Counterpunch: Housing market crashes and burns

September 27, 2007

What Congress Won’t Hear from Wall Street

Why did the bank thief in Homestead, Florida think he could get away with using a stolen backhoe “to lift and haul away a drive-through ATM from a Bank of America early Tuesday”?

Because that’s pretty much how it works in Homestead, where insiders run a once-rural now sprawl ridden community like their own chop shop, or, ATM.

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Counterpunch: Genuflecting to China

September 22, 2007

The Meaning of Mattel’s Strange Apology

 Mattel apologizes to China and to the Chinese people for safety lapses which resulted in the recall of 21 million Chinese-made toys in recent months. Excuse me?

 

Does anyone else feel a backlash rising against China, that is fundamentally different from the trade complaints of the past and skirmishes over the value of the Chinese yuan?

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Counterpunch: Who will buy my house?

September 21, 2007

What the Sale of the Carlyle Group Tells Us About the Collapse of the Housing Market

Would someone from Dubai or China please come to Miami and buy my home?

This seems a reasonable plea, given this morning’s news that the big private equity firm, (in which President George HW Bush made his fortune after leaving the White House)-the Carlyle Group–sold 7.5 percent of itself to the United Arab Emirates. 19.9 percent of NASDAQ is being sold to Dubai, that couldn’t get our ports but getting the platform on which US equities trade. China, discontent with the value of its foreign currency investments, has set up its own fund to invest directly, not just in US debt, the value of which is declining to record lows against other currencies.

Since no one else is going to buy my house, I invite foreign economic ministers to spend a few nights with me in Miami -we’ll put you up, give you the keys to the Toyota hybrid so you can drive around and see the value we’ve created from the sunshine state.

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Conterpunch: Interviewing Alan Greenspan–how 60 Minutes blew it

September 18, 2007

It is really a sad commentary on the TV media that given the chance to ask some hard questions of Alan Greenspan, it has no idea what to ask.In last night’s 60 Minutes interview with Alan Greenspan, Lesley Stahl looked like a deer caught in the headlights. This was a big interview and she blew it. Read the rest of this entry »


Counterpunch: This is Florida: epicenter of the housing bust and public corruption

September 14, 2007

The building boom in Florida is in cinders. It is going to take a long time to tally the costs and devastation to the public interest.

“Developer gives up fortune,” reads a bankruptcy story in The Miami Herald about Juan Puig who “lived the high life during the housing boom: a Gables Estates waterfront mansion, a condo near Aspen. A fleet of 10 luxury cars, including a 1966 Ferrari and 1969 DeTomaso Mangusa. A 59-foot Ferretti Yacht. More than 70 pieces of art. A gold Cartier watch with diamonds. Extensive wine collection. Welsh Hunter pony. But now he and his wife must give it all back.”

Puig’s flameout was caused by bad bets on the arbitrage between rental values and condos. But the $100 million in debt that Puig owes and can’t account for is a pinhole compared to the massive speculation and overinvestment in the hyper-inflated construction bubble that mars the Florida landscape.

Back in 2003, Jeb Bush loyalist and campaign finance chair, Al Hoffman—who was then chairman of WCI Communities, Inc.—crowed to the Washington Post that suburban sprawl was “an unstoppable force”.

Today, WCI is now struggling against a stronger force: reality. The cost to international credit markets from the exuberance of builders and the development lobby in fast-growing states like Florida is already measured in the tens of billions, a landscape of structured mortgage products and financial derivatives fertilized by Wall Street without friction, impedence, or meaningful regulation.

For the public interest, of course, what is left from the building boom are massive deficits, degraded wetlands, bad water quality, and a trail of public corruption that seems to have no end.

Take Palm Beach County, for example.

Former county commissioner Tony Masilotti is headed to jail, for taking a piece of the action on property he was involved in, as a zoning matter. Current county commissioner Warren Newell just plead guilty to criminal charges on another land deal where more than $300K lined his pocket from a success fee paid to an engineering consultant.

As reported by the Palm Beach Post, a key figure in the cases is Enrique Tomeu, president and co-owner of Palm Beach Aggregates. Tomeu’s company also figured in the corruption case of former County Commission Chairman Tony Masilotti. In a transaction that led to Masilotti’s political demise and conviction, Tomeu helped Masilotti gain control of$7.7 million worth of land in Brevard County. In return, Masilotti engineered a vast zoning increase allowing 2,000 homes on 1,200 western-county acres that had been limited to 120 units.

Tomeu persuaded a state agency, closely managed by the Governor’s Office in Tallahassee, to purchase 1190 acres of his property to be used as “water storage”.

An engineering consultant, Dan Shalloway, engineered the $190 million land deal for the Palm Beach Aggregates rock pit to be used for “water storage”. He is now facing a professional-misconduct complaint. On Monday, the South Florida Water Management District filed the complaint with the Florida Board of Professional Engineers, according to the Palm Beach Post.

