An Essay: The Twelve Days of Christmas ... by gimleteye

(Part One) If preventing a depression were the top goal of policy makers, focus of reform would recognize that limiting the speculation that wrecked the economy, and ensuring that the same destroyers are not deployed again in its rescue, does not begin with the organization of finance as much as it does the apparatus of zoning and local land use.

What is ironic about the seeming inability of the mainstream media or political entities to recognize this durable connection—between the ways things are built and how they are irrevocably tied to financial derivatives (weapons of mass financial destruction) —is that bankers and real estate interests know perfectly well how these ties bind to wealth and fortunes. It is all about mis-pricing risk.

So Eye On Miami offers an alternative Twelve Days of Christmas. Each of the next twelve days I will take a clip from an essay I began a few years ago. In its original conception, the Twelve Days of Christmas ends with The Feast of Epiphany. It is as good a conceit as any and a satisfactory way to end this exercise on Christmas Day. So here it is; our own Nantucket Sleigh Ride.


“We are only building what the market wants” has been the mantra of homebuilders and, in Florida, any obstacle to what the market wants has been knocked down with ruthless abandon, destroying the environment, quality of life, and the attributes of home. The world can now see clearly, “what the market wants” was code for “what Wall Street could finance.” The dream of the American home, that plunged millions of American families into shades of distress—from diminished economic circumstances to outright wrack and ruin — still animates the public discourse.

Contractors want to know when business will revive. Plumbers and sheetrock suppliers grope for political candidates who can restore the blush to the bride. But ways to prevent the home from being used as a fundamental ingredient in massive leverage is not addressed at all. The recent collapse of MF Global, run by former governor, US senator, and Goldman Sachs chief Jon Corzine shows that at the very highest levels of finance and influence, games of chance are still the currency of the realm.

Most Americans, however, not only live on a different plane of reality; they are repulsed by the inability of government institutions to wrap their hands around the essential nature of the problem. A problem whose solution would return American to both a functional economy and leadership among nations. For millions of Americans, the dream job has given way to the nightmare of vanished expectations. A closer, granular view discloses degraded American landscapes from suburbia to ruined wetlands, from strip malls to drained aquifers. In Florida, this is the landscape for which none want to claim responsibility.

The bubble in housing and construction began with the enthusiastic Chamber of Commerce challenge: “Build it, and they will come.” The question that local zoning answers is: where? In theory, development occurs where it best serves a public good. In practice, zoning decisions are the mother’s milk of local politics. The results are not the outcome of “the free market” as described by economists.

The now-defunct Miami Sun Post captured this giddy ordering and frames our own Feast of the Epiphany. The issue was titled, “Power Developers of Real Estate”. It appeared in its Christmas 2004 issue. “Power Developers of Real Estate” is a cautionary tale of greed, hubris and now, the great fall. Seven years.

The housing bubble was inflating almost as fast as an impact bag triggered from a collapsed dashboard. From a boat on Biscayne Bay, looking to the shoreline, I gave up counting the number of construction cranes. There were more than forty. Like other print newspapers including The Miami Herald, the Sunpost was shamelessly trolling for advertisers while nervously casting a glance to the threat of the internet/web based revenue.

Nothing captured that moment like “Power Developers of Real Estate”. Today it reads like spreading a chum slick for fish behind a party boat. It captured the principal actors in breathless prose. “What is a developer?”, the Sun Post begins. “According to the Second College Edition of the American Heritage Dictionary, a developer is "one that develops." So far, so good. “More specifically, it is a "person who develops real estate." A developer can also be "a chemical used to render visible the image recorded on a photosensitive surface." In hindsight, as one scans the ruins of what was so celebrated less than a decade ago, this hyperbole has an unintended staying power.

In the case of the mainstream media in Florida, with only a few exceptions (The Naples Daily News, Cathy Zollo, The St. Petersberg Times, Craig Pittman and Matthew Waite), news executives—whose concerns were focused on bottom lines severely eroding—never permitted the “developer” to illuminate the underlying stories. So much gold-leaf would be applied to the balustrades of condo construction, production homebuilding in wetlands, and land speculation in farmland that it was inevitable everyone would be partying, humping on the staircase treads, imagining they were in the master bedroom, or, in church where no one but God could see. The hubris could not end well. And it didn't ... to be continued