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Friday, December 30, 2011

The Return of Cain? Sizing Up GOP Primaries

On the eve of the first Republican caucus Tuesday, Herman Cain has announced he will not endorse any of the other candidates for the Republican presidential nomination.

Could Cain re-enter the race? Yes, he suspended his campaign and now has apparent "baggage." (Notably and interestingly, no better proof of any sexual-harassment or infidelity allegations has surfaced.) But all of the other candidates have demerits too, and no one has caught fire.  Moreover, Cain has both pledged to and has remained defiantly active in the public/political eye -- not exactly the behavior of a man caught with his pants down -- and has held off on endorsing anyone as he promised to do shortly after withdrawing last month. 

It's as if the Republican electorate is like a 40-year-old woman, still looking for Mr. Right (or, Prince Charming) but realizing she has to settle. That attitude explains how Republicans expect Mitt Romney to be their nominee, yet the man can't crack the 30 percent barrier in any poll.

In the absence of Herman Cain, no remaining contender has been able to hold on to a strong lead in a race that seems to be calling for an anti-Romney / anti-establishment candidate. This continuing failure -- which should be viewed in the context that we've yet to have one vote cast -- indicates that a Cain re-entry would re-energize voters and perhaps finally bring the GOP race to a three-man duel between the establishment Romney, intrepid Ron Paul and the everyman businessman Cain.

Often, a candidate's flaws validate his or her decision to withdraw. In Herman Cain's case, his withdrawal has left an apparent void in the race and in the issues debate. He shows an everyman sensitivity to economic and business issues not apparent from anyone else. His re-entry would be a welcome development. Finally, his re-entry would still leave him a viable candidate, as ballot access and petition drives can still be mounted in most states.

Eric Dixon is a New York election lawyer, political strategist, information marketer and entrepreneur.

Friday, December 23, 2011

What Makes a Mortgage Bad, Part 2

There are many ways a mortgage can be "bad," meaning that either its required payments are unlikely to be made or the collateral securing it can be damaged and lose value. Rarely is the structure of a mortgage, by itself, the problem; rather, the underwriting decision -- whether or not to give a particular borrower the loan -- is almost always the source of later troubles.

(See Part 1 of this series here.)

These decisions are made by the banks, with input (and incentives in the form of order flow) from mortgage brokers. In many cases, the decisions were egregious and show (both at the time and in retrospect) either a disregard for risk or incompetence in identifying it. In short, issuing banks originating mortgages committed an epic fail in their due diligence.

Surely there were irresponsible -- and unscrupulous -- borrowers who were gaming the system. (Many of these borrowers were professional investors and speculators.) Other irresponsible people elected to stop paying mortgages. The notion of strategic defaults and the game of "catch me if you can" has led to people living rent-free for upwards of two and even three years in judicial foreclosure states like New York (986 days on average to close a foreclosure) and New Jersey (984 days). 

In many cases, the same banks that were derelict in their due diligence of loans are now equally derelict in pursuing foreclosures. Even worse, there are indications that banks are selectively prosecuting for foreclosure those considered least likely to fight and the ones considered the easiest to evict.

And the rationale? Their homes would presumably be the easiest to flip upon seizure, and the purchasers can be funded with a mortgage guessed it...the bank. 

But getting back to the core issue of what makes a bad mortgage. It almost always is a bad underwriting decision. 

A keen observer -- such as a lawyer like me who knows what's in the documents and what anomalies to look for -- can spot the flaws and risks in a mortgage applicant's file which make consistent payment a risky proposition. 

Responsible due diligence is the key to success. An equally diligent investigation can uncover the mistakes of the past. 

Eric Dixon is a New York lawyer.

Thursday, December 22, 2011

What Makes A Mortgage Bad?

The recent Securities and Exchange Commission settlement with Freddie Mac and Fannie Mae and lawsuit against six of their top executives has returned attention to the mortgage origination practices which are widely blamed for the housing bubble collapse and subsequent economic recession.

The issue boils down to one basic question: what makes a particular type of mortgage bad?  My answer, put as simply as possible, is that the types of mortgages themselves are not bad; rather, the problem was the total disregard for the risk inherent in a particular mortgage because of the risk assessment, or underwriting decision.  Put differently, the problem came from the horrendous underwriting decisions that banks originating the loans made.  Many of these mortgages never should have been issued in the first place, on the stated terms or any terms.

In coming days and weeks I will explain the complex issues involved in unwinding the mortgage debacle.

Eric Dixon is a New York lawyer experienced in the public disclosure requirements of the securities laws, and with extensive experience investigating mortgage-backed securities, underwriting and real estate valuation processes, and market conditions in the residential housing market in the Northeast.


Saturday, December 17, 2011

Gingrich's Supreme Court Mistake

Republican presidential candidate Newt Gingrich's comments about ignoring Supreme Court rulings with which he disagrees indicate he is unaware that such a policy would threaten our Founders' concept of the checks and balances among the government's three branches which they considered essential in protecting us from tyranny.

Gingrich, whom as a long-term congressman and former Speaker of the House, will be viewed by an adversarial press corps as being one who ought to know better, said he is "fed up" with the "judicial supremacy" of many activist judges.  However, his actions would expose the American people to future tyranny from a future President or Congress emboldened by the precedent that a President Gingrich would create.

Gingrich ignores the following points:

1.  All judges, whether they overreach their bounds and whether they are "activists" or "strict constitutionalists," are nominated by the President and then reviewed and voted upon by both houses of Congress.  If a judge "goes rogue," the President and Congress bear the blame for picking that judge and, quite frankly, for failing to do the requisite due diligence into that judge's temperament and philosophy.

2.  Judges can be impeached (removed) in extraordinary cases.

3.  Judges' power is actually quite limited since they can only review the laws passed by Congress and approved and enforced by the Executive Branch (this means the President on down through all the divisions of the federal government, i.e., the bureaucracy).  Furthermore, this review power is limited to cases which are brought in our federal courts and which survive all sorts of motions.  Judges do not review all the government's laws, only the laws (or portions of them) which are at issue in lawsuits that they hear.  Moreover, judges rely heavily on the arguments and evidence presented by both sides in the lawsuit.  If a judge seems to make a "wrong" decision, it is reasonable to question how effective one of the sides argued and presented its position, before questioning the judges.

Those who decry and blame "judicial activism" and "activist judges" simply ignore their own ability to elect representatives in Congress to vote on those judges and bring the lawsuits that challenge the laws and seek interpretations and guidance on those same laws.  Congress may be largely impotent, but it is not powerless.  But we don't hear this argument much, since the judiciary (and the legal profession as a whole) make a popular and convenient target for blame.

Many conservatives feel frustrated by an overreaching bureaucracy and many judges whose sensibilities offend those of the voters or of Congress.  But the role of the judiciary is not to "rubber stamp" the actions of the President or Congress; it is its role to "stand athwart" the popular tide, to question and scrutinize the actions of the other two branches of government.

Often, the judiciary has been the one branch of government most responsible for protecting the civil rights of Americans from attack by earlier Presidents and, less often, a complicit Congress.  Next year, it may be the judiciary which rescues the American people from the colossal overreach of ObamaCare's unconstitutional (my opinion) individual mandate. 

