The Speculation Chopblock: Living at the Knife’s Edge

by Teresa Smith

 A mind all logic is like a knife all blade. It cuts the hand that uses it. ~ Rabindranath Tagore

Six years ago, I lost a teenage cousin to suicide, and while I know that he was responsible for making the decision to end his life, I believe that his experience of growing up in poverty guided his hand. As I grappled with my grief, I became determined to dismantle the system of power that had pulled care away from my cousin, a system that pits everyone against each other in a race towards psychological and ecological destruction.

I envisioned a new society where everyone would be empowered to meet each other’s needs and their own, and to create meaningful connections between ourselves and the planet, without our actions being tainted by the cold logic of capital.

In 2011, that vision seemed to be emerging with the public square movements popping up around the world. There was the Arab Spring followed by Europe’s Indignato Summer, culminating in the fall with Occupy encampments sprouting up in hundreds of cities across the United States. People were gathering in public squares to feed each other, to share their stories and art, to understand the real needs of their communities, and to dance through the streets together with colorful banners.

Then in October the raids came. The police coordinated with paramilitaries hired by the banks to shut down every major Occupy encampment in the U.S., and they did it within three weeks.

In Oakland, folks refused to let the vision go. We re-occupied, again and again, until January 28 of 2012. On that day, hundreds of us marched through Oakland to try to liberate an abandoned building. Our hope was to transform the long-empty, publicly-owned Kaiser Building into a true community center, a place where people could feed each other, and sleep in a bed, no questions asked. It would be a space with a roof where we could work together to continue to understand and address the evolving needs of our community.

But the social disease that is capitalism will not let itself be healed so easily. And on J28, the mass arrests, tear gas, and police batons finally beat the hope out of us.

We realized we wouldn’t be allowed to create a new care-based social space, and the logic of capital re-inhabited many our lives. Most of us still had rent to pay and debts to keep. With heavy hearts, many of us went back to seeking work.

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Last year, a professional poker player named Ballard moved into the Birdhaus co-op in South Berkeley, where I was living in a cupboard at the time.

Ballard had a certain sparkle to him. When he won at the tables, his eyes shone all the brighter, glinting like pieces of gold. When he lost, the air around him seemed heavy, his motions stifled.

Ballard claims he can feel it, the exact moment when his luck is about to run out during a game. The trick is knowing when to pull out. Good players will try to keep you in, trick you into staying at the table when you know you’re losing. Poker is a game played with magnetism, and I might say a spark of something animal.

Last week, I was drinking tea with Ballard at his new apartment, and I asked if he’d ever thought of extending his gambling skill into the speculative market. “You’d be good at flipping houses,” I said, baiting him.

He scrunched his nose like I’d loosed bad air.

“I could never do that,” he replied, and later explained: “When you play poker, everyone at the table knows the rules—they’ve consented to be there.” House-flippers are gambling with people’s homes and neighborhoods, and they do it without anyone’s consent.

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A few weeks ago, I was buying wine at the Black & White Liquor Store when three rambunctious men came bouncing in like they owned the place. They were knocking things over, tossing bags of chips back and forth. One of them turned to a young man with a bicycle and said, “I’ll give you a hundred bucks, cash, for that bike.”

Moments later, the young man was walking out of the store with the money while the three men clustered around their new bike, high-fiving each other: “We could sell this bike on Craigslist tomorrow for two hundred!”

I left the store, wanting to escape whatever mania they were flinging as quickly as possible. While walking home, however, I was followed by the man who had bought the bike.

“Hey, hey lady!” he was saying as he rode at my heels, “I just bought a house! Right here, in this neighborhood!”

He veered in front of me and suddenly his two henchmen were at my flanks. Three men to one woman: very bad odds. I grabbed my bottle of wine, ready to defend myself if needed.

The men were all talking fast.

“You want a job?” said the one with the bike. “I’ll let you guard my new house, super cheap.”

“You’re a house flipper!” I realized.

