(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.
Rudy Giuliani bet the farm on the national security card. He was right about the card, but wrong about the face.
Voters are afraid. The greatest threat to our national security is the state of our economy. And it is the economy–in terms of impacts to people–that will drive voters’ decisions on the next president of the United States. The Republicans are the party in trouble.
It took Florida voters most of 2007 to realize the state had been hit by an economic hurricane wrecking property values in a way that hasn’t occurred since the hurricanes of the 1920’s.
It was a story that the mainstream media didn’t want to report and, finally, couldn’t avoid: the statistics are just too revealing.
The government fudges numbers on inflation any number of ways. But there is no escape on the value of a home: it is only worth what a buyer will pay.
In December 2007, there were 3557 homes for sale in Miami-Dade County–Florida’s most populous and politically influential–with listing prices over $1 million dollars (statistics based on numbers provided by the South Florida Realtors Association).
Compared to a year earlier, pending home sales are down 33%. Homes sold are down 59%. A year ago December, based on the number of homes valued over $1 million, there was 34.7 months of inventory.
By December 2007, the inventory based on homes sold shot up to 87 months, or, more than 7 years.
There are a few obvious conclusions to draw from these numbers, and some that need teasing out.
First of all, Miami housing markets are frozen unless sellers are willing to sharply discount their price. 40% discount from listing price is the number going around.
Of the 3557 homeowners, some are foreigners whose purchases are based in Euros or petrodollars, and some are US taxpayers wealthy enough to ride out the storm. In any case, in Florida homeowners who can afford homes over $1 million are mostly Republican.
A high percentage cannot ride out the storm indefinitely–which is what 7 years of inventory represents. Some families are going to be ruined, and some will not be able to recover the loss of net worth represented by the collapsed value of their homes.
It is not clear that the Democratic Congress has grasped the severity of economic distress, represented in this snapshot of the wealthiest segment of Miami-Dade county. The government cannot bail out wealthy homeowners who made or were persuading to make bad choices on housing investments.
The housing market bubble was so excessive, concealed such great abuses of fiduciary responsibility–from the origination of securitized debt, to the issuance of individual mortgages, to the regulatory framework from the highest level to the lowest order of zoning council–that legislative, fiscal and monetary fixes cannot revive the housing markets until the excesses are fully wrung out.
Why single out the pain of the wealthiest homeowners? They are mostly Republican–and by next November, if the Democratic candidate for president can clearly state the case, they will have to agree that their own party, the party of fiscal conservatism, lost the mandate to the White House.
Voters will hold Republicans responsible. The race for president is the Democrat’s to lose.