Politics and the Housing Crash

by ALAN FARAGO

The world wide credit crisis started in the heart of America suburbia itself, and primarily through the politics of suburban development that radiated from South Florida. The story of subprime mortgage mess has not yet meshed with the campaign finance supply chain that wrapped up Florida production home builders, lawyers and lobbyists. But from the perspective of Miami and South Florida, it is clear that supply chain was managed by Jeb Bush, the former two-term governor.

Yesterday Bloomberg reported that $700 million in defaulted debt, representing sprawl (asset-backed commercial paper– the exact details have not been disclosed) has vanished from the trust funds invested by the Jeb Bush team, adding to losses that will change American politics in 2008 and beyond.

The world-wide credit crisis is too big to contain in one frame. It still has not come home to roost, how the hundreds of billions of losses reported by the world’s largest financial institutions from Hong Kong to Frankfurt to London to Beijing and Tokyo, have anything to do with politics.

But the most accurate frame to tell this story is the money trail from Jeb’s loss in 1994 governor’s race, to his victory in 1998, and subsequently, the presidential election stolen in Florida by George W. Bush in 2000. Both Jeb and W. were fully engaged in the policies of growth that spurred the hyperventilated housing boom that is now in flames. (for further detail, see eyeonmiami.blogspot.com under the archive feature, "housing crash")

Their programs and policies were grounded by a strategy to win Republican victories in the fastest growing suburbs in the nation. Today the massive leverage that supported suburbia has deflated, bringing hard currency consequences to taxpayers and voters whether they are Republican or not.

Although the news is now filled the housing market crash (in Miami, it’s the worst in a century), it is not being told in terms of politics. There are news segments on liar loans, reports on mortgage fraud and stories about hastily convened task forces, there are editorials on poor judgment by consumers and investors and efforts to bail them out, or millions of homeowners at risk of foreclosure, or who have been foreclosed.

These are the bits and pieces, and still, even if you laid them side-by-side, they would fail to capture the connections between the so-called fiscal conservatives and ordinary people now paying for the failure of the suburban dream.

How are Americans really hurt by suburbia?

Here is how.

Bloomberg reports today, "School districts and local governments in Florida have pulled $8 billion out of a state-run investment pool, or 30 percent of its assets, after learning that the money market fund contained more than $700 million of defaulted debt."

The State Board of Administration, that manages about $42 billlion of short-term investments, including the pool, as well as Florida’s $137 billion pension fund, is run by Coleman Stipanovich, brother of "Mac" Stipanovich, a Republican consultant and Bush family loyalist. In 2002, the fund lost $334 million on Enron, investing in the stock as the company was swirling down the drain-three times the loss of any other pension fund. A few years later, the same fund invested in Edison Schools whose stock value had collapsed from $37 to as little as 14 cents.

"Pardon the sacrcasm," the St. Petersburg Times editorialized after the Edison deal, "but was there no Enron stock left to buy?"

Enron-through its water subsidiary, Azurix-and Edison represented two areas of policy related to manias of the Jeb Bush years: socializing risk and privatizing profits. Jeb had been quietly encouraging the privatization of Florida’s water supply, administered by a network of state water management districts.

Enron’s collapse put a quick end to that, although stalking horses have not given up on the dream of privatizing water resources in Florida. And of course, Jeb’s acolytes, seeded through the Florida legislature, are still promoting charter schools as an answer to the teacher’s and other unions.

Now, to the $500 million plus that Governor Jeb Bush lost in the empowerment of private corporations, it is necessary to add an additional $700 million of defaulted debt tied to the housing market crash.

This is not some abstract penalty imposed by bad leadership on taxpayers.

The suburbs are restless and with good reason: suburbia and its costs are a Ponzi scheme for which no political leader will go to jail.

The scheme starts with local elected officials in control of zoning, up the ladder through lobbyists, land speculators developers and local bankers, all the way to Wall Street where lawyers and financial engineers, from investment bankers to hedge funds, who already spent billions in bonuses and fees for originating debt that has no value on the secondary market.

One reason the mainstream media has a hard time focusing on the heart of the problem, is that so many Americans call suburbia, home.

The mainstream media, in large part supported by the suburban supply chain, has either ignored or lambasted critics as elitists insensitive to the millions of Americans for whom glue gun, pod housing in bland and anonymous housing tracts (in order to conform to the requirements of mortgage backed securities) is an unassailable dream.

