For the time being, I suppose we can call this the Great Recession. That's what the New York Times is calling our current economic calamity. But maybe not. A year ago, as the world of finance imploded from its own greed and excess, ATM's were close to sputtering to a halt. As I drove through Miami everything seemed normal. I wondered at the time what the world would like; a year hence. That would be now.
The force of trillions of dollars of liquidity, unleashed by the Federal Reserve, prevented the economy from shutting down. The scenes from the Great Depression-- of hungry men lining up in soup lines-- have not materialized. Yet this slow unraveling is of a different order than anything we have experienced in our lifetimes, including the oil shock of the 1970's and the stock market malaise of the 1960's and several recessions.
As the epicenter-- politically and financially-- of the housing bust, Miami reflects the pain better than almost any other city in the nation. Coconut Grove-- Miami's oldest and most charismatic zone of commerce-- is badly suffering, but last weekend driving through Homestead, I saw more of the same. The Miami Herald is trying its best to sound an optimistic note on housing markets. But if this recession is "nearly over" (words of Fed Chief Ben Bernanke), what does the sharp downward trend in commercial real estate mean?
One of the most unappealing facets of this Little Depression or Great Recession is that its drawn-out nature has allowed accountability for the crisis to dissipate and, in some cases, to vanish. Other than Bernie Madoff, name a single banker or lobbyist who has paid a price or returned personal wealth as a result of the disaster of CDO's and other derivative debt at the root of the crisis. Regulatory reform is not only still-born in Congress, in states like Florida legislators are blaming regulations for the crisis and passing new laws that will make it even easier for new bubbles in development to occur in the future.
Locally, the unreformable majority of the county commission, that Eyeonmiami has railed against for years, continues to do business as though nothing happened; though in truth, the deep pockets that kept them in power are only deep, these days, because banks won't shut their owners down though they are technically insolvent. It's true: if you are a small homeowner, the bank owns you. If you had the good fortune to be up to your eyeballs in tens of millions of dollars in debt, you own the bank.
Here's a non-exclusive list of Coconut Grove restaurants that recently closed:
La Fontaine, 2911 Grand Ave
Mezzanotte , 2911 Grand Ave
Pizza Rustica, 2911 Grand Ave
Kaleidoscope, 3112 Commodore Plaza
Sonesta, 2889 Mc Farlane
Christabelle’s, 3157 Commodore Plaza
Bizxaya-Ritz-Carlton, 27 Ave/ Tigertail
Moulin du grove, 3425 Main Highway
Anokha, 3324 Virginia ST
Dan Marino-4 the floor Cocowalk
Senor Frogs, 3480 Main Highway
Oak parking garage-restaurant –3310 Mary St
Starbucks, 3010 Grand Ave (moved)
Qdoba, 2892 Grand Ave
Tuscany, 3484 Main Ave
Jacobs, 3157 Commodore Plaza
Papa john’s, 3201 Mc Donald
Wet Willies , 2911 Grand Ave
Modern Art Café, 2801 Mary ST
Coyote Ugly, Cocowalk
The fact that the Miami-Dade County Property Appraiser still does not include bank-related real estate transactions in the assessed base means that next year's news for local government budgets is likely to be more severe than even the current fiscal year negotiations. Why harp on all this bad news? For one, accountability has to surface at some point. Secondly, to build a foundation for an economic recovery depends on thinking about growth in new ways and making public commitments based on rational behavior. It may be that this economic event clears the air finally in Florida, so that there is a true accounting for the costs of unsustainable growth. The longer the delay in that discussion-- that has to occur in government forums, from the city and county commission to the state legislature-- the more painful this Great Recession, or, Little Depression as the case may be.
11 comments:
What measure are you using when assigning to the Fed's "liquidity" the award for economy saving? Job losses? Nope. Propaganda? Yep.
A depression is 10% GDP decline from peak OR 10% unemployment. If we were to calculate unemployment the way America did during the depression we would likely have exceeded their peak. Even the U6 rate is 16%+. We are in a severe depression that is getting worse with every passing day. Unemployment increased by 800k in August. The "green shoots" propaganda team are trying their hard to sell you crap disguised as a flower. And you're buying it?
It was the Fed's liquidity that screwed us to begin with. Low rates (1.3-1/7% for 33 months, if memory serves) and the Greenspan Put. Now the Fed saved us? This is rich. Very rich.
But the New York Times said so. Ah, well, they also said SH had WMD's, but they make lots of noise about being liberal (repeating fuzzy platitudes that their make their readers wet) but it is really just another tool of the super-wealthy and powerful.
So, bottom line: It is going to get much, much worse. Miami is in serious trouble, and there is nothing the local government can do. As long as Miami is attached to Florida which is attached to the massive corrupt institution call the United States we're forever to suffer as per the bankster needs. They need about a decade to repair their balance sheets via trading etc and as such there will be no liquidation of debt. And it is only liquidation of debt that can help us. Banks go under and their toxic assets are auctioned off at market clearing value. Then debt is renegotiated at the retail level. Until or unless that, we wait for the banks to fill trillions of dollars of holes a few bucks at a time.
