Romans 3:4 yea, let God be true, but every man a liar; as it is written, That thou mightest be justified in thy sayings, Luke 12:15 for a man's life consisteth not in the abundance of the things which he possesseth.
Busted American dreams
October 6, 2008
'You feel bad, you don't want to take their wedding rings from them, that's their memories and everything," says Michael Bruce from behind a row of thick steel bars. "But they need the money and that's what we are here for."
Bruce holds out a black velvet jewelry tray, each row holds a dozen wedding rings: big diamond, little diamond, stylish or gaudy, he has dozens. "While they take the ring off their finger, they get all choked up. It's just something you got to deal with... That's just the way the economy is, it's trash."
Bruce, whom everyone here calls Junior, is the manager at a pawnshop on the outskirts of Hollywood, Florida, itself a diamond of a city set on the perfect setting of Southern Florida's Atlantic beaches. "It is easier for them to pull a ring off their finger than to bring in a lawnmower," says Bruce, who says Americans are so desperate to pay off their mortgages that they are coming to his pawnshop to sell "everything from musical equipment to the gold teeth from their mouth."
No one has cash, debts are piled high and even the banks seem to be running out of money. "It is better to lose your ring than your house," he says.
Junior's Pawnshop sits alongside a faceless strip mall, across the street from a cement fortress - the sheriff's office. Inside the shop a steady stream of people come in and sell off their possessions to get cash. A stack of Palm Pilots here, brand new Bose speakers and so many Guess watches that Bruce won't take them anymore. "I get the guy who drives up in the Bentley and the people who walk in; no one has cash," he says.
Down the street at Circuit City, Alex, the sales clerk, agrees. "Before the economy was booming, the stock market was okay and people could spend. Now nothing is the same, a lot more people are struggling. There are more lower class than middle class," he says. "Do you know how many foreclosures there are every day? My aunt sells real estate and every day she has new foreclosures; people just don't have enough money."
Alex, 18, is already planning to leave the United States and find work overseas. "I don't think the country is going to go bankrupt, but if the next president can't get the economy going, I am moving out of the country. I am moving to Spain."
Hollywood, Florida, was elected "All America City 2007," the best place to live in the United States. Now it seems more like Ground Zero USA, the epicenter for the growing financial crisis. Practically every street is packed with "For Sale" or "Open House" signs. On some streets five or six houses in a row are all for sale, most with additional details like "Price Reduced" or "Foreclosure."
In a normal economy, no neighbor would ever so publicly admit he ran out of cash and had his house seized. Today the doors are plastered with "Sheriff's Notice" and "Final Notice of Eviction." Instead of signs for lost dogs, the telephone poles and traffic signs are plastered with handwritten signs pleading "Buy my home." One guy simply bought an "Open House" sign and scrawled in bad handwriting a single word - CHEAP.
I follow the "cheap" trail and find a tired home, in a quiet neighborhood, next to a golf course and canal. The beach is about 14 blocks away. The owner is simply gone. He has left the front and back doors open. A box of cockroach poison sits on the table next to a piece of paper with a cellphone number. Wires coil from the walls, the plants are dead, and it looks like the owner just simply gave up. I wait an hour, but no one appears.
PAWNING WEDDING rings and abandoning homes are just two small indications of the economic meltdown which has now so paralyzed the US and put the entire global economic outlook on pause.
From 1995 to 2005, the economy grew steadily. Housing prices in many parts tripled. Then in late 2005, the economy peaked. Housing prices slowed, stalled and then started to fall. Condo prices in the Hollywood area have now fallen by as much as 40%. People who bought a home in 2005, 2006 or 2007 now owe the bank much more than the house is worth. An entire vocabulary has erupted to describe the new situation - a house that has more debt than value is called "upside down" and in entire swaths of the us, entire communities are "upside down."
Nowhere has the economy been more crushed than in Southern Florida. As developers, speculators and investors saw year after year of 20%-plus returns on real estate prices, they just poured money in. Banks joined the party by offering a novel kind of loan - no documentation. The lender asked the guy off the street how much money he earned, whether he had ever been bankrupt and how much money he needed for a new home.
Throughout Hollywood, investors, developers and average people took all their cash and poured it into real estate. The boom got so hot that everyone wanted in - especially the banks.
"There was a lot of fraud, people would lie about how much they earned... whatever you put was true. You put down your salary and they gave you a million dollars and said go buy a house," explains Carlos Justo, who has worked in real estate for 30 years and recently founded Sotheby's International Realty of Miami. "I had a client, he's a banker and he said, 'Carlos, my 13-year-old son could get a mortgage.' I knew we were in trouble. The 13-year-old had a social security number and a tax ID, he could have applied to get a million dollars."
