Sometimes I read things in the press that just make me shake my head in despair. This piece is a prime example.

“Two brothers, Antonio and Pedro, and Antonio’s wife, Isabel, bought a three-bedroom home in the East Oakland flatlands five years ago. They saved up a 3 percent down payment from the brothers’ jobs at a vegetable market and Isabel’s part-time work cleaning houses….

…The house is now worth $425,000, $100,000 more than they owe on the mortgage.

Now the Sanchezes want to follow the same trajectory as other first-time homeowners, trading up to a bigger house near their relatives in Woodland (Yolo County), in a better neighborhood with good schools for Antonio and Isabel’s two young children.

But the chances that they can sell their home, which has been on the market for four weeks, are slim.

“Luckily, they have equity,” said their Realtor, Mary Dresser of Prudential California Realty. “But if they can’t sell, they don’t really have any equity, or at least they can’t gain access to their equity….

Even cutting the price wouldn’t help, Dresser said, unless it were a “fire-sale” slashing of $100,000. “Then they’d have no house and no money,” she said.”

Get a clue, Mary. If cutting the price $100K would get the house sold, then that is what it is worth. These folks may have had “equity” at some point. But they don’t have it any more. I know, they are entitled to a $100,000 profit, at someone else’s expense, so they can “move up the property ladder”. Well heck, they’re hardworking after all, that means they get a freebie, right? Hello. That game is over, we ran out of “someone elses” when the last batch of “someone elses” couldn’t pay their debts. Those big profits in real estate came at the expense of people who shackled themselves to huge debt burdens, that even if affordable will keep them house-poor for a very long time and in many cases drive them into bankruptcy. Yes, they did so willingly, but people need to realise that trading houses doesn’t add any value to the economy, your profit is someone else’s expense.

When people expect a house to pay for their retirement, or their kids’ college education, or whatever, they need to understand that means someone is working to pay that money.

The Ponzi game of inflating the prices of houses with ever-expanding mortgage debt turned out to have a limit. The next stage of the game is already underway as the debt industry implodes. The really smug cities, like New York and San Francisco, that are the money (debt) centers are particularly vulnerable because they have had it so good for so long.