(Counterpunch) In a series of reports, The Miami Herald discloses the astounding facts behind the $7 billion fraud of Stanford Financial. An absence of regulators. Shredded documents. Bags of cash airlifted from Miami International. It all sounds so Miami Vice. But it is more. Back in the late 1990s, when the Stanford scheme gathered the support of Florida regulators, I toiled as a late career financial advisor at Smith Barney. What it means to be “late career” is that I knew enough by that time that honestly toiling within the lines and hash marks of regulatory authority could not possibly account for the wealth that defined the Miami skyline. Its provenance had far more to do with flight capital from Latin and South America, drugs, and the snatch-and-grab growth schemes that turned Florida’s Everglades into Mercedes, private jets, and educational family vacations in Europe by an entire supply chain that prospered by turning a blind eye to the true costs of development. Their Grand Tour of Europe excluded every aspect of the strip mall culture that paid the freight.

Although the Stanford thievery by-passed 99 percent of Quik Mart consumers who bought a pack of cigarettes, a six-pack of beer and a quick box of cereal for the kids, its genesis shares certain common traits with the avoidance and sometimes criminal disregard of development regulations, laws and accounting that provided the backdrop for so much Florida Chamber of Commerce cheerleading, love, and fun in the sun. Stanford created and sold CD’s to anyone, but especially to investors who sought out a little more yield, a little better return, and who bought the promise that financial regulators in Florida had guaranteed these were real debt instruments and not a Ponzi Scheme through which Stanford funded his own lifestyle, trappings and accoutrements of a billionaire including virtual control of a sovereign nation, the island of Antigua in the Caribbean. That’s where the $7 billion went in satchels, exchanged as script of currencies, then disappeared in a blizzard of electronic transfers through undersea fiber optic cables to accounts and banks in places far, far removed from the scrutiny I endured as a financial advisor who believed in the bedrock values of buying and holding great American corporations as the dot.com bubble inflated, turning the US economy into a patient sucking on a tube filled with laughing gas.

That $7 billion that Allen Stanford allegedly stole isn’t funny today. Its fact is buried in a vast blizzard of real debt landing on the plates of real taxpayers: trillions and counting. The Miami Herald reports: “The key to understanding Stanford Financial Group’s business at the Miami office could be found on the third page of every customer order. In clear language, the documents show the money paid by clients for the firm’s prized investment: certificates of deposit. The next page contained the signature of the broker selling the security. Those records — blueprints of Stanford’s business venture — were routinely shredded in what became a regular exercise at the downtown center.” (“At Stanford’s Miami office, documents were routinely shredded”, Miami Herald, August 9, 2009)

The Herald reporter is right, but the Herald publisher and editor-in-chief still hold the high cards in this particular hand. Here is what those cards represent. The shredding isn’t “the key” to understanding the massive fraud. It is the fact that Stanford Financial, based in Miami, secured a unique privilege from Florida banking regulators in 1998. The year is important. The year is the face card.

It wasn’t 9/11 and the historic cuts in interest rates that followed, triggering the housing boom, that spawned our national economic emergency. We did it all ourselves. We required no outside intervention of terrorists. We only had to follow the course of political ambitions that transformed American politics in the 1990’s, and in particular the aspirations of grand Republican thinkers who still strut the national stage; plotting now to overturn Democratic advances as they did quite successfully after Bill Clinton was elected president in 1992. It all has to do with regulation; the enemy– in their conception– of property rights and free enterprise. And its focus was Florida.

In 1998, Lt. Gov. Buddy McKay fought a losing battle to become governor of Florida against developer/campaign contributors– Miami Republicans– who organized to push forward their candidate: Jeb Bush. (The Herald news reports do not disclose the exact dates of the Stanford lobbying effort with Florida banking regulators in Tallahassee, the state capitol. Those dates are very important to this story, and investigative journalists should weave these threads closer.)

After losing the governor’s race to former US Senator Lawton Chiles, a Democrat, in 1994, Jeb Bush went back to the drawing board to lay the framework for the next election. Jeb’s platform was the Foundation for Florida’s Future. It was his springboard, employing writers and thinkers who would later become senior staffers and appointees in his administration, to launch attacks on government regulation. It was critical, in their conception, to allow the creative energies of free enterprise to mobilize capital and build wealth. The way this would happen was simply to let the gears of commerce do what they do best: leverage human ingenuity in whatever form it should take. The key concept: leverage.

Besides tourism and agriculture, Florida produces little of anything. But it has been, until the worst economic crisis since the Depression, a magnet for new residents. Developers in Miami, Jeb Bush’s adoptive hometown, had far earlier mastered the machinery of building roads and ring suburbs on the cheap. By 1998, Miami-Dade County had turned into a vast melting pot; one of the largest and also poorest counties in the nation with a well developed and wealthy class of developer entrepreneurs eager to do their forefathers one better. They controlled local legislatures through campaign contributions. They owned banks and law firms. What they really needed was more capital and more freedom from burdensome regulation impeding where their large-scale communities could grow.

The Democrat Lawton Chiles, who preceeded Jeb Bush, was highly sensitive to the national trend that President Clinton had captured in 1992 and then lost in 1994 mid-term elections. In Florida, the political context was also to “triangulate” toward conservatives and away from government regulations. Chiles, for instance, endorsed land speculators and big developers by pushing away from growth management policies– the central regulatory authority that had been implemented under a Republican administration by Bob Martinez, in 1987.

In an earlier report, the Herald noted the Stanford operation was created as a foreign trust operation, “the only one of its kind in Florida.” (“Florida regulators never acted on troubling findings regarding banker Allen Stanford”, July 18, 2009) “… when the state allowed the transfer of money (to a foreign nation, Antigua) — an unprecedented freedom — it created a completely new enterprise, say experts. To this day, Florida regulators claim they don’t know why Stanford — aided by powerful Miami law firm Greenberg Traurig– (succeeded in escaping regulatory and law enforcement scrutiny).” The Greenberg Traurig connection is important.

In Miami, Greenberg Traurig is well known as a black hat law firm that virtually operates out of the inner sanctums of Miami and Miami-Dade County zoning processes: the bread and butter work that laid a foundation for a diverse and successful lobbying and regulatory practice. But the Greenberg Traurig connection is another key. Finding ways around regulations for its clients, at the inside edge of the law, is a Greenberg Traurig business model. The law firm’s image was badly tarnished by well-known employees like Jack Abramoff, but in 1998 it was on its game. In Miami, the law firm represented campaign contributors– Republican developers– who were well-known factors in national electoral politics and exerting substantial influence in the Florida governor’s race.

The game, in 1998, pitted a horse-trader in the White House, President Bill Clinton, whose legendary command of political demographics put the competition for Hispanic votes in full view. One of Greenberg Traurig’s projects had started in the wake of the devastating 1992 hurricane in South Florida: to convert a massive Air Force Base in Homestead, Florida into a privatized commercial airport for the benefit of Cuban American developers. By 1994, they had already secured a 99 year, no-bid lease from local county commissioners. (The palpable friction between Cuban American Republicans and the White House over the Homestead Air Base issue was a factor in both the 1996 presidential election, that Clinton won, and the 2000 Gore campaign.) The State of Florida, when confronted with air base political support, had rolled over on growth management regulations like a docile pet, inviting lawsuits by environmental groups because the proposed $10 billion dollar venture was on the edge of America’s Everglades. Stanford’s Miami venture, described by the Herald as a bold plan to “entice Latin Americans to pour millions to his ventures– in secrecy” did something else: it gave those cracker Tallahassee Democrats a chance to show that the party also understood Spanish. (“Florida aided Allen Stanford, suspect in huge swindle”, August 9, 2009)

”It’s absolutely insane,” Bill Branscum, a former U.S. Treasury agent, told the Herald. “That money could have been coming from anyone and going to anyone — like narco-traffickers or terrorists — and you never would have known.” And no one did know: bags of cash were stuffed on planes and sent to Antigua from Miami, where most of Stanford’s fraud was generated. State records show, according to the Herald, that 2100 accounts were set up at the Stanford office, generating hundreds of millions in sales of fraudulent financial products, in the first six years.

