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Friday, August 31, 2012

Explaining the Tea Party

Several nights ago a visibly half-tired yours truly explained the mission of the Tea Party movement.  I represent the Gotham Tea Party which is headquartered in New York City.

Thursday, August 30, 2012

Christie's Challenger Moment With Keynote Speech

This past Tuesday night, Americans needed to hear a conservative vision for a 21st Century America. A national party keynote speech is the best opportunity to articulate this view. Americans have rarely been more disappointed.

New Jersey Governor Chris Christie gave one of the most sophomoric, intellectually disappointing and, to be frank, insulting political speeches I have ever observed. His speech lacked both substance and inspiration. Governor Christie highlighted the growing ideological divide in our nation, but failed to bridge the gap, or even to try to put forth a competing view of our future. 

In the wake of four years of unprecedented deficit spending and dangerous expansions of Executive Branch power over individual liberties through overregulation, overcriminalization and the dreaded individual health-care mandate, Americans needed to hear a new vision. Instead, Governor Christie gave a speech that shows the Republican establishment which he represents is bankrupt of ideas, ideology, vision and inspiration. 

This is America. We can do better. Republicans can do better. The voters deserve better. America needs better.

Governor Christie never mentioned the Tea Party movement or its core issues of fiscal responsibility and individual liberty.  He never mentioned our incumbent President.  Christie then waited until his speech was nearly over to first mention the Republican nominee for President, as if Mitt Romney were an afterthought, and only mentioned Romney seven times while using "I," "me" or "my" dozens of times. 
In a speech that will be remembered for both its ideological failure and political narcissism, Governor Christie was an example of much of what is wrong in American politics -- and society -- today. In an era where hard times demand self-sacrifice and the concept of a shared mission and teamwork, we got a self-centered "me, myself and I" performance that reminded me of the bratty kids in "Willy Wonka and the Chocolate Factory."  

Most of all, Governor Christie's thematic, ideological and intellectual shortcomings reminded America that the Tea Party movement began -- as a reaction and response to the failures of the Republican Party.  His performance reminded us why the Tea Party movement remains alive (and perhaps healthier and more serious and committed than ever) and why it is the only citizen advocacy movement that has staying power to fight for fiscal responsibility and individual liberty.
In short, Governor Christie had his Challenger moment Tuesday.  He went to Florida, took off like a rocket with morning speeches to state delegations, and then blew up.
          Eric Dixon is a corporate and election lawyer, political strategist, think tank member and radio       show co-host. 

Sunday, August 26, 2012

Rescuing Alleged Serial Woman Groper Vito Lopez

Embattled Brooklyn Democratic Party chairman and longtime state Assemblyman Vito Lopez is now the subject of calls from the highest echelons of New York City politics -- including New York Governor (and strong if undeclared 2016 presidential candidate) Andrew Cuomo -- to resign following a state report issued Friday that found Lopez to have physically, sexually harassed several female staffers.

The problem here, aside from the actual (if proven) behavior, is that Lopez chose the wrong class of victim. You see, if Lopez had groped male staffers and perhaps admitted he was "a gay American" like New Jersey Governor Jim McGreevey did in 2004 (a move which may have spared him a criminal indictment), he would have insulated himself from political attack. That's because aspiring politicians like Cuomo feel the need to demonstrate their political bonafides by showing empathy to protected classes, purported victims, and a gay abuser gets sympathy because the gay community is considered to be perhaps at the top of the "victim special treatment" list. Even above female victims of sexual harassment in the workplace.

In the somewhat perverted world of sexual harassment and victimology, it's not the venial act that matters. It's the group identity of the victim-accuser. As an individual, you don't matter. (Sorry, narcissists, it's so not about you.) What matters is all about your political utility, what group you belong to. A straight white man who gets abused? Well, he's fair game. As a matter of fact, straight men of any race are open and fair game in the politically correct world of New York City. (Look at the treatment of the falsely accused Hispanic middle-aged men whom, as a class, were fingered by former ABC meteorologist Heidi Jones, since convicted of a misdemeanor criminal count of filing a false police report.)

