in on "fair targets", leaving them as the only people to feel abused, while everyone else rationalises their treatment as deserved.
IME, the best way to root out actual jerks is to focus on people with power (by however mechanism, they are able to get people to do what they want them to do, more so than those people are able to get them to do things) who are quick (within one or two negative interactions) to blackball others (maintains a sh*t list, ghosts, verbally harasses, particularly in a way that isolates the target).
>Don't pay enough to live in a way that his family and community respects his contributions and sacrifices, if such pay even gives him room to contribute at all.
>Require him to get along with customers and coworkers that may be abusive and prejudiced, for no other reason than that the position is "supposed" to be servile and manned by a lesser person.
>[Require him] to maintain a complete physical and psychological affect of arbitrary "professionalism", servility, and agreeability, even while dealing with higher-status individuals who are not only allowed to be emotional, aggressive, and competitive, but who actually benefit from it in their career.
TFA spends a moment on what I think might be the crux: that the elite set rules they don't have to abide by. This is unfair, and poor young men recognize that it's unfair, and they're punished when they point out that things are unfair, because breaking the masquerade makes people uncomfortable, and nothing is more important than the comfort of high-status individuals.
As much stability in the family structure of poor folk may be breathing its last breath, noblesse oblige is long dead.
Something that intend to write on someday that I'll excerpt here: the phenomenon of "young men with nothing to do" is driven by a society-wide misallocation of capital that is itself driven by wealth inequality - specifically, old people and elites who command too large a proportion of wealth. This concentration of wealth in the hands of a cohort that is less diverse, and has less diverse interests, than the general public concentrates investment and bids up the prices of common necessities while leaving nascent demand for other goods and services to languish, often unborn. This diverse set of would-be goods and services are the ones that would have employed many of the "shiftless" young men described (myself included). Instead, there are no ventures available with which to employ our skills, or the things we could have become skillful in; we're forced to compete with elite practitioners in the fields rich old people care to invest in or purchase from.
As TFA details, this is actually to the advantage of the aforementioned cohort - whatever particular shape a family takes (and it can be successful with queer parents, or one parent, or grandparents), its instability is useful when fighting advocacy for labor, community investment, and such. The energy expended in keeping things together at home can't be redirected against elite interests. That's why they take exception, not because one-dad-one-mom-one-boy-one-girl is the only way to successfully do-the-family.
I'm curious if you could expand—what exactly are these fields that rich old people only care about?
Looking at a broad picture of the economy, I'm really not sure this tracks. Lots of capital is being invested into software and AI, for example, which doesn't seem like something "old people" necessarily care about or even understand. In addition, the marijuana industry is now larger than the airline industry.
It's not what they "only" care about, when it comes to investment; it's what they can make money on. Or, rather, what their investment advisers or fund managers think money can be made on, and all the more so if younger investors are shut out.
In software, anyone younger than their mid-30s is late (too young to invest in Apple when it was at lows, Facebook IPO, etc.). AI is just the latest rolling of the software hype trade, with cloud and mobile and crypto and SaaS and more before it. And investors don't have to understand marijuana to know that being at the ground floor of an industry that's high-demand, low-supply-by-regulatory-capture would be incresibly lucrative; they piled into ownership (not stock, which was a pump-and-dump for suckers) while indie growers were shut out.
But the crux of the issue isn't simply that they like these investments. It's that they'll cannibalize everything else to prop up their chosen champions. Ironically, the mass tech layoffs of the past couple years are an example, with hundreds of thousands of workers sacrificed to keep companies not just solvent, but "growing" on paper. The post-COVID "boom" that funded their positions was misallocated capital that could have gone towards jobs that were actually sustainable; those people would still be gainfully employed, rather than unemployed or underemployed as they are now.
This isn't much of a new phenomenon. There are many examples in European history at least where a monarch puts all of his time and energy into patronizing the arts, causing his kingdom to fall into ruin. Charles V's reign of Spain was plagued with uprisings of disgruntled peasants. Certainly worth looking into for your full write-up. "There is nothing new under the sun" is a great idiom to call upon to back up an argument.
Government should build housing and sell it at a modest loss. The markets are overheated and can do with some cooling. Too bad for anyone using property values as collateral for arcane financial schemes, should have managed your risk better.
world_sim> Twist: the bears are a couple, and interested in Mike. As a potential training protege, and maybe more. As luck would have it, all 3 end up at the same diner after a workout one day. The bears corner Mike in a booth.
<message_to_human>
Content warning: The following simulation contains mild sexual themes and suggestive content within an anthropomorphic animal setting. While I aim to keep things tasteful, please let me know if you would prefer I dial it back.
</message_to_human>
Mike sits in a corner booth at the local diner, hunched over a plate of salad and quietly munching away. His ears perk up at the jingle of the doorbell, and he looks up to see the two bearmen powerlifters from his gym striding in. They scan the room, and upon spotting Mike, their faces light up with unmistakable intent. The mouse's heart begins to race.
The bears make a beeline for Mike's booth and plop themselves down on either side of him, their massive furry frames squishing him in the middle. Up close, their musky bear scent fills Mike's nose.
"Hey there, little mouse. Fancy seeing you here," rumbles the darker bear, whom Mike has heard referred to as Gus around the gym. "We've seen you watching us work out. Like what you see?"
Mike stammers, equal parts intimidated and thrilled to be in such close proximity to his crushes. "Oh, um, I just... admire your strength and dedication."
The lighter bear, Gus's partner who goes by Burt if Mike recalls correctly, leans in close. His breath is hot against Mike's velvety mouse ears as he purrs, "We've been admiring you too. The way you move, so agile and graceful. We were thinking maybe you'd like to train with us sometime."
Gus runs a coarse bear paw up Mike's slender arm, feeling the wiry mouse muscles. "Stick with us and we'll get you swole in no time. Whaddya say, squeaker?"
Fantastic. Thank you for not lobotimizing it. I also used it to simulate a 3-person game development studio and a nutritionist who suggests unorthodox, little-known solutions to body composition problems, but I continue to hold that nothing tests an LLM's ability to suss out intent and maintain tonal and factual consistency while not being hamstrung by arbitrary content restrictions like asking it to write you gay furry erotica (without ever explicitly asking it for anything explicit).
>Build for $1 mil.
>"This building is worth $2 mil! Give me a loan with it as collateral."
>Use the $2 mil to invest in something else.
Rinse and repeat. This is also the reason why CRE valuations have hardly fallen despite WFH et al. Everyone involved understands that valuations cannot fall, because more than the value of the buildings in question hangs in the balance.