Judging from the violence of Rudy Guiliani's collapse as a presidential candidate, Republicans are in big trouble. The American voter, who whistled to work while the foundation of the national economy eroded, is awake.
Rudy Giuliani bet the farm on the national security card. He was right about the card, but wrong about the face.
Voters are afraid. The greatest threat to our national security is the state of our economy. And it is the economy--in terms of impacts to people--that will drive voters' decisions on the next president of the United States. The Republicans are the party in trouble.
It took Florida voters most of 2007 to realize the state had been hit by an economic hurricane wrecking property values in a way that hasn't occurred since the hurricanes of the 1920's.
It was a story that the mainstream media didn't want to report and, finally, couldn't avoid: the statistics are just too revealing.
The government fudges numbers on inflation any number of ways. But there is no escape on the value of a home: it is only worth what a buyer will pay.
In December 2007, there were 3557 homes for sale in Miami-Dade County--Florida's most populous and politically influential--with listing prices over $1 million dollars (statistics based on numbers provided by the South Florida Realtors Association).
Compared to a year earlier, pending home sales are down 33%. Homes sold are down 59%. A year ago December, based on the number of homes valued over $1 million, there was 34.7 months of inventory.
By December 2007, the inventory based on homes sold shot up to 87 months, or, more than 7 years.
There are a few obvious conclusions to draw from these numbers, and some that need teasing out.
First of all, Miami housing markets are frozen unless sellers are willing to sharply discount their price. 40% discount from listing price is the number going around.
Of the 3557 homeowners, some are foreigners whose purchases are based in Euros or petrodollars, and some are US taxpayers wealthy enough to ride out the storm. In any case, in Florida homeowners who can afford homes over $1 million are mostly Republican.
A high percentage cannot ride out the storm indefinitely--which is what 7 years of inventory represents. Some families are going to be ruined, and some will not be able to recover the loss of net worth represented by the collapsed value of their homes.
It is not clear that the Democratic Congress has grasped the severity of economic distress, represented in this snapshot of the wealthiest segment of Miami-Dade county. The government cannot bail out wealthy homeowners who made or were persuading to make bad choices on housing investments.
The housing market bubble was so excessive, concealed such great abuses of fiduciary responsibility--from the origination of securitized debt, to the issuance of individual mortgages, to the regulatory framework from the highest level to the lowest order of zoning council--that legislative, fiscal and monetary fixes cannot revive the housing markets until the excesses are fully wrung out.
Why single out the pain of the wealthiest homeowners? They are mostly Republican--and by next November, if the Democratic candidate for president can clearly state the case, they will have to agree that their own party, the party of fiscal conservatism, lost the mandate to the White House.
Voters will hold Republicans responsible. The race for president is the Democrat's to lose.
20 comments:
And your post tommorow will read:
"Libertarians In Trouble"
Ha, ha, ha you are wrong. Tomorrow we write about the communist party, that doesn't appear to have a candidate yet so that makes them REALLY in trouble.
THERE IS THE RUB:
You said if the Democratic Candidate for president can clearly state the case...
Highly doubtful.
Dems need to take a word-smithing course above all else. They need to speak in sound bites to win.
Bush-o-nomics:
http://www.vanityfair.com/politics/features/2007/12/bush200712
I think a Democratic nominee is the worst possible scenario. I think Bush sucks and needs to go. The Dems will want to raise taxes and raise spending on social welfare. According to David Walker of the GAO we are already insolvent when calculating future obligations, the Dems will only compound the economic problems we face today. I want change like most American's. Obama/Clinton change is suicidal to the economy.
Response to Anonymous said... The remark fails to understand that a republican president and congress put us the unfortunate economic position we are all in. Why is more of the same a solution?
Anonymous #2: Read the article linked to in the post above yours.
Anon quote from the article we are all lazy...
The Dems would be the wrongest of the choices. Hillary/Obama both want to stop foreclosures and bailout everybody. They are just populists and just pander to the middle class. They don't really have any policies that will help the middle class. Just taxes that will stop people in the Middle Class from getting out of it and keeping the lower class adicted to government programs so they won't elevate themselves... Such is the life of a Democrat tax and spend.
hate the lingo...
last comment
"Tax and spend." that is so cliché. Think of a new one. What have the pubs done for the national debt? So you don't tax, you borrow. Which is better? Oh, yes one effects your children and the other you! Selfish, short sighted pubs with corny no meaning sound bites.
Let's see who is spending now buddy? who is spending and paying trillions for this military occupation? Speak English not Republicanese and then I will respect you. When you throw idiot sayings around that have no meaning except to small minded people, it is demeaning to you.
How can they (Hillary & Obama) be worse than the worst president ever. Your words...
