#The Independent Group

[mostlysignssomeportents]

How finfluencers destroyed the housing and lives of thousands of people

For the rest of May, my bestselling solarpunk utopian novel THE LOST CAUSE (2023) is available as a $2.99, DRM-free ebook!

The crash of 2008 imparted many lessons to those of us who were only dimly aware of finance, especially the problems of complexity as a way of disguising fraud and recklessness. That was really the first lesson of 2008: "financial engineering" is mostly a way of obscuring crime behind a screen of technical jargon.

This is a vital principle to keep in mind, because obscenely well-resourced "financial engineers" are on a tireless, perennial search for opportunities to disguise fraud as innovation. As Riley Quinn says, "Any time you hear 'fintech,' substitute 'unlicensed bank'":

https://pluralistic.net/2023/05/01/usury/#tech-exceptionalism

But there's another important lesson to learn from the 2008 disaster, a lesson that's as old as the South Seas Bubble: "leverage" (that is, debt) is a force multiplier for fraud. Easy credit for financial speculation turns local scams into regional crime waves; it turns regional crime into national crises; it turns national crises into destabilizing global meltdowns.

When financial speculators have easy access to credit, they "lever up" their wagers. A speculator buys your house and uses it for collateral for a loan to buy another house, then they make a bet using that house as collateral and buy a third house, and so on. This is an obviously terrible practice and lenders who extend credit on this basis end up riddling the real economy with rot – a single default in the chain can ripple up and down it and take down a whole neighborhood, town or city. Any time you see this behavior in debt markets, you should batten your hatches for the coming collapse. Unsurprisingly, this is very common in crypto speculation, where it's obscured behind the bland, unpronounceable euphemism of "re-hypothecation":

https://www.coindesk.com/consensus-magazine/2023/05/10/rehypothecation-may-be-common-in-traditional-finance-but-it-will-never-work-with-bitcoin/

Loose credit markets often originate with central banks. The dogma that holds that the only role the government has to play in tuning the economy is in setting interest rates at the Fed means the answer to a cooling economy is cranking down the prime rate, meaning that everyone earns less money on their savings and are therefore incentivized to go and risk their retirement playing at Wall Street's casino.

The "zero interest rate policy" shows what happens when this tactic is carried out for long enough. When the economy is built upon mountains of low-interest debt, when every business, every stick of physical plant, every car and every home is leveraged to the brim and cross-collateralized with one another, central bankers have to keep interest rates low. Raising them, even a little, could trigger waves of defaults and blow up the whole economy.

Holding interest rates at zero – or even flipping them to negative, so that your savings lose value every day you refuse to flush them into the finance casino – results in still more reckless betting, and that results in even more risk, which makes it even harder to put interest rates back up again.

This is a morally and economically complicated phenomenon. On the one hand, when the government provides risk-free bonds to investors (that is, when the Fed rate is over 0%), they're providing "universal basic income for people with money." If you have money, you can park it in T-Bills (Treasury bonds) and the US government will give you more money:

https://realprogressives.org/mmp-blog-34-responses/

On the other hand, while T-Bills exist and are foundational to the borrowing picture for speculators, ZIRP creates free debt for people with money – it allows for ever-greater, ever-deadlier forms of leverage, with ever-worsening consequences for turning off the tap. As 2008 forcibly reminded us, the vast mountains of complex derivatives and other forms of exotic debt only seems like an abstraction. In reality, these exotic financial instruments are directly tethered to real things in the real economy, and when the faery gold disappears, it takes down your home, your job, your community center, your schools, and your whole country's access to cancer medication:

https://www.theguardian.com/world/2012/jun/08/greek-drug-shortage-worsens

Being a billionaire automatically lowers your IQ by 30 points, as you are insulated from the consequences of your follies, lapses, prejudices and superstitions. As @pixelpusher220@dmv.community says, Elon Musk is what Howard Hughes would have turned into if he hadn't been a recluse:

https://mamot.fr/@pixelpusher220@dmv.community/112457199729198644

The same goes for financiers during periods of loose credit. Loose Fed money created an "everything bubble" that saw the prices of every asset explode, from housing to stocks, from wine to baseball cards. When every bet pays off, you win the game by betting on everything:

https://en.wikipedia.org/wiki/Everything_bubble

That meant that the ZIRPocene was an era in which ever-stupider people were given ever-larger sums of money to gamble with. This was the golden age of the "finfluencer" – a Tiktok dolt with a surefire way for you to get rich by making reckless bets that endanger the livelihoods, homes and wellbeing of your neighbors.