As the banks made no effort to check if the information was actually true, applicants typically were able to get subprime loans allowing for two to three years of minimal payments and then an increase of 500%, so that an $800 monthly payment suddenly balloons into $4,000 a month.
The economic chaos is widely blamed on the widespread use of these loans, leading the current recession to be called the Subprime Meltdown.
"You want to know how crazy it got," explains real-estate broker Katerina Brosda, 28. "At one point [in 2006] I was walking around with 57 checks for $100,000 each in my pocketbook, for two weeks. Each one was a deposit for a new condo and I walked around with my purse like this" - she clutched her Chanel bag close to her chest. "I had a couple of associates who were sleeping out in a tent waiting to get into the sales office to buy a condo, and I personally saw people fighting over units, hitting each other over who was going to get the last unit."
These days the locals are fighting to dig themselves out of debt. At the Hollywood Public Library, the only empty shelf is the section on financial help. "We can't keep that kind of book in stock; as soon as they come in, they go out," said Antoni, a volunteer in his 60s. "People are just upping and leaving. For the middle class on down, it is going to be a heartache." He pointed at an empty space. "This is where it would be. All the finance books and financing information is gone."
While the library books may all be checked out, there is no shortage of information on Web pages or blogs. Local papers are plastered with ads for Web sites which promise to cancel your condo contract and get the deposit back. Curious, I called one. Was it really possible for bankrupt Floridians to get their $40,000 back?
"The developers promised Olympic-sized pools and imported tiles, but what we got was tiny pools and tile from Florida," says attorney David Phillips. "Before, the units were selling so fast that no one complained, but now it is a different story."
For people trapped by the falling prices, Phillips offers expert advice. For the past 10 years, he worked for the developers, writing the contracts. Now he has switched sides, finding much more business picking apart the very contracts he designed. "At first this was a small side business, but now things are crazy, people are flooding into our offices."
With so much chaos in the economy, everyone you meet on the streets of Hollywood is either a real-estate expert or a victim. "It's all about greed," says a man in an SUV the size of a bus. "George Bush spent a trillion dollars on this war in Iraq. What is that going to do to our grandchildren?
going to cause another Great Depression." ([Saints See: The
American dream got sold out to China and Japan - The Chinese government holds in
excess of $1 trillion in U.S. securities. The Chinese fear the global economic slowdown
being led by this country will stifle the jobs boom that has moved hundreds of millions of
people out of abject poverty and created the Chinese equivalent of the American dream. If
the Chinese government, along with the U.S. taxpayers, were not left holding a bag of
debt, they would be laughing at the mess our banking and financial systems are in today.
U.S. taxpayers have taken over the country's two biggest mortgage companies, Fannie Mae
and Freddie Mac, and its biggest insurance company, AIG. Our government took no action as
the nation's fourth-largest investment bank, Lehman Brothers, tumbled into bankruptcy and
another investment icon, Merrill Lynch, was forced to sell itself to Bank of America. And
there is fear from Main Street to Wall Street that more dominoes are likely to fall. The
old socialists and communists -- Marx, Engels, Lenin and Mao -- must be chuckling in their
graves. Treasury Secretary Henry Paulson and many members of Congress have called on China
to address its currency manipulation and develop more transparency in its banking and
legal systems. We must admit that this lacks credibility and is a bit ironic when our
nation has failed to get its own fiscal house in order. America is hugely in hock to China
and Japan, borrowing money from those countries to underwrite the escalating debt brought
about by the Iraq war, cutting taxes while going on a spending spree, and being mired in
the mortgage crisis.][Saints See: United States!
Congratulations! - Having allowed the US financial system to create a minefield of
such arcane complexity, via Derivative Products, that nobody can accurately predict and
thus regulate the downside, the idiots in Congress have decided to go directly against the
collective wisdom on Main Street, and bail out rafts of toxic bank debt incurred through
idiocy, perfidy, greed and malfeasance. At a stroke, Representatives have elected to
devalue the US Dollar on global Forex markets.] Proverbs 29:7 The righteous
considereth the cause of the poor:]
Goldman Sachs Bribed Senate To Pass Bailout Bill
[How much bribe money
does it take to transfer $700 Billion taxpayer dollars to Wall Street's elite?
