Secretary of State Condoleeza Rice was in Lisbon for a day-long visit. According to the Embassy website, she met with Portuguese Foreign Minister Luis Amado, who hosted a lunch, and the two took questions from reporters at a joint press conference afterwards.
The press—at least the press earning salaries in Euros—might have noted the irony of Ambassador Hoffman, former campaign finance chair for President Bush and for two-term Governor of Florida, Jeb!, in Portugal, a nation that boasts its own superpower past.
Put another way, it's the fall in value of the US dollar that permits the European press and every other tourist from Europe to visit American cities that are no longer affordable destinations for Americans, like Manhattan where the price of a good but average room has spiked to $600 to $700 a night because of the Euro trade.
Maybe the Rice stopover was just to refuel and lunch, in a place friendlier than the Mideast, or maybe it was a thank-you for Portugal being a member of the Coalition of the Willing until its small contingent was pulled in 2005.
Maybe the press should have thanked Mr. Hoffman, for helping make the US cheap. By that, I mean the massive instability in the US dollar, not just from trade imbalances, but the effect of sequential speculative bubbles in the US economy--the last of which, in housing markets, is just starting to unwind.
If I were there, my questions would have been along those lines.
In the 16th century Portugal was hounded from its territories because other, bigger players in Europe got the same technology and had more weight to throw around the seven seas. Ambassador Hoffman should have got London, or Paris, or Madrid, don't ya think?
But maybe not. Maybe Portugal is exactly the historical framework in which the former chief of WCI Communities places well, who only three years ago! was on top of the world, a Bush loyalist consolidating campaign contributions from the development lobby and every engineering firm planning to reap windfall profits from the industrialization of Florida’s water supply.
WCI Communities was in the thick of the madness. It turns out that many investors in Europe, maybe even some in Portugal, were persuaded to buy mortgage backed securities that made the Florida condo market take off like Icarus.
In 2003, then WCI chairman Mr. Hoffman crowed to the Washington Post that development in Florida was “an unstoppable force.”
Four years later!, WCI Communities is a company with $2 billion in annual revenue that can’t, despite the best efforts of its Goldman Sachs, find a buyer, at least not at an honorable price for its principal shareholders.
Yesterday, The Miami Herald reported on the company’s woes. Since early this year, twice the volume of buyers have abandoned deposits as the company forecast would walk away in 2007. WCI’s stock price has plummeted more than 70 percent in the past year.
Wall Street asserts that production home builders are stuck in a cycle that is particularly difficult but a cycle nonetheless.
The oracles also say that Florida—the epicenter of the housing market crash—and other states prone to real estate speculation like California and Arizona are containable problems that will not spread to the broader economy.
The Miami Herald report on WCI Communities cracks a very tiny window on reasons both these assumptions are not true.
“WCI is one of the few publicly-traded high-rise developers in Florida, so its reports are a rare view into an industry dominated by privately-held firms.”
Most consumers take the retail view of the housing crash: liar loans, mortgage fraud, and shell games in the MLS listings where houses that can’t sell are taken off the market and then re-listed at lower prices, confusing statistics and leading many to think that the housing markets can fall without prices declining.
But the wholesale view is wrapped up in private transactions as noted by the Herald that don't make it to the financial pages because laws compelling disclosure simply do not exist.
It would take Congress and the White House to support new banking laws requiring hedge funds and private equity to disclose exactly the risks to shareholder equity. That would tend to make those investments less attractive, more risky, and would also require politicians to turn their backs on the same campaign contributors from the financial industries that gave WCI Communities every reason to believe that development in Florida was the greatest show on earth.
That was three years ago, and billions have been earned by Wall Street in the proliferation of financial derivatives which may be of even less value than WCI common stock.
But who knows and who cares, when Lisbon is so very far away?
1 comment:
Can we pay them to keep both of those guys?
Post a Comment