It's different if you're gay. If Vito Lopez were gay, he would hold the immunity challenges and be virtually, well, immune from attack, criticism or (probably) prosecution for his alleged harassment. That's because gays are presently considered the greatest victims, greater than female victims of harassment.

So if I'm Vito Lopez's political consultant, I'm having him watch that McGreevey "I am a gay American" speech from 2004.

Saturday, August 25, 2012

Dorm Roommate Scapegoat For Tyler Clementi's Suicide

The reality is coming out. Gradually. Tyler Clementi's parents rejected him when he admitted his homosexuality days before he left for college, and weeks before he committed suicide by jumping off the George Washington Bridge. Too bad this didn't come out soon after young Tyler jumped, when a virtual lynch mob was demanding the prosecution and incarceration of his freshman roommate (later convicted, sentenced and briefly imprisoned).

Some background: Tyler Clementi was the young freshman at Rutgers University whose romantic encounter with an older man was the subject of a webcam broadcast by Clementi's roommate, Dharun Ravi, using Ravi's own computer on Ravi's own desk and in Ravi's own shared room. Political correctness being what it is, the rush to judgment when Clementi killed himself held that it was Ravi's webcam activities that caused Clementi's death. But the law being what it is, that we don't yet consider societial rejection or hurt feelings a crime, Ravi was considered by the Middlesex County Prosecutor's Office to be someone they had to "get," someone who just "deserved" punishment -- never mind that this is a subjective judgment and that what he did will likely be ruled (upon appeal) to fail to be a crime. Prosecutorial stubbornness being what it is, Ravi was prosecuted for crimes for which a grand jury indictment and actual conviction could be achieved: amorphous and probably unconstitutionally vague "computer crimes."

Ravi was convicted, sentenced (lightly) and earlier this year served a few weeks in county jail. But make no mistake about it -- Ravi was prosecuted and convicted for failing to be insufficiently, eagerly supportive of Tyler Clementi's gayness.

Now we are gradually learning that Tyler Clementi's parents were probably the strongest "reason" for their son's suicide. Too bad they didn't speak up when it counted. Not when Dharun Ravi was being investigated and pressured by prosecutors. Not when Dharun Ravi was indicted and prosecuted, his reputation already destroyed before he was out of his teens. And not when Tyler Clementi was still alive. When it would have made a difference.  

Eric Dixon is an investigative attorney, radio show co-host and political and business strategist and "fixer."

Wednesday, August 22, 2012

Why Chris Christie Won't Run For New Jersey Governor in 2013

One of the laws of survival, whether in nature or in politics (arguably, one and the same), involves avoiding battle when one is weak or -- just as dangerously -- perceived as such.

This is why I predict New Jersey Governor Chris Christie will not run for re-election in 2013.  Should Mitt Romney win the presidency, there is a good chance Christie will be asked to join Romney's cabinet. Should Barack Obama win re-election, Christie may become the presumptive establishment choice in 2016 by virtue of his selection as national convention keynote speaker. (Note the emphasis in italics.)

Christie clearly has his eyes on national office.  His travel schedule gives this away.  His tenure in Trenton will be brief.  But Christie will decline to run for re-election next year -- if he doesn't step down first -- because there is the risk that re-election will expose his electoral shortcomings and thereby jeopardize his 2016 prospects. Christie may be at the apex of his popularity, and from here on out he may be in a steady decline. A 2013 re-election campaign would thus present a greater risk of damage than an opportunity for advancement.