Finfluencers are dolts, but they're also dangerous. Writing for The American Prospect, the always-amazing Maureen Tkacik describes how a small clutch of passive-income-brainworm gurus created a financial weapon of mass destruction, buying swathes of apartment buildings and then destroying them, ruining the lives of their tenants, and their investors:

https://prospect.org/infrastructure/housing/2024-05-22-hell-underwater-landlord/

Tcacik's main characters are Matt Picheny, Brent Ritchie and Koteswar “Jay” Gajavelli, who ran a scheme to flip apartment buildings, primarily in Houston, America's fastest growing metro, which also boasts some of America's weakest protections for tenants. These finance bros worked through Gajavelli's company Applesway Investment Group, which levered up his investors' money with massive loans from Arbor Realty Trust, who also originated loans to many other speculators and flippers.

For investors, the scheme was a classic heads-I-win/tails-you-lose: Gajavelli paid himself a percentage of the price of every building he bought, a percentage of monthly rental income, and a percentage of the resale price. This is typical of the "syndicating" sector, which raised $111 billion on this basis:

https://www.wsj.com/articles/a-housing-bust-comes-for-thousands-of-small-time-investors-3934beb3

Gajavelli and co bought up whole swathes of Houston and other cities, apartment blocks both modest and luxurious, including buildings that had already been looted by previous speculators. As interest rates crept up and the payments for the adjustable-rate loans supporting these investments exploded, Gajavell's Applesway and its subsidiary LLCs started to stiff their suppliers. Garbage collection dwindled, then ceased. Water outages became common – first weekly, then daily. Community rooms and pools shuttered. Lawns grew to waist-high gardens of weeds, fouled with mounds of fossil dogshit. Crime ran rampant, including murders. Buildings filled with rats and bedbugs. Ceilings caved in. Toilets backed up. Hallways filled with raw sewage:

https://pluralistic.net/timberridge

Meanwhile, the value of these buildings was plummeting, and not just because of their terrible condition – the whole market was cooling off, in part thanks to those same interest-rate hikes. Because the loans were daisy-chained, problems with a single building threatened every building in the portfolio – and there were problems with a lot more than one building.

This ruination wasn't limited to Gajavelli's holdings. Arbor lent to multiple finfluencer grifters, providing the leverage for every Tiktok dolt to ruin a neighborhood of their choosing. Arbor's founder, the "flamboyant" Ivan Kaufman, is associated with a long list of bizarre pop-culture and financial freak incidents. These have somehow eclipsed his scandals, involving – you guessed it – buying up apartment buildings and turning them into dangerous slums. Two of his buildings in Hyattsville, MD accumulated 2,162 violations in less than three years.

Arbor graduated from owning slums to creating them, lending out money to grifters via a "crowdfunding" platform that rooked retail investors into the scam, taking advantage of Obama-era deregulation of "qualified investor" restrictions to sucker unsophisticated savers into handing over money that was funneled to dolts like Gajavelli. Arbor ran the loosest book in town, originating mortgages that wouldn't pass the (relatively lax) criteria of Fannie Mae and Freddie Mac. This created an ever-enlarging pool of apartments run by dolts, without the benefit of federal insurance. As one short-seller's report on Arbor put it, they were the origin of an epidemic of "Slumlord Millionaires":

https://viceroyresearch.org/wp-content/uploads/2023/11/Arbor-Slumlord-Millionaires-Jan-8-2023.pdf

The private equity grift is hard to understand from the outside, because it appears that a bunch of sober-sided, responsible institutions lose out big when PE firms default on their loans. But the story of the Slumlord Millionaires shows how such a scam could be durable over such long timescales: remember that the "syndicating" sector pays itself giant amounts of money whether it wins or loses. The consider that they finance this with investor capital from "crowdfunding" platforms that rope in naive investors. The owners of these crowdfunding platforms are conduits for the money to make the loans to make the bets – but it's not their money. Quite the contrary: they get a fee on every loan they originate, and a share of the interest payments, but they're not on the hook for loans that default. Heads they win, tails we lose.

In other words, these crooks are intermediaries – they're platforms. When you're on the customer side of the platform, it's easy to think that your misery benefits the sellers on the platform's other side. For example, it's easy to believe that as your Facebook feed becomes enshittified with ads, that advertisers are the beneficiaries of this enshittification.

But the reason you're seeing so many ads in your feed is that Facebook is also ripping off advertisers: charging them more, spending less to police ad-fraud, being sloppier with ad-targeting. If you're not paying for the product, you're the product. But if you are paying for the product? You're still the product:

https://pluralistic.net/2021/01/04/how-to-truth/#adfraud

In the same way: the private equity slumlord who raises your rent, loads up on junk fees, and lets your building disintegrate into a crime-riddled, sewage-tainted, rat-infested literal pile of garbage is absolutely fucking you over. But they're also fucking over their investors. They didn't buy the building with their own money, so they're not on the hook when it's condemned or when there's a forced sale. They got a share of the initial sale price, they get a percentage of your rental payments, so any upside they miss out on from a successful sale is just a little extra they're not getting. If they squeeze you hard enough, they can probably make up the difference.

