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The Bhopal Economy

In The New York Times, Tom Friedman reports from India and a conversation with a local entrepreneur, “After asking for an explanation of the Tea Party’s politics, Gupta remarked: “Where is the American dream? Where is the optimism?” To help answer those questions, watch the CBS 60 Minutes Segment on the people of Newton, Iowa. The landscape of Newton stands for hundreds of thousands of American communities that were shaped from mom-and-pop stores and businesses serving industry to franchises of corporations serving other service-oriented corporations, using economies of scale to obliterate cultural differences. Newton, Iowa is not so different from anywhere else, after all is said and done: scared, in debt, and shell-shocked how fast 40 years of American prosperity ended.

It was called “The Ownership Society”, the 2003 public relations campaign to put more Americans into homes and mortgages they could not afford in an economic downturn. The GOP demolition crew that conceived this massive wealth transfer scheme is back in power. That would be Karl Rove and other Republican leaders who flattered Alan Greenspan into lowering interest rates while they fired up boiler room operations selling mortgages to anyone who could fog a mirror. They were rewarded for speed in execution of those mortgage pools and titles and deeds; fees for engineers, lobbyists, and campaign contributions rolled into a multi-trillion dollar toxic goop.

So here is the problem in the US economy that the Bhopol disaster illuminates. The goop that poisoned so quickly, isn’t easily cleaned up once it infects everything and doesn’t disappear for a long, long time.

The 2008 TARP program that the Tea Party detests was a last resort by the Bush White House to prevent bread lines and soup kitchens from dotting the United States. The hair-on-fire crowd now embracing Republican causes and funders doesn’t remember that. As the banks contemplated unloading their toxic mess, they knew it wouldn’t be nearly as easy to do as it was to assemble the disaster in the first place. In executive board rooms and management meetings, bankers knew that unwinding millions of foreclosures slowly would drag their profits down faster than they could adequately be paid for their time. So once the firestorm of taxpayer dollars comprising significant percentages of Tier 1 capital died down– and multi-million dollar compensation could be distributed without being handcuffed and led out into the town square guillotines– it was time to pull the plug and drain those toxic pools off confected balance sheets. Not slowly, one mortgage and title at a time, checking that signatures were accurate and fairness applied to individual circumstances. Fast as possible. So new boiler room operations were constructed from the same cubicles and Steelcase furnishings within the banks, to do exactly the opposite of what they had been purchased for, by those who made billions from the mortgage mess in the first place. “It’s an unstoppable force”, crowed Florida builder and developer Al Hoffman in 2003 to the Washington Post. Hoffman, who became an ambassador after running election campaigns for both Jeb and George W. Bush, was then CEO of WCI Communities, Inc, bankrupt by 2008. At the time, he was talking about suburban sprawl in Everglades wetlands and the futility of trying to stop the engines of growth. One can imagine it wasn’t exactly the same exuberance inside the banks’ paper mills to process foreclosures. More, like stealth. More, like panic. More, like the most common complaint at the water cooler was writer’s cramp.

Today contract law governing mortgages is acting like sand in the engine to resolve the foreclosure mess. Who, among the good Republicans, wants to challenge the sanctity of constitutional law? To frame this subject matter comes an excellent report in the excellent series on National Public Radio, Fresh Air. Terry Gross interviews NY Times Gretchen Morgenson on the foreclosure mess. These two women are heroes for Clarity. Listen by clicking here.

From Florida, we could see the economic disaster rolling up like a thunderous hurricane throughout the 1990’s. Citizens and activists, watching the way the Growth Machine tore up the Florida landscape with insta-gro suburbs and degraded wetlands and dying Everglades, knew that it was all unsustainable. The force of momentum built throughout the two terms of Jeb Bush as Florida governor, beginning in 1998. On Tuesday Jeb Bush Republicans– who had been held at arm’s length by his successor, Charlie Crist– stormed back, through the election of Florida US Senator Marco Rubio. The mainstream press reflects the GOP spin that Rubio is high on the list to be a presidential or vice presidential candidate in 2012. He was greeted to the Miami stage for his acceptance speech by Jeb, older, thicker and waiting perhaps for the taint of the Bush brand to fade.

The GOP machinery and campaign funders who supported Rubio were assembled from the identical interests who propelled Jeb Bush, a former developer himself, in the 1990’s. In this election cycle, they spent more than $15 million to defeat a proposed constitutional amendment called Florida Hometown Democracy. This citizens’ initiative was mounted by an intrepid band of activists and aimed to give voters the final say on whether or not to continue allowing speculators to tear up the landscape. The measure took seven years to reach the state-wide ballot, overcoming serial obstacles thrown in its way by Florida builders, developers, the Chamber of Commerce and Associated Industries. It needed 60 percent to pass. This supermajority requirement in the Florida constitution was inflicted on voters in 2006, dooming any future grass roots initiative unless it comes with $!0 million in the bank to wage a war on television. By Tuesday, FHD had run out of gas. The measure only garnered 33 percent of the statewide vote, but here is an interesting fact. The measure passed in the Florida Keys– where growth management is the perennial issue– by more than 50 percent.

There was no special campaign by Florida Hometown Democracy in the Keys. There, growth management controversies pitting citizen activists against irresponsible development are more ubiquitous than mile markers. Voters in the Keys knew the power of Florida Hometown Democracy. It is hard to square the mortgage mills feeding securitized pools on Wall Street with foreclosure boiler room operations in Omaha with the serene sea meadows of the Florida Keys, empty of fish or birds because of upstream pollution caused by sugar subsidies, land speculators, and “jobs” upstream now yielding to ghost suburbs in former wetlands. No wonder the general electorate is dazed and confused. Exactly the point of the torrent of corporate money in the mid-term elections that delivered an anxious America to the party that built its viewing platform.

ALAN FARAGO is a board member of Friends of the Everglades, and he can be reached at afarago@bellsouth.net

 

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

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