During this time, Jeb Bush was governor of Florida. In the six years from 1998 state banking officials visited the Miami office of the Stanford operation just two times. “When Florida regulator Keith Jasper arrived at the opulent Miami trust offices of billionaire banker Allen Stanford in 2001, he expected to see records showing that money turned over to the company was safely invested. But when the veteran bank examiner asked for the reports, he was told there were none. In fact, records of the millions of dollars that flowed through the office had been shredded.” (“Florida regulators never acted on troubling findings regarding banker Allen Stanford”, July 19, 2009)

By 2001, the dot.com boom had deflated. The laughing gas had sucked its own trillions from the economy. The Republican Reformation could now marry its mandate to opportunity, shrinking government, in Grover Norquist’s fertile conception, so that it could be drowned in a bathtub. State regulators returned to the Stanford Miami office in 2005. The Herald reports, “After both visits, state agents sent their findings to supervisors, including David Burgess, a senior analyst who helped negotiate the deal with Stanford. At the time of the proposal in 1998, Burgess wrote a crucial memo that helped find a legal justification for Stanford to create his ambitious center. Burgess said a foreign trust office was not supported by Florida law, but said if ”the definition of a trust company can be stretched,” the office could open “pursuant to the laws of another country.” He also wrote in his report that Stanford had been “active in cleaning up the Antiguan banking laws.” But federal records show that six months after Burgess wrote his memo, the U.S. Treasury put Antigua on a money-laundering alert list, saying the new laws pushed by Stanford actually weakened enforcement efforts. Burgess, who still works for the state, did not return calls.”

In January 2003, Governor Jeb Bush confidently marked the commencement of his second term: “There will be no greater tribute to our maturity as a society than if we can make these buildings around us empty of workers; as silent monuments to the time when government played a larger role than it deserved or could adequately fill.” To the agency bureaucrats, elbow to elbow with economic stakeholders in the front rows, the point was clear. Those bureaucrats included the newly appointed head of the Bureau of Professional Licensing, Donald Saxton, whose office would permit more than 10,000 former felons in Florida to operate as mortgage originators and lenders during the housing boom. (“Borrowers Betrayed”, Miami Herald, 2008) The central point was no longer about making government smaller: it was about removing those workers. And who exactly were they? Regulators who threatened developers and bankers.

The crushing irony is that this con game– not Stanford himself, but the one that allowed him to drive airplanes full of cash to God knows what enterprises helping to undermine the US national security– is still going on. Amidst a ravaged national economy that makes the dot.com bubble look positively innocent, arguments have been successfully levied by Florida Republicans to loosen regulations still more to allow free markets to breathe new energies and trickle down benefits to weary, angry citizens. The Florida legislature and Governor Charlie Crist, for instance, recently claimed that new laws dismantling regulatory authority for growth management were necessary to revive the struggling home building industry.

It only remains for the mainstream press to connect the dots up the political food chain. The Miami Herald has raised not a whiff of complaint against the jihad against regulation that marked the Jeb Bush terms as governor and continues to this day. It simply will not go there, even though its reporters have laid out the case and facts like rungs of a ladder lacking only vertical supports. Like Bernie Madoff, Allen Stanford was a smart guy who used greed and fear to exploit the politics of regulatory authority. When nothing means anything, anything can happen. Although I left the wealth management business in 1999, I learned: as goes Florida, so goes the nation.

(Counterpunch) Federal Reserve Chairman Ben Bernanke on Sunday said he engineered the central bank’s controversial actions over the past year because “I was not going to be the Federal Reserve chairman who presided over the second Great Depression.” Bernanke either doesn’t acknowledge or hasn’t tapped into the new zeiteist on pay cable television– where a raft of characters and plots are better leading indicators than those preoccupying Federal Reserve economists. If Washington doesn’t know how to describe a Depression, Americans attracted to cable TV do.

In the real world where most TV viewers cope with a cratered housing market, vanished assets and expectations, talk of TARP funds and fiscal stimulus hardly register. Note to Federal Reserve: for American audiences the economy has been bad for so long, the entire notion of “rescue” is a faded joke. On today’s menu of TV story lines: characters on the edge of a slow motion pratfall from the middle class.

The zeitgeist of the new television connects to societal depression, not a mental recession or tea leaves featured in Time or Newsweek or advertiser-sponsored, network TV. In NBC’s “The Office”, there are whispers of layoffs, triggering panic, but no one is layed off who doesn’t return. Everyone plays the edge of his or her comedic level of competence. Look, I’m a fan of “The Office”. But in “Breaking Bad” on the AMC Channel, an incompetent drug addict turned thief gets his head crushed by a pinball machine in the course of a kidnapping. His girlfiend’s fiendish response: get the meth from his pocket. It’s a laugh, alright. In “Eastbound and Down”, the retired home run king who lorded it over the protagonist gets his eye socket pulverized at a baseball “duel” meant to attract buyers to the local car dealership. No cars are sold, and it is very funny! The downbeat get their due on cable TV.

Today’s television comedies on cable skewer the passive consumer. Clearly, that’s not acceptable for the economically challenged mainstream media, like advertiser sponsored television, that prayerfully await the return of the consumer. Movie humor today is harmless, sophomoric and stripped of irony leaving only jokes about flatulence or premature ejaculation. The difference is because international audiences– for whom American movies are really made– don’t share the peculiar evolution of American awareness. They were never at the top of the economic order, so they don’t experience the bitterness having fallen so far.

Drama and comedy always thrive at the edge of normal behavior, with characters who dive back and forth entertainingly. But today’s best crop of television comedies are onto something new. In “Weeds”, a suburban mom turns wily drug dealer battling Mexican drug lord screws one to safety while protecting her family in idealized middle class stability. The joke is not just the sardonic nuclear family; it is that the nuclear family can only survive by breaking the law. In “Breaking Bad”, a suburban high school chemistry teacher with cancer– who cannot afford his cancer treatments without bankrupting his family– starts freelancing as a maker and seller of crystal meth. In “The Riches”, a family of gypsy grifters blend in seamlessly with the trappings of suburbia, cheating and winning with the flat-landers on adaptation strategies that viewers can only fantasize. In the new HBO “Hung” another teacher– the second winningest basketball coach in Westlake history– embarks on a career as a male escort to pay the bills and redeem himself with his twin Goths. In “East Bound and Down”, a former pitcher in the Major Leagues parlays a failed career into a dream of a middle school athletic coach who now can boff the Homecoming Queen without performance anxiety. He pitches his comeback to the small Southern town where he was once a hero, where everyone is overweight and teetering on the edge of ruin with sweetened ice tea, or excessively thin against the backdrop of suburbia as Potemkin village. In HBO’s new series, “Nurse Jackie”, healthcare and hospitals, the last standing leg of the US economy, provides a lead character who doesn’t even look at the label of the bottle or the number of the anti-depressants she is randomly pops. Funny.

These comedies don’t need to say the “green shoots” economy is a running joke. Place matters. In “Breaking Bad”, in “Hung”, and “True Blood”, the opening sequences are terrific visual montages of the creepy, dissolving American landscapes. This is the canvas of the new reality. “Hung” is set against the decrepit background of Detroit where solid middle class values–whatever they were– went the way of abandoned factories. People still have lake boats to tool around on weekends, and there is still gasoline in the Porches of the anonymous, blinding anomie of suburban Arizona (“Breaking Bad”) or California (“Weeds”). But the bottom line is its own horror: an American landscape so pockmarked with failed Chamber of Commerce values that you can only do one thing with the discrepancy between the idealized and the real: laugh or overdose.