The fact that this criminal playbook has wormed its way into every corner of the housing market makes it especially urgent and visible. Housing – shelter – is a human right, and no person can thrive without a stable home. The conversion of housing, from human right to speculative asset, has been a catastrophe:

https://pluralistic.net/2021/06/06/the-rents-too-damned-high/

Of course, that's not the only "asset class" that has been enshittified by private equity looters. They love any kind of business that you must patronize. Capitalists hate capitalism, so they love a captive audience, which is why PE took over your local nursing home and murdered your gran:

https://pluralistic.net/2021/02/23/acceptable-losses/#disposable-olds

Homes are the last asset of the middle class, and the grifter class know it, so they're coming for your house. Willie Sutton robbed banks because "that's where the money is" and We Buy Ugly Houses defrauds your parents out of their family home because that's where their money is:

https://pluralistic.net/2023/05/11/ugly-houses-ugly-truth/#homevestor

The plague of housing speculation isn't a US-only phenomenon. We have allies in Spain who are fighting our Wall Street landlords:

https://pluralistic.net/2021/11/24/no-puedo-pagar-no-pagara/#fuckin-aardvarks

Also in Berlin:

https://pluralistic.net/2021/08/16/die-miete-ist-zu-hoch/#assets-v-human-rights

The fight for decent housing is the fight for a decent world. That's why unions have joined the fight for better, de-financialized housing. When a union member spends two hours commuting every day from a black-mold-filled apartment that costs 50% of their paycheck, they suffer just as surely as if their boss cut their wage:

https://pluralistic.net/2023/12/13/i-want-a-roof-over-my-head/#and-bread-on-the-table

The solutions to our housing crises aren't all that complicated – they just run counter to the interests of speculators and the ruling class. Rent control, which neoliberal economists have long dismissed as an impossible, inevitable disaster, actually works very well:

https://pluralistic.net/2023/05/16/mortgages-are-rent-control/#housing-is-a-human-right-not-an-asset

As does public housing:

https://jacobin.com/2023/10/red-vienna-public-affordable-housing-homelessness-matthew-yglesias

There are ways to have a decent home and a decent life without being burdened with debt, and without being a pawn in someone else's highly leveraged casino bet.

If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2024/05/22/koteswar-jay-gajavelli/#if-you-ever-go-to-houston

Image: Boy G/Google Maps (modified) https://pluralistic.net/timberridge

[romantichopelessly]

I cannot believe Maggie Stiefvater invented this insane character of an old English historian turned assassin with a serial killer brother and a milf he’s in love with who exemplifies themes of detachment and coming back into living your life for yourself and violence and being a tool to the narrative and then DIDNT include him in her trilogy about ‘what happens after the prophecies’ and what family means and finding something to do with yourself after you’ve learned who you are and generational violence. but instead she made another character who makes herself a tool for a cause she doesn’t believe in because she’s trying to escape her serial killer brother. Okay. Yeah. That’s Fine.

[msfcatlover]

I just imagined what happens when my time traveling Robins realize they might all have been sent back, and are like, “OH SHIT, DAMIAN!”

(Cut to: The League of Assassins, actively on fire & at war with itself, less than one third of the forces it had remaining.)

Steph: *whistles*

Jason: “Damn. I’m impressed.”

Tim: “This saves me so much time & effort, honestly, you guys have no idea how stressed I was about having to take down two deeply ingrained, centuries old murder cults in a little over 10yrs.”

Dick: “DAMIAN!”

[sapphicherri]

me: omg why am i single

also me: avoidant attachment style, hates PDA, hates using pet names in front of people, horrible texter, physical touch avoider, severely independent and prefers doing almost everything alone to my own detriment

[annabelle--cane]

honestly it's so much easier for me to submit big assignments on time without extensions if my professors just say "I understand that life happens but it makes my job a lot more complicated if I have to keep track of late submissions" instead of the old "your poor time management is your responsibility <3" routine. if you sound like you're just power tripping at the expense of your students, I won't respond well, but if you talk to me like a person then I'm totally willing to work with you to keep everyone on schedule.

[caspersscareschool]

he literally sews his kids stupid little outfits from scratch does anyone even fucking care

[frikatilhi]

"If things continue developing the way they are at the moment" = if Bojan gets fluent enough in Finnish? 😂 For what though?! I think this Q&A left me with even more questions instead of actual answers 😭 I hate them so much (❤️)

Yeah, when he hits level 20 it's a go! What is? FUCK IF I KNOW

To be fair, I didn't think Jure and Jan would be spilling facts about independent Finnish project, so I'm pretty surprised they even picked that question? Wtf????