Far from being an evil, judges and lawyers advocating for our rights often are our last line of defense against government tyranny, the same type of abuses which led the colonists to seek independence from Great Britain and the Founding Fathers to enact our Constitution.

So tomorrow, go hug a judge!

Eric Dixon is a New York investigative lawyer who handles election law, complex investigations and other serious business, personal and political matters.

Monday, December 12, 2011

Negotiating With Terrorists Shows True Leadership

It has been virtually anathema to suggest negotiating with terrorists ever since the dawn of the Iran-Contra affair and President Reagan's tortured admission in November 1986 that the United States did so. The taboo has lasted ever since and is a diplomatic third rail. It is also totally unwise and the hallmark of horrible policy.

The goal of a negotiation is the achievement of an objective. Success can be measured simply by whether you won or lost. The process, or how you played the game, is irrelevant. (Bobby Knight's famous saying, "Show me a good loser, and I'll show you a loser," comes to mind.)

The fatal flaw in ruling out negotiations with terrorists is the removal of a powerful weapon from one's arsenal. Just as bad is to reveal this decision to one's adversary. It is like entering a street brawl and declaring one will not use his fists. A unilateral promise not to use each and every weapon at one's disposal is hardly sound strategy; far from it. An announced mothballing of a key weapon reduces flexibility and the very ability to win -- which is all that counts. To do this in order to "take a stand on principle" or gain the imagined public approval of some constituency is not good strategy or policy. Rather, the elevation of diplomatic other-directedness over the achievement of a critical foreign policy objective or the rescuing of innocent lives is the triumph of individual narcissism over true compassion for others. It involves valuing the reputational benefit, the positive public relations, to oneself over the very lives of others!

True altruism would demand sacrificing one's reputation for the tangible and tremendous life-saving benefit of others. Most of us easily see which is more important and would not be so selfish. This is why it was shocking to see the Republican presidential candidates at a recent debate try to outdo one another in trying to take the strongest pledge not to negotiate with terrorists. (This is not a partisan issue; perhaps no elected official today is willing to say he or she would negotiate with terrorists.)

Perhaps a personal scenario will help focus the issue. If your son were held hostage abroad, wouldn't you want our government to take all the steps available to rescue him?

Under the current no-negotiations dogma, your son might die. This inflexible rule, placing politicians' public reputations over your son's life, would result in your son coming back to America in the hold of an Air Force plane, carried in a coffin over which an American flag was draped.

You can expect to be told that your son died a hero, he died for his country.

While Reagan didn't exactly admit it, he knew it was more important to get your son back than to chase after the approval of the rest of the world. Wouldn't it be nice to again have a President who would say he would do whatever it took so that when your son comes off that plane, he's kissing the ground and then running towards you?

Reagan was willing to take the reputational hit, and risked his presidency, to save American lives. Reagan was secure in himself, in his character, and didn't need the affirmation or approval of others. Above all, Ronald Reagan understood that being President was a vocation of service, that it was about serving others, and that trivial matters of one's place in history or standing in the polls.

Sometimes the slavish devotion to ideals, or the terror of risking public scorn, overshadows the genuine priorities of our elected leaders and candidates to replace them. It is a paradox of current political culture that those rare men and women who care little or not at all about making unpopular decisions often end up being the most popular. That is because character makes leaders, and the American people desire more than anything else to be led.

(Eric Dixon is a New York election lawyer and conservative political strategist.)

Eric Dixon

Mets' Bankruptcy Watch On

The Great Recession, or fate, continues to hammer away at the New York Mets.

The bastard stepchild of New York baseball is reported today to have taken an additional bank loan of $40 million from a "major bank" (separately reported to have been Bank of America) to finance ongoing operations.  This loan follows an earlier $25 million loan from Major League Baseball that has not been repaid, and its general manager's assertion that the franchise lost $70 million in 2011.  (My opinion is that last claim should be viewed suspiciously, given the team's attendance over two million in 2011 and the likelihood that revenues to affiliate SportsNet New York are classified separately so as to facilitate ownership's sale of a stake in the baseball club without having to attach a stake in SNY as a deal sweetener.)

Whether or not the economy is "recovering," many businesses continue to deteriorate as the mistakes of the past continue to be unraveled.

Eric Dixon is a New York investigative lawyer with a strong background in the securities laws, corporate transactions and negotiations, and election law. 

Saturday, December 10, 2011

The Hidden Tax of Overcriminalization

While Congress debates tax policy, a hidden tax has plagued our economy and capital markets the last few years - the tax caused by the creeping de facto criminalization of business

The American economy is suffering from a hidden tax in the form of overregulation, overcriminalization and an overzealous and often-inconsistent application of laws and statutes to go after otherwise-innocent businesses, owners, entrepreneurs and managers.  This raises the risk of doing business, and results in the business community demanding a higher return in order to take that risk.

People are innately risk-averse.  Risk, and pain, are felt more acutely than an equivalent level of joy or gain.  The greater the risk (e.g., the risk of financial loss or loss of freedom) perceived from engaging in an activity, the likelier that the given activity will not be engaged in, regardless of the likelihood of a substantial positive return.  Hence, there has been a downturn in business and investing activity as the capital classes become increasingly aware of the risks of being sued, investigated or prosecuted for engaging in business.

Regulatory and legal certainty is a hallmark of the rule of law that has allowed for capital expansion to fund growing economies for centuries in the Western world.  Inconsistent and arbitrary application of the laws makes it hard for anyone with money to invest for fear of losing that money, if not their freedom.

In short, the government's choices of whom to investigate, threaten, sue civilly and even prosecute are another way of picking winners and losers in our economy and society. 

There are plenty of people who desire only to know what the rules are, so that they may follow them as best as they can.  Varying, inconsistent and even illogical applications and decisions on the law by bureaucrats, investigators and prosecutors acting without the requisite experience or seasoned oversight threaten to deter lots of legal activity and raise the risk awareness of business owners and entrepreneurs who are fearful of a federal government that seems to have a grudge against certain segments of our economy.

Healthy capital markets need regulatory and legal certainty. Arbitrary, capricious and outright unfair or unjust government actions cause a reflexive, defensive posture of conserving, protecting and hoarding capital. 

Think about that the next time you wonder why small businesses cannot get a loan on good terms -- or any terms -- or why investors are unwilling to finance any young venture. 

This trend has been several years in the making and acts as a hidden tax on existing activity as well as a serious deterrent upon future activity.  No wonder our economy has been trending downward for the last four years.

Eric Dixon is a New York investigative attorney who handles policy issues, election law matters and strategic matters for business and political clients.

MF Global, Corzine And The Path To Club Fed

The failed brokerage-and-commodities firm MF Global (in which the author invested, sadly) is the subject of a criminal investigation by the Manhattan U.S. Attorney's Office, according to this report (go to page 2).

Such investigations often presume guilt and sometimes work backwards, starting with the presumed wrongdoer (in official law enforcement parlance, a "target").  Observers should be patient for the findings to come out, and for justice to be served. 