This strategy has a historical parallel with another legendary (and still alive) former Northeastern governor: Mario Cuomo.  New York's former Governor Cuomo ran for a third term in 1990 against a no-name, know-nothing named Pierre Rinfret.  Rinfret was, by most accounts, either a disaster or plain nuts, and promptly got about 26% on the Republican ticket.  However, the little-known Conservative Party candidate, Herbert London, got about 23% and seriously challenged the Republicans for second place (an accomplishment that would have upset all the party patronage the Republicans still enjoyed).  These numbers meant that third-termer Cuomo only got 51% against two weak opponents and divided opposition.  These numbers showed clear weakness and fueled visions of a Republican upset in 1994 that became reality when George Pataki rode the mid-term enthusiasm over Newt Gingrich's Contract with America and conservative backlash against, among other things, HillaryCare. 

Christie would be a formidable candidate for re-election in 2013. However, he has purposely alienated core conservative constituencies like Second Amendment advocates, illegal immigration opponents, the Tea Party and pro-lifers, of which the latter view his pro-choice lieutenant governor with disapproval, while embracing windmill energy subsidies and appointing Muslim advocates to the judiciary.  A Christie re-election bid would expose his ideological weak spots and leave him vulnerable to attack when Republican presidential contenders begin to emerge (and that horse race is already beginning).  Moreover, a less than convincing victory over either a primary opponent or general election opponent would raise questions about his electability and damage his fundraising abilities for a presidential bid.  By declining to run in 2013, Christie can capitalize on his mystique, keep his aura largely undiminished, and avoid the battle scars until he hits the early primary or caucus states of New Hampshire and Iowa.

Eric Dixon is a New York-based election lawyer and political and legal strategist.

Wednesday, August 15, 2012

Coverup Indicated By DOJ Rush To Exonerate MF Global

Criminal investigations are complex and can take a long time, particularly when sophisticated financial instruments are involved. When hundreds of millions of dollars in customer funds go missing and unaccounted for, and customer funds apparently go commingled with brokerage firm operating funds (a huge no-no, verboten), particularly when the firm was on the verge of insolvency, there should be a strong working presumption of negligence if not criminality. That is why it is so surprising that the Justice Department is indicating it is ready to close its criminal investigation into the commodities brokerage firm MF Global less than ten months after the firm's implosion without bringing criminal charges, not even against former CEO and former New Jersey governor Jon Corzine as to whom I surely thought perjury charges would be brought on account of his decision not to take the Fifth Amendment before Congress.

The complexity of the factual issues, never mind the legal issues surrounding the appropriate standards of proof for either civil sanction or criminal indictments, strongly argues for a lengthier investigation. Nine months is barely enough time for seasoned investigators to determine whether the information they have gotten from witnesses is genuine and credible. Sometimes the best test of a person's credibility is time. And it is by no means certain that everyone who was aware of what happened at MF Global did tell the truth and the whole truth to investigators.

Nine months is barely enough time -- no, in fact, it is not enough time -- for investigators to try to "flip" underlings to get them to "cooperate" against corporate officers and managers higher up the ladder of responsibility and presumed to have had knowledge of criminality. In other corporate fraud investigations involving insider trading or misrepresentations to investors, investigators have often spent nine months or more just working to flip one targeted witness to get him to cooperate. In one particular case in the Southern District of New York, investigators spent years building a case using some very suspect witnesses. One of these witnesses, the lead cooperator and in fact the probable prospective lead trial witness for the government, took a guilty plea in an unrelated matter and then spent years taping others in order to develop evidence, and while working for our federal government also spent time deceiving federal judges in simultaneous civil and bankruptcy courts and using multiple aliases in official court papers. And in that case, federal investigators were presumably very careful and took their time to make their case against the founder and a top broker of a securities brokerage firm.

For this and other reasons, the Justice Department's apparent reluctance to keep a criminal investigation open on MF Global is very puzzling and suspicious. Particularly when compared to its persistence on other and arguably far less significant cases, and further when considering the political prominence of the chief executive officer of MF Global, the former New Jersey governor Jon Corzine.