The same, of course, holds true for the law. In Showtime’s “Dexter” or “Damages”, law enforcement, lawyers, and forensic detectives all thrive betraying their professional license requirements. The proliferation of drugs in American society is so obvious, prohibitive laws so ineffective that the plot lines glide straight through the obsessions of political “values”. Those values voters? More likely or not snorting meth or spacing out on hash brownies or hiring the largest dong in Detroit or cheering Kenny in “East Bound and Down” or contesting the true value of vampire blood.

In the new television, what should be in the shadows is out in the open. This is, too, the playfulness of “Mad Men” that tracks the evolution of American advertising through the 1950’s and 1960’s. Today, there is no Cadillac in the year-end performance bonus. Just the Detroit high school coach figuring the commercial advantage of an extra large size penis by the inch, the housewife with a keen sense for making money selling pot by the ounce then kilo from her Corian kitchen countertop, the grifter without legal experience becoming legal counsel to a fraudulent real estate developer, the beaten down former baseball pitcher trading status as a has-been pro-baller for community acclaim: the more outrageous one can make the “getting by” in these difficult times, the funnier the premise.

In his TV interview, Fed Chief Bernanke described himself as “disgusted” at the circumstances that led to the biggest intervention by government in the economy since the Fed was formed in 1913. I’m going to guess that Mr. Bernanke is nowhere near as disgusted as the viewers watching the new television by the millions. It is a form of silent protest against the modern version of a Depression that shows no “green shoots” for 99.8 percent of viewers.

That’s why all we need is love, a little more Coke, and a little less of the real thing.

(Counterpunch) As a grade school kid in Providence RI I was a baseball fanatic. I dreamt the Boston Red Sox and the New York Yankees and practiced my home run swing in my sleep. I memorized statistics and slept with my baseball glove under my pillow with neats foot oil so it would be pliable for tomorrow’s pickup game. I could have been anyone of those kids caught in the camera during the excellent HBO documentary on Ted Williams, the Boston Red Sox legend, broadcast this week. Although Williams had already retired from baseball when I became a grade school expert of the game, he still cast a long shadow over Fenway Park– if only for his impossible hitting average. Fast forward a few decades for my Ted Williams story.My dad had a friend from New Hampshire who owned a furniture production company. His name was Bill Levy and he was one of the most prolific fly fishermen of his era. Bill and his wife, Esther, lived on the ocean side of Marathon in the Florida Keys in the winter. By the time my father bought a house on Sister’s Creek in Marathon, in the early 1970’s, Bill had already clocked twenty five years on the flats. He was in his 70’s when I met him: silver-haired, trim, short and hard as a rail.

Bill held numerous world records at the time for the fish he sought: bonefish, permit, and tarpon. All on fly. There were legendary fishing guides in the Keys. I was lucky to fish with some of them. But I never fished with Bill. Bill fished from a canoe, alone, and handled it himself until his late 70s. And even if I could have fished with Bill, I would never have. Bill had a real temper. He was a perfectionist about every single aspect of fishing. In the mid-Keys he had only one peer. Ted Williams.

I was curious about Ted Williams, of course. It was my grade school kid leaking upwards. I only tried once to raise the subject with Bill. He walked by it like roadkill. “Oh don’t ever mention Ted Williams to Bill,” his wife Esther laughed. Esther was a hoot. She was Bill’s match in everything, except fishing. They had a durable, loving and lasting marriage– no children– built around the act of fishing that they never, ever shared together. Esther, when she went fishing, went with “one of her ladies”. And she also had a mouth on her like a Marine.

“That Ted Williams is the nastiest man in the world,” Esther said to me. “He’s a great fisherman,” I replied, baiting the hook. “Oh he fishes with a guide,” she said, waving off the Splendid Splinter. “Bill Levy,” she informed me, “is better fisherman than Ted Williams with his little pinkie,” she said, holding up her finger. She had a deep throated laugh. Bill Levy, it is true, was a legend. He commanded the full respect from the old guard at the Wooden Spoon, where breakfast was served winter mornings before dawn and the whole fraternity was there filling up on bacon, toast and eggs easy over. “Did Bill and Ted ever get into an argument,” I asked Esther.

“Oh,” she answered, “they don’t speak at all,” drawing out the aw-ll into the version of a New Hampshire accent sure as maple sugar. “They used to see each other on the dock at Islamorada.” That’s where Ted had a winter home for many years. “Ted would ask Bill what he caught, and Bill would rattle off one or another world record. And somehow Ted would start swearing like the tail end of a dishwasher, and Bill would start swearing. Oh they had terr-ible arguments every time they met.” She paused and I tried to conjure the image of white haired titans of the flat reaming each other out; the one a prickly self-made man from New Hampshire, as quiet and plain as the sun rising and the other, the greatest hitter who ever lived. “It’s not good for his heart, you know,” Esther said, pointing to her own ticker.

Both Esther and Bill Levy have passed away, more than a decade now. I think about them often. Bill died in his 90’s. When he could no longer fish by canoe, by himself, he gave up the sport for good. I never had a chance to say good-bye to him. Esther died in a nursing home in New Hampshire, Alzheimer’s taking all those memories with her. I called her on the phone. I don’t know that she recognized me, but she asked about my mother and father. I wanted to say how sorry I was about Bill’s passing, but I didn’t.

I wanted to remember the memory of two men, swearing at each other on the dock like there was no tomorrow, over records that have disappeared and fish harder and harder to find because they have been pushed out by pollution. They are ghosts of the plentiful, exhilirating schools that roamed sea grass meadows in the vast open space of Florida Bay, dotted with mangrove islands and caught by reflections of towering thunderheads, waiting for that one, perfect cast.

(Counterpunch) In the end Robert McNamara said his mea culpas for the Vietnam War. He had been Secretary of Defense; his demeanor and bearing not unlike Donald Rumsfeld’s — utterly convinced he was right even when overwhelming evidence had proven him wrong.I almost met McNamara, once. I had just finished my first year as an undergraduate at Yale where, like other Ivy League schools, the surefire, wrong logic of the Domino Theory held a sturdy grip. On a blustery, late spring day, I took a ferry from Wood’s Hole to Martha’s Vineyard looking for as summer job. The year was 1972. The season had not yet started and the vessel was nearly empty. In the middle of Buzzards Bay, I went outside to the walkway in the lee of the wind. I passed behind a solitary man leaning against the rail, staring into the sea and the ferry’s surging wake. It was Robert McNamara.

I was young and strong as a bull. He already seemed a faded mimeograph. We leaned against the rail on forearms, captured by thoughts turning like waves and set free in the wash fading without any record. After a while, he returned to the ferry cabin. A few months later, on that same passage, a stranger– furious at McNamara for his prosecution of the war– would try to throw him overboard. The obituary said he had been ill for a long time. Robert McNamara lived to the ripe age of 93.

In a sign of how perilous the national economy is, The New York Times favors broadly reducing principal on underwater residential mortgages (“Not much relief”, July 5, 2009). “Everybody wins” according to the Times by resolving the collateral damage of a speculator-driven economy. Taxpayers win because they will not be required to dole out additional billions when the economy is dragged down further the rabbit hole.

But here is who doesn’t win: responsible homeowners who did not buy a bigger mortgage than they could reasonably afford, or, citizens who could have bought but rented or who otherwise remained on the sidelines during the speculative frenzy that turned home mortgages into gambling chips to enhance their standard of living. Why should these heroes be forced to pay?

The New York City residential real estate market is one of the most inflated in the world. That is the result, mainly, of the Wall Street juggernaut built on confections of debt. Now that markets for fraudulent debt has cratered and Wall Street is shriveling, inflated values for condominiums, apartments, and houses are collapsing, too.

The Times’ view is that reducing principal will establish a basement for the depression in residential real estate. But the tidal wave of foreclosures has already radically changed market values.