As for MF Global former CEO Jon Corzine, I believe that he placed himself in greater jeopardy of being charged with any crime, merely by talking. (Don't know how? See this analysis, entitled "Corzine Becomes A Criminal," in which I predict attempts to criminalize any misstatement or incomplete recollection, however nuanced and qualified, particularly if prosecutors cannot charge him with a substantive crime.)  He is a presumptive subject and desired target -- if only for his name cachet and potential to "make" someone's career -- and on that basis alone it should be presumed that efforts to charge him are already underway.

Eric Dixon is a New York lawyer who helps people under investigation or in the process of litigation handle the stresses of being involved in our legal system, in addition to more conventional legal work like investigations and complex, sensitive situations for business and political clients. 

Thursday, December 8, 2011

Corzine Becomes A Criminal

Embattled MF Global Chief Executive Officer Jon Corzine placed his freedom in great jeopardy today by testifying before the House Agriculture Committee this afternoon.

Corzine is a highly recognizable public figure as the former Goldman Sachs CEO, Senator and Governor of New Jersey. Adding his present notoriety to that profile automatically makes him a "name" target for investigators and prosecutors looking to make a name for themselves. In short, career ambition -- resume-building -- puts Corzine in grave danger before he said one word.

The presumed government predisposition to prosecute Corzine will not need any testimony from him to fuel an investigation. Rest assured, efforts are already underway to see how he can be held criminally liable. But his testimony -- regardless of its content and honesty -- will add to the fire by providing the federal government with a series of statements that will be scrutinized to see if any "false statement" can be established as provable "beyond a reasonable doubt." (Note that this is different from the objective of investigating the who, what, when, where and how questions as to what really happened.)

Remember that any discrepancy between the most honest "I don't know" from Corzine and any conflicting account (or mis-recollection) from any other witness involved in MF Global becomes the basis for a criminal investigation -- and likely prosecution -- for perjury.

Corzine's testimony provides a paper trail and video record of his statements. It will be presumptive Government's Exhibit 1. Had he asserted the Fifth Amendment right against self-incrimination, he would at least avoid providing his adversaries with that material with which to work.

Without testifying, the government would have to prove criminal intent regarding wrongdoing, e.g., he either did something illegal and knew about it, or consciously avoided doing something about an act which he knew was illegal (the doctrine of "conscious avoidance").  By testifying, the government can get Corzine convicted of a crime merely by parsing his testimony and finding someone else to give a contrary account of what happened, in order to prove Corzine lied to Congress. 

Clearly, the second avenue is much easier to prove.  

Regardless of the content of his statements or the genuineness in his heart, Jon Corzine made himself much more likely to be prosecuted for false statements (Title 18 U.S.C. Section 1001), if not for a substantive financial crime like commodities fraud.

In this climate, Jon Corzine chose to speak. Incredible hubris.  Incredible mistake.
Eric Dixon is a New York attorney who counsels people under investigation, prosecution or awaiting sentencing on how to handle the stress of these life-altering situations.

Eric Dixon
Eric Dixon LLC

Monday, December 5, 2011

Could Cain Use Perot's 1992 Playbook For Return?

Herman Cain's announcement Saturday that he was suspending -- but not terminating -- his campaign to avoid the mainstream news media's onslaught of sex-related accusations marked a rapid fall from front-runner to non-candidate. However, it may not be the actual end of his campaign. Cain could return, if he follows the playbook of another legendary candidate.

Ross Perot was the front-runner as an independent candidate in 1992 as late as the eve of the Democratic National Convention. Perot stumbled badly the week before, losing campaign co-manager Ed Rollins and making his infamous "you people" remark at an NAACP dinner. As the news media smelled a wounded candidate (really, they smelled a great story, everyone loves to watch the fall of a public figure), Perot suspended his campaign on the Tuesday of convention week in mid-July 1992.

Virtually immediately, Bill Clinton catapulted from third place to front-runner over incumbent President George H.W. Bush.

Perot, however, was not done. A special committee called the Perot Petition Committee was started and continued work to get Perot on the ballot in New York State, a notoriously difficult state in which to run as an independent. Perot submitted over 91,000 signatures in late August and qualified for the general election ballot.

Behind the scenes, preparations began for a formal re-entry into the race. Campaign structures were re-staffed. In late September, Perot resumed the campaign with a vengeance.

Perot gave speeches before crowds of upwards of 50,000 in Somerville NJ and elsewhere, and bought blocks of thirty minutes for infomercial-length presentations with the legendary pie charts. He appeared in all the major TV debates and was generally considered to have done very well.

There were gaffes. Perot chose as a stand-in vice presidential candidate Admiral James Stockdale (Ret.), who was visibly addled and likely suffering from dementia during his infamous vice-presidential debate performance in which he said, "Who am I? What am I doing here?"

The post-script: Perot got 19 percent of the national popular vote and came within a few thousand in states like Utah and Wyoming of coming in second ahead of Clinton. While Republicans blamed Perot for Bush's defeat, polls showed Perot took evenly from Bush and Clinton in 1992.

In retrospect, it is clear that Perot never intended to withdraw from the race, but decided on a tactical retreat which stopped his fall from being "the story." At the appropriate time, he resumed his campaign and was able to have a different "story," that of the promise of an impossible comeback.

There is nothing to suggest that this strategy could not be followed by Herman Cain. The roadmap is there.

Eric Dixon is a New York-based investigator, lawyer, strategist and entrepreneur. Mr. Dixon was active in Ross Perot's 1992 New York petition drive as an election lawyer and supervisor, and as a national spokesman for the campaign who appeared in studio on ABC's Good Morning America.

Eric Dixon
Eric Dixon LLC

Friday, December 2, 2011

Post-Conviction Stress Can Kill You

Aside from life-threatening diseases and deaths of close ones, perhaps there is no more stressful event than being convicted of a crime and facing jail time.

If you are convicted and over the age of 40, your crime could result in what Manhattan federal judge Jed Rakoff called a sentence of  "effectively life."  For background, Rakoff (with whom I worked briefly when I started my career) was using this phrase when trying to determine the sentence of former New York power lawyer -- and total fraud -- Marc Dreier.  In a morbid twist, the sentencing conversation between Rakoff and Dreier's lawyer Gerald Shargel turned almost entirely on the expected life expectancy of the then-59-year-old Dreier, and ended with Dreier getting 20 years -- probably out in about 17 years with parole and good behavior. 

Might a younger defendant have gotten more time?  See the case of another really bad lawyer, Scott Rothstein, whose infamous South Florida scam resulted in the then-49-year-old Rothstein getting a 50-year sentence. 

A brief aside: Consider the cases of Dreier (59-year-old gets 20 years), Rothstein (49-year-old gets 50 years) and Bernie Madoff (72-year-old gets 200 years from former federal district court judge turned federal appellate judge Denny Chin).  All these men plead guilty.  No trials.  For the lengths of these sentences -- which also result in the convict going to at least a medium-security federal facility (no Club Fed) -- what was the benefit at sentencing in "accepting responsibility"?  

Nah, I couldn't figure it out either.

