Like Icarus, the housing market's rise and fall signal not only a shift in the availability of credit, but it will also impact county and statewide budgets. WashPo has a piece this morning about the $220 million budget shortfall in Fairfax County Virginia. Just in case you haven't been, and you probably haven't, Fairfax County is the richest county in America, with an average annual income of over $100,000. But dropping home prices in Fairfax are reducing the tax revenue for this county of over a million residents. Since I am life-long District resident, I'm having a schadenfreude moment right now because Fairfax is also home to many politicians, lobbyist and defense contractors, who suck on teat of the government yet fear to live inside the District of Columbia. (Side note: the NRA moved its national headquarters to Fairfax from DC in part due to safety concerns, even though their former DC office was located about 2 blocks from the White House.) With foreclosure rates rising in even the most affluent county in America, is this just a picture of what we can expect for years to come - budget shortfalls, lack of funding for schools, cops, infrastructure? My prediction is yes. If the richest county in America is hurting, it is only a matter of time before budget shortfalls and other related problems become apparent elsewhere.
Another bi-product of the increase of no money down home loans and the foreclosures that followed - commercial cultivators of marijuana have jumped on the opportunities. Before the credit "bubble" burst, pot growers used so called "no doc" loans to obtain property without showing income, and thereby buying up property for grow operations. After the bubble burst, or the credit market was cached, pot growers took advantage of neighborhoods with multiple empty houses on each block to set up grow operations as squatters. Besides the observation that the drug trade is perhaps the only truly free market in the US economy, don't forget to bring a towel.
Ironically, this brings me to a recent report on the declining use of illicit drugs by America's teens. While numbers are down in usage of drugs like pot, cocaine, meth, and heroin, there has been a rise in the reported use of prescription drugs and ecstasy. So I guess America is winning the war on drugs? Or is it more that drugs with corporate sponsorship are proliferating? Anyone remember how the makers of Oxycontin plead guilty to felony fraud and purposeful mis-branding of its highly addictive product? Why bother chasing the dragon down a sketchy alley when you can enjoy synthetic heroin in the comfort of your own home, no needles required. In a sense, I think prescription drugs are more dangerous than illicit drugs; their proliferation is legal, big Pharma and doctors alike reap a financial windfall from their proliferation, and prescription drugs are of standardized quality and dosage, thus they have the appearance of safety....I'll let Rudy take up the rebuttal.
(Author's disclosure: as I write this I am whacked out on Aleve Cold Sinus, caffeine, Claratin, and Vitamin C pills and some Green NyQuil - it is the cold/flu/holiday season.)
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