It seems that the Justice Department decided there was no criminality, but the absolute haste must suggest at least the possibility of political considerations trumping justice. Justice for victims. Justice for others wrongfully charged, like David Stockman who was charged with fraud but then exonerated prior to trial in 2009. Justice for others wrongfully investigated and threatened and intimidated, but never charged, like Mark Hatfield who was investigated in connection with the 2001 anthrax attacks. Nine months is not enough to close an investigation. Not unless you are being willfully blind. Or there is a coverup. Or there are two sets of justice, one for the connected, and one for everyone else. (Again, you might say, government is picking winners and losers, playing the corrupt game of crony justice.)

Someone needs to investigate the investigators. Attorney General Eric Holder needs to provide a solid, thorough explanation for why prosecutorial discretion is being used so quickly, so hastily, to close this investigation. The American people are owed answers as to the Great MF Global Whitewash.  

Eric Dixon is a New York investigative attorney.

Mandated Salary Floor Threatens NHL Season

As the National Hockey League careens towards the third lockout of players in two decades, we await news of the league's reaction to the National Hockey League Players Association's counterproposal.

The owners, acting for the time being as a united front, want additional contract givebacks that would operate to reduce the aggregate revenue percentage which players receive.  Some owners have no problem lavishing $100 million, 14-year contracts on star players, yet other owners are struggling under the weight of either perennial losses or crushing debt service.  

I have speculated in the past that at least two franchises are approaching bankruptcy.  I have previously written about the perilous financial state of several franchises including the New York Islanders, whose owner, Charles Wang, may have lost at least $250 million since buying the franchise in 2000.  Meanwhile, the New Jersey Devils are believed on the cusp of bankruptcy because their current owners simply owe too much money stemming from using debt to buy the team.  The Phoenix Coyotes' proposed sale to a new owner who would buy the club from the league -- which has operated the team for three seasons after buying it out of bankruptcy in 2009 in order to keep it in Phoenix -- is also being held up by financial considerations and has, ominously, failed to close.

While hockey is an undoubtedly popular sport among its niche, the economics of the NHL need tweaking.  The largest expense is player salaries, and the last collective bargaining agreement achieved cost certainty by imposing a rather narrow band within which teams' aggregate salary obligations must remain.  The problem, at least for low-revenue clubs, is that as NHL revenue league-wise has grown, the terms of the last CBA forced the salary band up, in turn raising the floor above a level where some teams can spend and remain profitable.  For example, the New York Islanders were right above the floor in the 2011-2012 season, spending about $47 million on player salaries.  This amount was about $10 million more than what they spent in 2005-06.  Had the previous CBA remained in place, the Islanders would have been required to spend about $53 million on salaries.  Factor in that club's losses, which have been estimated to be anywhere from $15-25 million per season (and could in reality be worse).  Simple math dictates that the previous CBA's salary floor and salary band structure have created an inflexible environment in which some franchises are virtually locked into substantial financial losses and, even worse, face a future of mandated additional spending which may outpace those clubs' ability to grow their own revenue.

A new collective bargaining agreement needs to recognize that mandated spending can cripple some low-revenue teams.  If one or more clubs fold or are contracted by the league, the lost jobs for players will overshadow the short-term benefits of mandated player salary spending.  Some franchises need additional flexibility at the low end of the salary scale.

One smart solution would be to increase the width of the salary band, so that the salary cap can rise more than the salary floor.  Another solution may be to untether the connection between mandated salary spending and a set percentage of hockey-related revenue.  Both solutions would help relieve low-revenue teams from the burden of having to increase spending as a result of the revenue-generating success of teams that virtually print money, like the Toronto Maple Leafs.  Perversely, such successful teams can now force weak sisters into near-oblivion, not by carpetbombing them in player salaries, but by generating so much hockey revenue that they impose cost increases, mandated salary increases, on all clubs through a sharply rising salary floor.