I currently consult for a recent middle-aged federal convict -- whose identity I shall keep confidential -- who has suffered a few heart attacks since losing at trial.  He wouldn't be the first to suffer such pain.  Former Enron CEO Kenneth Lay suffered a fatal heart attack following his criminal conviction at trial at age 63. 

The stress of merely being investigated is one thing -- and that alone can be extremely grueling.  Just ask anthrax attack suspect Stephen Hatfill, who was under investigation for five years by the FBI -- and even named publicly by Attorney General John Ashcroft as a "person of interest" -- before the investigation was closed without further action. (Postscript: The federal government paid Hatfill a $6 million settlement.)

If you are innocent, it's even worse.  At least if you are guilty and are somewhat able to admit that fact, and do so before a judge, you can avail yourself of the substantial benefits: the promise of leniency at sentencing, and perhaps even the opportunity to get paid by the government to be a federal informant.  (But that is a topic for a different time.)  The innocent have no escape hatch, nothing to offer for leniency, only the determination that they refuse to admit guilt for something they did not do -- in essence, they refuse to lie.

The stress of being indicted, actively prosecuted, and put on trial is an additional and severe strain.  The stress of being convicted and actually facing the very likely prospect of jail just piles on with the stress becoming exponentially greater.

These situations can be deadly and require assistance for all but the most stout of characters to survive.  If I can be of assistance -- and if you can pay using funds which are not tainted by or from the proceeds of any arguably criminal activity or origin -- you should contact me.

Eric Dixon is a New York investigative lawyer, management and political consultant, and litigation stress and crisis consultant.  Mr. Dixon may be reached at  Mr. Dixon is also on twitter @dixonstrategy.


Monday, November 28, 2011

Con Edison Ripping Off New Yorkers?

A report shows that Con Edison raised electric rates nearly ten percent last year while national average electric rates stayed about even. (Link to )

New York residents paying their own electricity and natural gas can save substantially on the supply portion of their bill. Residents and business owners interested in these savings should contact me for an assessment of their savings potential at

Eric Dixon

Saturday, November 26, 2011

Britain Warns Of Riots If Euro Breaks Up

Extreme civil disorder is being warned about by the British Foreign Office in the event the Eurozone breaks up.  A major investment bank is also warning that an extreme scenario would see the loss of "basic property rights" upon the collapse of the Euro currency.

In a multinational economy where banking systems are global in nature, the consequences for businesses in the United States needing ready access to revolving credit cannot be understated.  A return to the days in late 2008 when we were -- by some accounts -- within days of a total freeze-up of the financial system and by extension most of the commerce in the nation is not out of the question.

Such concerns would validate corporations' concerns about raising -- or hoarding -- cash.  Similar concerns would explain why intelligent people have been raising cash stores personally for months or, in some cases, years. 

Eric Dixon is a New York investigative attorney, management consultant, strategic analyst and political consultant.  Mr. Dixon follows economic and real estate matters in addition to certain legal and political trends.

Monday, November 21, 2011

Two Runners Die At Philadelphia Marathon

Two male runners died from heart attacks at or near the finish of the 26.2-mile Philadelphia Marathon yesterday.

Autopsies are likely -- I would recommend them -- for the victims, a 21-year-old male and 40-year-old male. However, other factors may have been at work and deserve careful exploration.

Weather conditions Sunday morning in Philadelphia were described as ideal. I say: Nonsense! As a veteran marathoner (eight-time finisher) who completed Sunday's marathon (plagued by injuries in 4:09), I disagree vigorously with that description.

Although temperatures were in the 50s, the humidity was high (nearly 70%). During the race the temperature rose nearly ten degrees. The combination could be lethal, even at sub-room temperature. High humidity impairs the body's ability to cool itself through perspiration.

The humidity could have combined with another factor to impair runners. If runners were not wearing wicking material (which draws perspiration away from the skin and out), soaked overshirts could cause runners to lose the ability to release heat. Overheating could occur, particularly after several hours of uninterrupted exertion. (This is the difference between a training run and a four-hour-long run where body core temperatures could rise steadily and inexorably.)

These factors deserve careful consideration before any blame for these deaths is placed.

(Eric Dixon is a New York investigative attorney and nine-time marathoner and veteran roadrunner.)

Eric Dixon

Sunday, November 20, 2011

The Other Eric Dixon, Esq. -- Some Other Guy

There's another lawyer named Eric Dixon who is in some serious trouble for allegedly trying to run over a New Mexico state judge with his vehicle.

For the record, this is someone else.   It sure as hell isn't me.  For what it's worth, I've never been in trouble with the law in any respect and I think I've only gotten about three moving violations for driving over 25 years.  Got that?

Thursday, November 17, 2011

Ground Zero Mosque About To Go Down For Good

The ill-conceived and grossly insensitive Ground Zero Mosque is now very unlikely to ever happen.

The developer of the mosque and Muslim "community center," Sharif El-Gamal, is being sued in Manhattan State Supreme Court for approximately $1.7 million in back rent by Con Edison, which owns one of the buildings which would be replaced by the center.  The parties appeared in court Thursday at a hearing to determine whether a court order stalling an eviction would be lifted. 

Occupiers Back At Zuccotti

Several dozen protestors were arrested this morning and the bulk of Occupy Wall Street demonstrators have returned to Zuccotti Park.

Occupy Wall Street...Live

Estimating 500-1,000 protestors. Various groups are broken up and moving around making thing difficult for NYPD to keep control. Traffic blocked on Pine Street. Pedestrians can get through but must show identification to get onto Wall Street.

Dangers later today of disinformation and unannounced events. Real risk of traffic and mass transit disruption.

No violence or arrests witnessed thus far.

Zero Hour For Occupy Wall Street

On the eve of promised, widespread civil disobedience -- and possible violence -- in New York, the nature and potential of the Occupy Wall Street movement to represent a legitimate vehicle for discontent will be tested. 

In short, Thursday, November 17th may be Occupy Wall Street's "jump the shark" movement, after which it becomes a serious protest movement, or just a quick flameout co-opted by professional rabble-rousers.

For most of the world, Occupy Wall Street represents opposition to the perceived irresponsibility of "big business." The movement tries to speak to the dissatisfied, the worried among us.  This is the same target constituency of the Tea Party movement, those Americans mortified by a $15 trillion national debt and a federal government hellbent on spending more of our kids' money in stimulus programs and other boondoggles which they recognize just transfer their money through taxes to the pockets of the connected and corrupt. 

There are major differences between the Occupy Wall Street and the Tea Party movements.  The Occupiers blame big business for economic exploitation of the people; the classic Tea Party blames big government for choosing winners and losers in our economic system of crony capitalism.  The Occupiers are either unaware of or ignore the role of government in running and ruining our economy, while the Tea Party realizes the government has been the primary problem in shaping preferences, misallocating resources and promoting moral hazards and other perverse incentives.  The Occupiers blame capitalism for society's ills, while the Tea Party movement blames government for perverting our economy into a crony capitalism that socializes losses but privatizes profits -- in plain English, the general public shares only in losses and risks.