It is principle, not principal, that needs protecting. The buck has to stop somewhere.

As a card-carrying member of the hero class of homeowners, I ask: why should responsible taxpayers who violated no standards of fiduciary responsibility be forced to underwrite those who did? I was a refusenik. I did not buy into the housing market bubble or the culture of greed and speculation that plunged the US economy into the worst economic crisis since the Depression. Why should I pay, again and again and again?

Of course, all US taxpayers are all paying– hugely– for miscalculations of risk that passed as sound public policy by elected officials, Democrats and Republicans alike. All those business school degrees in high places didn’t add up to a hill of beans. The Alan Greenspans and Robert Rubins of the world have no place in the public realm. But in addition to their banishment on an Isle of Elba or Alcatraz, I have a counter-proposal on behalf of the hero class: if Congress and the Obama administration approves reducing principal for homeowner mortgages that are underwater, then home owners who did not chase the fireflies of unsustainable personal debt or do not benefit from their own TARP should be compensated.

Give the hero class, his or her due: a 30 year income tax holiday equivalent to the average amount of forgiveness of mortgages for the top bracket of income earners, compounded annually. Allow individuals to trade these hero class tax credits to profitable corporations for cash. Why the upper bracket and not the average of home values of reduced principal? Because the upper bracket of wage earners benefited mostly from and contributed to the speculative fever that is now destroying the national treasury.

This suggestion is only half in jest. If you weren’t part of the culture of greed and excess that marked the past decade, if you weren’t bailed out and haven’t been able to get your 100 cents on the dollar like Goldman Sachs, you don’t even have a party favor to remind you of what you missed. Welcome aboard.

My keyhole view into the operations of the US Treasury is from a low level of ordinary interest. I don’t know how much future national pain could be avoided by reducing principal of underwater mortgages today. Clearly, the New York Times has data that is not being reported. But I do know that reducing some principal on mortgages– self selected by past mistakes–, when neighbors aren’t given the same opportunity to profit, makes a mockery of contracts and is theft by any other name.

The bottom line: speculators who continue to agitate for the next bubble in the US economy need to be wrung from the system. Their bankrupt behavior and preferences wrecked the economy. Tragically, their interests are still represented in Washington more than mine and yours, notwithstanding “change we can believe in”.

In the 1960’s, conservatives were fixated by the threat of the Red Menace and a youthful culture supine with drugs and rock ‘n roll. They set out the foundations of a new Moral Majority to combat these threats. The precepts of the Moral Majority were Christian, mainly, Republican, mainly, and meshed with Chamber of Commerce values, mainly. SC Governor Mark Sanford, who exemplified these conservative values, is only the latest politician who knocked down the limbo stick.

Sanford who spent the last five days “crying in Argentina” voted as congressman in favor of three of four articles of impeachment against President Bill Clinton, citing the need for “moral legitimacy”. It is not just conservatives, of course, caught up by the limbo stick “on the Appalachian Trail”: Senator Gary Hart (Monkey Business) and Congressman Wilbur Mills (Silver Slipper), former New York Governor Elliot Spitzer (Most Expensive Night), former New Jersey Governor Jim McGreevey (Dear, I have something to tell you), and House Majority leader Newt Gingrich and Senator John Edwards (Dear, you have cancer?). US Senator Larry Craig (Foot tapper in airport men’s room), and the judiciary, US District Judge Samuel Kent of Texas (sexual assault).

Moral transgressions are so ubiquitous I misread the other big news today, “35,000 year old flute found in German cave”, and assumed it was another story about infidelity.

The Victorian Age was notable—mainly in Great Britain—for its obsession with covering up impulses of men and women through high manners and layers of clothing: tight bodices, hoops, and other paraphernalia meant to contain and restrain what might burst into the open. Didn’t work very well. We should look back to the Victorians to understand to our obsessions with conformity in a time of unparalleled change. In the past two decades, changes to the US economy have been even more momentous. We are no longer an industrial nation manufacturing our own goods. We are consumers caught in a world made smaller and flatter by technologies we helped to create but not master.

The ascent of the Moral Majority was not just an assertion of religious values —as its proponents largely contend—as it was a natural response to rearrangements of industrial America from its bases in the Godless northeast and the Rust Belt to the fast-growing areas of the south and southwest. No wonder we fall for the allure of 35,000 year old flutes.

(Counterpunch) As Democrats approach a filibuster proof US Senate, every race will be a heated battle. In 2010 one of the key contests will be in Florida where a governor perceived to be moderate, Charlie Crist, is locked in a primary against the former House Speaker in the Florida legislature, Marco Rubio.

When Crist became governor scarcely three years ago he brought an amiable disposition and style that quickly distinguished him from his predecessor, Jeb Bush. To the irritation of Bush acolytes, Crist opened the door to his office and embraced dialogue with the other side, including environmentalists who had endured eight long years of policies matching predetermined outcomes. Where Bush pushed the thread of Florida’s changing demographics with grim determination, Crist breezily followed it.

When Jeb left office in January 2007 to join the private sector—including work for Lehman Brothers as a consultant—he anointed the telegenic Rubio as his standard bearer. Both are from Miami. The political base of both is securely tapped into campaign contributions from development industries.

The primary battle between Rubio and Crist will test versions of the Republican vision among the party’s faithful before rolling out a more palatable version to a statewide electorate that surprisingly delivered Florida to President Barack Obama in 2008.

This week Gov. Crist, who built a solid environmental record for his Senate run, signed a highly controversial bill opposed by citizens and editorial boards throughout the state and supported by the various constituents of easier rules and regulations governing development, including the Florida Chamber of Commerce, Associated Industries, and the state’s real estate industry.

Interestingly, Florida’s counties and municipalities also opposed the bill, the ridiculously titled, “Community Renewal Act”. The law represents anything but “renewal”. It is more aptly named “A Bailout Bill for Land Speculators”.

The bill does two things principally: it eliminates the need for “traffic concurrency” in urban areas. That state planning requirement is meant to address taxpayer and voter frustration with mind numbing traffic congestion. Florida not only has some of the worst urban traffic in the nation, it is also a poster child for suburban sprawl and its massive, unallocated costs. Today, those costs prominently include ghost towns formed from the remnants of the housing bubble. The real killer is a provision in the bill redefining urban areas exempt from state review as those “with an average of at least 1,000 people per square mile or in counties with populations of at least 1 million.”

Florida is not only swamped with foreclosures—one of the highest rates in the nation– it is also an incredible example of the endurance of the boom mentality in construction and development. Since 2007 more than 600,000 permits have been issued for new home construction. In areas like Homestead, Florida nine out of ten real estate sales today involve properties in some stage of foreclosure, and yet statewide, the number of permitted but unbuilt homes is greater than all the housing starts anticipated for the entire US for 2009.

1000 Friends of Florida president Charles Pattison criticized the new law without delving into the underlying contradictions of a state so dependent for revenue on real estate transactions, “The areas being exempted are not the ones that are urban and dense,” Pattison told the St. Pete Times. “This is clearly meant to benefit development interests.”

The sole statement in the Governor’s press release is downright wistful, “”It’s probably one of those bills where no one’s going to be overly happy on either side of the argument. So hopefully, it’s right down the middle and will be able to stimulate our economy and not do harm to our beautiful state.” It is not right down the middle by a long shot, unless you are in love with median strips and swales in highways that the state and federal government count as “functional wetlands”.

“Our economy needs the shot in the arm that this legislation will provide,” said John Sebree, the Florida Association of Realtors vice president for public policy. Associated Industries of Florida president and CEO Barney Bishop said the state’s prosperity hinges on its ability to grow and the new law will provide a spark by “easing the regulatory burdens that have been stifling economic growth.”