“The four count complaint includes allegations that Shalloway lied to the district in 2001 about his relationship with Palm Beach Aggregates, a Loxahatchee mining company that was trying to sell 1,190 acres of rock pits to the district for water storage. “Please let me clarify that neither my firm nor I works for Palm Beach Aggregates, “ Shalloway wrote to then-district Executive Director Frank Finch. “We were merely pointing out to water available to the public as good citizens.”

Shalloway and (Palm Beach County Commissioner Newell) made arrangements as far back as 1998 to share the profits from any sale of the pits.

The media has yet to explore the links between Tomeu and Governor Jeb Bush, who was elected to his first term in 1998, and had clearly articulated the twin goals, economic development and environmental protection, that were well served by entrepreneurs like Tomeu—a Geoge W. Bush Pioneer and contributor to the US Senate campaign of Mel Martinez—who keeps up appearances with Florida environmentalists.

And that is another price of the building boom: the extent to which environmentalists were compelled to cozy up to land speculators and entrepreneurs like Tomeu.

If any of the greens were aware of the behind-the-scenes manoevering including the corruption of local government in Palm Beach, through land deals pushed by Tomeu, no one is raising their hand.

Nor did conservationists have any leverage when the State of Florida agreed to the per acre benchmark established by the Palm Beach Aggregates deal, at more than $180,000 near lands owned by Big Sugar and coveted by the environmental community for the restoration of the Everglades.

The outrageous purchase price was justified for its “environmental benefit”: in fact, it was a price pushed by corruption. Period.

But the consequences are extreme: inflated values which supported wealth creation of the growth machine have pushed the cost of environmental restoration into the stratosphere on the one hand and buttressed by well-financed property rights advocates on the other, establishing precedents by which future land values will be measured.

For county commissioners and bankrupt developers, there is always a chance to start over. And for career bureaucrats, another rung on the professional ladder.

But there is no starting over for the train of destruction that greed has etched on the Florida landscape.

In June, Nicole Brochu, columnist for the Ft. Lauderdale Sun Sentinel, wrote, “Count me as thrilled federal prosecutors are cleaning up the halls of government and tossing the scoundrels out of office. But when you watch as low-life drug dealers get 10 and 20 years for their craft, or vandals get enhanced hate-crime penalties for spray-painting a swastika on a synagogue, or even button-down CEOs like Enron’s Jeffrey Skilling get 24 years in the slammer, you expect the same iron fist to come down on the dirty politicians who infect the democratic process and victimize the entire community.”

But the same iron fist is not coming down on those who illegally facilitated the growth machine.

The tale of $100 million disappearing down the drain of the housing bust, of county commissioners shuffled off to jail, tells another story: why Florida voters are ready to take away the power from elected officials for new changes to comprehensive land use plans. (See, Florida Hometown Democracy at floridahometowndemocracy.com)

Here is the hard scrabble truth: while the beneficiaries and entrepreneurs of the late, great housing boom may be able to “start over”—after their fortunes have been lost and declaring bankrupcy, or, business plans burnt to a crisp—the communities they wrecked by promoting terrible zoning changes, allowing the costs of infrastructure to be deferred, wetlands destroyed, water quality: these results cannot be reversed.

There is no starting over for Florida.

The legacy of the building boom—the call by the growth machine for “streamlined permitting”, “more protection, less process”—all the ways in which Floridians have been promised a higher quality of life, while the public interest has been dragged under the bus—these are reasons Floridians will vote for the Florida Hometown Democracy measure if they are given a chance.

It should come as no surprise to the construction and development lobby that it reaps what is sows: profound citizen discontent over the trashing of Florida and barriers erected against the public interest—like Amendment 3 approved by a state-wide vote in 2006 that raises the threshold to 60 percent of the electorate, for changes to the Florida Constitution by referendum.

The Herald reports that the Puig bankruptcy “is the biggest yet to come out of the slumping housing market”. But it is certainly not the last. And Florida is far, far from totaling the damage.


Counterpunch: The governor and the growth machine… on cruise control into a ditch

September 8, 2007

It is the battle for the soul of Florida: whether Floridians will have a vote on changes to land use plans that turned the state into the poster-child for collapsed housing markets. The Florida Chamber of Commerce and the growth machine have pledged to spend $65 million–or whatever it takes–to defeat the citizen referendum that is closing in on the number of voter signatures to quality for a state-wide ballot.

In an interview with the editor of the Florida Northwest Daily News, Governor Charlie Crist (Rep.) may have inadvertently boosted the misinformation against the citizen’s iniative, Florida Hometown Democracy:

He said, “… in terms of Hometown Democracy, and how that affects us in our future, (I think) that if you have to have a permit for every single new business that wants to go up, and you have to have a vote of all the people in order to get it accomplished, that can slow down things tremendously and therefore maybe thwart the opportunity for economic growth and new jobs coming into the state, and it concerns me in a significant way.”

