Destroying the Everglades at 25 Cents Per Ton: Turning Wetlands Into Rock Mines

December 21, 2009

In early December, on an unseasonably hot and humid Florida day, I sat under a large tent in a crowd of hundreds at the edge of a man-made canal draining the Everglades. On stage, Interior Secretary Ken Salazar, deputy assistant secretary of the Army ‘Rock’ Salt who oversees the Corps of Engineers, Gary Guzy, deputy director of the White House Council on Environmental Quality, and assorted dignitaries to celebrate the decision by the Obama White House and Congress to invest in the elevation of the roadway—one mile of Tamiami Trail—allowing fresh water to flow and hopefully nourish parts of the Everglades that remain as a pale reminder of spectacular biodiversity. Make no mistake: among serial claims of historic accomplishments for restoring the Everglades, this was a big deal. The first hard dollars for a project to restore water flow into the Everglades.
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The National Ponzi Scheme: trolling the wreckage

March 17, 2009

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. Read the rest of this entry »


Counterpunch: Sprawl, Mortgage Fraud and Political Corruption

November 16, 2007

Snagged on the Precipice

In the Friday pullout real estate section of The Miami Herald, local Latin Builder Association member Caribe Homes announces it is throwing in a swimming pool and 3 percent off closing costs and “no builder’s fee”, for its stale inventory: Antilles Isles.

But throwing in the kitchen sink or swimming pool won’t be enough to stimulate buyers because there are none-or only a few. The last dregs of the housing boom sucked up the final tranche of possible buyers-culled from frauds, deadbeats, the weak and gullible. For the foreseeable future, it is a waiting game and an unstable one at that.

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Counterpunch: A brief history of Florida environmentalism

November 10, 2007

Tangled Up in Blue

Last week, Congress handed President Bush the first override of a presidential veto. The issue was the Water Resources Development Act– and for Florida, what was at stake was reviving the federal half of Everglades restoration.

In 2000, Congress set out to solve the Everglades restoration riddle (in the last WRDA Act) that had been wrapped up in more than a decade of litigation relating to Big Sugar’s pollution of federal lands.

It became one of the signature environmental efforts of the Clinton White House: putting aside the acrimony between the state and federal government and moving forward in Florida with concrete plans to restore the fabled River of Grass. Seven years later, cynics call it: the River of Gas.

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Counterpunch: Disaster capitalism and the housing crash

October 25, 2007

The Way to Paradise?

In the meager section of this week’s Miami Herald real estate section, there is a multi-color, mini magazine pull-out called: Paradise Way.

It is “sponsored by “Homestead’s Premier Builders: Caribe Homes, Lennar Homes, Lowell Homes, and United Homes.” All are suffering through the worst crash in housing markets in a century-although you won’t read that comparison, yet, in the mainstream press. Lennar, one of the nation’s largest publicly-traded home builders, is based in Miami. The private owners of Caribe Homes are executive board members of the Latin Builders Association, the industry group that dominates South Florida through informally bundled campaign contributions.

Standing at the top of the Florida Keys, the city of Homestead is a mess of a small rural town converted by greed into yet another sprawl-ridden bonanza for production home builders now fallen on hard times. It is where the building boom came to a screeching halt in Miami Dade, Florida’s largest of most politically influential county.

As advertised in The Miami Herald, Paradise Way represents the aspects of disaster capitalism that can’t be papered over.

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Counterpunch: Presidential candidates mis-pricing risk to American voters in dismal housing markets

August 5, 2007

In the summer of 2000, I looked out this same window in a small house on an island in Maine and, watching the tide emptying and filling the cove, contemplated what it would take for Gore to win the 2000 election.

I had a lot of company in despairing that advisors had prevailed in persuading candidate Gore to stifle the environment as a campaign issue.

At the time, I was spearheading a campaign to stop the Clinton administration from allowing political insiders and powerful campaign contributors in Florida’s largest county, Miami-Dade, from hijacking a former military base at the edge of the Everglades and turning it into a privatized, commercial airport.

Voters were upset enough how Clinton and Gore both were avoiding the environment that the beneficiary in the November 2000 election would be Ralph Nader—as indeed he was in Florida.

To be fair, Gore advisors had a rationale for believing that “the environment’ was on balance negative. The air base fiasco was far from the only mistake made in that respect.