WOW... it's pretty insane to think that Obama or Hillary could be worse than the WORST administration of modern times, aka Bush/Cheney.
And they have the nerve to call the DEMS the 'tax and spend' guys, when Republicans have been so clearly the 'BORROW and spend' party for all the years they were in power?
Oh yeah, the deficit doesn't matter, we'll NEVER have to pay off that $9 trillion, no siree bob. Or pay yearly interest payments in the hundreds of billion to SERVICE that debt that the GOP helped run up, every single year.
It's just laughable that the party of Abramoff and Enron (Ken Lay), the party of not doing a damn thing to regulate the mortage industry until the subprime fiasco blew up in everyone's faces, the party that spent like a drunken sailor until they finally LOST both houses of Congress, thinks it can say jack s*** about anything anymore.
At this point, I'd vote for a labratory rat before I'd vote for a Republican. The lab rat at least learns from its mistakes when it runs its mazes... Republicans never seem to.
Great post.
The subprime and adjustable rate mortgage default crisis looks set to be the single biggest detriment to local housing markets and economic development on the horizon. I don't think that bailouts for these lenders is the solution. It only encourages moral hazard when what lenders should be doing is redrafting lending policies to prevent consumer abuse. If there are going to be tax breaks on offer, they should be directed toward consumers and small business to stimulate consumption and job growth.Democrats who articulate this clearly - and are willing to rein in (or advocate prosecution, a la Elliot Spitzer in NY) egregious abuses in lending and development practices - stand a good chance of focusing voter angst on this topic, and of building a broad consensus that can carry them to the White House. If not, individual states will have to step in (again Spitzer's turn as NY Attorney General provides a helpful guide in this regard). Thanks for providing decent FL political coverage.
I think we have some right wingnuts commenting here that are trying to stomp out the flaming bag of truth left on their front porch.
After squandering a budget surplus that former Fed Chair Greenspan, wringing his hands, fretted would be "too big" and handing us a budget deficit that dwarfs even the Reagan mess; after dropping - literally - planeloads of cash into Baghdad and not even bothering to keep receipts to see which terrorist group had stolen it to buy weapons to kill our soldiers; after outsourcing jobs our troops used to do for ten times the cost and demoralizing our volunteer armed forces even further in the process; after allowing the energy market meltdown embodied by Enron's spectacular collapse; after presiding over the complete implosion of the US housing market and the destabilization of world financial markets; after sneering at fuel efficiency and alternative energy research as "lifestyle choices" while watching the price of oil TRIPLE in just 6 short years,
the Republican Party must give back the Nation's credit card and get a second job to pay off the debt like the rest of us would have to do if we @#$cked up like they have. And not just the dimwit in the White House, but the complicit Repubs in the legislature too.
You no longer have the right to even suggest that you are fiscally responsible unless it is intended to be a punchline.
Tax the rich and spend it to help the poor. Build a bridge or two. Provide mental health care for our returning Vets. Spend a couple bucks to make sure my kids' toys aren't toxic. Simple stuff that eludes Republicans.
I'm an independent who will most certainly be voting Democrat.
WELL SAID! I too as an independent have also come to your conclusions. Thankfully you articulated the reasons better than I ever could! Thank you reader.
The Democrats have been in charge for a year -- with ZERO plans to address ANY of the aforementioned problems. And Hillary and Barack don't propose anything more than "blame Bush" for everything. Talk about cliche.
At least they are working together on a bi-partisan economic stimulus package that will avert a recession (which we have yet to experience).
Republicans, Democrats, what's the difference. They're exactly the same; ineffective people who have big names and positions and no brains other than to put your money in their pockets. Anyone who still believes in the political system is crazy. We'd be much better off if both parties bit the dust along with our whole phony system. If you think either party can help you right now than be prepared to serve your children dog food for dinner soon.....
The economic stimulus package will prevent a recession? Is that some kind of joke?
The NY Times today offered the calculation that the loss of net worth to homeowners from falling home prices last year alone exceeds the value of the "stimulus package".
Which political party, do you imagine, bears full responsibility for the burst bubble?
Neither political party bears such responsibility. The market does -- from the speculating borrowers who bought more house than they could afford, to the mortgage brokers who arranged loans to NINJA borrowers (No Income, No Job or Assets), to the appraisers who inflated the values in collusion with the mortgage loan brokers, to the bankers who didn't see the impending disaster of too many subprime loans, to the investment companies that didn't kow or care their securities were built on sand.
I don't expect the folks in DC to grasp the complexities of the disaster, as too many of the players themselves didn't grasp it. This was much more of a market failure than a scandal, and not a conspiracy.
like that "NINJA" Borrowers. Very good.
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