“I’m a family man!” he protested, and pulled out his smartphone to show me photos of his wife and kids. His first granddaughter had been born just two days earlier.

The man introduced himself as Jack and he was born in Mexico in the 1970s, just as globalized trade began its stranglehold of that nation’s labor market. His family moved to up East L.A. when he was a boy, and Jack grew up in dire poverty there. But now, thanks to his luck flipping houses, Jack’s granddaughter was going to grow up rich, Rich, RICH! She would go to nurturing schools, eat healthy food, and never have to sleep with gunfire as a lullaby—just as long as Jack flipped his houses right.

I followed the three back to the beautiful 102-year-old Victorian that Jack had just purchased on MLK Blvd. The other two men had been hired by Jack to remodel the the house so he could sell it in 6 months for much more than he paid for it.

When we entered the house, I was shocked to see that the beautiful built-in bookcases had been pried from the walls, and that the antique molding was lying in pieces on the floor.

“We’re scrapping this junk,” Jack explained. “It will be all new wood!”

He was erasing the personality of the house, just as the whole South Berkeley neighborhood is being gradually sterilized, replaced by something less funky, less interesting, by investors trying to predict the tastes of the next set of investors. And here was century-old woodwork being sent to the landfill, to be replaced with the bones of fresh trees.

As a teenager in the mid-90s, I watched a real estate boom rip through the Seattle area. During that time, investors from around the world descended upon the region, buying up land, flipping it, developing it, and flipping it again. Massive housing tracts were erected in the hills, displacing the creatures that had lived there for uncountable generations. In the middle of the day, bears and cougars could be seen wandering the streets like ghosts, searching for their vanished ecosystems.

As the Seattle housing bubble peaked, fueled by the flipping frenzy, only the highest paid industrial workers in the nation (tech workers and a few aeronautical engineers) could afford the inflated housing prices. When the tech bubble burst and the Boeing layoffs came in Year 2000, the housing market collapsed as well, and hundreds of new homes were left empty in the woods, haunted by a the specter of a future that never came.

The investors who were left with those houses when the downturn hit lost a great deal of money, while those who sold early enough made off like bandits.

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“House flipping is less like poker, and more like old maid,” said X.lenc as we were putting together this issue of Slingshot. “In Oakland, it’s like the speculators are pulling cards right out of your hand.”

Last month, X.lenc was evicted from his apartment in San Francisco, where eviction rates are horrific. Between March 2010 and February 2013, housing prices in SF surged by 22 percent and evictions rose by 38 percent, with 1,716 households suffering eviction in the city in 2012.

After the eviction, X.Lenc relocated to East Oakland, where he has had to confront widespread fear about “gentrifying the neighborhood.” Folks are scared of doing social work in their neighborhoods in Oakland because they don’t want to risk raising the housing prices, which would surely bring the plague of evictions over from across the Bay.

A few months ago, Phat Beets and Arizmendi, two radical Oakland collectives dedicated to urban farming and making pastries, discovered that their organizations had been listed on a map that was used by real estate agents to sell the neighborhood. The real estate people had even renamed or “rebranded” the area as “NOBE,” in an effort to erase the Golden Gate neighborhood’s working class roots and to make houses there seem like a trendy commodity.

“It’s like, you try to do anything good in a neighborhood, and suddenly your work becomes a card in the speculators’ hands,” says an exasperated Xander.

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As radical squatters continue to liberate empty buildings in Oakland, creating beautiful community gardens, libraries, bike shops, and free schools in abandoned buildings, they often have to face that lingering fear that the speculators will move in and evict them, reaping the profits of their free labor.

Two winters ago, the radical squat known as Hellarity was shut down in West Oakland after a glorious 12-year run. It was purchased, sight unseen, in 2006 by a house flipper from India who spent 6 years fighting the squatters in court. In 2012, a judge ruled in the house flipper’s favor and Hell was evicted.

Even though adverse possession laws seem to be in their favor, squatters rarely gain legal ownership of the spaces they fix up.