UPDATE 8/16/12 6PM: See this report from TSN in Canada, which has a similar analysis to mine.  Read the following passage:
The financial success of the wealthiest franchises over the last seven years ended up hurting the poorer ones.
That's because the salary cap was tied to overall hockey-related revenues and rose dramatically from $39 million in 2005-06 to $64.3 million last season, bringing the salary floor (the minimum teams must spend) up along with it. If next season was played under the current system, the cap would have been set at $70.2 million and the floor would have been $54.2 million.
The new CBA needs to protect low-revenue clubs from drowning, financially, in the wake of the one dozen or so financial behemoths in the league whose revenues are clearly in, er, another league.  Otherwise, the NHL cannot remain as a 30-team league with three teams in the New York area, teams in the Sunbelt like the Florida Panthers and Phoenix Coyotes, and even midwestern clubs like the Columbus Blue Jackets and Nashville Predators.

Eric Dixon is a New York attorney and former hockey season-ticket holder.

Wednesday, August 8, 2012

Major Housing Price Drop Coming in NY, NJ, IL, FL: Trulia

Trulia is now admitting that the foreclosure glut has not hit some major states, from which one should infer that prices in those major states have not hit bottom. 

Jed Kolko from just acknowledged on the Bloomberg radio show "Bloomberg Surveillance" this morning that Florida, Illinois, New York and New Jersey "are not through their foreclosure crisis yet" because they are judicial foreclosure states.  This means that home prices in these states cannot have bottomed out yet.  These are the states in which there is a looming, huge glut of homes that will eventually hit the market when the banks either holding or servicing the mortgages get tired of getting no income on them and act to start foreclosure.  At some point, these homes will reach the market, and the increased supply will reduce prices. There is no way around that fact.

The news gets worse.  As real estate analyst Keith Jurow pointed out to me -- and this further bolsters his contentions of an approaching real estate price plunge in much of the United States (including possibly a 50% drop in the New York metropolitan area) -- the percentage of homes whose first liens (the primary mortgages) are in serious default (meaning delinquent 90+ days) or foreclosure has increased in the last year (comparing March 2012 defaults against March 2011 defaults) in most United States markets.  Just look at this March 2012 map and see the large swaths of light brown in the entire New York metropolitan area including New Jersey, New England including most of Massachusetts, Connecticut and Rhode Island, the entire Chicago metropolitan areas and much of northern Ohio.  Then see the dark brown -- the very worst -- for most of Florida.

While commentators like Kolko try to spin numbers to support the thesis of a housing price recovery, the unavoidable fact is that in major markets, the supply of homes has been kept artificially low because banks have refused to foreclose. If anything, this has artifically supported prices...and pushed the decline into the future, thus pushing a genuine lasting recovery well into the future.  However, there are too many prospective buyers who either fear or anticipate continued price declines. Buyers who will buy today will likely price in an anticipated future price drop, and this depresses prices and prevents a recovery.

This article is the latest by Eric Dixon in an ongoing series of reports following the housing market with a particular emphasis on the Northeast. 

Saturday, August 4, 2012

Revised Foreclosure Bill Aims To Wreck New Jersey Housing Market

The war on New Jersey homeowners has resumed.  The home in foreclosure next door may be turned into a very-low-income housing project using federal and state grant money, while your state elected officials can play crony capitalism and give huge favors to "no more than two" special housing redevelopment companies.  Home values will be destroyed, while the connected insiders get rich and Democrats can get votes from the poor in exchange for deeply-discounted housing -- all at the expense of hapless homeowners. And no one may be more responsible than New Jersey Governor Chris Christie (RINO-Mendham).

Advocates like Americans For Prosperity and the independent think tank Financial Policy Council helped get bipartisan opposition to the Residential Foreclosure Transformation Act (old Senate bill 1566, Assembly bill 2168) in June.  That bill threatened New Jersey homeowners with homeless shelters, halfways houses and drug rehab centers for neighbors, and imminent home value destruction. 