No longer. Not when people’s pensions are affected. And not even in Florida, where a Republican legislature still holds firm. For now.

ALAN FARAGO of Coral Gables, who writes about the environment and the politics of South Florida, can be reached at alanfarago@yahoo.com.

Like What You’ve Read? Support CounterPunch
July 28, 2015
Mark Schuller
Humanitarian Occupation of Haiti: 100 Years and Counting
Lawrence Ware
Why the “Black Church” Doesn’t Exist–and Never Has
Peter Makhlouf
Israel and Gaza: the BDS Movement One Year After “Protective Edge”
Eric Draitser
China’s NGO Law: Countering Western Soft Power and Subversion
Paul Craig Roberts - Dave Kranzler
Supply and Demand in the Gold and Silver Futures Markets
Carl Finamore
Landlords Behaving Badly: San Francisco Too Valuable for Poor People*
Michael P. Bradley
Educating About Islam: Problems of Selectivity and Imbalance
Binoy Kampmark
Ransacking Malaysia: the Najib Corruption Dossier
Michael Avender - Medea Benjamin
El Salvador’s Draconian Abortion Laws: a Miscarriage of Justice
Jesse Jackson
Sandra Bland’s Only Crime Was Driving While Black
Cesar Chelala
Effect of Greece’s Economic Crisis on Public Health
Mel Gurtov
Netanyahu: An Enemy of Peace
Joseph G. Ramsey
The Limits of Optimism: E.L. Doctorow and the American Left
George Wuerthner
Bark Beetles and Forest Fires: Another Myth Goes Up in Smoke
Harvey Wasserman
Will Ohio Gov. Kasich’s Anti-Green Resume Kill His Presidential Hopes?
Jon Langford
Mekons Tour Diary, Episode 4, a Bowery Ballroom Blitz
July 27, 2015
Susan Babbitt
Thawing Relations: Cuba’s Deeper (More Challenging) Significance
Howard Lisnoff
Bernie Sanders: Savior or Seducer of the Anti-War Left?
Martha Rosenberg
Big Pharma’s Profiteers: You Want Us to Pay What for These Meds?
John Halle
On Berniebots and Hillary Hacks, Dean Screams, Swiftboating and Smears
Stephen Lendman
Cleveland Police Attack Black Activists
Patrick Cockburn
Only Iraq’s Clerics Can Defeat ISIS
Ralph Nader
Sending a ‘Citizens Summons’ to Members of Congress
Clancy Sigal
Scratch That Itch: Hillary and The Donald
Colin Todhunter
Working Class War Fodder
Gareth Porter
Obama’s Version of Iran Nuke Deal: a Second False Narrative
Joshua Sperber
What is a President? The CEO of Capitalism
Zoe Konstantopoulou
The Politics of Coercion in Greece
Vacy Vlanza
Without BDS, Palestine is Alone
Laura Finley
Adjunct Professors and Worker’s Rights
Jon Langford
Mekons Tour Diary, Episode Three, Where We Thrill Everyone by Playing Like “Utter Bloody Garbage”
Weekend Edition
July 24-26, 2015
Mike Whitney
Picked Out a Coffin Yet? Take Ibuprofen and Die
Henry Giroux
America’s New Brutalism: the Death of Sandra Bland
Rob Urie
Capitalism, Engineered Dependencies and the Eurozone
Michael Lanigan
Lynn’s Story: an Irish Woman in Search of an Abortion
Paul Street
Deleting Crimes at the New York Times: Airbrushing History at the Paper of Record
ISMAEL HOSSEIN-ZADEH
Making Sense of the Iran Nuclear Deal: Geopolitical Implications
Andrew Levine
After the Iran Deal: Israel is Down But Far From Out
Uri Avnery
Sheldon’s Stooges: Netanyahu and the King of Vegas
David Swanson
George Clooney Paid by War Profiteers
ANDRE VLTCHEK
They Say Paraguay is in Africa: Mosaic of Horror
Horace G. Campbell
Obama in Kenya: Will He Cater to the Barons or the People?
Michael Welton
Surviving Together: Canadian Public Tradition Under Threat
Rev. William Alberts
American Imperialism’s Military Chaplains
Yorgos Mitralias
Black Days: August 4th,1914 Germany and July 13th, 2015 Greece