As a real estate agent plying his trade in the trenches (Miami is the Baghdad of foreclosures), I think our mess is a combination of greed and outright fraud....From Joel Achenbach's whirlwind tour of the U.S.
Report From the War Zone
...Most of what I do now is foreclosure sales in Homestead, about twenty miles south of Miami. Six or seven years ago, what is now literally thousand upon thousands of ticky-tacky, side-by-side townhomes and crammed together "zero lot line" homes, was tomato, potato, bean and strawberry fields. Homestead was the winter vegetable capital of the world. The economy was roaring, agricultural land was cheap and people wanted "affordable" housing. The politicians, in the thrall of the developers, said sure, go ahead and flatten those fields.
So they did and where vegetables once grew housing sprouted. Cheaply built cookie-cutter housing. With no additional infrastructure to handle the traffic or enough schools. People were pushed into adjustable mortgages with low initial payments and told not to worry about the re-set because they could always refinance because the houses would be worth more every year. People, "flippers", hoping to profit from the boom bought five or six houses at a time...MORE
*Did you see George Will's story on Vallejo California a couple weeks ago? Proof positive that the madness wasn't confined to Wall Street (the column was originally in the WaPo, this is via the Pasadena Star-News):
...each of the 100 firemen paid $230 a month in union dues and each of the 140 police officers paid $254 a month, giving their respective unions enormous sums to purchase a compliant City Council.
So a police captain receives $306,000 a year in pay and benefits, a police lieutenant receives $247,644, and the average for firefighters - 21 of them earn more than $200,000, including overtime - is $171,000. Furthermore, police and firefighters can store up unused vacation and leave time over their careers and walk away, as one of the more than 20 who recently retired did, with a $370,000 check. Last year, 292 city employees made more than $100,000. And after just five years, all police and firefighters are guaranteed lifetime health benefits...
The city of Vallejo has filed for bankruptcy.