If you think Christie is siding with homeowners, look closer!  Christie vetoed the first bill, but notably declared the veto to be on budgetary grounds and not on policy grounds.  With what may be stealth encouragement from Christie -- a Machiavellian signal not uncommon in New Jersey -- New Jersey affordable housing advocates have submitted a revised foreclosure relief bill (now, Senate bill 2157). The new bill (a/k/a Foreclosure Transformation 2.0) would allow the state to purchase homes out of foreclosure and turn them into deed-restricted affordable housing for households making less than 80 percent of the median household income in New Jersey. This means the foreclosure next door can be turned into low-income housing, and being deed-restricted, will remain low-income housing. 

How bad is the foreclosure situation in New Jersey? Hard facts are hard to come by. But check out these statements from real estate analyst Keith Jurow about the sheer volume of defaults and delinquencies across the river in New York City and Long Island. Jurow cites figures reported by banks to New York State.  Why should New Jersey be any different?
I TOLD YOU THIS WOULD HAPPEN. On June 29th I predicted the foreclosure bill, in a different form, would be re-submitted.  The particular reason I cited was that New Jersey Governor Chris Christie explained his veto as being on budgetary grounds, but given the opportunity to criticize it on policy grounds this Governor -- who does not hold his tongue when he is confronted on Jersey Shore boardwalks -- chose to say absolutely nothing.  That silence was, I argue, the covert encouragement, the Machiavellian signal, to the original bill's sponsors to try again on foreclosure transformation.

Christie's stealth war on New Jersey homeowners -- the people who should be his political base -- continues.  Now, Christie should not hesitate to declare this revised bill (sponsored by Democratic State Senator Ray Lesniak of Union, who also sponsored the original bill) dead on arrival...and if he doesn't do that, he is signaling that he will risk the real estate wealth destruction of New Jersey homeowners. 

Why Christie would take sides with legislators who want to exploit liberal white guilt as an opportunity to get votes paid for by homeowners' remaining home equity is a mystery explained only by political ambition -- a desire to get reelected by any means possible -- or, frankly, the existence of a secret and the continued need to maintain its secrecy.

How bad is the new bill?  To be frank, it is much worse than the original.  While there is one improvement, in that the new bill does not allow for conversion of these properties for social services uses (a leading objection to the first bill), do not get fooled.  The new bill is worse, and the "devil is in the details." 

The new bill still requires conversion of properties bought and re-sold by the state into deed-restricted housing for "qualifying households." The way the new bill defines this term is troubling. Here's the definition:
"Qualifying household" means a very-low, low-, or moderate-income household, the head of which certifies in writing that the household intends to occupy the property as a principal residence for at least 12 months. (Emphasis added.)

This means that the state can turn around and sell or rent the house or apartment next door to you, at high subsidies that you pay for, to low and moderate-income families who only have to give their word that they intend to stay there for just one year. Signing a one-year lease will be enough. They can stop paying rent after one month and they're still fine under this definition. This means your new neighbors will be transients. Tumbleweeds. Deadbeats. Residents who won't stick around and who likely will be bad neighbors. Homeowners know this will crash the value of their homes.

Now, this is not to say that most people on welfare or receiving Section 8 housing vouchers are bad neighbors or bad people. However, when all people are entitled to free or heavily-subsidized housing, you can have "the worst element" be your neighbor. You can and do have some of the worst neighbors in housing projects, because there is no place else to put this worst element when they won't pay for their own housing. The proof in the pudding comes from former tenants of housing projects, who themselves won't hesitate to move out at the first opportunity.

Who gets harmed? All homeowners, but as I previously wrote about the original bill, the Foreclosure Transformation Act will have a particularly pernicious, discriminatory effect on middle-class, working-class and low-income homeowners who are more likely to be members of minority groups.  This bill is sure to have the same discriminatory effect, and that effect is sufficient for a court challenge under federal law.

The bill defines the income brackets as follows: 
"Low-income" means 50 percent or less of the median gross household income for households of the same size within the housing region in which the household is located, based upon the United States Department of Housing and Urban Development’s (HUD) Section 8 Income Limits (uncapped) averaged across counties for the housing region.

