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Florida: Just Another Ponzi Scheme

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posted on Sep, 7 2009 @ 07:30 AM
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My family goes to Florida several times a year, we have relatives there. It's been interesting to observe the slow-motion train wreck.

The little Panhandle enclave that we frequent has gone from 24/7 traffic and activity to just barely open for business. There are miles upon miles of empty strip malls and other vacant commercial properties.

When we go there, we stay at the house of one of our family members that's in a residential neighborhood a few blocks from the beach. He is only one of three or four residents on a street of a dozen houses, the rest are empty. He made his fortune on flipping property in Florida and renting houses. Lucky for him it was mostly a cash only business when buying the properties because now most of his properties - commercial and residential - are empty and, as for the the rest, he has difficulty collecting the rent. He can't scale back and unload any of the property because no one is buying anything. He's just going to have to wait it out.

He moved there years ago because he liked the vibe he experienced on family vacations - everyone was happy and looking to have a good time. Money and opportunity was everywhere. Those days are long gone, now he finds it totally depressing.

The crowds of people having a good time are thinned out. The residents, mostly retirees, have had their 401Ks and other investments decimated and they are in coping/survival mode. People are leaving in droves, whether by choice, foreclosure or bankruptcy. Additionally, because the vacationers can't afford to visit and the Boomers aren't spending, a huge portion of the service industry jobs held by middle and lower income Floridians and are disappearing as well. The misery is just trickling down.

It's not so sunny in Florida any more.

www.npr.org...


For the first time since World War II, Florida is losing population. University of Florida demographers recently reported that the number of residents dropped by more than 58,000 last year.

Florida has always had a tenuous relationship with reality. In the 1880s, we convinced the ailing and infirm that Florida was good for their health, despite the mosquitoes and the suffocating heat. In the 1920s, we sold swampland to Yankees, promising that with just a little draining and a little fill dirt, it could be paradise. We call ourselves the "Sunshine State," never mind that it rains an awful lot.

The rest of America sold corn, cotton, iron or coal. Florida sold itself. When you retired you were going to where there was no snow to shovel, where you could pick oranges off trees growing in your backyard, and flowers bloomed in winter. Taxes were low; living was high. Florida was Eden on the cheap.

It was bound to catch up with us. Gary Mormino, a distinguished historian of Florida, says our whole economy is more or less a big Ponzi scheme. The state funds its roads and schools by bringing in new investors — that is, new residents — to pay sales taxes and property taxes. When nobody can afford a condo in Boca, when tourists stop coming even for a week at Disney World, the Ponzi scheme collapses.




www.cbc.ca...


Swindled and beaten bloodier than most states by the economic crisis, Florida is lying awake at night like a terrified cardiac patient, praying the angina will pass. The confidence games here were ruinous. The housing fraud was industrial-scale. The economic shortsightedness bordered on lunacy.

Gary Mormino, a professor at the University of South Florida, has compared the economy here to a giant Ponzi scheme, the confidence game in which investors are paid with the money of new investors.

The Ponzi State. The phrase is catching on and it's making Mormino famous.
He says Florida's economic setup has always depended on ever more people, often retirees on fixed incomes, arriving from out of state with money to spend.
Since 1970, the state has grown by an average of 350,000 new residents a year — or a thousand a day.

To accommodate them, politicians in Tallahassee basically let developers build whatever they wanted just about anywhere they wanted. Usually, that has meant apartment towers and minimally inspected cinder-block homes on concrete slabs.
The construction barely paused and neither did the waves of tourists — as many as 80 million vacationers a year, all ready to pay hotel taxes and rental taxes and restaurant taxes and sales taxes.

Now, everything's flat. In fact, more residents might be leaving than arriving. And the tourists are staying away.

For Mormino, Florida is just a palm tree fantasy with a tax structure "that was insane." And now, he says, "we're paralyzed."

Unemployment is nightmarish and rising. Tax-hating Floridians, turning to their government for help, are finding a stunted, business-driven entity with nothing to offer.

"When people began looking behind the palm trees and into the account books," says Mormino, all they discovered was "massive fraud and lack of oversight."


Much like the Finance sector of our economy, Florida has been a free-for-all with little regulation and this is the result. Neither Jeb Bush or Charlie Crist should get their hopes up for 2012.


[edit on 7/9/2009 by kosmicjack]




posted on Sep, 7 2009 @ 07:39 AM
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S&F for you.

Love visiting parts of FLA for a couple of weeks at a time, but don't think I could live there permanently. For starters, the way people drive there is infuriating.



posted on Sep, 7 2009 @ 08:37 AM
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I arrived in Florida in 1981 with a baby, 2 suitcases and not much else to my name. I lived on the east coast in West Palm Beach for 9 years, knowing that what I wanted was just out of my reach income wise. But I was tan and I went to the beach on Christmas Day every year (just because I could) and life went on.

I moved to the fabled west coast (Naples) in 1989. The money here is unbelievable. It made Palm Beach look quite shabby by comparision. The Nouveau Riche are here.

I got married and we bought our first home in 1991. It was a small 3/2 starter home, brand new, and the mortgage payment of $720 a month looked huge and scary to me. Did I mention it was out in the stix on a dirt road? We still couldn't afford to live "in town". Again, that was just out of my reach. I also had an epiphany at the time that has ended up serving me well throughout my life. When I was watching them draw up the papers and waiting to sign my life away, I realized it was all just numbers on a screen.

