Wednesday, October 26, 2011
Bringing the Inner City to Woodstock
I just sent this letter to the editor of The Woodstock Times.
The tip-off as to what is behind the regional push to build inner-city style section eight housing in rural villages like Boiceville and Woodstock was the support The New York Times offered to it in a September spin piece. Public-private partnership housing like the Woodstock development subsidizes regional and global banks. In particular, besides receiving a virtually risk-free return the banks receive a tax credit. In Woodstock, Key Bank receives a tax subsidized, nearly risk free return on its $15 million RUPCO-linked loan to build the Woodstock project. Perhaps The Woodstock Times and Paul Smart should rename themselves The Bankers’ Voice.
Allow me to refresh your memories about The New York Times’s history with respect to supporting subsidization of banking interests through urban renewal. In the 1940s and 1950s The Times sang Robert Moses’s praises to the heavens as he took a sledge hammer to New York City’s economy, destroying more housing units than he built, destroying neighborhood after neighborhood, and draining the City’s character, all in the name of urban renewal. The story is in Robert Caro’s Power Broker. At the same time, Moses, with The Times’s support, devastated the environment outside the city with road building, subsidization of automobile use, and suburbanization on Long Island, in New Jersey and in Westchester.
Having trashed megapolis, by the late 1990s, The Times supported a final step to expansion of suburban housing through the subprime housing bubble. One example was Steven A. Holmes’s September 30, 1999 Times article. The Bush era housing bubble did almost as much harm to America’s economy as Robert Moses’s urban renewal did to New York City. New York City never came back from its urban renewal-induced collapse; Bush and Obama transferred wealth to banks to delay a collapse. In a properly functioning economy the banks that lent and invested in subprime mortgage securities would have closed. But The Times, MSNBC and Fox objected (since, after all, they are owned by interests tightly linked to the banks), and Obama followed through on Bush’s monetary expansion and bailout. The publicly described bailout of $2 trillion was miniscule compared to Federal Reserve Bank asset purchases in excess of $16 trillion, larger than the entire US economy of $14 trillion. But the Obama Fed’s largest subsidy to banks has been the expansion of the monetary base, which has more than tripled. Obama’s tripling of the monetary base signifies as much as a 30-fold increase in the US money supply when banks convert the base into loans under fractional reserve banking.
The potential 30-fold increase in the money supply, which has occurred virtually unreported by The Times, Republican or Democratic talk radio, or television news, is potentially the largest transfer of wealth in the history of the world. It is a transfer from working, middle class Americans to banks, Wall Street, shareholders, hedge funds, real estate interests, and government. The Woodstock Times and Paul Smart have lent their support to this transfer, sheepishly following The Times’s rhetoric. Without this transfer there would be zero interest in public housing in Woodstock or Boiceville.
Because the bursting of the subprime bubble has limited the Robert Moses-approach to urban renewal, a new approach had to be created. The new approach is to advocate once-again- environment-destroying urban-style development, except that now it is to be in rural areas. Rather than bankrupting urban centers, the large regional and money center banks will suck small towns dry. The development is couched, ironically, in environmentalist rhetoric, just as the rhetoric that advocated the subprime bubble was couched in rhetoric that claimed benefits for the poor. The only beneficiaries then and now were banks, Wall Street, and related economic interests. The current bubble in rental properties and REITS reflects this new tactic. “Smart growth” and “green development” are code words for “more subsidies to banks. “ I pity Woodstock for what your naiveté will do to your once beautiful tourist center.
Because the Federal Reserve Bank has created such a large amount of money while federal and state policies and banking interests have done so much to destroy the America’s real economy, I am expecting ever more creative and ever more destructive policies, all of which will entail expansion of bank lending. These will take on green rhetoric and make use of manufactured fears: from the left, the superstition that environmental regulation and new kinds of light bulbs can affect global warming; from the right, the claim that Islam is a threat or that it is imperative for the US to build democracies in Arabia and Africa.
Mitchell Langbert, Ph.D.