FacebookTwitterGoogle+RedditEmail

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.

 

 

 

Alan Farago is president of Friends of the Everglades and can be reached at afarago@bellsouth.net

More articles by:
June 30, 2016
Richard Moser
Clinton and Trump, Fear and Fascism
Pepe Escobar
The Three Harpies are Back!
Ramzy Baroud
Searching for a ‘Responsible Adult’: ‘Is Brexit Good for Israel?’
Dave Lindorff
What is Bernie Up To?
Thomas Barker
Saving Labour From Blairism: the Dangers of Confining the Debate to Existing Members
Jan Oberg
Why is NATO So Irrational Today?
John Stauber
The Debate We Need: Gary Johnson vs Jill Stein
Steve Horn
Obama Administration Approved Over 1,500 Offshore Fracking Permits
Rob Hager
Supreme Court Legalizes Influence Peddling: McDonnell v. United States
Norman Pollack
Economic Nationalism vs. Globalization: Janus-Faced Monopoly Capital
Binoy Kampmark
Railroaded by the Supreme Court: the US Problem with Immigration
Howard Lisnoff
Of Kiddie Crusades and Disregarding the First Amendment in a Public Space
Vijay Prashad
Economic Liberalization Ignores India’s Rural Misery
Caroline Hurley
We Are All Syrians
June 29, 2016
Diana Johnstone
European Unification Divides Europeans: How Forcing People Together Tears Them Apart
Andrew Smolski
To My Less-Evilism Haters: A Rejoinder to Halle and Chomsky
Jeffrey St. Clair
Noam Chomsky, John Halle and a Confederacy of Lampreys: a Note on Lesser Evil Voting
David Rosen
Birth-Control Wars: Two Centuries of Struggle
Sheldon Richman
Brexit: What Kind of Dependence Now?
Yves Engler
“Canadian” Corporate Capitalism
Lawrence Davidson
Return to the Gilded Age: Paul Ryan’s Deregulated Dystopia
Priti Gulati Cox
All That Glitters is Feardom: Whatever Happens, Don’t Blame Jill Stein
Franklin Lamb
About the Accusation that Syrian and Russian Troops are Looting Palmyra
Binoy Kampmark
Texas, Abortion and the US Supreme Court
Anhvinh Doanvo
Justice Thomas’s Abortion Dissent Tolerates Discrimination
Victor Grossman
Brexit Pro and Con: the View From Germany
Manuel E. Yepe
Brazil: the Southern Giant Will Have to Fight
Rivera Sun
The Nonviolent History of American Independence
Adjoa Agyeiwaa
Is Western Aid Destroying Nigeria’s Future?
Jesse Jackson
What Clinton Should Learn From Brexit
Mel Gurtov
Is Brexit the End of the World?
June 28, 2016
Jonathan Cook
The Neoliberal Prison: Brexit Hysteria and the Liberal Mind
Paul Street
Bernie, Bakken, and Electoral Delusion: Letting Rich Guys Ruin Iowa and the World
Anthony DiMaggio
Fatally Flawed: the Bi-Partisan Travesty of American Health Care Reform
Mike King
The “Free State of Jones” in Trump’s America: Freedom Beyond White Imagination
Antonis Vradis
Stop Shedding Tears for the EU Monster: Brexit, the View From the Peloponnese
Omar Kassem
The End of the Atlantic Project: Slamming the Brakes on the Neoliberal Order
Binoy Kampmark
Brexit and the Neoliberal Revolt Against Jeremy Corbyn
Doug Johnson Hatlem
Alabama Democratic Primary Proves New York Times’ Nate Cohn Wrong about Exit Polling
Ruth Hopkins
Save Bear Butte: Mecca of the Lakota
Celestino Gusmao
Time to End Impunity for Suharto’’s Crimes in Indonesia and Timor-Leste
Thomas Knapp
SCOTUS: Amply Serving Law Enforcement’s Interests versus Society’s
Manuel E. Yepe
Capitalism is the Opposite of Democracy
Winslow Myers
Up Against the Wall
Chris Ernesto
Bernie’s “Political Revolution” = Vote for Clinton and the Neocons
FacebookTwitterGoogle+RedditEmail