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THE VIEW FROM HERE -
Forethought – Trump’s Proposition to Americans
“Believe that my lies are the truth or die!” DJT
America-cide Part II – Monetization Financially Rapes Los Angeles
Corruptionism Replaced Keynesian Capitalism, Our Political System was Doomed
As Lord Acton noted in 1887 and as the Founding Fathers knew when writing the Declaration and the US Constitution, power tends to corrupt and absolute power corrupts absolutely. Both Adam Smith’s Wealth of Nations, and John Locke’s Two Treatises of Government cautioned that a free economy and a free society required a government which constrained the accumulation of power in one or a few power centers.
As mentioned at the end of the prior article , the repeal of Glass-Steagall and the legitimations of Credit Default Swaps (CDSs) removed the most vital checks and balances on Wall Street, where economic power was concentrated. Since the 1930's, investment firms had been forbidden to own banks. By 2000, US banks held $34,774,331,010.45 (in 2026 dollars). Yes, the banks had close to $35 Trillion!
Back in 2010, the Supreme Court case of Citizens United v. Federal Election Commission, 558 U.S. 310 (2010) allowed corporations to make unlimited political contributions so that they could buy enough legislators, representatives, senators and judges so that Wall Street, rather than the US government, would enact (or erase) the legal checks and balances for the economic system. In September 1998, creditors and other firms dumped $3.6 billion into Long-Term Capital Management L.P. (LTCM) to prevent the firm's collapse. LTCM had borrowed $30 for every $1 in assets so that the lacked the funds to make interest payments. The bailout staved off one disaster, but more were looming. Wall Street realized that LTCM would have had no problem if had owned commercial banks so that could shift around all the commercial bank’s deposits into the LTCM accounts thereby proving nearly unlimited financing — until its profligate ways bankrupted its commercial banks. As soon as LTCM had been bailed out, Wall Street used the power, which the Supreme Court had granted it in Citizens United to purchase enough Congressmen to repeal the Glass-Steagall Acts, to re-write the law so that Wall Street investment firms could buy banks. Investment Firms now had access to trillions of dollars with no need to account to anyone how many billions they looted or how they used those funds.
How Monetization of Real Estate Funnels Wealth to Wall Street and Away from Main Street
Now that Wall Street firms had access to trillions of dollars and owned the politicos who made the laws, Wall Street went hog wild. One gigantic fiasco was the looting of both Iraq and the US treasury by corporations like Dick Cheney’s Haliburton so that American corruptionism destroyed the prospects of a free and functioning Iraq. The nightmare which continues to this day was blamed on Nation Building, when the true cause was unrestrained greed, corruption, and fraud by the Bush American Administration and the corporations which owned it.
At home, Wall Street was running the Subprime Scam, which every educated American should be able to recite as easily as “Mary had a little lamb . . . .” One indication of today’s economic and political nightmare is the public’s total ignorance of the Subprime Scam. Brief synopsis: Wall Street made hundreds of billions in bad loan on residential homes and then sold those bad loans to investors in large bundles, representing that the loans were Triple A +++ guaranteed to pay interest and dividends. The guarantee was called a Credit Default Swap (i.e., insurance). To investors including foreign countries who buy the bad loans, it looked like a win-win situation. Even if every homeowner defaulted and zero interest and dividends were paid the CDSs would pay the investors 100% of what they had expected.
Because all the subprime loans were intentionally bad, they would all fail and the Credit Default Swap would have to pay. Who were the CDS? They were the investment firms who sold the bad loans. The firms’ executives who had created the fatally flawed mortgages had also bought Credit Default Swaps on the homes. As soon as the loans failed, as the executives knew that would, them executives demanded payment on their CDS. A single bundle of mortgages could have one hundred or one thousands CDS, which its own executives had bought.
It was a form of accounting control fraud. CDSs were not insurance where only the owner may collect on a loss and the entity which issues the insurance must legally have enough cash to pay the claims. Thus, investment firms all of a sudden were faced with hundreds of millions of dollars in claims by their own executives! Not only could the firms not pay the CDSs, they could not pay any of their regular expenses.
Wall Street Scams to Loot Angelenos in Order to Funnel Wealth to the One Percent
Developers do not buy today to build tomorrow. Developers often buy properties years in advance of their planned construction. They believe it is wise to buy early. In 1959, the Bunker Hill Renewal Project was begun, but the majority of is skyscrapers were not built until the 1980's. The excessive densification of Bunker Hill made the properties worth more and more, which meant higher Wall Street construction loans and mortgages. Operating on the delusion that Los Angeles’s population increase would continue forever, developers bought up as much low income property as possible and evicted the poor which started the Homeless Crisis – a pattern which Bunker Hill pioneered. Developers who were unable to handle costs for DTLA office towers focused on destroying rent controlled units. As more developers paid higher prices fo the RSO apartments, the land values increased. Developers pay above market value when they can replace an old 12 unit project with a 50 unit luxury project. Wall Street loves it because the construction loans will be in the millions and then the loan term mortgages will likely be in the tens of millions.
The poor people who lived in the destroyed units paid the highest price as the foundation of the family’s economy was ruined when they had to move to a new place which cost two times as much. Paying a higher rent meant the family had less money for food, for entertainment like movies, for regular consumer projects, TV’s, etc. Their disposable income did not benefit the local economy. Instead, it went to the landlord and he sent most of the money to Wall Street for his mortgage payments. New projects replacing old buildings escalates housing costs for everyone so that more disposable income for rents and home prices results in less money going into local economy.
Because the Costa-Hawkins Bill allowed rent control to apply only to projects constructed before 1979, developers realized that the real money was in building something new in 1995, in 2005, 2010 rather than to rehab older buildings. One cannot blame any individual contractor since they were following the laws of economics – densification increases value (while decreasing quality of life) with the added dimension that new construction was free of rent control.
When one sits in Wall Street, destroying the old to finance newer more dense projects is the obvious wise business model. They ignore the facts that LA would be losing population, people hated density, and wanted single family homes rather than apartments. All Wall Street saw was its own delusion that demand for dense apartments would increase forever and Angelenos would need higher mortgages.
Densification serves two purposes: (1) To funnel billions of LA wealth to Wall Street and (2) To reduce the quality of life for Angelenos
(Richard Lee Abrams is a former Los Angeles-based attorney, an author, and political commentator. A long-time contributor to CityWatchLA, he is known for his incisive critiques of City Hall and judicial corruption, as well as his analysis of political and constitutional issues. Abrams blends legal insight with historical and philosophical depth to challenge conventional narratives. A passionate defender of civic integrity and transparency, he aims to expose misuse of power and advocate for systemic reform in local government. You may email him at [email protected])
