(Published at Counterpunch.com) Judging from the violence of Rudy Guiliani’s collapse as a presidential candidate, Republicans are in big trouble. The American voter, who whistled to work while the foundation of the national economy eroded, is awake.
(Published at Counterpunch.com) For decades, from the time Hispanic builders began to profit from construction of low cost housing in Miami Dade farmland, the Latin Builders Association has been the de facto political arm of south Florida construction and development interests. They gained hundreds of millions in profit by manipulating zoning codes and permitting; using local legislatures and appointed boards to direct public tax dollars for infrastructure servicing new platted subdivisions in the hinterlands. Read the rest of this entry »
(Published at Counterpunch.com) “Were the good times a mirage?” is the front page, above the fold headline in today’s New York Times. The article summarizes the point of view we buff to a shine in our blog (eyeonmiami.blogspot.com): that overdevelopment in Florida was grounded in greed and fraud stretching all the way from local zoning councils to the state legislature and Wall Street. Read the rest of this entry »
(Published at Counterpunch.com) It is astounding: if you only read the mainstream media (with a few notable exceptions like the New York Times or the Wall Street Journal) you would wake up to this morning’s headline in The Miami Herald, “How would an economic stimulus package help South Florida”, and wonder: since when did we need an economic stimulus package? Read the rest of this entry »
(Published by The Orlando Sentinel) If there is a silver lining in the sharp contraction of housing markets across the natino, it is the impetus to reform a model for economic growth–suburban sprawl–that is fundamentally flawed.
The state investment pool — repository for taxpayer funds of municipalities in the state of Florida — sunk billions of dollars into leveraged financial products tied to suburban sprawl.
In other words, whether we like it or not — whether we are Democrat or Republican, environmentalists or developers — Florida invested in the dream, others profited from it, and now all taxpayers are at risk on the sprawl side of the ledger.
It’s time for some plain speaking: The financial system that underpins low-density, scattered development in Florida, most often viewed as platted subdivisions in wetlands or farmland, is bankrupt.
That is a problem because the sprawl model has been a big, if not the biggest, driver of Florida’s economy.When policies about growth for construction and development are discussed by government, they are organized around rules and regulations for zoning and permitting.But the true parameters for suburban sprawl aren’t set by rules or regulations or even by public choices on land use and development: They are established by banks and what banks can finance.Most consumers hear about it in terms of “subprime mortgages.” The reality is different. Those who benefited most from the “ownership society” don’t live on Main Street; they work on Wall Street and made huge fees and commissions on speculative leverage, the underpinning of suburban sprawl.There are many intermediaries — praetorian guards to the field generals of sprawl, each reaping a host of legal, engineering and lobbying fees. But the end goal of Wall Street’s sprawl arrangement was to persuade distant investors, through the assurances of ratings agencies and insurers, that any particular development — based on demographics, proximity to markets and even architectural and design parameters — would deliver returns with the same reliability as a similar set of box retailers or platted subdivisions in, say, Las Vegas.Thus, the passion for preserving a local spring, or the Everglades, was blocked out by fractions and formulas claimed to diversify risks while guaranteeing a predictable, high stream of income to investors.Not only have we lost our springs and much of the Everglades, the banks lost, too.The banks didn’t lose roseate spoonbills or swallow-tailed kites. Instead, they lost hundreds of billions for investors, many of whom have abandoned the market for leveraged debt related to housing.In other words, the spoonbills will come back sooner than the markets tied to debt for suburban sprawl. So, it is a good time to consider alternatives to a status quo that lost whatever leverage it had to reality.Although its advocates claim the contrary, subdivisions far from places of residents’ jobs are not what the markets want; the subdivisions are what Wall Street can finance to its maximum benefit.Those benefits are defined by the degree of leverage. Conversely, if one puts limits on leverage, attached to particular locations and property, it is possible to choke off sprawl the same way cancer researchers are learning to limit the spread of tumors by cutting off their blood supply.It is time for a new model for growth that puts brakes to sprawl, matching what investors can expect to earn and what developers can finance to the true cost of protecting aquifers, the environment, and infrastructure that serves existing taxpayers.For this to happen, Congress has to connect banking regulations, governing the issuance of financial debt such as mortgage-backed securities and such, to land use and the environment.It is a tall order, but there is no better time than the middle of a crisis to consider new solutions. In the United States, the work of bond ratings, insurance, public and private debt has been deemed off-limits to scrutiny to all but the financially competent who are rewarded, in turn, by tipping the scales of equity to private interests.During the housing boom, this worked especially well because everyone was a winner (except the poor and the environment). In The New York Times, Floyd Norris captured the formula in part: “It was the greatest credit party in history, made possible by a new financial architecture that moved much of the activities out of regulated institutions and into financial instruments that emphasized leverage over safety.”The other part of the formula is the one that matters most: So long as leverage fails to account for the safety of our communities, we will be at the mercy of Wall Street and the masters of suburban sprawl. It is time to get smart and put handcuffs on a financial system that has been golden to all but the people who have to pay for them. That would be you and me, Florida taxpayers.
(Published at Counterpunch.com) Today’s Miami Herald’s “Foreclosures haunt condos” (January 9, 2008) outlines the macabre turn of the condo real estate market and ends with a good news spin, even if it does make the quoted sound like a madman. The Club at Brickell Bay condo owner says, “This is Manhattan, it’s the future Manhattan, so we’re all sitting real good.”
I recall, on “sitting real good”, they said the same on the Titanic. Read the rest of this entry »