"Borrowing money" and "paying cash" are very different. Regardless, Blackstone didn't force anyone to sell anything. There was a willing buyer and a willing seller. Yes, some people have more money than others. Some use it wisely, and others, like the very connected Lehman Brothers, lose it all. I bet Blackstone purchased discounted real estate from companies that were also "connected" and extremely over leveraged when the economy tanked.
That's a common argument. But...."this time is different." There are for more workers/laborers competing for jobs than in the past. An American worker is also competing with someone from India. Capital is more mobile than ever before and can quickly be moved to locations with the lowest costs. Technology makes this possible. And it makes a few people incredibly wealthy, but the majority of people are going to have get used to lower living standards.
You totally missed the point. Totally. Lets say both you and I want to purchase the same property. You have to get a loan at 4%. Even though I "could" pay cash, I'd rather use "other people's money" and take out a loan with the Fed at less than 1%. You cannot complete with me. There is no free market here. I can practically corner the market for obtaining rental properties in an area.
I bet Blackstone purchased discounted real estate from companies that were also "connected" and extremely over leveraged when the economy tanked. The Fed bought billions of dollars worth of properties to bailout the banks. Blackrock then borrowed money from the Fed to purchase them from the Fed by taking advantage of ZIRP.
Who initially borrowed from the banks to purchase the real estate before they defaulted on the loans?
It has everything to do with the price of apples. Many of the foreclosed homes purchased by Blackstone were once owned by individuals. You state that only big connected corporations can take advantage of sweet deals the government offers, but that is wholly incorrect. The individuals that were able to buy homes, despite not financially qualifying for the home loans, took advantage of the ultimate sweet deal offered by Barney Frank and Christopher Dodd via the U.S. Govt. They were able to buy homes using adjustable rate mortgages and interest only mortgages thanks to government regulations requiring banks to loan to unqualified borrowers. Freddie Mac and Fannie Mae backed those loans. In fact, Freddie and Fannie had guaranteed over $2 trillion in home loans. When housing prices collapsed, Freddie and Fannie lost over $300 billion. The bailouts of those two institutions cost the taxpayers more than the combined bailouts of Bank of America, Citigroup, Wells Fargo, and J.P. Morgan combined. Frank and Dodd were the two individuals that we can pinpoint as being primarily responsible for economic collapse in late 2008. Despite warnings from auditors that reform of Freddie and Fannie were needed, Dodd (Chairman of the Senate Banking Committee) and Frank (Chairman of House Committee on Financial Services) dismissed every warning. When the Office of Federal Housing Enterprise Oversight (the regulator for Fannie and Freddie) issue repeated warnings about the pending collapse, Frank, Dodd and others in Congress attacked the OFHEO with threats of cutting its budget and replacing its leaders. So what did Dodd and Frank say after the collapse that they caused by forcing banks to make home loans to unqualified individuals? They wanted more government intervention. They also wanted to forgive the loans of those whose homes went into foreclosure. Why were the politicians so supportive of Freddie, Fannie and the entire corrupt system? First, it wasn't their money at risk, it was ours because we pay the taxes. Second, the politicians lined their pockets with campaign donations from Fannie and Freddie, and engaged in crony capitalism by getting their relatives jobs at various institutions that were benefitting from the government intervention. Who were the worst offenders behind the collapse? Barney Frank, Chris Dodd, Franklin Raines, Rahm Emmanuel, Barbara Boxer, Maxine Waters, Joe Baca, Nancy Pelosi, Bill Clinton and Charles Rangel. At one point in 2004, 76 Democrats sent a letter to President Bush, after Bush expressed concern about the riskiness of Fannie and Freddie, stating that "an exclusive focus on safety and soundness is likely to come, in practice, at the expense of affordable housing". So the answer is: The price of apples is greatly impacted by government intervention, and the apple market became so artificially inflated that it ultimately collapsed. Congratulations to those that were smart enough to wait to take advantage of yet another ridiculously stupid government foray into private markets. For the average taxpayer, too bad. Maybe you should quit voting for Democrats.
^^^THIS^^^ We just took advantage of an opportunity/ability for a return to Silverton, Colorado. LOVE IT up there. But all through those mountains is a testament to this very fact. Little mining towns all over the place ... thrived for a short time while silver was the good to get. Then dried-up faster than they were created. That was market economics. What's been happening the last 100 years/so is that Big Govt has over regulated to the point where now too many people, even otherwise smart people, think it's a right to have contraception provided for them. ... IDK about the automated trucks in 3-5 years. Too many variables operating in the same space as passenger vehicles ... same problem with the "drones" although not quite as complicated. Having just made the 850 mile trip from Silverton back to Texas ... I shudder to think there's not someone with the opportunity (if not ability) to THINK about what's happening around that rig.
But the changes are becoming harder and harder to adapt to now that more and more of them require extra non-earning or low-earning years spent while spending large sums of money to acquire larger peacock feathers. The fault is not in our stars, but in our selves. (Most of the) people complaining about stuff like this are also the ones causing it - which is true of most of the political or social complaints, honestly. Somebody else should always do the work and pay for whatever makes life the fairest but we/you/I should never be the one to sacrifice to make it happen. People want the music but aren't willing to pay the piper.