(Also, the JoKä collab is actually going feature Raiven, a classically trained opera singer. I cracked it I solved it there you go)

[leahthedreamer]

If it’s one thing Season 2 reinforces is that Carmy NEEDS Sydney but Sydney doesn’t necessarily need Carmy to the same capacity.

Without Sydney and her leadership and intuition that restaurant would have never opened on time. Carmy is a work in progress, desperately needs therapy and probably a vacation and clearly couldn’t handle any semblance of a relationship while juggling stress and his past trauma.

Which is why if I had an ending of the show pictured, it would be them parting ways with Sydney earning his full respect as a chef and a Carmy hopefully free enough to achieve things himself and maintain some happiness in his life.

[legallybrunettedotcom]

any social media post about the origins of slavic people, any anthropological, genetic research findings, is just filled with comments like "silly you. you do not exist. you are just *insert one of the four cardinal points + religion + any other ethnic group besides the one you are*"

[calciumcryptid]

Decided my proposal for a We Are Series ghostship is Beer and Kleun. They could make a very chill couple.

[yuridovewing]

oh my god can the erins shut up about the sisters already

[bi-writes]

ok i've done some light research. if you want a software engineer/fic writer's inital take on lore.fm, i'll keep it short and sweet.

my general understanding of lore.fm functionality:

they use OpenAI's public API. they take in the text from the URL provided and use it to spit out your AI-read fic. their API uses HTTP requests, meaning a connection is made to an OpenAI server over HTTP to do as lore.fm asks and then give back the audio. my concern is that i wasn't able to find out what exactly that means. does OpenAI just parse the data and spit out a response? is that data then stored somewhere to better their model (probably yes)? does OpenAI do anything to ensure that the data is being used the way it was intended (we know this probably isn't true because lore.fm exists)?

lore.fm stores the generated audio (i am almost certain of this because of the features described in this reddit post). meaning that someone's fic is sitting in a lore.fm database. what are they doing with that data? what can they do with it? how is it being stored? what is being stored, the text and the audio, or just the audio?

i find transparency a very difficult thing to ask for in tech. people are concerned with technological trade secrets and stifling innovation (hilarious when i think about lore.fm, because it doesn't take a genius to feed text into AI and display the response somewhere, sorry to say). and while i find the idea of AI being used to help further accessibility on apps that don't yet provide it promising, i find the method that lore.fm (and OpenAI) chooses to do this to be dangerous and pave a path for a harmful integration of AI (and also fanfiction in general -- we write to interact, and lore.fm removes that aspect of it entirely).

we already know that AI companies have been paying to scrape data from different sources for the purposes of bettering their models, and we already know that they've only started asking for permission to do this because users found out (and not from the goodness of their hearts, because more data means better models, and asking for permission adds overhead). but this way of using it allows AI to backdoor-scrape data that the original sources of the data didn't give consent to. maybe the author declined to have their fic scraped by AI on the site they posted it onto (if the site asked at all), but they didn't know a third-party app like lore.fm would feed it into an AI model anyways.

what's the point of writing fics if i have no control over my own content?

[mad-raptorzzz]

Watched Hazbin Hotel and...

So I know there's some drama about the creator ( I haven't looked deep enough in to figure it all out) but I really did like the show

Specifically that an online pilot was able to get enough support for Amazon to pick it up as a full show. That's pretty cool for indi animators and artists

Also Alastor the ace icon is great. I really really really really hope he turns into an anti-hero esque person. Where he's presented with something he really wants at the cost of his new found family and he actually choses to help Charlie/Angel/Husker/Lucifer. But also, I know he has ulterior motives.... specifically targeted at Charlie and maybe Lucifer (especially after the Hell's Greatest Dad Song)

Speaking of that song. Three things. 1) love that Lucifer has a golden fiddle, Devil went down to Georgia anyone? 2) It's just a bop 3) The amount of rubbing into Lucifer's face Alastor does convinces me that he has some specific reason for getting close to Charlie.

Also Lucifer. Oh my gosh we love a short king. I appreciate that through Helluva Boss we meet the rulers of hell and except Lucifer to be all tough like them (I know Ozzy is actually a big softie, but still) and then Lucifer is just like some dad. Just a guy. A dude. A silly man. That's incredible. And he does give ringleader.

And Angel is tragic.

Will draw fanart at some point.

[vtuberconfessions]

The Vtuber of the Day is Clio Aite from the Indie Australian vtuber group, Vershion! She is an Australian historian who does free history streams on her Twitch! She streams in English as an indie.

[needle-noggins]

Nightow really just saying it out loud, huh

[pinkeoni]

Independent El doesn’t mean she’s lonely it means we’ll get to see more of her interacting with everyone next season and not with just one person send tweet