But the lesson is this: insiders, cocooned in political campaigns and preoccupied with the challenge of raising campaign cash from an economic elite, tend to mis-price specific risks that touch ordinary people and ordinary voters.

In this respect, Florida is again instructive to candidates who may be the next president of the United States.

Bloomberg reported (July 20, 2007) on the weird manifestation of the housing boom and bust as dozens of construction cranes in Miami edge skyscraper condominiums toward foreclosure. “The oversupply will force prices down as much as 30 percent, the worst decline since the 1970s, and help push Florida’s economy into recession as early as October, said Mark Zandi, chief economist at West Chester, Pennsylvania-based Moody’s Economy.com, who owns a home in Vero Beach, Florida.”

Forget about October: the Florida economy is in a recession today.

“Thirty-seven new high-rise condos and 20,000 new units are being built in Miami’s 1,040-acre downtown, where sales fell almost 50 percent in May, according to the Florida Association of Realtors. The new units will join the 22,924 existing condos in Miami-Dade County that were for sale in April, according to Jack McCabe, chief executive officer of McCabe Research & Consulting LLC in Deerfield Beach, Florida.”

Government statisticians roll out serial reasons for optimism in the broader economy: employment remains strong, unemployment at 4.5%, and consumer confidence is said to be high.

But I’m on the side of the recent Wall Street Journal/NBC poll conducted July 27-30 showing that the nation’s economic mood is gloomy.

In coastal Maine you can feel it big time. “More than two-thirds of Americans believe the U.S. economy is either in recession now or will be in the next year.”

Florida is the epicenter of the housing bust in the United States, for the political connections between Jeb Bush’s election in 1998, W’s in 2000, and a cast of characters tied to the biggest speculative bubble in housing in Florida history.

Al Hoffman, the former chair of Florida-based WCI Communities crowed in 2003 to the Washington Post that development in Florida was “an unstoppable force”. Indeed, during the housing boom local county commissions and the Florida legislature spent entire sessions making it harder and harder for citizens to intervene in protecting their water quality, their communities from bad development, and even from petitioning their own government.

Hoffman was campaign finance chair for Jeb Bush in 1998 and 2002 and national co-chairman for President Bush in 2000.

Today Florida’s housing markets are in tatters. The state budget is nearly $1.5 billion in the hole, as receipts from real estate transactions dry up.

WCI Communities’ stock price has plummeted. The company retained Goldman Sachs to explore options for the sale of its business or assets and can’t find a buyer.

The reason WCI Communities can’t find a buyer is that company decision-makers price its value at the other side of the economic chasm into which the fortunes of publicly traded homebuilders are falling.

So far, the presidential candidates are ignoring the distress, as if to avoid taking the hit when you are forced to mark an asset to the market and not some conjured value.

This is exactly the discussion that is ricocheting around Wall Street today and hundreds of billions of dollars of financial derivatives whose value is up in the air.

With each passing day and report of condo busts in Miami and production homebuilders leaning into the stiffest headwind in modern history, it is becoming clearer and—and with as much certainty as the tide moving in and out of Long Cove—that the defining issue in the 2008 campaign will be the unfolding maelstrom in housing markets across the nation.

David Leonhardt, in the New York Times “Keep your eyes on adjustable-rate mortgages” (August 1, 2007) dryly noted, “… the carnage in the mortgage market thus far has come even before the bulk of mortgages have reset.”

President Bush called it “the ownership society”. You don’t much about that anymore. Nor did you hear much about the recent visit to China by HUD Secretary Alfphonso Jackson who was rebuffed in his effort to persuade the Chinese to buy more US mortgage debt. In early July, Jackson told the Chinese, according to Bloomberg: “Mortgage securities offer China’s central bank better returns than U.S. Treasury bonds at the same level of credit risk.” Is that so?

“The peak month for resetting of mortgages will come this October, according to Credit Suisse, when more than $50 billion in mortgages will switch to a new rate for the first time. The level will remain above $30 billion a month through September 2008. In all, the interest rates on about $1 trillion worth of mortgages, or 12 percent of the nation’s total will reset for the first time this year or next. A couple of years ago, by comparison, only a marginal amount of mortgage debt—a few billion dollars—was resetting each month.”