Of course, the biggest difference between Occupy Wall Street and the Tea Party is in tactics.  The Tea Party has always been peaceful and its members "police their own," meaning they identify and expel people who cause trouble at their events.  The Occupiers have been enslaved by their desire for inclusiveness and paralyzed into inaction; the result has been to attract and be dominated by people who have co-opted the original movement to advance any of a motley crew of disparate and often-radical agendas.

The events of Thursday may reveal the extent to which professional anarchists, unrepentant Marxists and others on the absolute fringes of civil society -- never mind respected political discourse -- have ruined an opportunity for constructive political discourse on the perils of Dodd-Frank, the government-sponsored enterprises of Fannie Mae and Freddie Mac, and other misguided regulations that have enhanced economic troubles rather than solve them.  

Eric Dixon is a New York investigative attorney, political strategist and management consultant.  Mr. Dixon is a 1994 graduate of Yale Law School, former election lawyer for several presidential campaigns and current legal adviser to several conservative and libertarian groups including Gotham Tea Party, Inc. 


Wednesday, November 16, 2011

Joe Bruno's Honest Services Theft Conviction Reversed

Another defeat for the Department of Justice. The Second Circuit federal appellate court reversed the conviction of former longtime New York State Senate Majority Leader Joseph Bruno for the deprivation of honest services.

The appellate court followed the Supreme Court's guidance (in United States v. Jeffrey Skilling) that the honest services statute only criminalized kickbacks and bribes, but not the conflicts of interest that characterized Bruno's conduct that was at issue in his trial.

However, the court found that Bruno could be retried on these charges on alternate theories of criminal liability.

(Eric Dixon is a New York lawyer who handles complex investigations, strategic analysis and political/election law matters.)

Eric Dixon
Eric Dixon LLC

Tuesday, November 15, 2011

Occupy Wall Street Killing Street Vendors

Crime, Politics and Policy has learned of one street vendor who claimed to have suffered significant business losses because of the Occupy Wall Street occupation.

The vendor, whose identity and precise location are being kept confidential for safety reasons, had a foot cart situated within the metal barricades that surrounded Zuccotti Park.  Vendors' sidewalk spots are regulated by the City of New York.  This vendor had a peculiar problem: his spot was inside the barricades and as such, he would not be able to return to the spot inside the metal barriers if he removed the cart.  However, with belligerent protestors, homeless and other undesirables increasingly hovering, demanding he make change and tell them the time, he was compelled to occupy and staff his cart 24/7 within the metal barriers to protect his business.  

Yet, despite the full around-the-clock presence, the vendor said his business was down.  He blamed Occupy Wall Street for driving away his regular customers who were either scared of or physically repulsed by the protestors (or both).  Furthermore, he said the protestors were always getting free food and therefore had no need for his grub and  hot drinks.


Occupy Wall Street May Cause Another Real Estate Crash

Today's lower court ruling that the Occupy Wall Street protestors can return to Zuccotti Park, but cannot rebuild their shantytown with tents and other facilities, may be the first major skirmish in a battle over the very extent of private citizens' property rights, and threatens real estate values on a macro scale.

Occupy Wall Street argues that the "tents are there [in Zuccotti Park] 24-7 as part of speech," according to their lawyer.  This may be the first domino to fall in a long cascade that could lead to a redefinition of where public free speech ends and private property rights -- including the right to simply be left alone on one's own property -- begin and are safe from violation by others.  It is possible that the Occupy Wall Street position could lead to a redefinition of what public space is, what is subject to free speech rights, and what private property owners must be prepared for.

The implication of this battle is that property owners could face having to deal with a new paradigm of what it means to own and enjoy one's own property.  In fact, owning property could be reinterpreted to require owners to accept public intrusions.

Naturally, the imposition of such requirements and degradations will make the ownership and leasing of property -- both residential and commercial -- less desirable.  Rents will fall and carry down with them real estate prices as the notion of property rights is defined down.  (As if there weren't already enough factors threatening to pull real estate values down between up to 50 to 80 percent from current levels.)

The economic implications of this movement now are becoming apparent.  Is Occupy Wall Street seeking nothing less than to destroy the very concept of private property?

Eric Dixon is a New York lawyer, political and legal strategist and management consultant.  Mr. Dixon is available for comment at 917-696-2442 and by e-mail at  Mr. Dixon also comments on twitter under the name @dixonstrategy.


Occupy Wall Street: NYPD Clears Zuccotti Park

Breaking 1:45 am: New York police and fire department personnel are clearing the original encampment by Occupy Wall Street protestors to clean and sanitize Zuccotti Park.

Reports indicate protestors will be allowed to resume the sleepover once the park is cleaned.

Police personnel apparently surrounded the park and moved in after 1am.

(Eric Dixon is a New York investigative attorney, political strategist and management consultant.)


Sunday, November 13, 2011

Down's Syndrome Test Uses Abortion As Cure

A scandal-ridden company is marketing a controversial new test to identify fetuses with the chromosonal defect (Trisomy 21).  But rather than cure the genetic defect, the test facilitates strategic abortions: that is, it allows for screening fetuses for the defect so that parents can abort the unwanted child.

The test's proponent is Sequenom Inc., headquartered in San Diego, CA.  Sequenom previously suffered a catastrophic stock price drop in 2009 when it was revealed that several of its scientists were fudging scientific test data; even as the broader stock market was recovering in the spring of 2009, Sequenom's stock plunged from $13 to $3.  

Eric Dixon is a New York investigative lawyer with a strong background in complex litigation, securities compliance and business transactions.

Thursday, November 3, 2011

Saving Herman Cain

Without a doubt, Republican presidential candidate Herman Cain can still survive and thrive even after old sexual harassment allegations surfaced Sunday.

Allegations and even settlements do not equate to behavior which makes one unfit to be President. The only "problem" here is a charismatic personality which, frankly, many people find attractive. Some people get envious or jealous because they cannot attract the attention of their desired target, and can lash back out of revenge. Harassment claims, aided by a legal culture and society which affords a presumption of credibility to the accuser (flipping the legal presumption of an accused's innocence on its head), are among the easiest means to achieve this.

While bonafide sexual harassment is reprehensible, it is a pathetic fact that many harassment claims (sexual or otherwise) are bogus.  Many claimants know that harassment claims are toxic when made, and as the perfect hit-and-run strategy to inflict permanent, if not necessarily major, damage upon a target, make an excellent tool for extracting money through blackmail (or more appropriately, "greenmail") or litigation (derided as legal blackmail).

Another point that bears emphasizing is that harassment claims are by their nature subjective and defined by the mind, and sensitivity, of the accuser.  A standard that an accuser's "discomfort" is enough to validate a harassment claim is shocking -- and ridiculous.  Just decades ago, many public places were still segregated -- in fact if not under the law -- because whites felt "discomfort" around blacks.  Current feminist harassment theory would have made all blacks the victimizers if applied equally.  It is time for mature people in society, the opinion leaders at all levels, to blow the nonsense whistle on this theory.  There is a segment of society, many of whom are borderline mentally ill or socially challenged, whose purported discomfort is more a function of their deficiencies than anyone else's behavior.  It is time to stop passing the accountability buck on this issue. 

