In "Shadow Market clouds housing recovery", The Miami Herald takes first steps away from the rear-view mirror of the economic crisis that has characterized its reporting. The schizophrenic take on the news is enough to twist off a few heads. The recession is over. The public equity markets have recovered nearly half of their losses. Housing prices have "stabilized". Now, in Miami "The number of properties on the market may be much larger than anyone thought and appears likely to swamp South Florida with more deeply discounted homes, clouding the prospects for a housing recovery." The Herald analysis shows that five times the number of homes and condos listed for sale by the Florida Association of Realtors is in the foreclosure pipeline.
Today's Herald reports, "South Florida homeowners walking away from underwater mortgages". "In September, homeowners here collectively owed $62.7 billion more than their homes were worth, according to an analysis by First American CoreLogic. The analysis found that about half of all outstanding mortgages in Miami-Dade and Broward are underwater." (Please click, 'read more')
In "Short Memories at Goldman" The New York Times business reporter Joe Nocera notes that of the $16 billion Goldman is setting aside as bonuses for executives; a significant portion would not have been possible but for the intervention of the US government to keep Goldman from failing. Although Goldman Sachs has paid back its TARP money, some of those billions belong to the US taxpayer. It is theft on a grand scale.
When a handful of Wall Street executives-- smart and well-equipped with technology and contacts to take advantage of market dislocations-- pay themselves billions, and the rest of America watches witlessly, it is easy to see how the "I got mine" has changed into "I'm taking mine" from the bank.
The net result of trillions of liquidity-- really obligations by taxpayers-- has been banks unwilling to lend, homeowners unwilling to abide by contracts, a court system swamped by foreclosures, the US Treasury incapable of saying either who got what, or what profits the walking dead can legitimately claim as private.
Tens of millions of Americans bought into the housing asset bubble. What is not clear yet, is if this path to recovery is also turning the United States into the biggest economic basket case in world history. It is no surprise that Miami's local county commissioners still cannot come up with budget cuts totaling only a few percent when the property tax base throughout the county has plunged by half. "Everyone is doing it".
9 comments:
Diplomacy is about talking to people who don't share your point of view. It's time to start taking the olive branch in to our commissioners, talking with them, and trying to make a difference. This is getting worse and worse, I am sorry to say. I believe it's time to put "I told you so" aside and start talking about what can be done, constructively, to put things on a better track.
What is getting "worse and worse"?
Hey Gimleteye, why to you say "...some of those billions belong to the US taxpayer" with regard to Goldman?
The US taxpayers offered them the money, they borrowed the money and then they paid it back with interest so what is the continuing "equity" the taxpayers have in the company? Why is this different than any other loan?
@ Steve,
Without the billions that flowed to Goldman via the AIG bailout there would be no bonus at Goldman. Hell, there wouldn't even be a Goldman any longer.
It was the golden opportunity for this society to rid itself of this parasite called Goldman Sachs. Unfortunately this opportunity was squandered. Given the state of affairs a new opportunity might arise sooner than most think. I just hope Uncle Sam will be too broke so bail these gangsters out a second time.
As for "homeowners unwilling to abide by contracts", walking away from your home is not a breach of contract! The contract is "you pay or the bank gets the house". A put option which banks failed to price properly.
steve:
goldman paid back their TARP equity but still have money raised through other government guarantees (e.g., TGLP) and also raise money for next to nothing through FDIC insured deposits now that they're a bank holding company. They are still many billions into the taxpayer!!!
Written over two years ago but still meaningful today.
During his eight-year reign as governor of Florida, Jeb Bush fashioned an economic time bomb (Governor Crist has since done nothing to defuse it). On his way out the door he lit the fuse. His handiwork will soon devastate this state and visit unprecedented suffering on its people. It will be a nightmare, part of which will imperil the public schools, the operation of local governments and the state retirement system.
If he could have, Jeb Bush would have relieved Florida's wealthy persons and corporate entities of their entire tax burden. As it stands he came very near his goal. Tax loopholes created during his administration for corporate income now shelter between $500 and $600 million that was counted as revenue before. $600 million more was lost to the state when Bush eliminated the tax on intangible properties (stocks and bonds) in January 2007.
Jeb Bush tried to privatize all things profitable and make the people assume all risk associated with investment. His program gave a leg up to charter schools and turned elements of the state's water supply, public roads and social services over to wealthy investors. The lynchpin of his healthcare agenda was to turn Medicaid into a private managed health care system. That program was piloted in five counties. The Department of Children and Families was turned into a massive private gamble that money could be made off Florida's most vulnerable children.
When investments went bad the working people of Florida ate the loss. In 2002 the state's short-term investment and pension funds lost $334 million as Enron collapsed, three times the loss of any other fund in the nation. Jeb Bush's minions invested in Edison charter schools when the stock was valued at $37 and got out when it was worth 14 cents. Another $500 million of the public's money was lost to enable other corporate adventures.
This fiscal year (2007) the state treasury suffered the first waves of the tsunami that is coming. The servile Florida State Legislature was called back into special session barely six months after passing a $71 billion budget to address a 1.1 billion dollar revenue shortfall. Among other things these servants of the wealthy took $100 from each of Florida's public school children to rebalance the budget. The lights had not been turned out in the Capitol Building when the Office of Policy and Budget projected an additional $2.5 billion revenue shortfall over the next 18 months.
The Governor and State Legislature have no answers because the only solution requires they turn on their masters. There is no salvation to be found in higher sales taxes for working people, or slightly lower property taxes for the average homeowner, or reduced funding for schools, fire and police protection, or shredding the social safety net, or higher rates of unemployment, homelessness, crime and violence. Florida's survival now hinges on one question, "Can the people force this corporate band of reverse-Robin Hood's to give up enough of their ill-gotten wealth for the sake of everyone's survival?"
The men in charge in Florida have looked over the horizon and seen the inferno that lies ahead. They fear only one force-their victims united and mobilized in acts of resistance. They have already begun sowing seeds of division hoping to block any uprising as human misery and deprivation spread across the state. They don't expect their sham property tax proposals to result in lower property tax bills. They expect the measure to pit desperate homeowners against teachers, fire fighters, police officers, and other workers living paycheck to paycheck. Their campaign, as always, they will attempt to sharpen racial divisions. They will point the finger at immigrant workers, local governments, and district school boards. Any scapegoat will do to divert attention from them as they make their last desperate maneuvers to stay in seats of power.
Goldman Sacks was owed billions by AIG for bonds. Goldman may have paid back the TARP money but they received 100 cents on the dollar from AIG for their(GS) bonds. Other bond holders such as the GM bond holders received cents on the dollar. Does something seem unfair here?
Teaching people how easy it is to walk away from mortgages and how it won't damage their credit is not the role of the newspaper. It is hurting the rest of the community. Shame on the Miami Herald.
Yes! The Herald should get back to waving the pom-poms. What could go wrong?
http://www.youtube.com/watch?v=zDAmPIq29ro
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