The odds of containing the financial contagion in mortgage markets to a few hedge funds or just the matter of financial derivatives tied to housing and not the massive markets in corporate debt before November 2008 are low.

Wall Street and the current administration are applying tremendous pressure to keep traders from marking risk to market. It has been a Herculean effort and the sweat is showing.

The economic tide is now running as inevitably against Wall Street as it does here on Long Cove: on one side, millions of homeowners at or beyond the point of distress as they struggle to meet the costs of maintaining high mortgages in falling property markets, and, on the other side, holders of petrodollars and the beneficiaries of America’s trade imbalances who are disinclined to make bad investments, or, to be scammed.

Ordinary people and most voters aren’t up to the challenge of understanding the risks in financial derivatives. But the signals are everywhere.

The candidate who can tap into the frustration around collapsing home markets and the proliferation of unsustainable risk to the economy will be the next President of the United States.


A salty future? Everglades restoration is key to state’s survival

May 20, 2007

If you can see through the smoke of forest fires, consider the experiment of putting 18 million people, plus visitors, on a narrow peninsula — Florida — in the midst of an historic drought.

Soon enough, your eyes should stop itching. What should bother you more is what you can’t see: the effect of drought on shallow-water aquifers serving Floridians with drinking water.

Here is the problem for a state built on limestone: If the aquifer empties, salt water rushes in. A little home experiment can show most of what you need to know.

Fill a shallow plate with a film of water. That would be the bay, the gulf or the ocean.

Now wring a sponge dry. Call it drought.

That would be the Biscayne aquifer. The holes of the sponge are not so different from the geological formation beneath our feet, porous and filled with occlusions and voids that allow the water below ground to migrate the same way it does above ground.

If you have a good imagination, picture a straw pulling water from the sponge. That is a drinking-water well, and represents billions of dollars of pipes and pumps, serving the showers and sinks, the washers and sprinklers and farmland of one of the nation’s fastest-growing states.

The end of the experiment is simple. You put the semi-dry sponge in the plate with a little water and what happens is that the sea wicks into the aquifer.

The most serious consequence of historic drought conditions in Florida is the destruction of drinking-water wells by saltwater intrusion.

It is a really, really big problem, and if this drought goes on much longer, it will be news around the world.

If you have a freshwater swimming pool, you are probably aware that you can’t recirculate chloride in the same pool system. The pump may not be designed to handle the corrosive effects of salt.

Also, at a time when reducing energy demand is urgently needed, the cost or removing salt from municipal drinking-water wells and treatment facilities is untold, unfunded billions of dollars.

There is a further problem with saltwater intrusion, noted by environmentalists who have shouted themselves hoarse over the issue:

It is one thing to know about pollution on the surface where you can see it and take measures (one hopes) to avoid it.

It is quite another thing to wreck an underground aquifer you rely on for the only substance you can’t live without: drinking water.

Are water managers worried about that happening?

Yes.

Ever since Florida was settled, engineering skills have been applied to the draining of wetlands to make the land habitable.

Through the housing boom, elected officials pressed water managers to use more engineering and more industrial processes to wring the maximum productivity from Florida’s aquifers.

If you looked closely, you could see the effects on the ground and it made you want to cry: vast de-watered expanses of Florida, underlying water tables sucked dry by crop irrigation or municipalities.

It was only two years ago that water managers, frightened by a series of dangerous hurricanes, opened control gates to lower the water level of Lake Okeechobee and dumped billions of gallons of polluted fresh water, causing massive ecological destruction along both Florida coasts.

What does the current drought tell us, coming so quickly and so dramatically on the heels of overabundance?

One, that population pressure has removed the elasticity from demand and supply — extraordinary in a state that received more than 50 inches of average rainfall per year and wastes most of it in order for America’s most heavily subsidized crop, sugar, to be profitably grown south of Florida’s liquid heart.

Second, that restoration of the Everglades is more of a necessity than many people ever expected would arise from its benefits to nature.

There are a few critics who argue that global warming will make tens of billions of taxpayer dollars spent on the Everglades a waste.

Nothing could be further from the truth.

If we don’t take care of the interior part of the ecosystem — the Everglades — and make sure it is full of clean, fresh water at the right time of year, there won’t be drinking water at the edges.

Wherever those coastal edges are, in an age of global warming, that’s where most people will be.

Unless, of course, Florida turns into a pillar of salt.