Coconut Grove was killed about 30 years ago when someone (probably chamber types) priced out the artist community and small shops to make it Anywhere, USA. It was no longer a unique place to visit. Teenagers took over the streets cruising in circles at all hours of day and night. The fumes, noise and traffic made visiting an unpleasant chore. When the recession hit, the movie set was revealed to be an unsustainable model. The folks with disposable income had moved to an Anywhere, USA closer to home. The same stupid chamber mind set can be seen in Key West, Coral Gables (how long can Merrick Park survive?), Sunset Drive and other neat places that used to be popular.
I stopped going and buying in Coconut Grove when they built that stupid Coco Walk and the white elephant mall next door. The closing of the theatre was just another reason to never set foot on Main Street. They killed the goose.
Svend, read the archive 'housing crash' to get the full picture of what happened here, and how I've written about these proceedings.
The points are correct about what killed Coconut Grove, or, at least made it exactly like every other location in Florida where local culture has been strip mined. It wasn't so long ago, that Lincoln Road was a pretty hip place. The city manager at the time went to a chamber of commerce meeting and said, that with the sidewalk improvements and closing the street, now "we could really develop Lincoln Road". City governments DO have the power to protect places and enhance culture and preserve local character. But name one in Florida that hasn't sold out to the developer/campaign contributor gang?
You had me until I looked at your list of "recently"closed restaurants. Kaleidoscope closed well over 15 years ago (remember that smaller recession in the late 80's?) Dan Marino's and Wet Willies have got to have been closed over 5 years. I think you got the wrong list because this one is very out dated. Restaurants open and close all the time, and several that you have named have had other establishments in the same location that you have here.
Maybe your list should be one that shows which businesses have closed in the past year. Kaleidoscope? Really? A sign of the times?
Sorry, I really love your blog.
to m
Though the Coconut Grove bloodbath is bad, South Beach is hemorrhaging.
In the past 16 months, the Gansevoort, Fontainebleau, Mondrian and W hotels opened, all whose business models depend on room rates exceeding $300/night.
The Fontainebleau's troubles are well publicized, but the Mondrian had a 47% occupancy rate during the first six months of 2009 and the W looks to be a ghost town. Andre Balazs is selling the Raleigh in the worst market imaginable to sell and was quoted in the Miami Herald as saying it's only going to get worse. It's only a matter of time before a major hotel lands in bankruptcy.
The clubs are being crushed under the weight of untenable leases and there are simply too many of them.
Restaurants are collapsing. The Forge is closed, Tuscan Steak shut down, Table 8 filed for bankruptcy.
Lincoln Road vacancies are way up and you cant give away retail space on Washington Avenue.
Svend is correct (me thinks) until the fed and the government allow the market to set itself (Liquidate, Find the bottom) we will be in this eternal malaise. \
Gimleteye I disagree regulation or de regulation are not the issue as much as money supply. I also found an article dated 2002 which talked up FNMAE relaxing lending standards, but people kept throwing money at it because they knew the US gov would not let it fail and they were right. Had this not been the case investors would have proceeded with a bit more caution.
But Obama has his bailout (more to come)Bush had his TARP and Greenspan and Bernake have kept the prsesses at full steam ahead.
All this favors the big bankers and mega traders but is disastrous for those of us at the bottom (stagflation is coming soon, and not to theaters at COCOWALK). Locally the counties and cities must cut their budgets significantly (across the board and pensions have to return to planet earth) and at the same time lower property taxes significantly. We must find ways to bring in industries that actually build something (other than homes and not widgets) lets face it tourism, government make work, hydroponic labs, and fraud are not industries you can rely on to keep an economy strong.
I think you are right. There is something going on here. We are losing population. And visitors aren't coming. The people left here are struggling to hold on. People in local government aren't looking around them, and are functioning as if business is as usual. They will be really surprised when they see the small amounts they will get from various tax revenue sources. Someone should really be tracking it weekly.
Just as we prepare for hurricanes, we need to prepare for this. Government needs to deal with basics. My guess is there are a lot of people who are going hungry here, but are not saying a lot. We need to provide food kitchens in poor communities, but also in areas we might not necessarily think of. We also need to rethink various jobs programs to provide more hands-on employment matching. Additionally, local government may have to chop a lot of big jobs and create a lot little jobs so more people can be sustained off of the reduced tax base.
You see it, I sense it, a lot of people know it beyond a doubt. We must move quickly to address it.
The South Florida economy is terrible. Businesses are barely surviving. Many close every week.
When the average taxpayer works two jobs to make $37,000 to $50,000per year how can local governments pay its workers $100,000 to $300,000? And how can taxpayers who seldom have pensions afford to pay $200,000 per year to retiring firemen?
How can the idiots running local governments overpay their workers so much?
The private sector is suffering and the Mayor and Manager in County government are sitting back fat and happy.
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