Brewster Kahle's Blog

Jim Zarra of a church in New Jersey gave me a tour of 2 houses that they own and run that are in many ways, debt-free and public benefit.    They also have an 11 unit addition to their church that is also part of this program.   Their program leverages government money to get it going with no money upfront and then, in 20 years in one case, and 30 years in another, would be theirs free-and-clear making it a possible way to create permanently debt-free housing.

As I understand it, this is how it works:

They buy a house and fix it up using money from the county and then they repay the “mortgage” back to the county.     But this is a special mortgage, in that they do not have to pay anything while they use it for the purpose the county designated.     In other words, the mortgage payment is waived on the months they house people with the right issues they are trying to help.   In this case the tenants are homeless veterans, or those with mental health issues, or those recently homeless.

So the 501c(3) non-profit organization set up by the church buys properties and gets a one-time payment from the county to pay for the purchase price and the renovation.  In one case this was $100,000 purchase price and $40,000 for renovations to bring a 1200 square foot house up to snuff.   I toured this and one other and they look very nice.    Five formerlessly homeless guys live in one (2 in a room) and 3 young women live in the other (one in a bedroom).

Because the houses have no mortgage payment, they cost only 25% to 40% of what other rentals houses cost to operate.   Since they have been recently renovated, the number is actually much less.    They do pay property tax and insurance.

Further, these individuals have rent vouchers that are meant to pay for market based rent.    This can be $1100 or $560 in their cases.    This assumes that the landlord has more costs than a regular lower middle-class unit because of the special needs of these tenants.    But it still comes to much more than the costs of running these houses.  This means they are starting to build up a reserve that is allowing them to purchase more houses.

Therefore the county is paying for the property and paying market rents.

At the end of the mortgage period the houses are the non-profit’s free and clear.   They can sell them or do whatever.    Of course, my interest is in making permanently debt-free housing, but this is not required in any way from the county’s perspective.    Seems like a very good deal for the church, and I commend their expansion in this area.

Is this how other housing projects work?    Does anyone know?

Iain and Gillian Boales in front of the new building on Fleet Street

Iain and Gillian Boal showed me their building before it is renovated that will be an archive and center for conversation about dissent, anarchy, and social movements.    It is great that it is located right across the street from Goldman Sachs (which does not bear any signage).    The first floor tenant is a pawnbroker– which gives an further idea of the current trades on that street.

Mayday Rooms “is a safe house for vulnerable archives and historical material linked to social movements, experimental culture, and marginalized figures and groups.”

They are working to have it last a long time because it preserves the alternative voices that have been forced out.

May the Anarchive live and educate forever!

Mayday Rooms building in Londond

Iain and Gillian Boales in front of the new building on Fleet Street

Iain and Gillian Boal showed me their building before it is renovated that will be an archive and center for conversation about dissent, anarchy, and social movements.    It is great that it is located right across the street from Goldman Sachs (which does not bear any signage).    The first floor tenant is a pawnbroker– which gives an further idea of the current trades on that street.

Mayday Rooms “is a safe house for vulnerable archives and historical material linked to social movements, experimental culture, and marginalized figures and groups.”

They are working to have it last a long time because it preserves the alternative voices that have been forced out.

May the Anarchive live and educate forever!

Mayday Rooms building in Londond

Proud father time.

Caslon at the polling place in the Presidio. No lines, paper record, nice people. All good.

Caslon Voting for the First Time

My friend Matt Ostrowski sent me a link to an article written in 2001 by Michael Hudson.  Not an easy read, but interesting because it was written in 2001, therefore the before the housing bubble popped in 2007.    It shows some of the favorable tax treatment afforded to the real estate industry, and the encouragement to trade properties to leverage repeated depreciation cycles to maximize this tax treatment.   I have wondered why properties never get past their 30 year mortgages, and this helps explain why.

Further this paper showed how the bubble could have been made more obvious except that the Federal Reserve stopped reporting some key statistics in 1994:

“But nationwide totals [of land and building values] were no longer compiled [by the Federal Reserve]. … Instead of making better land estimates, the Fed has dropped what had become a political and statistical hot potato. 1994 is the last year for which it has estimated economy-wide land and building values.”

But not reporting this is important because it fueled leverage buyouts (now called Private Equity) deals:

“Since the late 1940s ‘concealed value’ in the form of properties carried at outdated book values reflecting low acquisition prices was a major factor behind corporate raiding, mergers and acquisitions. Aggressive firms employed accountants to pour over the Stock Exchange’s 10K reports searching for such hidden values.”

This also shows how certain appraisal approaches help avoid income taxes through depreciating buildings over and over again:

“These fiscal considerations help to explain why it has been so hard to get Washington to produce national land value statistics.”

This lead investors to sell and resell properties quickly.

Combined with low cost credit leads to price appreciation and bubbles ensue.

Interestingly, nothing in this analysis has changed, so all these incentives still exist and the lack of public statistics and lack of political will to change seem to imply we are in much the same position we were before this last run-up popped.

This makes me more encouraged to find a way to create stable housing outside by changing some of the rules, in our case non-profit and debt-free housing.

Patricia Watts’ Mother at her Credit Union

A friend, Patricia Watts, sent this picture of her mother because she knew we are setting up a Credit Union. Helen M. Watts (1922-2012) managed a credit union in Phoenix, Arizona for 15 years (1961-1976). She was a pioneer in the movement and was a big inspiration to her daughter.

