The Ponzi State: Emil Bizon: 22 Feb 09Bill, thanks for posting the bit I wrote up.On the same subject, and at the moment there appears no other will override it, there is an excellent article in the New Yorker of Feb 9-16 by George Packer. Its title is The Ponzi State. It is written in a style reminiscent of John Steinbeck or, even more so, Erskine Caldwell. He wrote a small book called Tobacco Road which gave a devastating view of depression era people trying to eek out a living in Appalachia. This book is as much social commentary as reportage on the Florida real estate bubble, American Dreams and the American way of life.Perhaps it might interest our resplendent class!
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ABSTRACT: A REPORTER AT LARGE about Florida’s real-estate market and the economic downturn. Writer visits a number of inland real-estate developments near Tampa, Florida. Developers there dreamed up instant communities, parceled out lots, and built look-alike two-story beige and yellow houses. The houses sold to some of the thousand or so people who moved to Florida every day. Now many are ghost subdivisions. In one community, Twin Lakes, property values dropped by more than a hundred thousand dollars in the past two years. Writer interviews Angie Harris, a Navy veteran and mother of five, who says of her neighbors, “It used to be people would wave. Now they don’t.” In another community, Hamilton Park, the writer interviews a woman named Lee Gaither, whose only income came from Disability payments. She was facing eviction and planned to sell many of her possessions on eBay. Florida is one of the places where the financial crisis began. Gary Mormino, a professor at the University of South Florida in St. Petersburg, tells the writer that, “Florida, in some ways, resembles a modern Ponzi scheme. Everything is fine for me if a thousand newcomers come tomorrow.” The state depends for revenue on real-estate deals and sales taxes. By 2005, the housing market in Florida was hotter than it had ever been. Flipping houses and condominiums turned into an amateur middle-class pursuit. Writer tells about Floridians with modest incomes who made money buying and selling real estate. Mentions one case in which a house appreciated in value by almost fifty per cent overnight. According to an investigation by the Miami Herald, government oversight of the real-estate market was so negligent that more than ten thousand convicted criminals got jobs in the mortgage industry. Flipping and fraud burst the bubble. But in places like Pasco County, it was the ordinary desire of ordinary people to buy their own home that turned things toxic. Tells about Anita Lux, who moved to Florida from Michigan with her husband, Richard. Gives a brief history of Cape Coral, Florida, which was first developed in the fifties by two businessmen from Baltimore. Writer interviews a number of Florida residents who have lost their jobs or homes. A Fort Myers real-estate agent named Marc Joseph tells the writer, “Greed and easy money. That was the germ.” By last year, the highest foreclosure rate in the country could be found in Fort Myers and Cape Coral. Mentions other indicators of the economic hard times, including the closure of auto dealerships and the theft of copper. Writer visits the office of Tampa’s mayor, Pam Iorio, who is determined to build a light rail system to revive the city’s fortunes. A number of people in Florida told the writer that the state needs a fundamental change in its political culture.