GOLDMAN SACHS CONTRIBUTIONS:
Obama, Barack (D-IL) $691,930
Clinton, Hillary (D-NY) $468,200
Romney, Mitt (R) $229,675
McCain, John (R-AZ) $208,395
Himes, Jim (D-CT) $114,748
Giuliani, Rudolph W (R) $111,750
Dodd, Christopher J (D-CT) $105,400
Edwards, John (D) $66,450
Specter, Arlen (R-PA) $47,600
Emanuel, Rahm (D-IL) $32,950
Reed, Jack (D-RI) $30,100
How much money did your Represenative get from Big Bankers to look the other way and pass a bill that the American people clearly did not want?] Proverbs 29:7 but the wicked regardeth not to know it. Luke 16:13 No servant can serve two masters:)
While he blocks traffic and ignores cries to move and let traffic through, he tells me that the meltdown has shaken his faith in America. "I never thought that Americans could do this to Americans."
Around the corner, standing outside his $780,000 three-bedroom home, Jim Robinson smokes a cigar and admits that if he wanted to sell he would have to drop the price to about $600,000.
As he describes the housing situation, Robinson sees a far more serious economic collapse. "This country is no longer an industrial power; we don't even manufacture steel, and the Saudis own 30% of Wall Street and Dubai had to bail out Citibank."
With his thick tattoos and tales of gunfights in Sudan, Robinson is a veteran who has traveled widely in the Third World, in conditions of drought, starvation and war. Now he sees those same chaotic conditions engulfing his beloved Hollywood. "These people are so clueless about what is happening beyond their compact little world. They are absolutely clueless for what the potential [for economic meltdown] could be. You shut down the grocery store for a day and they panic. Look at what happens when we have a hurricane! People go to stores and fight over a loaf of bread."
"PEOPLE ARE walking away from their homes. We sold homes to young couples four years ago for $400,000. Now they could only sell it for $275,000, so they are just walking out and losing it all. This is happening in great numbers. You won't see that in the newspapers," says Bob Boynce, a real estate broker.
"They think about it for three or four months, go to a lawyer if they can afford it. Then they find a place to rent. Their payments may be $4,000 a month and they can rent a decent place for $1,700. They are cutting their payments in half, and the only thing that can be done to them is their credit rating will be bad. They can't arrest you. It's not a crime. This is happening by the thousands; I have two close friends who have done this."
This new phenomenon has become a standardized operation. First the family moves out their furniture. Then the car. Finally they mail the keys back to the bank. In the morning, when the bank employees would collect the day's mail, the box of letters would rattle - the sound of so many keys clanging together. Now it is so common that homeowners even gave it a name, they call it "Jingle Mail."
Even the local policemen have a hyper-developed knowledge of the current real-estate crisis. When I ask Officer Lerner about home prices, he sounds like a calculator. "On the open market these houses are selling for 86% of the [listed] price; at auction that falls to 79%-83%, so it is 3% to 6% less." Even so, houses are so expensive that many police officers are moving "to Georgia or the Carolinas" he said.
Lerner told me to visit the county sheriff's. "They have so many foreclosures that every Tuesday, Wednesday and Thursday they are having auctions."
But with the locals out of cash, who is buying? "The foreigners are coming in droves, 80% of the people coming into our office are from England, France, Germany, Italy. Between the falling prices and falling dollar, they can buy here for practically nothing. Who wouldn't be here?" says Paul Merlesena, a local real-estate broker who notes that some of the first homes at auction just sold for $240,000. "Last year that was selling for $660,000."
In the American press, this housing meltdown has been portrayed as a series of isolated events - few reporters investigate the evidence of another Great Depression. To better understand this phenomenon, I climbed into a dumpster outside an office building in Hollywood. In the dumpster were crates of unopened mail. What could I find in the unopened mail of ordinary Americans?
The first letter was from Land Rover to Isaac of Miami. The March 25 letter began: "Your debt to Land Rover Capital Group is still unpaid." The letter offers Isaac a simple form to fill out and a space to mail back a check for "the balance in full" - $13,540.76.
Another letter was for Uri of Miami, chasing down a debt for $88,000. The lawyers from New York were making a one-time offer. If Uri would just mail in a check for $35,000, the debt would be paid. They were offering a 55% discount.
I soon found other letters for Uri, totaling tens of thousands more. Uri alone owes close to $100,000, and the people chasing that money seemed unable to get him to even open the mail. Multiply Uri by a few million and you begin to understand the depth of this meltdown.
I only stayed in Hollywood for a week, but I came to love the quiet streets, the screech of parrots often the loudest sound around. The bike lanes were swept clean and the public library, a huge building packed with all variety of books, had 24 Internet-ready computers free for the public. But as I left, I was haunted by that pawnshop. The wedding rings, the broken end of the American dream.
"People come in here and want money, they are not spending anything. They are really not, our sales are completely down," said Bruce. "Except for one thing, golf stuff is selling. It's crazy. The stuff you think people are not going to want to go out and do. Obviously they are not working, so they go out to the range."
Courtesy THE JERUSALEM POST