But that is not what has stifled growth in Florida. Florida is literally buried under overbuilding and oversupply whose effects, in aggregate throughout the states, are now costing US taxpayers trillions of dollars. Florida Chamber of Commerce president and CEO Mark Wilson praised the legislation while criticizing “special interests and others” for making “a last-minute push to politicize” the issue.”

Crist had intended to publicly sign the bill last week but an avalanche of calls, emails, and faxes pushed the issue off his daily schedule. Citizens who have been fighting bad growth in Florida for decades—well before the current economic crisis disclosed its rotted core—had reason to hope for a veto. Apparently, Crist came to the conclusion that most of them would not be voting in a Republican primary. Yesterday, he signed the bill into law far from cameras.

There were approximately 254, 491 reasons that Gov. Crist did so. That is the amount of money recorded as campaign contributions in Marco Rubio’s quarterly campaign finance report for his exploratory committee to run for US Senate, filed on April 9, 2009.

Here are a few of the highlights from Miami contributors. Caesar Alvarez, CEO of Greenberg, Traurig the Miami-based law firm whose origins are tied to Miami land use law for zoning and permitting sprawl in farmland and wetlands, $2400, Alan Becker, Becker and Poliakoff, a Miami-based law firm with an extensive zoning and land use permitting practice with close ties to Rubio, $2300, Ronald Book, ubiquitous lobbyist, $2400, Silvio Cardoso, former president of the Latin Builders Association and sprawl builder, $2400, Santiago Echemendia, Tew and Cardenas, the law firm mostly closely associated with Jeb Bush, $1000, Herman Echevarria, a political consultant close to former Miami Dade mayor Alex Penelas and the Latin Builders Association, $2400, Ann Herberger, Bush family fundraiser, $1400, Miami-Dade lobbyist Jorge Luis Lopez, $1000, Miami-Dade political consultants Marin and Son, total of $7200, Mestre family interests in Redland garbage and land development, total $12,200, Milton family interests, Miami’s major contributors from the development industry, total $4800, Miami sprawl developer Stanley Tate and family, $4800. These numbers, while not large in themselves, are tell tale indicators of what obstacles Gov. Crist will face in raising millions for his primary battle.

Also of note, (along the lines of no good deed goes unpunished) Crist’s highly publicized and successful effort to put more than 70,000 acres of US Sugar lands into public ownership for Everglades restoration antagonized Fanjul family interests based in Palm Beach, sugar barons who are powerfully connected to Miami by employing legions of downtown lawyers over decades to cement their interests on top of wetlands. Contributions to Rubio from the Fanjul interests total $11,200: (Cantens, $1000, Dominicis, $2400, Oscar Hernandez, $1000, Albert Recio, $1000, Armando Tabernilla, $1000, Jose ‘Pepe’ Fanjul Sr., $2400, Jose Fanjul Jr., $2400)

In a significant departure from Bush policies, Crist’s Everglades initiative provides a modicum of hope that eventually, with large and costly technological inputs, that the Everglades can be restored by a more natural flow. What Bush—and the Fanuls—preferred was a highly controlled and even more costly, mechanized system of managing water infrastructure. This model was a form of strait-jacket that served Republican politics very well. Why? Because a highly mechanized system provides easy access for spigots for campaign contributions from interests that need guaranteed water supply: from Big Sugar to cities that were formerly exploding. Both Sugar and Development in Florida, it turns out, only survive based on immense taxpayer subsidies. 

The same special interests that used the housing bubble to hold power in Florida succeeded with the signing of yesterday’s bill in securing a free pass to do it all over again, if and when demand revives for suburban sprawl. To be sure, they are struggling through the worst climate for development since the Great Depression. But they banked a lot of wealth during the housing market asset bubble—from cement and rock mining, to highway construction and engineering infrastructure, to building sprawling suburbs.

Most Americans are clueless how Republican developers who run states like Florida are itching to use economic stimulus in whatever form it arrives and whoever gives it to them to rebuild their net worth. Charlie Crist said to them yesterday, “yes we can”. Recently, Jeb Bush Jr. endorsed Marco Rubio for US Senate.

(Counterpunch) Eonomists agree that the collapse in housing markets in the United States plunged world economies into the worst crisis since the 1930’s. A revival of housing markets and new construction is one of the anticipated signs of recovery. In the meantime, the US taxpayer is on the hook for trillions of dollars of debt constituted from the detritus of the housing boom. If value is to be created in service of a new economic order, it is imperative that stimulus money be directed in ways that prevent reigniting a model of growth through construction and development that has demonstrably failed: namely, through the fraudulent wealth creator called suburban sprawl.Congress recently permitted banks to no longer mark to market their toxic assets. In a real sense, this action postpones the day of reckoning for sprawl and its rotted foundation: derivative debt tied to mortgage backed securities. This wink and nod papers over—at immense taxpayer expense—and delays accounting for the excesses of the debt that showered billions on Wall Street and its supply chain.

In the final stage of the housing boom, from California’s Central Valley to the suburbs of Washington DC, it was called “the ownership society”: a marriage of greed and political imperatives accruing mainly to operatives and special interests identified with the Republican Party. Although we are through all that, by not confronting suburban sprawl and its costs directly, the Obama White House takes on considerable risk.

Here, there is danger in letting sleeping dogs lie. The construction and building industries, related to sprawl housing and construction of fringe suburbs, is dead as a doornail. Perhaps it is a pragmatic not to ask too directly; who owns what? On the other hand, the taxpayer does own a multi-trillion dollar share of assets that are rotten, toxic, cratered: our choice.

And since it is our choice, really, whether to shoulder such enormous fiscal burdens as the costs of suburban sprawl rotting on balance sheets everywhere, we might ask some common sense questions. For instance, if the day of reckoning of asset values is being delayed so that an incipient recovery (‘green shoots’) can help financial institutions and jobs through the crisis, what is the end result we have in mind?

A very small, powerful, and wealthy constituency is waiting for the pump to be primed, so that suburban sprawl can rise from its ashes and all asset bubbles begin inflating again. This is, after all, the path of least resistance. Marriages of convenience are convenient precisely because roles are well established. Economists offer no solution to the way greed lubricates political ambition and deforms democracy at the same time.

So if this is where we are headed, then it stands to reason that the recovery-to-be looks exactly like the same sprawling, platted opportunities for growth that are now half-empty subdivisions, or, millions of square feet of empty condos and strip malls and other commercial space built in the last gasp of an artificial boom serving hedge funds, flippers, and banks turned speculators. President Obama says otherwise, but there is nothing in TARP, or TALF, or any other specific funding measure to prevent stimulus moneys from flowing down exactly the same channels in respect to the built landscapes of America’s suburbs.

If we want, as a nation, another model of economic growth; one that does land us in the same crisis we are in, today, then “stress tests” for banks are a very rough tool for a job that requires fine thought and action. Banks are agnostic. They will sell loans to whatever the market wants and is within legal parameters. The market pretends to be agnostic, but it is not.

Indeed, if you pull the thread of controlling regulations intended to keep solid financial institutions far from the hands of speculators—in particular as relates to property development—where you end up is a place much closer to the need for “stress testing”: the underlying zoning and land use for construction and development.

The question of the hour is not why banks should be subject to stress tests but why land use decisions by local—and sometimes state—government are not. This is, after all, the fertile soil from which so much debt exploded like noxious weeds.

Banks and other financial institutions involve economic activities that link the interests of all Americans and so are regulated by the federal government. But test of federal interest is also true of land use, especially in farmland that converts to fringe suburbs through zoning changes by local government. Why should “one size fit all” when it comes to federal regulation of banks and insurance companies, but that control of private property is whatever owners can persuade local government to allow?

Both financial markets and raw land for suburbs have provided the opportunity for speculators arbitrage the inefficiency of laws regulating financial derivatives and what can be built from those confections of debt. The absence of regulations in financial derivatives marches hand in hand with the blushing bride: an empty, hollowed out regulatory structure that has failed to protect quality of life, environment, and communities.