It should also be explained that harassment is a subjective term which is defined in the mind -- or delusion -- of the person claiming victimization. The danger of false accusations is everpresent. The potency of such accusations is greater, given that such claims often lead to the imputation of the most vile personal traits and motives upon the named accused.

The existence of settlements is also easily explained away. A settlement may save the company -- the restaurant association -- money and the association is the driver behind the settlement. In fact, the executive who objects to a settlement in such cases can be sued by his own company, for failing to abide by fiduciary duties. In other words, someone like Cain could have been sued for failing to take one for the team.

The danger in these allegations is the potential to encourage any spurned or rejected woman to try to destroy her target's financial or political career, with no proof of actual wrongdoing and purely out of spite. We should demand a much higher standard of proof from accusers before we rush to make potentially catastrophic, disqualifying judgments.

As for Mr. Cain, this controversy is eminently survivable.  However, discipline, fortitude and candor are all needed to address this issue and quell the questions and doubts.  I believe Mr. Cain will come out of this stronger.

Eric Dixon is a New York election lawyer who handles crisis legal matters and legal stress management.  He has not been retained by or on behalf of the Cain campaign.

Wednesday, November 2, 2011

MF Global and Presumed Guilt

Multiple media sources report that MF Global is under federal criminal investigation pertaining to allegations of illegally converted customer funds for use to finance the brokerage's operations. 

In such investigations, given the high profile of the brokerage and of its chief executive, former New Jersey Governor Jon Corzine, there is an operational presumption of guilt.  This means that the investigation should be assumed to operate on the premise that someone committed a crime.  The concept of innocent until proven guilty is a concept honored in the breach, and respected only before the court (which, fortunately, it has effect and may be the last but best protection of your freedom from government abuse). 

Furthermore, the investigation should not be viewed as a "fact-finding" operation but more like an exercise in validating the original theory, which is that someone has committed a crime.  After all, people are human and humans like to prove they are right. On the surface and in press conferences, the protestations will be that there is an ongoing investigation, but in reality, the "targets" of the investigation will be determined very rapidly. (And quite possibly, they will be determined -- and the government will be wrong.)

Almost all titled executives of MF Global should consider hiring experienced white-collar criminal lawyers who are adept at handling financial fraud cases and who possess some understanding of the securities laws.  Many of these people will fall under suspicion for no reason other than their title at MF Global.  That factor, without more, is an excellent reason to hire a lawyer.  If one is indeed innocent, this need to hire a lawyer is actually greater!

The investigation may not be quick.  There may be substantial documentation to sift through, and each party ultimately charged will have its chance to go through the same evidence.  I would not expect a quick resolution of any MF Global investigation.

Eric Dixon is a New York investigative lawyer who handles complex investigative matters and trains targets of government investigations how to handle the stress and other emotions commonly felt by people under investigation or being prosecuted or sued.  Mr. Dixon has substantial experience with the securities laws, compliance and corporate transactions.  Mr. Dixon may be reached for comment or inquiry at 917-696-2442 or by e-mail at

Monday, October 31, 2011

Cain New Target of Women Seeking To Get Paid

The latest sign of a deepening recession may be the report Sunday night of allegations -- unproven -- that presidential candidate Herman Cain was the target of two sexual harassment allegations.

There is a myriad of reasons why an accusation may be made.  Jealousy and envy, whether over a personal relationship, promotion or a raise which another person enjoys, often are behind accusations.  In some jurisdictions like New York State, such accusations can be entertained in courts even if the accused did not intend anything wrong or offensive, because the standard for liability is subjective and relies on the feelings reported by the accuser. 

Let there be no misunderstanding:  Such a standard creates a strong presumption in favor of the accuser, and permits a false accuser to exact irreversible damage, to at least some degree, on her target.  Furthermore, there is a subset of otherwise highly-educated people who openly declare that accusers -- and specifically, female accusers -- just "would not" lie about such circumstances.  This attitude places men in peril, for no other reason than their gender. 

In other words, it's "open season" on men -- and particularly, men of substance.

Let's put aside the fact that such a legal standard, and the gender-based discrimination it helps foster, are ripe for all sorts of abuse.  The ease with which such lawsuits can be brought and reach the trial stage, surviving pre-trial motions to dismiss, often means that an absolutely baseless lawsuit can be based on entire lies and yet cause an innocent corporate executive or manager and his/her employer to sustain significant legal fees. 

In recent history some plaintiffs have exploited corporate America's fear of controversy and unwillingness to confront bogus allegations. Settlements are achieved because the target realizes that it saves money by settling.  Corporate America's and shareholders' bottom-line priority to save money and cut losses has fueled this reluctance to take some of these plaintiffs "to the mat." However, if reputation is more important than money, defendants can choose to go all the way and challenge plaintiffs to prove their case.  Some of these cases end up being total victories for the defense.  And it bears reminding that plaintiffs also risk their reputations in these cases.  Serious harassment allegations should never be considered a girl's golden path to future financial security.

While one cannot paint a broad brush on how and why accusations are made, it stands to reason that the most legitimate of complaints are also the ones resolved quietly and often without litigation.

In my opinion, merely being accused of harassment, even if one's company or organization chose to settle, is nothing of which to be ashamed.  Herman Cain -- and many men in business and public life -- may want to consider making examples of someone right now, not for reasons of retribution but more for the deterrent effect on future abuse.

Eric Dixon is a New York investigative lawyer who specializes in crisis situations and strategy, and counsels people on how to handle the stress of lawsuits, investigations and prosecutions in order to prevail in situations exactly like that described above.  Mr. Dixon is available for comment or consultation at 917-696-2442 and by e-mail at 

Friday, October 28, 2011

New York May Get October Blizzard

In a delightfully strange year for weather, New York City is predicted to get a record-breaking October snowfall and could even have blizzard conditions.

The Friday evening official National Weather Service forecast calls for New York's Central Park to experience blizzard-level gusts during Saturday night and to receive close to four inches of snow.  Air temperatures should approach the freezing mark, which is surely enough to produce snow (air temps under 38 degrees are usually enough) and the danger of "black ice."  The cause is a fall nor'easter that will bring heavy rain, cold temperatures and heavy sustained winds to areas near the coastline.

New York has NEVER received more than one inch of October snow since weather records started being kept in 1869, and the last measurable October snowfall (0.5 inch) was in 1952.  Even in November, measurable snow is rare and most years do not measure even a trace of snow.  The last November measurable snowfall was in 1996.

In interior sections of the Northeast and particularly in the Poconos and Catskill Mountain regions, over a foot of the wet, heavy snow can fall.  This poses a particular risk of falling branches.  The fact that most trees still have leaves on them, because there hasn't been a killing frost in any but the highest elevations, amplifies the danger.

Curious about other New York weather records: click here.  For more Northeast weather arcana specifically relating to this potentially historic storm, click here for's report.

Other forecasts in the region of note:

Newark NJ:  about five inches of snow Saturday night, and lows Sunday night in the upper 20s.

Philadelphia PA: farther from the ocean, thus expected to get only about one inch.

Islip NY: not as much snow (maybe one inch) but gusts of over 50 mph Sunday morning.

