The Stimulus and the Meltdown: from sound to slush

(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?

It is as though we went from President Bush’s, “our economy is sound” straight to a serious recession, stopping off to touch on the subprime mortgage crisis.

An economy doesn’t go from sound to slush in four months.

The economic distress we are experiencing has been building for seven years and could have been reported as such– since the Republican drunken sailors took control of Congress and the White House (and Florida) and used the building boom and associated infrastructure madness to funnel campaign contributions into political war chests.

It didn’t work out very well, did it? But you won’t hear that from the mainstream press.

(In 2005, in Miami-Dade, Florida’s largest and most politically influential, county planners tried to rebut the blitzkrieg of applications by developers to move the urban service boundary to plow more platted subdivisions in farmland and open space bordering the Everglades. Planners showed maps and statistics how the boom was a bubble and that building permits soared far beyond any norm or historical average. The Miami Herald didn’t even think the presentation or its implications to be newsworthy or worth editorial comment.)

The national recession upon us is a reflection of 100,000 similar circumstances across the United States: of local government and zoning councils folding neatly into the meringue of Wall Street compensation schemes and the most egregious asset bubble in modern history– far outpacing the consequences of the internet stock mania.

The Fourth Estate has been as delinquent reporting the national economic morass as its failure to report the lies and misinformation that led to the war in Iraq.

Yesterday, the Wall Street Journal showed in its own form of Rip Van Winklism: “Financiers reap riches even as deals wobble”. It’s the center of page, above the fold story, “At every level of the financial system, key players… often get a cut of what a transaction is supposed to be worth when first structured, not what it actually delivers in the long term.”

Well, the point is that the mainstream press never questioned whether the trillion and a half dollars of debt that fueled the housing bubble, generating massive fees to bankers, lawyers, and the lobbying class, was a Ponzi scheme for which no one will ever go to jail.

A few years ago, Warren Buffett called securitized debt: “weapons of mass financial destruction.” He was right, and those weapons of mass financial destruction are exploding, now, all over the place.

Look: to understand the consequences to the economy was not like reading tea leaves. It just wasn’t reported, as such.

Last March 9th, the inside pages of the Miami Herald business section published a story on the severe distress of Modernage Furniture: “Modernage Furniture, one of South Florida’s oldest names in retailing, is on the verge of going out of business. The end may be near… The company is running aggressive promotions in an attempt to boost sales. With South Florida roots dating back to 1940, Modernage is making a last stand.”

By April, the company was done. On the blog (<http://eyeonmiami.blogspot.com>http://eyeonmiami.blogspot.com), I wrote: “Of itself, the 72 (Modernage) employees who will lose their jobs are a statistical blip. Even the fact that its parent company, Leath Furniture, is reportedly in financial straits will not register on any economic seismic recorder… But the troubles of Modernage Furniture is an early sign how the aftermath of the housing market crash will lead to a major recession in the United States. … Banking regulatory officials continue to state the case that the impacts to the economy from the collapse of the subprime mortgage market are contained and limited.” And so they did, all through the summer of 2007, and reported dutifully as such by the mainstream press.

It is as though newspaper publishers and editors closed their eyes and walked blind-folded through the past year on the economic front and just took the blind-fold off.

Here’s a tip for mainstream media reading this blog: take a look at how Florida, the state that couldn’t count ballots in the 2000 presidential election has deformed the petition verification process for citizen initiatives to change the Florida constitution by referendum. There is a February 1st deadline to certify more than 750,000 petitions filed by Florida Hometown Democracy to qualify for the November 2008 election, and it has been hopelessly bungled by the Florida Division of Elections.

There is no coincidence, that the same forces who propelled Jeb Bush to two terms as Florida governor, beginning in 1998, and George W. Bush to president in 2000, are scared to death of the incipient revolt by Floridians against the economic elite, against the way development is permitted in Florida. Florida Hometown Democracy is a grass-roots effort seeking to take decision-making for long-term development away from corrupt local legislatures and require a popular vote.

They don’t want to mix a state-wide ballot referendum that focuses the public wrath on fraud and the housing bust with a presidential election. In that case, the Democratic candidate for president would have the upper hand.

To the Chamber of Commerce, Associated Industries of Florida, and the builders: Florida Hometown Democracy is hateful. It is a citizen’s initiative the Miami Herald has scarcely reported, at all.

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