A truer scenario for economic recovery would impose a stress test on zoning for land development, incorporating a higher set of hurdles than “concurrency” models that turn local zoning decisions into a game of counting angels on the head of a pin.

Almost as soon as the housing markets began to crash, the air at conservative foundations was filled with noise that land use regulations were to blame for our economic ills. Indeed, in state legislatures like Florida’s, the economic crisis has provided lobbyists from the Growth Machine with energy to knock down what marginal protections exist for sustainable growth. Instead of solving the budget crises, Florida’s Idiocracy is chasing down and mauling the state agency charged with growth management, pinning blame on too much regulation of development. The truth is that the sorts of development local and state government lavished attention to matched up exactly to the shape and cut of financial derivatives that wrecked the nation’s financial institutions.

Those responsible for the economic disaster are excellent at counting angels on a pin. Instead of medieval monks, we have land use and property rights lawyers, spurred on by speculators and local bankers who bought mortgages and sold them in packages and pools without looking or raising a single eyebrow. They are anti-regulation Idiocrats in a daisy chain with local title companies, mortgage brokers in Florida, and cement manufacturers promoting infrastructure by the ton, scooping up zoning officials and local politicians of every stripe along the way.

They are former Wall Street risk analysts lying low behind gated estates in Fairfield County, Connecticut and executives from Standard and Poor’s, Moody’s and AMBAC, paid billions to miscalculate risk of derivatives bundling suburban sprawl. They are Congressmen and White House economic advisors, past and present, who made sure that derivatives received communion every time they came from the pews. Everyone took a slice. Everyone ate a wafer. Everyone skimmed from the top. (The Miami Herald detailed how more than 10,000 felons permitted to become Florida mortgage brokers. Regrettably, Herald executives never unleashed its investigative team to track the fraud up the political food chain. They had the beast in its hands and let it go.)

Few in the supply chain thought there was a risk to the fetid, lousy development that passed for sound judgment and property rights.

When bankers and the real estate development lobby get hold of reporters, what they say is this: be careful not to throw out the baby with the bath water. But a stress test of what suburban sprawl has done to our nation would pass no one’s muster except those who profited mightily from making derivatives out of every kind of stable value. The simple home and wetland is equally orphaned by the madness that has allowed “private property rights” to triumph over every reasonable protection of the public commons.

Here is one example that stands for thousands: Vitran Homes of the Preserve; a failed platted subdivision of two baker’s dozen in Southern Miami Dade County. Miami Dade is the epicenter of the housing boom and bust for this reason: the code was broken, here, in the mid 1990’s, tying conservative values in the political sphere, to deregulation of financial instruments in the economic sphere, permitting unfettered building and construction to bludgeon laws protecting the environment, and government agencies, like a copper penny flattened on a railroad track. And it all went very badly wrong.

Today, Vitran Homes exists as shells formed of concrete blocks shaped into a single story, false gabled homes set in weed-strewn, former farmland. To say the development is unfinished is an understatement. Its window openings are open to violation by the elements and squatters: spaces for doors and half-completed stick frame joists propping up Mediterranean tiled roofs.

That’s the outside. Inside, the “homes” have been christened by broken bottles, crushed shopping carts, an aquarium lying in a pool of its own glass, a discarded pair of pants hardened into unintelligible evidence. The development is post apocalyptic; a place for teenagers seeking relief from boredom, drugs and the ritual testing how reality shatters on cement, a haven for stray dogs and squatters. Vitran Homes is not a work-in-progress: it is a work in collapse.

What Vitran Homes does “preserve”, and all that it preserves, is the hubris that accompanied the building boom, scattering low cost production housing into Florida farmland and wetlands like confetti. According to a recent AP story, nearly one in four houses in the neighboring Homestead and Florida City areas are in foreclosure: one of the highest rates in the nation.

When you hear the term “toxic assets”, think: these access roads, these lots, these concrete shells occupy an address in the portfolio of a bank or insurance company or hedge fund that may have used properties like this as collateral for a loan, for another insurance-related product like a credit default swap. Today, you may own it. It may be yours.

Appropriately, Vitran Homes is identified as “theoretical” SW 226th Street. It is theoretical the way that the asset value is represented as theoretical debt still marked on some bank’s balance sheet, and now pegged to a level that retains the simulacrum of value on a balance sheet. There is nothing theoretical about the weeds reclaiming Vitran Homes. There is not a job in sight, unless you count the new hospital at Homestead whose patients were scavenged from other nearby hospitals, mostly uninsured and uninsurable in the wealthiest nation on earth. It was all good, until it was crap.

On the other side of the street from Vitran in South Miami Dade, a Google Earth satellite image shows a massive development by Miami’s homegrown heavyweight production homebuilder—Lennar Corporation–, scarified and prepped and ready for cement. The Google photo is only a few years old. It shows the green land scraped bare: white as bone or the dust of ancient, pulverized coral reef.

Today the Lennar development is finished in a manner of speaking. The entire development has the look as if its building plans were printed from a single computer file: this one has two hundred fifty units, Mediterranean like the rest of South Florida off the Turnpike, fire hydrants spaced and cul de sacs measured according to code, building materials spec’ed in China, etc.

A key feature of the financing underlying platted subdivisions like this is sameness. Ratings agencies like Moody’s or Standard & Poor’s bless derivatives according to computer models that match the theoretical housing, from cement to every other cost element, to theoretical addresses and surrounding demographics: the imagined pool of American consumers who flock to sameness because it is low-cost and filled with features that support consumer “preferences”.

Back in the day, the proponents of so much Lennar-type sprawl called it “what the market wants”. What the market wants was shouted from the rafters of the National Association of Homebuilders to the National Association of Realtors, from Associated Industries to the Chambers of Commerce. The mainstream media, especially newspapers, bought it hook-line-and-sinker because it came attached with muscular advertising dollars. Today, the entire region feels as though the oxygen has been sucked out and all that remains are hapless passengers stranded by a bus that never will never arrive.

The Lennar regional VP is the president of the Latin Builders Association; the influential Miami-based lobbying group that controlled Miami politics through vilification of Castro while imposing its own hegemony through the award of county contracts, from road building to the painting of highway stripes, from insider deals at Miami International Airport to the conversion of the last remaining farmland in South Florida to suburban sprawl. The owner of Vitran Homes of the Preserve is a director of the South Florida Builders Association.

Theirs was a game of risk to play private profit through artificial demand, inflated by land use lawyers paid $500 to $750 an hour and especially, to berate citizen objectors (“They don’t know what they are talking about.”) and bedazzle officials with powerpoint presentations and slick graphics papering over campaign contributions delivered, sometimes, in paper sacks. No one knew what they were talking about, and especially not in the vegetable fields where farmers loved pallets of sheet rock more than pole beans, cement trucks more than tomatoes, and the certainty of road graders and ditch witches in irrigation fields.

When it comes to suburban sprawl, everyone was paid and paid well to be dumb as dirt.

Production homebuilders and their associations do excel in this: use profits from mass production housing to blow through calculations of risk in zoning and permitting of development. Whether risk to investors or the environment, it is all the same: a blazing confidence that public policy must keep its mitts off the formulas that worked so well in the past; an imaginary tide lifting all fictitious names and luxury yachts registered in the Bahamas. Developments like Vitran Homes are exactly what the builders’ lobby wanted and lobbied for, turning valuable farmland into the fiction of demand and manageable risk. They were neither.

Lennar recently took out an unusual advertisement in the Miami Herald: “Builder Closeout: Every Condo Must Be Sold”. It was a full page ad in bold red, white and black graphics. No longer, at least in the case of its two enormous Miami developments called Colonnade and North Bay Village, is Lennar trying to lure buyers with the promise of protection if the buyer loses his or her job. Now it’s a “Sealed-Bid Auction: Your Best Price Plus Zero Dollars Closing Costs!”