I love the quotation from Alphonse DesJardins, the instigator for North American credit unions.

Edge of the dust storm shows that it was a bright day.

Driving across the country with my son (great fun), in Arizona the bright sun was blotted out with a red cloud. Dust.

The person at the Agricultural inspection station at the California boarder said it happened every so often.  It is just from the desert not the agricultural land.     But I dont know…  wild.

I recently read a wonderful book about the economic and political circumstances of the Dust Bowl in the 1930's–  it is the same overstomping application of capitalism that got the country into the stock problem.    I do not think much has changed since then, and we had some recurrance last year of dust storms.

Dust Storm in Arizona blotted out the bright sun

I saw Hugh Sinclair speak and just finished his fabulous book:  Confessions of a Microfinance Heretic: How Microlending Lost Its Way and Betrayed the Poor .   It shows how Kiva, Citi, and a famous VC, Vinod Khosla, among many others have made high returns off of the poorest women in the world with loans with interest rates that are often over 100% per year.

I am now in Georgia with my inlaws and was stunned to see the number of “microfinance” institutions here.   I would say over 15 are in this 1 mile strip occupying the most expensive roadside real-estate.  These are financial services organizations that “serve” the working people of Rome Georgia.

You can take a your own stroll with Google Street viewto see all the signs.   But here are some:

Title Pawn, or Title Loan places take your car, and lease it back to you. A high interest loan secured by your car. Banks are paying about 0% to the fed for money, the poor are paying much more.

Weekly payments are the same as how the microfinance places work in developing countries. The Nobel Peace prize winning approach to poverty eradication has arrived in the USA. Like what you see?

Title Pawn your JetSki.

Smiling beautiful women.

Car Showrooms here are surrounded by barbed wire.

Serving the latin american population, for a fee.

“Buy Here, Pay Here” means you go back weekly to make your payments rather than dealing with a bank.

Renting and Leasing has replaced owning. This place will rent a computer.

No need to go to a bank– used car lots will make the loan for you.

Car sales locations now look like places your car tow lots. Maybe they are car tow lots.

I hear there is a TV show called “Pawn Stars”. Here it a store named the same thing.

Pawn shop? They say they sell computers.

By “Finance”, I think they mean they are not a regulated bank.

Jail Bond places are a rip-off: if you want to get out on bail and can not afford the full bail amount, you pay 10% to one of these places and do not get your money back. Judges price bail so the middle class can just afford this amount.

Title Pawn is when you surrender your car title and then you lease back the car. These are all over the south.

Chinese Coins (round with square hole) Made into a Doll

Up until the mid-20th century, the villagers of Bali mostly did not use money, or at least not for anything real.   They used rice.   Rice has the great characteristics that hording does not work (it rots), you can use it to plant more rice, and you can eat it.     This changed with the foreigner-imposed “green revolution” which is another story, and a sad story.

The Chinese hundreds of years ago tried to introduce money into Bali, and the coins are all over Bali, but they are used for decoration.  The make dolls out of them, or decorate offerings, make jewelry out of them, to dress a

Offering which included a coin

pig for a cremation (see photos below).    But money did not become central to their interactions with others.

For a thousand years, money for the Balinese was a garnish.    I think they are on to something.

Coinage is good for trading with people you don’t trust.  Herodotus writes about the first time he finds coins used (they were not used inside ancient Greece).   They were used in border towns between the Greek and Persian peoples– he wrote that these coins did not lead to good things (great write-up in Buchan’s book Frozen Desire: the Meaning of Money).

Cremation offering with coin attached to the ear

Coinage was often introduced in order to supply provisions to distant professional armies in the 6thC BC, as reported by Graeber in his fabulous book Debt: the first 5000 years.  This was an ingenious system.  If you were a King and your people mostly lived on giving credit to each other, then if you soldiers arrived in a village, they were not likely to get credit because they were transient and possibly untrustable.  To keep your soldiers from stealing what they wanted they came up with a system.   They gave the soldiers

Cremation offering close-up

tokens with the kings face them, and then demanded these tokens back from merchants as taxes.     So the Merchants had to get these tokens, the way to get them was to sell things to the soldiers.    This historically corresponds with currency creation being synchronous with the rise of professional armies in 600BC and the surge in the issuance of money with the rise of war debts.

But now bank credit and coinage are firmly linked.   Credit does not have the flexibility it did when it was between family members or community members– it now mostly issued by banks and enforced by police or armies.

What would it mean to treat “Money as a Garnish”?

Wall decoration incorporating coins

It would mean that the essentials of life would not go through money: housing, food, education, health.    Fun and non-essential things could still go through money– travel, movies from big studios, commercial rock concerts, trinkets from China.      But your essentials would not depend on your continuously winning the money game– it would be secure and reliable.   It would depend on community, friends, and family.    There might be credit systems set up between people, as all social relationships fundamentally are,

Coin left on temple step

but they could or might now be denominated in the coin of the realm.   Having ones house depend on always having a money flow means being homeless if the money is stopped for some reason.   This is scarey.

Money as a garnish would mean all money would be “fun money”, or “pin money”.    Our livelihood would be secure.

Money as a garnish.   Maybe the Balinese were onto something.

Doll made with mask and coins