Do You Live In An Iceberg?

Ed Raymond

A New Listing In The Real Estate Business

Because of the “new” world economy there’s an increasing gaggle of golden geese millionaires and billionaires building monster homes on exclusive streets in cities and country estates around the world. Many want to continue to live in London, Europe’s financial center. They want to live near other ultra-rich in or near Kensington Palace Gardens, the most expensive property in all of Britain. But there’s a catch. There are restrictions on building height but none on basement depth. Building plans of multimillionaires have coined a new real estate term – iceberg basements. That is – only 10% of the homes on the street may end up above ground because of the current mega-basement craze. The rich install gyms, movie theaters, climbing walls, bowling alleys, ballrooms, and huge man caves on various basement levels. A wealthy hedge fund manager has built a four-story basement with a 16-ft. deep swimming pool on one level. The chairman of the Kensington Society, the residents association for the area, has received plans from a billionaire who wishes to remain in the area for a five-level basement which would house a car museum, a tennis court, an elevator, a swimming pool—and a rotating ferris wheel apparatus to bring vehicles in and out. Digging deep not only enrages neighbors on each side, but it gets to be complicated construction because underground trains run deep through central London. The borough of Westminster close by Kensington has the same building restrictions and has approved double the permits for mega-basements (or icebergs) between 2010 and 2014. Some of these multi-level basements take years to construct, so neighbors object to noise, excavation piles, and storage of construction materials above ground. It’s getting tougher to be a billionaire in London these days. Some areas have passed legislation limiting basements to one-level.
A new real estate term came into being following the 2007 recession and the housing boom and bust. While Wall Street bankers were selling subprime mortgages mixed in with prime ones out the back door to suckers around the world as soon as they were registered inside the front door, suddenly the value of millions of homes in this country tanked and foreclosures grabbed many of them. If homes were valued less than what their mortgage was, they were said to be “under water.” If homes were still valued more than what they were mortgaged for, they were said to be “above water.”  I imagine there are a few iceberg basement homes around the world that are under water because billionaires do go broke. Just think Trump.

The Iceberg Is Becoming The Symbol Of The Last One Hundred Years

When the unsinkable HMS Titanic with its load of 20th Century millionaires and billionaires hit a North Atlantic iceberg in 1912 on its first voyage, damage below the waterline soon sent it 8,000 feet under water. The discussions about climate change began to be noted when our world became a little warmer, and became prophetic when the Iceberg B-15 broke off from the Ross Ice Shelf in Antarctica in March of 2000. It is still the world’s largest recorded iceberg, measuring 183 miles long and 23 miles wide with a surface area of 4,200 square miles when it broke loose. Because icebergs are made of fresh water they float in salt water, with only 10% visible above water. So before it broke up into smaller bergs as it started to hit warmer oceans, B-15 was probably over 40,000 square miles under water. In 2006 a small broken-off piece of B-15 was spotted off the coast of New Zealand.  The section above water was 121 feet tall and the surface area was 11 square miles. Just a tiny part of the mother berg, B-15.
   Perhaps the iceberg is the best symbol of what is happening economically to our now oligarchal society with 10% of our population above water and 90% under water. About 33 million Americans, the above water top Ten Percent, are living the life of Riley, of Donald Trump, of the Hamptons, of Fifth Avenue, of Larry Ellison, and the Walton sons and daughters. About 300 million Americans, the under water 90 Percent, are living the life of the homeless jungles, Appalachia, Harlem, 16th Street in Washington, D.C., the declining suburbs, the Mississippi Delta, Southside Chicago, and Northside Minneapolis. According to a December Pew Research Center report: “Fully 49% of U.S. aggregate income went to upper-income (above water) households in 2014, up from 29% in 1970. The share accruing to middle-income (under water) households was 43%, down substantially from 62% in 1970.”

American Oligarchs Have Created Mega Icebergs By Putting Democracy On Cash Layby

Income inequality is probably affecting our Generation Y, the millennials born between 1980 and the mid-90’s, more than Y’s in other countries, but income inequality is a world-wide economic problem. An investigation by the English newspaper The Guardian (which covers the U.S. better than the New York Times or the Washington Post now) reveals: (1) Young adults around the world are facing a perfect storm of debt, joblessness, demographics, globalization of businesses, and rising home prices; (2) Incomes of millennials are so depressed in the developed world it is resulting in unprecedented inequality between generations; (3) Young adults are now earning as much as 20% below the national average of wages 30 years ago while pensioners have seen their incomes rise; (4) Young adult disposable incomes are the same as they were 30 years ago; (5) In the U.S. people under 30 are poorer than retired people (student debt has now reached $1.3 trillion); (6) Poverty rates are rising among young adults while they are falling among pensioners; (7) An increasing number of people think their children will be worse off financially than their parents; (8) Since the downturn of 2007 and 2013 under-30s have less income than people aged 65-79; (9) Young people in England no longer believe they can own homes and property in their democracy, and that feeling is now sweeping through  U.S. millennials who cannot afford to buy a car and rent an apartment because of paying off student debt; and (10) Thirty-somethings in Italy, Spain, and the U.S. are increasingly living with their parents.