In the only known case of a radical squatter gaining legal ownership of a house in California, the original owner had died, leaving no next of kin. This situation is quite rare. If the squatted building has a living owner or is owned by a bank, it is often only a matter of time before the property is reclaimed by the market.

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Mike Delacour, who is known in the Bay Area for coming up with the idea for People’s Park, believes house flippers killed his wife Gina Sasso, who was known for her longtime advocacy for homeless and disabled peoples’ rights.

Early in 2011, a pair of eager young real estate flippers purchased the South Berkeley apartment building in which Gina and Mike were renters. The new building owners insisted that Mike and Gina remove decades of projects that the couple had accumulated on the back patio.

Gina was exhausted from her work fighting measure S, and it was the rainy season, but the investors where quite pushy, anxious that the real estate bubble might pop, and they wanted to remodel the patio before selling the building.

Gina died of pneumonia on May 25 of 2011, midway through cleaning the deck. The building has changed owners half a dozen times since then.

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Life is a hustle in the Bay. Between rent and debt, the costs of food and fees for healthcare—you have to make money somehow. Even most squatters I know work jobs or find some way to bring cash into their lives.

Last year, I started a booth where I sold jewelry made out of garbage. The booth itself was a statement about capitalism—every item was to be made of something that I had saved from going to the landfill. “Do you realize there are villages in China that have no garbage!” I would orate to passersby, “Garbage is necessitated by the system, but we can undo it!”

Anti-capitalism must have been a hot commodity that year, because my garbage jewelry was selling fast. When winter came, I found myself in a dilemma: three craft fairs in a row and I was out of garbage to make new jewelry with—and I had already pre-paid to have my booth at the events! So I broke my vow to myself and bought new feathers and buttons.

In Catholicism, there is the idea of the “original sin.” For those not indoctrinated, the legend goes something like: Eve and Adam were these two hippies, and they ate some fruit they weren’t supposed to. The fruit gave them a new type of awareness, but it must have been a pretty bad trip, because afterwords they were spiritually severed from their creator, who kicked them out of her garden, and they couldn’t hang out naked or forge for their food anymore, but instead had to wear clothes and work the land to eat.

Perhaps, when we surrender to the logic of capital, we each have a kind of “forbidden fruit moment” which comes when we make our first decision to do something that we are morally opposed to in order to receive cash.

After I broke my vow to make jewelry only with garbage, a sort of numbness settled in. I felt as if I had surrendered a bit of myself to the logic of of the system. Capital had been allowed to rewrite a part of me, to eclipse me. Since then, I have felt more detached from my work, and have found it easier to take on new jobs and bring money (care/power) into my life.

Rather than knowledge, the forbidden fruit of capital offers a lack of knowledge of good and evil: this “initiating sin” delivers a claim to innocence and ignorance. “I was just doing my job,” says my inner capitalist, “and I am not responsible for the things my job makes me do.”

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Last week, an intense storm blew over the East Bay, with lightning striking houses and setting off car alarms. I was in Oakland during the storm, treating myself to lunch with my favorite Marxist and his partner while the rain poured in buckets outside.

When I told the Marxist I was planning to write about the “disease of speculation” and the “gambling class,” he wanted to caution me against moralizing the behavior of capitalists. After all, they are just following the rules.

“If you could describe capitalism in one simple sentence,” I said, “What would it be?”

He thought for a moment, then said, “You spend money to get money.”

It is upon that basic mechanism—spending money to get money—that so many other mechanisms whirl into play. Often folks don’t realize that, when we choose to allow the logic of capitalism to invade our interactions, other things we might not consent to—like deforestation, homelessness, colonialism, and gentrification—are built into the system.

Capitalism is a closed system of logic—it is only concerned with its function of perpetuating itself by turning more things into commodities. Community needs and ecological protection simply aren’t built into this logic of perpetual expansion of value, so they are not factored in to capitalist decision-making.

This logic of capital is self-perpetuating: it aims to rewrite all human activity. This is why we’re seeing the rapid privatization of what were once public services—post offices, schools, hospitals, prisons, low-income housing, and more. Under capital, everything is to be transformed into a commodity ripe for speculation.

