A solution for surplus homes

Buy a house, get a green card? Offering permanent US residence to any immigrant willing and able to reduce the stock of unsold new homes is an idea that could gain traction if American property prices keep falling. South Africa already faces serious competition for its skills. This could make the competition hotter.

The bursting of the US real estate bubble is a leading factor in the global slump. House prices are off 26 per cent from their peak in 2006 and still falling. Surplus inventory, which economist Gary Shilling puts at a net 2.4 million units, is a big part of the problem.

Fuelled by cheap credit, the supply of homes began to exceed the number of qualified borrowers in 2005. To sell the excess, builders and mortgage originators happily roped in unqualified borrowers, knowing they could shunt the risk to others. Wall Street repackaged it into AA- and AAA-rated securities which sold like hotcakes.

Then the unqualified borrowers started defaulting. The securities derived from their mortgages turned toxic. Financial gangrene set in. The Obama administration’s latest plan to leverage up to a trillion dollars to cleanse lenders’ balance sheets may or may not stem the rot. Continue reading “A solution for surplus homes”


Are You Now or Have You Ever Been an Arabist?

“Are you now or have you ever been an Arabist?” Could this be he signature phrase of a post-Cold War McCarthyism that poisons Washington’s ability to deal rationally with the Middle East and sometimes makes it Al Qaeda’s best recruiter? The admirers of Charles Freeman certainly think so, though few who seek advancement in this town have what it takes to say so publicly.

Freeman, arguably one of the most talented American diplomatists of his generation, was to have come out of a busy retirement to chair President Barack Obama’s National Intelligence Council. Last week, under bipartisan fire from Israel’s – or more accurately Likud’s – staunchest defenders in Congress, he stepped aside.

The White House failed to come to his aid, evoking this from Washington Post’s David Broder, the down-the-middle doyen of America’s political commentators: “The Obama administration has just suffered an embarrassing defeat at the hands of the lobbyists the president vowed to keep in their place, and their friends on Capitol Hill. The country has lost an able public servant in an area where President Obama has few…credentials of his own, the handling of national intelligence.” Continue reading “Are You Now or Have You Ever Been an Arabist?”

Dead dead trees

Pushed over the edge by the slump, the American newspaper industry is going the way of buggy whips. But while we know what replaced horse-drawn conveyances, there’s no agreement on what is going to take over from the hunk of highly processed dead tree that lands on our doorsteps each morning, or, more accurately, how, and if, the contents are going to be produced when the traditional container ceases to be viable.

This is not a good time to be a producer of those contents.  Denver’s Rock Mountain News closed last month. Hearst is expected to close The Seattle Post-Intelligencer any day.  Tribune Co., publisher of the Chicago Tribune, the Los Angeles Times and the Baltimore Sun, is in bankruptcy, along with the Minneapolis Star-Tribune and the Philadelphia Inquirer. The McClatchy chain, whose titles include the Miami Herald and the Kansas City Star, is slashing payrolls.

The New York Times, perhaps the strongest brand in the business, saw ad revenues plummet 12 per cent last year and is battling to make a debt payment due in May. It has sold its smart new headquarters under a leaseback deal to raise $220 million and, according to the Washington Post’s media correspondent, Howard Kurtz, is borrowing $250 million from a Mexican billionaire it only recently described as having a “robber baron” reputation. Continue reading “Dead dead trees”

Jarndyce v. Jarndyce Redux

Like Jarndyce v. Jarndyce in Charles Dickens’ Bleak House, Khulumani v. Barclays National Bank grinds on inexorably  before a federal court in New York.  We are now in the seventh year of this oft-renamed quest to extract reparations from multinationals that did business with the South African government under apartheid.  No immediate relief is in sight.

There have been developments, though.  We have a new judge.  She is Judge Shira Scheindlin. Her predecessor, Judge John Sprizzo, died last December. He wanted to dismiss the case, but the appeals court found fault with his reasoning. The Supreme Court was expected to uphold his dismissal but could not produce a quorum. Too many of its members had stakes in defendant companies and had to recuse themselves. So the case went back to Sprizzo.

He would likely have dealt with the appeals court’s objections quite quickly. Though divided, the three-judge panel gave him clear enough instructions on how to bullet-proof his dismissal next time. Alas, the reaper intervened.  Now it is up Judge Schiendlin to rule afresh on the defendants’ motion to dismiss. At a preliminary hearing last week she seemed inclined to go to trial. Legal history crooked a seductive finger. Continue reading “Jarndyce v. Jarndyce Redux”

Tragedy and Hope

David Tswamuno is both the tragedy and hope of Zimbabwe. Tragedy because he is not at home, putting his very considerable talents and energy to use for his country; hope because he is minted from the extraordinary human capital with which Zimbabwe is blessed and which could, in shorter order than many expect,  undo the damage done by the gangsters into whose hands his country fell.

Tswamuno is a 20-something financial analyst at UBS in New York.  His resemblance to the actor Presley Chweneyagae is striking; friends call him Tsotsi.   He is from Mutare. There he received an education better than almost anything he could have had at a public school in the US. He came away with four or five good A-Levels.  Mugabe may yet be saved from the bottom depths of hell by his decision to stick with the English system.

Tswamuno’s next stop, with help from the US embassy in Harare, was Middlebury College in Connecticut. It is a very competitive school. He was two years ahead of his class when he arrived. Writing skills taken for granted as a basic A-level requirement in Zimbabwe his American professors thought he could only have gained through special tutoring. So poor are US standards. Continue reading “Tragedy and Hope”