Eric Dixon is a New York investigative lawyer who uses creative and strategic abilities to solve clients' legal, managerial, operational or personal problems.

Thursday, October 27, 2011

Calling Business A Crime

Growing legions of law-abiding businesspeople, entrepreneurs, managers and even low-level employees are increasingly at risk of being jailed and having their lives ruined, as an aggressive Justice Department expands its interpretations of criminal statutes. In an alarming development, prosecutors are treating unintentional violations of federal agency regulations as criminal and seeking jail time for people even when it is acknowledged there was no evidence of criminal intent.

The recent investigations and prosecutions of some executives and employees are making well-intentioned and innocent people fearful that they may be prosecuted for the conduct of another in which they did not participate, according to one GlaxoSmithKline lawyer.

Crime, Politics and Policy has covered this issue in the past -- see this September 2011 article and July 2011 article, among others --

Eric Dixon is a New York investigative attorney who also advises on strategic and business management matters and consults with people under investigation on how to handle the stress of being sued or investigated or prosecuted.

In New York, Open Season on Hispanic Men

In New York City, women can falsely accuse Hispanic men of sexual assault and other crimes which could send the hapless victims away for years of hard prison time, with little fear for the consequences.

Former ABC weathercaster Heidi Jones was sentenced yesterday to 350 hours of community service for her misdemeanor plea to filing a false police report last year in which she lied about being sexually assaulted in New York's Central Park and specifically identified her imaginary attacker as a middle-aged Hispanic male.  This is in stark contrast to the certain hard jail time that would face her attackers if they were found guilty of the accused crimes.

There is a bright side.  The diligence of New York Police Department detectives in uncovering and pursuing inconsistencies in the accuser's story helped prevent innocent men from being falsely accused, arrested and convicted.  And at the very least, while this commentator criticizes the Manhattan District Attorney's decision to make and accept a generous no-jail plea deal for a crime equivalent to perjury -- for which people from Barry Bonds to Martha Stewart have faced or served prison time in the federal system for perjury charged as obstruction of justice -- it should be recognized that, sadly, in many jurisdictions no prosecution would have been brought or even considered for this crime.

Where the Hispanic and Latino community organizations and bar associations -- which have been publicly silent -- stand on this shameful action is and remains a mystery.

Eric Dixon is a New York investigative lawyer who runs often in New York's Central Park and fits the profile of the imaginary accuser. 

Wednesday, October 26, 2011

Goldman's Gupta Arrest: Who's Getting Nervous?

Many high-ranking executives and even government officials might be getting nervous after Goldman Sachs director Rajat Gupta was arrested earlier today on charges relating to alleged insider trading.

The arrest was no surprise. Gupta was heard on audiotapes played at the recent federal trial of Galleon Group founder Raj Rajaratnam, who was sentenced earlier this month to 11 years in federal prison. In addition, the Securities and Exchange Commission filed earlier civil charges against Gupta (since dismissed, now re-filed in a parallel proceeding).

Gupta now has some choices -- assuming he isn't (in his own heart, between him and The Man Upstairs) totally convinced of his innocence. Unlike the head-scratching cases sometimes brought, Gupta likely faces some (apparently) very formidable hurdles in strong evidence (the aforementioned tapes and records of phone calls), strong and credible witnesses (whom might include Rajaratnam if he wants to try to get lenient re-sentencing down from 11 years) and a United States Attorney's Office confident of its ability to win cases and perhaps aware of the mobs at the Occupy Wall Street demonstrations. Does Gupta dare the government to meet its burden of proof, or does he consider the value of the secrets he may keep, the name cachet of the other big names -- "targets" -- he can implicate, and weigh how much he can shorten or avoid a prison sentence through plea bargaining and fact bargaining?

It is per se improper -- if not downright dangerous to our entire system of justice -- to even consider protests in deciding whether to bring or stop an investigation. But it would be naïve to assume there is no effect.

Gupta is left with choices. Much of Wall Street -- and one dares say, the highest levels of our Federal Government -- is anxious to hear of the outcome.

Eric Dixon is a New York lawyer, commentator and litigation stress consultant.

Tuesday, October 25, 2011

Ordinary Housing Won't Sell

The value of real estate is commonly viewed as dependent on three factors: location, location, and location.

Distinguished locales will have and hold their value, even as empty lots. Homes with distinctive views of a skyline or mountain range will have similar price strength.

On the other hand, non-descript ("cookie cutter") homes in ordinary, non-special areas will languish unless properly priced. Unlike a "one of its kind" home in a unique area, an ordinary ranch house that is one of thousands will have little value, and its sellers would be advised to distinguish their home on the basis of price before the market drops further.

Housing price trends are not likely to reverse a five-year downward trend, due to macroeconomic factors (the recession) and real estate-specific factors such as a glut of supply, an overhang of possible foreclosures, tight mortgage credit and a likelihood of substantially higher mortgage rates in the near future.

Eric Dixon is a New York lawyer and investor who advises startups and entrepreneurs on legal, business and crisis management issues.

Eric Dixon
Eric Dixon LLC

Obama's New Housing Aid Epic Fail

President Obama announced the lifting of certain restrictions on banks in the hope of encouraging banks to refinance some underwater mortgages. This latest plan will cost the banks and some investors in bundled mortgage-backed securities, and do next to nothing to rescue the housing market. It will be, in short, nothing but false hope and a temporary stopgap for a few.

The housing crisis is perceived that way only by current homeowners who have suffered huge price declines averaging 31 percent nationwide. If you are a first-time buyer with a FICO score in the high 700s and can put down 20 percent, this is no crisis; it's a godsend.

Let's call the housing crisis what it really is: an erosion in current values which shows no sign of stopping. Cutting monthly payments to forestall foreclosures is a last-ditch effort to reduce the growth in the supply of homes for sale.

The problem is that too many owners -- and this now means the banks holding the mortgages -- want to dump their properties. This impulse to sell will stop only when:

(a) prices go and stay up, which is not expected for years;
(b) universal principal reduction restores equity to homeowners, delaying the problem until further erosion puts up back where we are today; or
(c) the government enacts barriers to sales of existing or new homes which, in seeking to block new supply, eviscerate the demand to purchase real estate as an investment.

The imbalance between supply and demand will correct only when demand rises to meet the glut of homes on or ready to hit the for-sale market. Unfortunately for current homeowners, this requires a significant drop in real estate prices. Efforts to stop or delay this drop will only prolong the housing sector depression and current overall economic recession.

Eric Dixon is a New York investigative attorney, entrepreneur and investor who handles due diligence and management issues for businesses, investors and individuals.

Monday, October 24, 2011

Sky Capital Post-Conviction Updates

An interesting battle on legal grounds is shaping up in New York City, regarding two recent criminal convictions which will test whether the securities fraud provisions of the Exchange Act of 1934 apply to sales and purchases of securities outside the United States.

The battle originates from the convictions of Ross Mandell and Adam Harrington, principals of the now-defunct brokerage firm Sky Capital, for securities fraud in a case which seems to have generated peculiar interest from the federal government.