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In June of 2013, tree sitters attempted to stop a permaculture farm in San Francisco’s Hayes Valley neighborhood from being developed into apartments. The farm had been sold by the city to a giant real estate corporation, and proponents of the development claimed that there was a desperate need for housing in the city. But according to the 2010 census, an estimated 30,000 homes in SF stand vacant, held by speculators who do not want to burden themselves with renters. These are enough homes to house every homeless person in the city—five times over.

On June 13th, 2013, dozens of riot police raided Hayes Valley farm and arrested the tree sitters in a raid orchestrated by the Department of Homeland Security.

Exactly a month before the Homeland Security raided Hayes Valley Farm, researchers at the Mauna Loa Observatory clocked the atmosphere’s CO2 levels at 400 parts per million (ppm), the highest ever. In the mid-1980s, CO2 levels climbed into the “climate change danger zone” of 350 ppm, and now, at 400ppm and climbing, mass extinction and global starvation is already happening.

If you live in America, the average distance your food travels to reach you is 1500 miles. Creating urban farms where residents can grow their food locally is a vital first step towards reversing the fossil fuel emission that leads to climate change.

Under capitalism’s cold logic, however, our society’s biggest priority is for Wall Street investors to flip their stocks—to make their publicly traded corporations worth more this quarter than when it was when they bought its stock. That is the logic that leads a 45,000 square foot urban farm to be transformed into apartments in a city with 30,000 empty homes in a time of climate crisis, and is pushed through by an internal national military.

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During last week’s storm, Ballard, my poker-playing friend, was in a building that was struck by lightning. “I could feel it in my feet!” he later said, laughing, as if exhilarated by the thrill of it.

To be alive is to risk death. When our lives are on the line, we are reminded, quite viscerally, of how much those lives are worth to us. This is the value of taking risk.

The smalltime commodities investors get to experience the thrill (and stress!) of great risk because they are often putting everything on the line—the wellbeing of their families, their future social mobility—with the hope of making more money.

As you move up the wealth ladder, however, you find that speculation begins to take on different forms because “risk” is no longer actual risk to the investors’ livelihoods, it is simply an abstract part of an equation. And as risk becomes more abstracted, extremely risky decisions are made without fear of failure, because the failure may be considered smaller than some other success.  This is the logic of an investor with many types of holdings.

Just look at the role that risk played in the CDO-driven subprime housing collapse. Invented in 1987, a CDO (Collateralized Debt Obligation) is a financial instrument that is essentially a promise to pay investors in a prescribed sequence based on the flow of cash that the CDO collects from the assets that it owns. CDOs buy debt, so it is in their best interest for more debt to exist. In the early 2000s, CDOs actually gave lenders incentives to make the risky home loans that led up to the 2007-9 mortgage crisis, leading to the “Great Recession” in which nearly 9 million American jobs vanished, and strife spread across the global.

The decisions made by CDOs insured that millions of people would lose their jobs, but the investors who pulled out at the right time made a fortune. The subprime home loans were a huge risk that had been factored in to the equation of creating wealth for a group of investors over a set period of time.

On the macro and micro levels, the system of often capital encourages investors to bet against the public good–or at least, the public good isn’t factored in to the decision-making–and if these investors play their stocks and financial instruments right, they will walk away rewarded.

A majority of the globe’s resources and labor have been hijacked by this game of creating temporary profits for those who are able to gamble for the highest stakes. But as this system attempts to replace all human relationships with its broken own logic of perpetual growth, all of us are bound to lose.

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As a person with epilepsy, I have found that the money helps me get the care I need to reduce my seizures, and to do the projects that lend meaning to my life.

Every day, I struggle to justify my interactions with a system I despise, telling myself that I am worthy of the care that the money I make brings, but also vowing to keep my eyes open, to take every opportunity I can find to liberate care from the system, to de-commodify the things that matter to us, liberating care from the market, one commodity at the time, to the extent that is currently possible.