Is Governor Crist on the wrong side of facts, deliberately or simply because he had a bad day? When enough voters sign petitions (print out your petition here) to qualify for the ballot, Floridians will have a chance to vote on a simple measure: new changes to comprehensive development plans that have already been approved by local government will first go to voters, then to local government.

Florida is the abject example of growth gone haywire, and the responsibility lies squarely with elected officials who benefit each and every time the true costs of growth are deferred. Now that the building boom is in cinders, the results are plain as day.

But don’t count on newspaper executives, whose bonuses may be tied to advertising page revenue increases, to shed much light. “I would agree,” says the newspaper editor from the region where massive new developments are being primed that could accomodate millions of new residents to Florida when finally demand returns to collapsed housing markets.

“That’s what you have your local officials for is to review those different changes to the land development code, the growth management act. Under (a hometown democracy) amendment, you’d have to have a referendum for that. And I think that’s what you have elected representatives for.”

Let recent experiences in Miami-Dade County, Florida’s largest county, inform Governor Crist who worries that Florida Hometown Democracy will require “a permit for every single new business that wants to go up”. That is simply untrue.

In Miami, unlike northwest Florida, the growth machine has already left behind the detritus of suburban sprawl for 2 million residents and taxpayers funneled into unabsorbed costs as meekly as cattle in a factory farm.

Here, in the 2005 round of applications by developers and land owners to move the Urban Development Boundary—which required new changes to the county land use plan—citizens were forced into a multi-year game of cat-and-mouse with the growth machine, tended by land use lawyers, engineering consultants, and an army of lobbyists who long-ago corralled a majority of county commissioners through bundled campaign contributions.

It is all well and good for high public officials to praise volunteers and giving back to the community (as President Clinton apparently does, in his new book, ‘Giving’), but the Florida example of democracy in 2007–as it relates to growth–makes a mockery of “giving”.

It is draining, demoralizing, and frustrating for homeowners, taxpayers, and even some business interests when the outcome of changes to land use plans is predetermined by the influence of big campaign contributors from developers, land speculators, and big farmers.

By all means, let Governor Crist (and newspaper editors) spend a couple of years trundling down the road to changes to the land use plans, strewn with virtual IED’s by the growth machine. See what ordinary people face in the daily struggle to protect communities from unsustainable development.

Giving citizens the right to vote on new changes to comprehensive land use plans before local elected officials do redresses the imbalance that has ruined representative government in Florida because of the outsized influence of building and construction.

It is wrong to suggest that the balance between the environment and the economy is what is at issue in the Florida Hometown Democracy movement. It is about respect for fiscal responsibility. It is about the soul of Florida.

The building and development industry–its greed, excesses, coupled with strong-arm tactics by state and local legislatures contributed mightily to the housing bubble and the costs the bubble’s burst has imposed on Florida taxpayers.

In 2005, a majority of county commissioners in Miami-Dade County would have voted to approve each and every amendment to the county comprehensive development plan outside the urban growth boundary, despite overwhelming objection by citizens.

What counted, then, wasn’t the law–and the legal challenges that citizens would have been forced to mount–but slick powerpoint presentations that confidently predicted endless demand for suburbia.

Only quiet intervention by the State of Florida, related to concerns about the availability of fresh water, stopped these amendments.

Because local legislatures are controlled by political contributions from the growth machine, because people don’t have the time or financial resources to spend years, time after time, addressing the same applications for ill-advised development, the land use planning process has turned into a a fifth grade school play, with all the stock characters in their bad costumes, a marathon contest whose results are indelibly etched in the built landscape of Florida.

Right now, in Miami-Dade County, the real cost of infrastructure deficits because growth does not pay its own way is close to $10 billion. It is a number that elected officials won’t talk about and newspapers won’t print.

But every day, citizens in Miami experience that number through gummed-up roadways, classrooms for children in air-conditioned trailers, unkempt and inadequate parks and playing fields, pollution, degraded wetlands and a declining quality of life.

This isn’t a “gloomy point of view”. This is reality. The $10 billion that the growth machine won’t talk about represents the imposition of an unfunded mandate on Miami-Dade taxpayers. But local elected officials won’t talk about that unfunded mandate, the one imposed by unsustainable growth.

Why should the people of Florida acquiesce to the fiscal irresponsibility that is at the heart of the growth machine’s objection to Florida Hometown Democracy?

The reasons to support Florida Hometown Democracy are all around us: the highest foreclosure rates in history, housing inventories so saturated that it will take years to absorb, degraded wetlands and public corruption.

Let the people vote on new changes to comprehensive land use plans that local elected officials have already approved.

Give the people of Florida a hand to democracy, Governor Crist. We know it is possible. We have faith.