Then the mini bust came in 92/93. I lost my job. My husband was working minimally. We had no credit card debt at all, but we still lost our home to foreclosure. Looking back, I laugh knowing I was WAY ahead of THAT curve. At that time, the banks were almost viscous in the way they handled it. If you were even one payment behind, you had to pay all arrears in full for them to accept your money. Unbelievable. The numbers were against me now. We moved into a rental and filed for bankruptcy ($500) and tried to start the credit building process over.

It was tough, but I certainly learned the value of NOT over-extending myself. My husband, alas, did not. We parted ways and life went on.

I moved into an apartment and found a room-mate. The rent was $720 a month. The same as my almost forgotten first mortgage payment. It didn't seem like quite so much money now, but I was getting ALOT less for it.

I stayed there for a few years, met my current husband and in 98 we bought a small condo "in town" for $52,000. Such a deal, but it needed lots of work and we built the sweat equity. We sold it in 02 for $95,000 and bought virtually the same starter home I'd bought in 91, but this one had a pool and we paid $154,000. The day we closed, our realtor told us she had an offer of $30K more, did we want to sell? We reasoned that if we sold, we'd have to pay at least $30K more for another home, so we declined. We are still here. At the top of the market (05), this house was appraising for....are you ready???.....$440,000!!! Crazy!!! But hubby wasn't ready to move, so we stayed. Today, it's appraising at $128K and still dropping.

We're leaving next year. Joining the mass exodus. Likely, we'll have to rent this place out, which is fine with me.

I know so many people, personally and for real, who lost some, alot or everything in this craziness. The homes are sitting empty, decaying, being stripped of any and all contents, countertops, wiring, that can be sold. It's tragic and sad.

What happens now? What happens to all these houses that are sitting empty and rotting in the humidity?

A Ponzi scheme indeed!!



posted on Sep, 7 2009 @ 08:43 AM
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I have lived in FL for 25 years and it has gone down hill drastically IMO. I grew up in Ormond Beach (next to Daytona Beach) and the tourism there is non-existent! I remember the beaches being full of people and families but no more. Even events like Bike Week and Race Week have been drastically reduced. Many stores/shops are closed and empty...It looks like a ghost town in some areas....I now live on the Space Coast and we have the cruise terminals here and even that isnt busy like it use to be. I remember even 2 years ago driving from 95 to 528(b-line) coming into Cape Canaveral during Labor Day weekend, well you would be in traffic for at least an hour or more. Well this weekend was just like any other weekend, nobody was here! A1A use to be very busy but in the last 6mths it has drastically changed. There isnt as many people on the beach or coming to the beach like previous years.
A friend of mine went to the races this year in Daytona and half the stands were empty! They were selling tickets for half price to get people in there. This is unheard of believe me. I have seen every race week since I moved here and it is usually a mad house for weeks in Daytona Beach. This year was quite compared to most. I am not a race fan myself but I worked right in the middle of it so I saw all the traffic and tourists, this year was kind of quiet.
I am waiting to move to Mobile, AL where my bf lives and I honestly cant wait. The cost of living there is so much less and there are way more jobs available. I found an apt for 479 with a fireplace and water incl...now an apt like this here in FL would be about 900 with nothing incl. You pay for the beach and palm trees! I never want to see a palm tree again when I move!


[edit on 9/7/2009 by mblahnikluver]



posted on Sep, 20 2009 @ 01:29 PM
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I had to add this..........

www.heraldtribune.com...


Arthur G. Nadel faces 15 federal counts in an alleged scheme that cost investors nearly $400 million. Beau Diamond has been hit with wire fraud and money laundering charges, accused of preying on Sarasota's New Age community. John and Marian Morgan have traded their bayfront mansion for Sri Lankan jail cells while awaiting indictment over an alleged get-rich-quick prime bank scheme.


I'm so proud of my state!!!



[edit on 20-9-2009 by ThatDGgirl]



posted on Sep, 20 2009 @ 01:55 PM
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reply to post by kosmicjack
 



In their bids to get electric rates increased next year, two of the state's top electric companies said Monday that it's not in the public's interest for them to disclose how much they pay their top executives, according to documents filed with state utility regulators. Florida Power & Light and Progress Energy argue that disclosing how much they pay their executives in salaries, stock and bonuses is not necessary for the Public Service Commission to determine whether to allow it to raise rates by as much as 31 percent starting next year. But PSC staff argues otherwise, noting that the salary data is essential to the regulators' ability to ``evaluate the appropriateness of the employee compensation to be included in the rate base.''


www.miamiherald.com...

I found this article not too long ago. I actually started a thread on it because it ticked me off so much. This is one reason that state is in the shape it is. Here, the big bosses will not disclose how their money is used, they just want to raise the rates and that's that. Sickening.

Edited to add S+F for bringing this up!


[edit on 20-9-2009 by jackflap]



posted on Sep, 20 2009 @ 02:11 PM
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reply to post by jackflap
 


Here in Florida, we refer to Florida Power and Light as" F*&%ing People and Lovin It!"

Disgusted, but not surprised by your info. Thanks (i think...




posted on Sep, 21 2009 @ 10:30 PM
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Good riddance! Now less disruptions to pristine beaches and less plastics for tortoises to eat.


Go back to your holes, you stupid latte-sipping, limp-wristed, politically correct tourists!



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