Both men are currently seeking to have their convictions overturned by trial judge Paul Crotty, whose pretrial rulings and trial decisions seemed to weigh strongly in the government's favor.  It is likely the convictions will stand, with the stage being set for a real fight before the Second Circuit Court of Appeals.  The basis for the challenge, and the appeals that are certain to follow, will be the interpretation of the recent 2010 Supreme Court case of Morrison v. National Australia Bank Ltd.  The Morrison case involved a civil proceeding about which the Court held that Section 10(b) of the Exchange Act only applied to United States transactions.  The Sky Capital defendants argue that the bases for their convictions are transactions which occurred outside the United States. 

Eric Dixon is a New York investigative attorney.


Sunday, October 23, 2011

The Housing Crash: Price Drops Are Value Traps For the Unwary

Housing is down an average of 30% from its nationwide highs of 2005-07, with important variations in price among and even within individual markets.  There is already a disconnect between recent achieved prices and actual values -- meaning that some buyers have bought at prices likely well below the true value of the property -- and this trend should only accelerate given the numerous factors I've explained before (and which I itemize at the end to remind you) which should depress real estate on a "macroeconomic" level for the foreseeable future.

Why Housing Is Going To Zero

This is only a slight exaggeration.  Housing -- on average -- will never go to zero.  Except, that is, in certain markets where there are literally no buyers for real estate any price.  The reason is that the credit bubble led to gross overspeculation.  Where the speculation was in several dimensions, the damage is catastrophic.

What do I mean?  Take the general, nationwide speculative bubble that spread across the nation and made people think real estate would never go down.  Then consider the speculation that arose from the belief that certain proto-markets in out-of-the-way areas (think the "exurbs" some 40+ miles from a metropolitan area) would develop and lead to rapid population and jobs growth.  When this latter speculation proved unfounded, when promised highways or train lines were not built, prices could and did collapse as demand evaporated.  Where speculative building occurred before the evaporation, the damage was exponentially worse, with oversupply grossly outstripping virtually nonexistent demand. 

In locales where demand went literally to any price...the oversupply of unused and rotting housing inventory will mean that the supply may need to be destroyed -- razed, burned to the ground, whatever -- for the pre-existing housing stock to recover its earlier 1990s value, and that even in that case, macroeconomic factors may depress purchasing power and buyer demand and keep prices barely above zero.  These markets are most often found in Nevada, central California, Arizona and Florida, but can also be found in the highlands or mountainous interior of mid-Atlantic states like New York, New Jersey, Pennsylvania and Maryland.

Such locales present value traps for the unwary.  There is the illusion of value from the major price drops.  But just as with stocks, whose value can go straight to zero, an 80% price drop does not indicate that a price recovery (and your profit) is any likelier than a straight-down nosedive to zero (can't-be-sold-at-any-price).  Let me explain how such properties are a great hedge against estate taxes, meaning: if you invest in them, you won't have an estate to tax when you die.

If you buy such a property for your primary residence, be prepared to stay put and die in that home.  The general factors that blew up that market, the promised development and ensuing pullout, may continue.  The surrounding area may never be developed.  New highways or industries may never come.  The value of the property may not fall much further, but it may never go up either.  There is no assurance that the macroeconomic depression won't continue for several more years...or even decades.  

If you buy that property as your residence and it is a condo, you have the additional risk of having defaulting neighbors abandon their units and sticking you and your remaining neighbors with the common charges.  An insolvent or bankrupt condominium association is a value-killer for anyone who bought before the collapse.  (But in my opinion it's the time to get in if you're willing to risk costs to maintain or rehab a unit and to keep the development afloat; if you can make an investment of total risk capital, meaning you can afford to lose your entire investment, perhaps it's worth considering a purchase where you buy for little more than the agreement to assume the ongoing property taxes.)

But your situation could be even worse if you rent out the property.  In less populous areas, the evaporation of buyer demand often means that no one wants to live there...under any conditions.  This means your target market of potential renters is likely a pipe dream that's gone up in smoke.  Your investment requires rental income to be profitable, and without renters you will immediately be cash flow negative from debt service (if you've gotten a mortgage) and ongoing taxes and common charges. Almost as bad is having to take it a renter at a bargain-basement rent.  This could lock you into a rental stream insufficient to give you cash flow, with uncertain prospects for being able to increase it, while you still endure the landlord risk of having a deadbeat tenant who doesn't pay and could leave your property in much worse shape than he found it.

My advice for now:  Wait for the market to collapse.  Mortgages are rarely being given and your competition among real estate investors is decreasing by the day.  Prices will continue to fall, because of the following macroeconomic factors:

1.  The overall economy is unlikely to grow in the wake of anticipated higher taxes, hidden taxes in the form of regulatory burdens like ObamaCare and Dodd-Frank, and the $14 trillion national debt for which debt service costs must be expected to increase.  The result is stagflation, at best, and a prolonged recession or depression, at worst, which depresses the job market, income levels and the desire for investment in all sectors and encourages the hoarding and nondeployment of available capital.

2.  Demand to buy real estate will decline -- or vaporize -- when another credit crunch makes banks unwilling to lend to anyone but the most credible borrowers and on the stiffest terms.  Banks are already hesitant to lend to major developers in major metropolitan areas.  Real estate is still a financed commodity, and currently, a whopping 30% of all real estate purchases are made in cash-only deals(In certain markets like Miami and Las Vegas, over half of purchases are all-cash.)  This means that real estate is particularly vulnerable to global macro events -- like a plunge in foreign currencies versus the dollar, or a global equity markets crash -- which could destroy the willingness of the all-cash investor base to make purchases and hence wipe out the strongest remaining segment of the pool of available and willing buyers.  Any such events would cause buyer demand to again evaporate and take prices straight down again.  

3.  Housing supply -- meaning properties on the market -- will increase at any moment when there is either a sign of a price recovery, or more likely, when other events force current homeowners to capitulate, stop holding out for the price of their dreams, and list their homes at fire-sale levels where they are willing to take virtually any offer.  

4.  One day, banks will push foreclosures.  One day: I promise. There will -- there must -- be a day when banks no longer are willing -- or permitted -- to refuse to recognize all the nonperforming loans on their books (i.e., all the mortgages on which borrowers have defaulted).   At present, there are millions of borrowers not paying their mortgages.  At some point, someone will seek to make income from these properties.  A glut of properties will necessarily force prices down.  The alternative is a government-imposed or de facto foreclosure moratorium or restriction on all real estate transactions in a desperate effort to prevent a supply tidal wave, but which would send the catastrophic message to homeowners that they would not be free to sell their homes when they want.  The ultimate result would be to do to homeowners what other countries do to entrepreneurs when they nationalize (i.e., seize) industries -- cause the capital to flee and the value to plunge as buyers demand huge discounts to compensate for the risk of buying a totally-illiquid and potentially-worthless property.

5.  To the extent real estate purchases still are financed, interest rates can only rise from the sub-four percent levels currently reported.  Rising rates mean increased monthly payments and diminished purchasing power.   Just as plunging interest rates after 2001 helped goose the bubble in home prices, the reverse is all too easy to imagine.

If you intend to be a real estate vulture investor, I believe your patience will be rewarded.

Eric Dixon is a New York lawyer, entrepreneur and consultant.