Posted inPhoenix

Phoenix stumbles into an epic reshuffle

A reader passes along word of a sign seen in Phoenix: "Please God, let there be one more housing boom and this time I won't piss it all away." Yes, you would. To paraphrase Linda Hamilton in Terminator: It's what you do. It's all you do."

The bad news isn't just that Phoenix continues to lead the nation in house-price declines — down a stunning 32.7 percent for 2008. It's not just that the bubble is only 60 percent deflated nationally, by some estimates — so good luck with that spec house in Maricopa. It's that the whole Ponzi scheme is over.

Urban theorist Richard Florida calls cities like Phoenix and Las Vegas out in an influential article in the March issue of Atlantic magazine. The title: How the Crash Will Reshape America. "The boom itself neither followed nor resulted in the development of
sustainable, scalable, highly productive industries or services. It was
fueled and funded by housing, and housing was its primary product.
Whole cities and metro regions became giant Ponzi schemes." In other words, pissed away. Now it may be difficult for Phoenix to avoid being one of the biggest losers as the competitive geography shifts decisively because of the Great Disruption.

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Posted inPolitics: National

Can candidate Hoover fool us again?

John Sidney McCain III said today "the fundamentals of our economy are strong," sounding exactly like Herbert Hoover after the crash of 1929. The parallels are interesting. Republican policies largely caused the Great Depression. Hoover had done honorable and even miraculous work before the presidency (feeding World War I refugees). He was a progressive Republican but became a reactionary. The biggest similarity, besides "the fundamentals" lines, is that the world had passed both men by. The world had become too complex for their remedies or policies. They were/are overwhelmed. Except Hoover didn’t have Karl Rove, "the base" (which interestingly translates in Arabic as al Queda) and so many ignorant, easily led voters.

On the other hand, maybe the key word in McCain’s statement is "our" economy. As in the economy represented by his rich friends and supporters, the nationless corporate oligarchy and his Treasury secretary-to-be, former Texas Sen. Phil Gramm (also prime architect of banking and Wall Street deregulation). He of the "nation of whiners" and "mental recession." For them, the winners at a time when income inequality is worse than anytime since before the crash of ’29, the economy is strong. So maybe unlike his campaign of late, McCain actually spoke the truth.

The recession that’s all in our heads claimed two of the most powerful and influential investment banks in the world over the weekend. Anybody who claims to tell you what will happen next — much less that the worst has passed — is about as reliable as all those telephone mortgage chislers during the housing bubble. What is more clear is how it happened, and, perhaps, some of the ramifications.

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