Phoenix in the nineties
Posted inDowntown & central Phoenix Phoenix Phoenix 101: History

Phoenix in the nineties

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The new decade came upon a Phoenix beset with crisis. Charlie Keating, the most lionized Arizona businessman of the previous dozen years, was facing federal fraud and racketeering charges. His palatial Phoenician Resort was seized by a platoon of U.S. Marshals, lawyers, regulators, and locksmiths in November 1989. American Continental Corp., flagship of Keating's complex web of businesses, was forced into Chapter 11 bankruptcy reorganization. Among the casualties was his ambitious Estrella Ranch project south of then-tiny Goodyear.

Behind much of the trouble was the savings and loan scandal and collapse, a financial crisis that cost taxpayers about $132 billion. It also took down some of the Sun Belt's biggest institutions, including Phoenix's venerable Western Savings, controlled by the Driggs family, and Merabank, a subsidiary of Pinnacle West Capital Corp. meant to make big bucks for the holding company of Arizona Public Service. It would take the federal Resolution Trust Corp. years to sort out and dispose of all the properties and hustles. The worst of the S&L wrongdoing was the Keating Five scandal. Its U.S. Senator members, who leaned on regulators on behalf of Keating, included Arizona's Dennis DeConcini and John McCain (Disclosure: John Dougherty and I were the first to break this story at the Dayton Daily News).

The local trouble had been predicted in a December 1988, Barron's article about Phoenix's overheated real-estate market, fueled by S&L money. The headline: "Phoenix Descending: Is Boomtown USA Going Bust?" The boosters had been outraged. Barron's had been right. In an ominous foreshadowing of the future, the city hit a record 122 degrees on June 26, 1990.

For individuals, the worst was yet to come. Unemployment in Arizona rose from 5.3 percent in May 1990 to a peak of 7.8 percent in March 1992. This seems modest compared with the Great Recession (11.2 percent for the state); it was painful enough. State and city leaders committed to establishing a more diverse economy, weaning Arizona off its dependency on population growth and real estate. Economic development organizations were set up across the state for this purpose, including the Greater Phoenix Economic Council, led by the brilliant Ioanna Morfessis. It established goals to build strategic clusters around high-technology sectors with high-paying jobs.

Tragically, the effort failed. The 1990s, when the U.S. economy enjoyed its longest, strongest, most innovative economic expansion in history, saw Phoenix and Arizona double down on "growth." The state's population grew by a staggering 40 percent, 45 percent for metropolitan Phoenix. The cluster strategy lacked sustained focus. Yet none of this was obvious or inevitable as the decade began. 

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Phoenix Underworld
Posted inPhoenix Phoenix 101: History Phoenix Confidential

Phoenix Underworld

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The scene after Arizona Republic reporter Don Bolles was fatally injured when a bomb went off in his car in 1976.

You don't have to scrape too far beneath the veneer of "a clean, new, well-run city" to understand that Phoenix is perhaps historically one of America's more corrupt, crime-run cities. It didn't get a great city in exchange for its corruption, as with Chicago. And being crime-run isn't the same as being crime-ridden, so whatever statistics the boosters pull out to show community safety are really beside the point.

It's long been this way. When I was a child, Phoenicians sniffed that Tucson was the Mafia town, with Joe Bonanno, Pete Licavoli Sr., and company. Yet the FBI estimated that in the 1960s Phoenix had more mobsters per capita than New York City. I grew up just a few blocks from the house where, in 1958, Gus Greenbaum and his wife had their throats slit in retaliation for Gus' skimming from the casino tills in Vegas (and, local lore has it, the hitmen then ate the steaks the Greenbaums had just cooked). Phoenix was full of bars (Rocky's Hideaway, the old Blue Grotto, Ivanhoe, the Clown's Den, etc.) frequented by made men and the wanna-bes.

This was not the result, as some would have it, of "the Wild West atmosphere." Rather, it was the interface between a city growing too fast with few rules or institutional checks and the migration of Midwestern gangsters to exploit the situation (or, later, to be relocated by the feds). And an establishment willing to look the other way, or join in the "business." A culture of fraud built on successive real-estate booms, or scandals such as the collapse of Arizona Savings in the early 1960s, also made the city a magnet for criminals. The most prominent figure in this was Ned Warren (aka Nathan Waxman), the Kingpin of Arizona Land Fraud. He figured in the Bolles bombing.

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Posted inPhoenix Phoenix 101: History

Phoenix 101: Rugged individualism

Phoenix is built on many myths. Perhaps the greatest is that of the rugged individualist, standing in opposition to the statist and collectivist tendencies of "the East" and Europe. It's a familiar myth of the West, but it reaches levels of hilarious dissonance in my hometown.

In reality, Phoenix is the largest-scale example of government social engineering and public ownership of the commanding heights of the economy — i.e. socialism — in American history. Without massive government intervention, Phoenix would be a benighted little farm town of a few thousand, instead of a benighted migropolis of some 4 million, many raging along the public highways in their SUVs imagining themselves as 21st century range riders.

Modern Phoenix began with federal reclamation, the Newlands Act, which would begin the dam building that tamed the Salt River. It envisioned a Jeffersonian yeoman farmer democracy, with plots of 160 acres cultivated by citizens liberated from the dark satanic cities of the East. It didn't quite work out that way — rich farmers emerged and poor farmers (like my family) struggled. But all were being subsidized by federal tax dollars long before the New Deal. Their endeavors would not have been possible without the federal investment.

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Posted inPhoenix Phoenix 101: History

Phoenix 101: Power primer

Phoenix has no history. Why are things so screwed up here? It's just like every other place…

Such are some of the statements, whether inane and inaccurate or plaintive, that I often hear from Rogue readers, or just folks down in "the Valley" when I sneak back for a journalist-guerrilla raid. So, a new occasional feature, Phoenix 101, to try to fill in the gaps for a place where even natives my age have never even ridden a city bus, much less know a rich, corrupt and even inspiring history. Let's start with power.

From the era of the Hohokam, power in the Salt River Valley flowed from water. Whoever controlled the water — and how it was used — sat upon the commanding heights of the society. Even today, the divide between Phoenix and the East Valley is partly an echo of the old war between the north and south side of the Salt River over who would get the precious, and fickle, riches of its stream. Even today, the Salt River Project remains, very quietly, the kingdom and the power and the glory.

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