Congratulations to former Miami New Times writer Jake Bernstein, of the writing team that won a Pulitzer Prize awarded to journalism that appeared first on the web, and not print. A significant first.
Jake and Jesse Eisinger wrote for ProPublica,
"The Wall Street Money Machine". I had followed the Magnetar story without realizing its Miami connection or Bernstein's coup. The series is the first detailing a complaint that was a focus here at Eye On Miami long before the financial crisis broke, involving the rampant use of platted subdivisions and corruption of local zoning and political processes to feed the Growth Machine. Miami and its environs were the epicenter of the housing crash precisely because of the way local builders and lobbyists meshed political ideology-- that propelled Jeb Bush into the Governor's Mansion in 1998-- and the proliferation of financial derivatives tied to housing. Both depended on the elimination of accountability: the former, through the evisceration of government authority to regulate the use of cheap wetlands and farmland to build sprawl and the latter, through the use of "demographics" to match distant investors with paper investments tied to formulaic developments; whether zero lot line housing, strip malls, or other mass market features of the suburban landscape. Both depended, utterly, on persuading buyers that risk was minimal compared to reward. Last but not least: both depended on speed of execution. The analog of knocking down banking regulations was to clearcut regulations protecting the environment. The formula was perfected in Florida, where a 30 Year War against the environment, started by the Sagebrush Rebellion and Wise Use Movement in the 1980's, found highly productive fuel in governmental efforts to protect the Everglades and other vital natural resources. It was snake oil from carpet baggers on a grand and national scale, wrapping up state legislatures, Congress and the White House. And it originated in Florida. (check our archive, under 'housing crash', for more.)
The billions of dollars flowing to Wall Street financiers from short selling their own financial derivatives could not have happened unless "product" was delivered. And the delivery of product depended on groups like the Latin Builders Association and assorted lobbyists geared into local politicians who used zoning changes in farmland and exploited Everglades wetlands to build platted subdivisions.
Their product was suburban sprawl, and it was fraudulently sold to the public as "what the market wants". In the latter stages of the housing boom, when Magnetar was hatched, the billions in profits and compensation were increasingly tied to an exhausted supply of home buyers; so exhausted, that by the end in 2005 forward mortgages were distributed like confetti.
More than a decade ago, while writing for Miami New Times, Bernstein wrote an article on another aspect of the fraud necessary to keep the Growth Machine humming: the use of underground aquifers by Florida's municipal governments and counties to illegally dump more than a billion gallons per day of scarcely treated sewage. Put another way: platted subdivisions and their builders relied on cheap methods of disposing all the waste generated by millions of new residents.
Click 'read more' for Bernstein's early venture into the Ponzi Scheme (and my role, then, as a Sierra Club leader in Florida). In the meantime, ProPublica would be interested to know that the recent session of the Florida legislature proves lobbyists successfully exploiting the economic crisis to cement their advantages. Today they call it "creating jobs" but what new bills do is to ensure that any barriers to the next Ponzi scheme involving cheap, low cost housing in wetlands and farmlands will be unimpeded by civic opposition. There's another Pulitzer. From my point of view, it would start with banks like US Century and the Miami-Dade fraudsters, showing how the small gears all connect back up to the big ones, like Magnetar.
