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THE VIEW FROM HERE - We can’t! Why do you think it is called a Doom Loop? Let’s see why the Doom Loop is unstoppable.
Los Angeles Operates like a Narco-drug State
Like a narco-drug country which is addicted to its opium production, Los Angeles is hooked on ever increasing doses of densification. Wall Street is the pusher while Los Angeles is the addict. LA feels that it will financially die without a constant stream of developer dollars. Meanwhile, the city ignores that more densification is flooding the city with homeless people and driving out the middle class and businesses. Nacro-drug states are unable to address the needs of its citizens for the same reason Los Angeles cannot address Homeless and Millennial flight. Drug cartels do not make money by funding a full government but only spare enough cash to buy more politicos so that the drug revenues do not stop. Wall Street does not care that densification comes with more homeless and higher housing prices for Millennials and deteriorating infrastructure.
Wall Street Internalizes Profits and Externalizes Costs
Wall Street’s monetization of housing follows an old pattern, which Teddy Roosevelt attacked. When a manufacture floods the local river so that the town’s drinking water is poisonous, the manufacture does not voluntarily pay the costs of its highly toxic by-product of pollution. It leaves those costs for the public to pay. Wall Street’s internalization of profits and externalizing the costs finally forced conservative Richard Nixon to sign the National Environmental Policy Act (NEPA) in January 1, 1970, and the Clean Air Act Extension in December 1970. Now, the corrupt cities and their financial donors were held accountable. Citizens forced businesses to do two things: (1) find a way not to produce pollution, and (2) force businesses to pay the costs if they did not reform their manufacturing.
After the 1970's acts levels air pollution dramatically fell. Auto emissions are exemplary. In 1970, air quality regularly exceeded 0.50 ppm with over 100 smog alerts. In 2015, it averaged roughly 0.12 ppm to 0.14 ppm with no smog alerts since 2003. Beyond mortality rates, the strict limits placed on ozone and fine particulate matter annually averted 200,000 heart attacks, 2.4 million asthma attacks, 135,000 hospital admissions, 18 million cases of child respiratory illnesses. Under the Declaration of Independence, it is the government’ duty to protect individual inalienable rights which requires preventing businesses from taking the highest profits by ignoring its trampling the rights of individuals by forcing horrible illnesses and premature deaths upon regular people.
Wall Street Has Followed this Illicit Game Plan with LA’s Housing
People forget that in 1776, Adam Smith had certain rules for capitalists. Too many people think capitalism means letting the rich and powerful do whatever they wish. That was not Adam Smith. The capitalist economy is not capitalism unless it limits what business people may do. Wall Street has no right under capitalism to steal wealth from others by refusing to pay for the harm with their businesses impose on people. Monetization of housing has two main costs: (1) Dramatic increase in Homelessness, and (2) Unwarranted escalation of housing costs for both owners and renters.
How Housing Monetization Has Turned Los Angeles into an Addict
Because Wall Street’s objective is to extract as much wealth as possible out of housing, the higher the market value of a piece of property, the higher the mortgage. Thus, Wall Street’s “drug pushers” fraudulent inflated land values. One way is Spot Zoning, where a developer is allowed to bribe a councilmember to ignore zoning and/or other limits on the developer’s project. Where zoning allows on R-1 homes, the project has multi-units without required setbacks, off-street parking, height, etc. Reducing code requirements means to increase developer’s profits by harm the public.
Because the developer will make millions of dollars, he out bides families. The developer’s high purchase price goes into the “Comps database” so that the next seller lists his property for what the developer just paid for his nearby spot zoned lot. Within a few years of this escalation of Comps, housing prices no longer reflect what a Willing Family will pay, but instead that the Willing Developer will pay. To the extent some affluent families will pay the inflated price, they have to carry inflated mortgages. For obvious reasons, they are called air mortgages.
The Big Lie
The city, developers, and Wall Street push the Big Lie that Los Angeles has a housing shortage and the only way to stop price escalation is to build more. Of course, densification always increases land value (prices) and the number and size of mortgages per lot, making hundreds of billions of dollars for Wall Street. This is known as The Wall Street Tax .
The Post 2008 Crash Fraud
After the 2008 Crash, Wall Street purchased tens of thousands of foreclosed homes. Rather than putting them back on the market, Wall Street withheld the homes thereby creating an artificial shortage despite the fact that actual demand was decreasing as Millennials were beginning to move to other places where they could afford a detached home.
Wall Street Exiles Facts to Oblivion
Wall Street also falsely advertises housing prices to be substantially higher than the far market value. Thus, potential buyers believe – if Redfin etc. all say a house is worth $2Million, that must be the fair market. No, it is not. Their projections are not facts, but rather they are hype to deceive buyers to pay higher than the actual fair market value.
When Happens When Even Local Politicos See the Need to Reign in the False Price Escalation?
The answer is simple. Wall Street buys politicos at the State level, such as the reprehensible State Senator Scott Wiener (who is the state’s leading anti-Semite) so that the state imposes laws to perpetuate the monetization at the local level.. SB 79 is one prime example how monetization becomes Vulturalization of decent neighborhoods. They want to swoop in and destroy Historic Preservation Zones (HPOZ). See Citizens Fight Back
Because Wall Street only cares about profits in the next quarter, it ignores the devastating crash looming in our future. As Millennials flee, Wall Street turns to public housing so that the city becomes the owner of Affordable Units. The city uses Wall Street money and becomes the Affordable Projects’ owner. Taxpayers forget that the City has to repay the loans so that the city always lacks the funds to maintain their units. Thus, the Doom Loop continues.
(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])