An Age When The Falcon Cannot Hear The Falconer

William Butler Yeats wrote his poem “The Second Coming” describing conditions before and after World War I. He was referring to the bloody mess of the Russian Revolution and the murderous battles of World War I, but it talks to what is happening today, too:
“Turning and turning in the widening gyre (circle) the falcon cannot hear the falconer,
Things fall apart; the centre cannot hold, mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed , and everywhere the ceremony of innocence is drowned;
The best lack all conviction, while the worst are full of passionate intensity.”
This is only the first stanza but it shows that the delicate balances in the world have been upset because the “falcon cannot hear the falconer.”  Falcons have been used by hunters for centuries because they are very intelligent birds that train easily and love to hunt, utilizing their speed and claws to catch prey. But when the falcon cannot hear the commands of the falconer “things fall apart; the centre cannot hold.” Because of the absolute idiocy of the U.S. Supreme Court equating speech and money, The president, the Congress, and even the courts have been placed on the auction block and have been bid on and hammered to do the wishes of above water oligarchs instead of under water people. Congress now is no better than a House of Anarchy, following the commands of very visible ones above water.
The world’s top 20 richest billionaires had a relatively bad year in 2015 because their combined wealth fell from $899 billion to $827 billion from a slump in global financial markets. Then again, they have so much, maybe they didn’t miss a few billion. Carlos Slim, the Mexican telecom guy, did lose $27.1 billion last year. That’s a real bundle at about $74 million a day. These are tough days, Carlos.  Bill Gates at $75 billion is still the richest man in the world but he did drop $4.2 billion last year. Facebook boss Mark Zuckerberg was the big gainer among the richies by adding $11.2 billion to his check book in 2015. Alice Walton of WalMart fame is among the top 20 richest in the world. I wonder if she feels any shame that the American taxpayer puts up about $1 million for the workers in each WalMart store in the country so they can have food stamps and a minimum health care plan. Most likely not. It’s tough to see from the top of the iceberg to the huge bottom of the berg.

What Do Billionaires Value? What Do They Really Care About?

I would imagine that many of the 1,810 billionaires in the world depend upon the infrastructure of countries, the roads, bridges, railroads, airports, canals, rivers, seaports, to make their billions. With thousands of trucks delivering goods to over 4,000 WalMarts in the U.S., one might think that Alice Walton and her brothers who are worth a total of over $160 billion would be interested in maintaining the roads and bridges their trucks wear out as they deliver goods priced a few cents an item below their competitors. We have 607,380 bridges in this country that average 42 years of age. One of nine bridges has been declared structurally deficient and more than 30% of existing bridges have exceeded their design life. In order to have safe bridges by 2028 we must spend $20.5 billion a year, but we are scheduled to spend only $12.5 billion. I haven’t heard any of the Waltons pledge to pay their fair share of taxes. Maybe it’s difficult when all of your U.S. profits are listed in the Cayman Islands, the Bahamas, or other tax havens to escape U.S. taxes.
Beijing, China has replaced New York City as the billionaire capital of the world with 100 certified as opposed to New York City with only 95. The U.S. does remain the home of the most billionaires at 540, with Europe second at 489. We are now saddled with 1810 billionaires in the world. Chinese billionaires have another hurdle to jump. Because of the one-child policy of over 35 years in China, many parents aborted female fetuses. According to demographics China will have 24 million “surplus” males aged 20-45 by 2020, so looking for a bride is very competitive----and very expensive. One Chinese billionaire tried to induce a female to wed by arranging a fleet of luxury cars into the shape of a heart which would be hers if she accepted his proposal. Another proposed his love by arranging 1,001 hot dogs into a declaration of lasting love. A billionaire techie offered 99 iPhones to his beloved if she accepted his proposal. Bride prices in China do get a little weird. The bountiful billionaire who formed a heart with luxury cars has a lot to choose from. Since the number of ultra-rich in the world is increasing each month, car makers are trying to meet the demand for Bugattis, Lamborghinis, Ferraris, and Maseratis. These ain’t Fords, Chevys, or Dodges, folks.  The Bugatti Chiron, as an example, has 1,500 horsepower, a maximum speed of 261 miles per hour, and goes to 60 mph in 2.5 seconds. It starts for $2.6 million stripped.  Bugatti has already sold about 200 of them. Times for billionaires must be really tough.
In New York City, where height is permitted and appreciated instead of banned, the ultra-rich buy $100 million apartments in mega skyscrapers instead of building iceberg basements. The icebergs are just reversed from London, shading the 75,000 homeless living on the dark New York City streets.