"Low-income housing" means housing affordable, according to United States Department of Housing and Urban Development or other recognized standards for home ownership and rental costs, and occupied or reserved for occupancy by households with a gross household income equal to 50 percent or less of the median gross household income for households of the same size within the housing region in which the housing is located.  

"Moderate-income" means more than 50 percent but less than 80 percent of the median gross household income for households of the same size within the housing region in which the household is located, based upon the United States Department of Housing and Urban Development's (HUD’s) Section 8 Income Limits (uncapped) averaged across counties for the housing region.

"Moderate-income housing" means housing affordable, according to United States Department of Housing and Urban Development or other recognized standards for home ownership and rental costs, and occupied or reserved for occupancy by households with a gross household income equal to more than 50 percent but less than 80 percent of the median gross household income for households of the same size within the housing region in which the housing is located.

"Very-low-income" means 30 percent or less of the median gross household income for households of the same size within the housing region in which the household is located, based upon the United States Department of Housing and Urban Development’s (HUD) Section 8 Income Limits (uncapped) averaged across counties for the housing region.

"Very-low-income housing" means housing affordable to, according to United States Department of Housing and Urban Development or other recognized standards for home ownership and rental costs, and occupied by, or reserved for occupancy by, households with a gross household income equal to 30 percent or less of the median gross household income for households of the same size within the housing region in which the housing is located.
Who gets to do the redevelopment of foreclosed homes? So-called "qualified community development financial institutions" which have at least $50 million in assets under management and a minimum of two years' experience in the financing and acquisition of real estate for affordable housing.  That's right, just two years' experience.  Nothing is said about any success benchmark. We could have some real dodgy community groups as the new landlords of transient poor renters, living down the block from you. Again, a recipe for destroying the value of your home.

Somehow, I see Van Jones -- my former law school classmate, Obama's green housing czar and an unreconstructed Marxist race-baiter -- coming to New Jersey as our housing czar.

Even worse, the new bill imposes the 30-year deed restriction on all properties purchased by municipalities which exercise their right of first refusal under the bill. This means that towns cannot step in and buy up foreclosures to prevent their transformation into affordable housing.

The very concept of affordable housing is an oxymoron. As I wrote earlier this summer, the concept of affordable housing is wrong.  The New Jersey Legislature will make a huge error by creating affordable housing, and doing so by destroying the value of all other real estate.

Eric Dixon is an attorney licensed in New York and New Jersey.  Mr. Dixon is on the board of directors of the Financial Policy Council and represents numerous business and politcal clients on legal, regulatory and strategic matters.

Thursday, August 2, 2012

New York City Real Estate Might Collapse

New York City real estate prices might be on the verge of collapse. Noted real estate analyst Keith Jurow has been warning of a second housing price crash for at least two years now. I've personally checked his work and questioned him. His analysis is very solid and I totally agree. (I also have explained my December 2011 reasoning for a 50% to 80% price drop.)

Jurow was a big hit -- and a strong wakeup call -- to an audience at a June 2012 event held by the Financial Policy Council, a think tank on whose board of directors I serve.

In a passage from the Rick Grant blog, Keith Jurow writes:
"I just received the updated second quarter serious delinquency stats...truly scary. More than 400,000 seriously delinquent owner-occupied properties just in NYC and Long Island. Almost none of them have been put into foreclosure. Sooner or later, the banks have to start acting on them. When they do, home prices collapse throughout the NYC metro area -- 19 million people. I am as certain of that as I am that the sun will rise tomorrow morning."
Jurow continues:
"I have posted charts in my articles which show that after a property goes delinquent more than 60 days, 95% of them will not become current again. This means that some action against the borrower will have to be taken at some point in the future.  The only real exception is those delinquent owners who receive some kind of mortgage modification. But we have very good data from OCC and Hope Now which show that over 50% of all mortgages that were modified have become delinquent again . . .
"For two years, I've been saying that the banks can't keep extending and pretending indefinitely. Once they start to take some action -- either foreclosure or a short sale -- prices in the entire NYC metro area will collapse."