Miami was where it started: the easy financing of endless high-priced condos without a clue of who would actually buy them. Ninety thousand of them were built on paper; bought, and traded in the Magic City before they were even completed. In the boomtown frenzy of quick cash, high flip rates, the entire housing market went crazy in the Sunshine State. Speculation got politicians drunk - Miami Mayor Manny Diaz was on the cover of magazines as his newfound economic engine heralded a renaissance of the city; the developers had saved us all. Ballooning property values fattened city and state budgets. With free flowing campaign contributions from high developers, the governor, the GOP controlled state legislature, and the complacent Democrats went along with drastic tax cuts that everyone knew would be devastating when the bubble burst.
Meanwhile, low-income communities were the canaries in the coal mine. At the height of the bubble, low-income black and immigrant communities were crying out about the disaster underneath. There was an affordable housing crisis by 2003, as home prices began skyrocketing and both state and private actors abandoned the preservation and production of low-income and moderate-income housing. More importantly, real income and real jobs were growing increasingly out of reach. There are no "real" jobs that can pay the bills, no wages that can send kids to college, no work that people can be proud of. While developers and bankers threw champagne parties on South Beach to celebrate the newly glitzy towers in downtown, the people of Liberty City, Overtown, and East Little Havana had hit the downturn first.
Globalization has finally caught up to America. What's left is a hollow de-industrialized economy in the heart land, and cities that were built on serving the global finance industry or producing media and entertainment that said it was all okay. The only standing industry is the military, and even that is overstretched and not quite providing the spoils that empire demands. For 30 years, the United States was heralded globally and convinced us internally that this strategy is flawless, that global free market fundamentalism is the solution for humanity. For three decades, in rhetoric and in aggressive policy, the U.S. has championed neo-liberalism where governments around the world were forced to cut social programs and taxes to allow corporations to run amok. And like in Miami, where developers were allowed to make mega profits without any investment back into community, where there was blind faith in the trickle down theories, the world saw poverty deepen while the few that were connected to speculation got fat.
Some have called this casino capitalism, and for America the game may be up. The position of the American worker shows the dilemma of U.S. capitalism. As workers' ability to make a living diminished, and social safety nets were cut, Americans' actual buying power shrank. Just as easy credit, allowed for the creation of condos that nobody could afford, borrowing filled the void that real wages once provided. People began using credit cards and taking loans at an unprecedented rate. This was not just people's choice it was official policy. The federal government fueled and encouraged loose credit, and finance institutions happily followed. Especially in working class communities that were strapped for cash, credit was loose. Cheap loans were financial crack in the community. The economic depression that is now coming was staved off through fake loans and fake money, but the longer and bigger that fictitious capital grew, the bigger the crash.
American capitalism is in trouble. After decades of deregulation, union busting, destroying social services, and saying that there is no room for 'big' government, the government is now going to spend more on the national financial bailout than any other government intervention ever. The financial bailout would be the largest government nationalization of an industry in the history of the planet. However, despite spending all that money, the government, and moreover, the public, are not going to own the banks. In other words, we are paying for nationalizing the financial industry without actually owning the assets that we're buying. While opposed to big government spending on education, housing, and social security, $700 billion is a free welfare check for banks and insurance companies.
In doing so, the government hopes to stabilize the credit industry in the short term with overwhelming capital infusion. However, covering all that fictitious capital does nothing to resolve the fundamental issues in the U.S. economy. There is a double bottom line. If the U.S. cannot produce something beyond movies and money managers, it cannot survive. The strategy of the U.S. being the managers of the world economy just went bankrupt. If working class people cannot buy homes, food, and energy, with money in their pockets and not through lines of credit, then there is no end to the crisis. The economy can only be saved through those nasty two words: spreading wealth.
It is time to flip the script.
The good thing about the bailout is that a $700 billion price tag to save the economy is now common. So, take that first $700 billion for the banks and double it. Make it $1 Trillion, or more, which must be invested in the incomes of normal folks to spark the economy. Scrap the trickle down philosophy that resulted in inflated CEO salaries while regular folks continue to suffer. Put the money directly in the hands of our people and our communities. It's that simple.
Second, halt all home foreclosures and evictions. The mortgage crisis is the largest loss of wealth in communities of color, ever. We must halt the rapid erosion of wealth and ensure the basic needs of people are met. Use the money to reestablish wealth in those communities through underwriting empty homes and producing more housing in the urban core. Give those assets to people and communities that have a long term interest in their use and prosperity. Bring social security to where there was speculation.
Third, and most fundamental to the long term, we must ground the economy in producing wealth and value. The emerging green economy can pave the way to producing wealth again. It is a way out of the double crisis we are facing: the economic crisis and the energy crisis of oil. Massive investments must be made where the housing crisis first hit: Black and immigrant low-income communities. Investing in job-producing green enterprise in our communities - recycling plants, alternative energy, and green building supplies - will ground us in wealth-producing infrastructure for now and the future. And this time, instead of just handing these assets over to greedy corporations and banks, we need to imagine a new era of community and publicly controlled enterprises where the jobs, knowledge, and wealth stay in the community and serve the people.