At the very same time, the corporation is offloading its stale inventory at auction. In the midst of the worst housing markets in a century, Lennar is promoting zoning changes in Miami-Dade farmland—a multi-thousand unit development called Parkland– outside Miami-Dade’s Urban Development Boundary, close to the Everglades. The company wants the zoning change today, even though it will be 2014 before the development is ready for occupancy.

Lennar wants its cake and eat it too: fair enough. As long as you are inside the legal boundaries, why not?

There is nothing mystical about the deals and hand-shakes between developers and officials charged with zoning decisions that lead to so much carnage in farmland and on waterfronts. Across the America’s suburban landscape, there has been nothing like “wise use”. The pattern of low density suburban sprawl has wrecked aquifers, destroyed natural habitats and, at during the political ascendancy of “family values” torn apart families by imposing huge costs on commuters and consumers.

If “wise use” worked, why have American taxpayers been forced to shoulder the trillions in debt, underwriting the horrendous miscalculation of risk that showered wealth from Wall Street down the supply chain of developers and production homebuilders, into the campaign coffers of local city and county commissioners?

In respect to promoting regulatory reform of banks, hedge funds, and insurance companies, the Obama White House has been exceedingly careful. Banks should be subject to stress tests. 

But there should also be a federal “stress test” for local zoning, tied to subsidies to states and local jurisdictions. Without a federal stress test, including measures to prevent fiscal stimulus billions from reviving suburban sprawl, Americans will continue to be driven by a growth machine that is in key respects a Ponzi scheme, requiring future taxpayers to shoulder the costs of trillion dollar mistakes. A top-down approach to stress testing financial institutions will not lead to any kind of recovery—because the revolving door of big engineering firms, planners, government agencies, lobbyists, and elected officials is committed to reviving a failed economic model of growth.

Real estate developers, their supply chain, and land speculators are taking advantage of confusion and the appearance of relative calm in stock markets to harden their bunkers before citizens take up the pitchforks. The conservative foundation gin mills are hard at work buffing and polishing and re-branding failed models of growth.

If banks are stress tested but underlying land use is not, future growth will be along exactly the same pathways leading to the worst economic crisis since the Depression, green shoots and all. It doesn’t have to be that way, but does President Obama understand why it is?

(Counterpunch) When Treasury Secretary Timothy Geithner spoke to the Economic Club in Washington yesterday and said the United States bears a substantial share of responsibility for a global economic crisis and its multi-trillion dollar costs, he might have pointedly singled out the epicenter of the housing market crash– the state of Florida– where the absence of regulations governing financial derivatives matched laws designed to fail: in particular, regulations protecting the public from the excesses of suburban sprawl. Official pronouncements from White House officials are still far from informative. Geithner said, “Never before in modern times has so much of the world been simultaneously hit by a confluence of economic and financial turmoil such as we are now living through.” Yes, well.

Neither Geithner, nor President Obama, seem interested to explain how much turmoil and loss originates from the culture of deception expressed through this formula: that increase in tax base through construction and housing in new, low density “communities” is the primary purpose of government. Never mind the end result whether measured by foreclosures, a declining quality of life, degraded environment, standard of living, and a permanent, immoveable incumbency welded to the interests of production home builders, cement manufacturers, their lobbyists, engineering firms, and trade associations. This culture is not humbled or bowed by hubris.

Far from it, it has states like Florida in a vise grip. These interests are also joined by the state’s other big industry: agriculture and land speculation. Here is an contrast from recent news in Florida that helps illustrate these points. In the St. Augustine Record, the preturnaturally sunny Gov. Charlie Crist pumps up the state’s economy: “Florida has seen home sales grow by 20 percent over the past year… “Home sales nationwide are up 5.1 percent… and in Lee County in Southwest Florida, once Ground Zero for foreclosures, sales are up 90 percent. If I had money, I’d put it into Florida real estate.” Crist is ready to declare the recession over and the race he plans to join to be the next US senator from Florida, complete.

In the New York Times David Leonhardt has another perspective, grounded in another reality. He reports on a Miami foreclosure auction recently where homes” … sold for just a fraction of what they would have even a year ago. The rate of decline in Miami hasn’t even slowed noticeably in recent months, according to data kept by Real Estate Disposition Corporation, known as R.E.D.C., which runs the auctions.” A recently transplanted New Yorker named Michael Houtkin won the bidding on a one-bedroom condominium on the outskirts of Boca Raton, a few blocks from three golf courses, for the incredible price of $30,000. “Things were almost being given away,” he said later.

Out with the old, in with the new.

The St. Pete Times reports, rising from the rubble that is still falling: “A development boom is brewing under the radar of Floridians distracted by deteriorating real estate values and record foreclosures. The state is processing an unprecedented number of proposals for new homes and commercial development. If approved, these projects could pump more than 600,000 rooftops onto a market suffering from a surplus of product and slowdown in population growth.” (Florida Builders poised to pounce, April 17, 2009) Crist “said increases in real estate sales have come at the same time property taxes are going down, sweetening the market. Property insurance rates have also dropped by 18 percent in the past two years. “There are bright days ahead,” Crist said. It is not clear if those bright days include the forecast for US banks that are being pressured to write down “toxic” derivative debt tied to mortgages, ten cents to the dollar, while being forced to make loans for new housing at one hundred cents to the dollar, and at the same time private equity is redeeming credit default swaps– bets against the market–at par.

Again, the New York Times: “… Fannie Mae, like many banks, is inundated with foreclosed properties. In recent weeks, banks have begun accelerating foreclosures again, after having held off while waiting to find out which homeowners would be eligible for the Obama administration’s assistance program. The glut of foreclosed homes creates a self-reinforcing cycle. Falling prices lead to more foreclosures. Foreclosures lead to an excess supply of homes for sale. The excess supply then leads to further price declines.”

Today, the Florida legislature is speeding a new bill toward Gov. Crist’s desk to eliminate the pesky business of growth management, by eliminating the Florida Department of Community Affairs, the state agency that regulates growth. In last year’s legislative session, the DCA budget was slashed to the bone. The remaining officials are literally like the last soldiers at the Alamo. The St. Pete Times reports, “When the department recently pulled together data on all major developments pending and approved since 2007, the totals were staggering: projects covering 410,126 acres, with a potential for 630,965 new homes and 479.5 million square feet of non-residential space. “This really catches me by surprise,” said Denslow, who is with the University of Florida’s Bureau of Economic and Business Research. “I’ll have to revise my thinking.”

Speaking of revised thinking, The Augustine Record reports, “In his real estate percentages, Crist was actually conservative. Realtor Ed Paucek cited figures from the Florida Association of Realtors that indicate the state’s increase is really 27 percent, not 20. And Lee County’s sales were up 97 percent, not 90 as Crist said. “Sales in the Greater Jacksonville area, which includes St. Augustine, are up 6 percent,” Paucek said. “Fort Myers’ sales, though higher, are down 50 percent in dollar value. Here, sales are down 11 percent in dollar value. But that’s a good indicator of stability. We’re obviously not rising as quick as some (counties), but also not losing as much value.”

The end is near. The end probably isn’t near. For Jennifer Seney, an environmental activist who lives in Wesley Chapel, overdevelopment is not an abstract threat. “In her Pasco neighborhood, about one-third of the houses are for sale. Home prices are down 27 percent from a year ago. The Cypress Creek well field, on which Seney’s home depends for water, is bordered on all but one side by residential development. Now the county wants to put more than 4,000 homes on the untapped portion. “It’s like we can’t win against this force of money and greed,” Seney said. “I’m just sitting here waiting for my well to go dry.” (St. Pete Times, cited above.)

Moreover, the fiscal stimulus trillions are being used by the status quo to build hardened bunkers against reality’s bunker-busting bombs. Today, at the very same time the Florida legislature is humping for the Growth Machine, another new bill aimed at suppressing Florida voters –hand delivered to the legislature by Miami state senator Alex Diaz de la Portilla and Growth Machine lobbyists– is moving at lightning speed. The bill was allowed six minutes debate in committee. It would: expand the “no-solicitation zone” at polling places creating an area, constantly shifting and impossible to enforce; restrict voters’ ability to receive important non-partisan information about voting at the polling place; limit acceptable IDs for voter registration without proposing acceptable alternatives, preventing eligible citizens from registering to vote, and preventing properly registered voters from exercising their right to vote; increase the frequency of “list maintenance programs” causing more validly registered voters to be removed from the voter rolls; and discourage voter registration drives by authorizing fines up to $250 if completed registrations aren’t turned in within 48 hours.

An economy built on foundations of sand cannot stand. The longer that fictions are maintained in the service of a status quo that controls local and state legislatures, the risk increases of an economic collapse different from anything the United States has experienced in its short history. Whether the end comes in five minutes, five hours, or five months; count on the ratings for Florida’s general obligation bonds first be downgraded. The rating agencies are on the case. The frikkin chickens are coming home to roost.

It is now clear how the “ownership society” was part of a Ponzi scheme that skimmed the cream from financial derivatives tied to mortgages and used earlier profits to pay off later adopters; spreading wealth through a well organized supply chain to create, through the housing asset bubble, frictionless growth.Although this confidence game is over, the principal actors are still in place. The difficulty reviving the economy is that frictionless growth only worked when risk was mispriced.

The very notion of orderly risk analyses, of accounting rules to “mark to market” the value of assets, and of clarity and transparency is anathema to the old economy. Today, there is an effort to rewrite the history of who, exactly, mispriced risk: that consumers are to blame for taking on too much debt, too much house, or that regulations protecting wetlands and land use drove up the price of housing, luring buyers into untenable contracts with lenders. In other words, don’t put the dope dealers in jail: encourage the addicts to “just say no”.

There is indisputable misery in cities, where homeowners for one reason or another used home equity lines of credit for lifestyles and consumption they guessed were within their means. But the tinder for this economic collapse was not in urban areas.

The subprime crisis was not triggered in slums or on leafy middle class streets. It started in the suburbs where platted subdivisions provided energy for financial derivatives because their uniformity, consistency, and easy packaging matched the needs of Wall Street for scalability.

XYZ tree-lined neighborhood could not form the basis for trillions of debt. Financial derivatives, to be attractive to large investors like banks and insurance companies and wealthy investors who sought higher returns from fraudulent parsing of risk, needed fraudulent assets on a massive scale. Suburbia, with its homogeniety, was the golden calf.

Suburbia, especially in California, Nevada, Texas and Florida—where the mechanics of mass production of housing reached to perfection—is the toxic heart of the world-wide economic crisis.

It is easy enough to diagnose in the real estate section of your local newspaper. Here, the Miami Herald’s “Home Guide” section was once the muscular core of profits, filled with glossy advertisements of production homebuilders and proliferating the notion that suburbia was ‘what the market wants’.

What Wall Street needed were more and more mortgages to package. Without those mortgages, there is no real estate section of the daily paper. In 2005, the former president of the Latin Builders Association, Willy Bermello, crowed–unrefuted–from the editorial page of the Miami Herald, “This bubble is not made of latex. It is made of stainless steel.”

Critics, of course, were afforded no similar space for opposing points of view. The Herald recently announced further additional layoffs. The stock price of its corporate parent, McClatchy, is headed to the pink sheets, and the “Home Guide” is a thin tombstone folded into the paper, behind sports news of steroid abuse.

9/11 may have pushed Alan Greenspan and the Federal Reserve to unleash a historic flood of easy credit, but the politics of the building boom lay down tracks to disaster long before external threats provided the rationale. Those politics propelled a younger Bush brother to the Governor’s Mansion in Florida in 1998 and Miami lobbyists into kingmakers at County and City Halls.

What is clear from the Miami example of excess is that the housing boom was never about supplying housing for people in need. Marketing sprawl was easy as selling dope. In a recent “Home Guide”, there was a single page rendition of reality, as though all the builders had chipped in to eek out: “auction-like prices on luxury estate homes” at a more than 50 percent discount from original prices. Below the fold; a second advertisement, “HUGE price reduction at Sunset Falls”.

The ad is paid for by GL Homes, a big production homebuilder in South Florida that grew profitable by inserting platted subdivisions that fit derivatives profiles into irreplaceable wetlands edging the Everglades. That’s why its subdivisions are prefixed “Sunset”: from the western reaches of Miami and Fort Lauderdale and Palm Beaches, the suburbs face west to catch the light glimmer over what is left of the Everglades.

Fifteen years ago, in December 1994, GL Homes’ predecessor corporation—called Atlantic Gulf Communities—won a bitter fight against community activists for a 2000 unit development called Sunset Lakes. (Sun Sentinel, December 21, 1994, Sunset Lakes in Miramar gets OK).

Sunset Lakes was a Waterloo for Florida environmentalists. The battle lines had been clearly drawn. A blue ribbon panel, The Governor’s Commission for a Sustainable South Florida, specifically and explicitly sought to tamp down building in areas that were critical for water storage and Everglades restoration. Earlier massive suburban sprawl, like Arvida’s Weston (the real estate fortune of Republican frm. ambassador Chuck Cobb) or Miami Lakes (the real estate fortune of the the family of former US Senator Bob Graham) had elicited calls for reform of land use in Florida.

“Broward County took its finger out of the dike today. You can’t restore what you’ve given away,” said Patti Webster of the Environmental Coalition of Broward County to the Sun Sentinel at the time of the zoning approval in historic wetlands, only a mile and a half from the Everglades.

In July 1995, a Democratic administration in Florida waved concerns that had been expressed by the weakest regulator in the nation, the US Army Corps of Engineers, that the land in question should be considered as a buffer between the Everglades and urban development—and approved the project, unmoved by the clamor that Sunset Lakes would destroy open land “crucial for replenishing water to the Everglades and restocking underground reservoirs that will be the primary source of drinking water.” (Sun Sentinel, Miramar project heads for OK, July 26, 1995)

That is what Miami and its pass-through economy were destined to provide through gated subdivisions at a scale replicable throughout the state. The Sunshine State’s traditional attractions– warm weather throughout the year, a place to start over– comprised a sturdy funnel to pour people in at one end, and money out the other.

In November 1999, Atlantic Gulf sold its interest in Sunset Lakes to sprawl builder GL Homes, now dumping old inventory like jet fuel from a plane attempting an emergency landing. Today, ten years after GL Homes picked up Sunset Lakes, Broward land near the Everglades has been sucked dry by developers and special interests.

The damage that was done is still being done by special interests tied to the spawl lobby, now gaming Congress for bailouts, bonuses, subsidies and stimulus money to “improve” roadways near other sprawling projects in nearby Miami Dade, like Lennar’s Parkland, whose only conceivable purpose is to rescue wealthy and influential land speculators who are major Republican donors.

Production homebuilders in Miami-Dade controlled local politics and state politics by extension for decades. Its profit model, built around suburban sprawl and related infrastructure, is in full disarray but it is still in power.

In Tallahassee, the legislative session is underway, and the same forces are pushing to eliminate growth management and the agency that they have suppressed for decades; using the general chaos to specifically eliminate what they perceive to be “obstacles to growth” along the lines of the Jeb Bush mantra: you need economic growth to afford environmental protections.

There is nothing, in principle, wrong with enlisting bottom feeders to the purpose of cleaning up pollution. They troll the remnants of once valued property and scavenge efficiently until a new equilibrium is created between supply and demand. The mainstream media is least likely to call the meaning of these serial financial rescues for what they are, gearing our economy to the requirements of bottom feeders: a massive economic failure.