Mon, Sep

The 1% Have Our Money and We Want it Back


THE VIEW FROM HERE - The Los Angeles City Council is dealing with the aftermath of Garcetti Corruptionism.  On March 1, 2012, which was over a decade into Garcetti’s Manhattanization mania, CityWatch published its first Hollywood Becomes Fraudywork article.  

“As we saw four years ago with the fraudulent home mortgages, greedy SOB’s were robbing people blind while ignoring all danger signs as they reached for that one last dollar.  Then the laws of economics intruded and the Crash of 2008 hit.  Hollywood has its own real estate fraud which has been several years in the making.” 

Over the ensuing decade, the refrain “Then the laws of economics intruded,” has been repeated in myriad articles and ignored and smothered by faux FBI investigations such as the one which just settled last week with former Councilmember Jose Huizar.   January 17, 2019, CityWatch, Pay for Play, Vote Trading: Did Garcetti Want the Huizar’s Gone?, by  Richard Lee Abrams.   The lies from City Hall have been non-stop despite Judge Allan Goodman’s ruling in January 2014 that the city intentionally used fatally flawed data and wishful thinking to the extent it subverted the law.  No one heeded Judge Goodman who  temporarily was not a Superior Court judge. The attorney (Yours Truly), who brought the demographic data on which Judge Goodman had relied, was disbarred for being, inter alia, “a troublemaker Jew who would refuse Jesus Christ.”  The Chief Justice of the California Supreme Court Tani Gorre Cantil-Sakauye relied on Cal. Const. Art VI, Sec 10 last sentence that judges may use religious prejudice and attorneys may not object. After the Thomas Girardi Scandal broke in 2020 due to U.S. District Judge Thomas Durkin in Chicago, all the various judicial institutions which Chief Justice Tani oversaw were implicated, prompting her hasty retirement. 

Then the Laws of Economics Intruded 

While the laws of economics are unstoppable, they work too slowly to regulate society.  As we see with Garcetti’s Manhattanization and the concomitant judicial corruption, the perps have reaped their booty and have moved on to their next endeavor by the time “the laws of economics intrude.” The economic problem facing Los Angelenos is that after two decades of funneling wealth to the top 1%, it has sucked dry the poor who have no money and like a sinkhole in Chatsworth, it is dragging the near-poor and smaller businesses with it.  Although we may classify Mom & Pop businesses such as a retired couple who own a strip mall or a few rental units as wealthy, their wellbeing rests upon their tenants having enough funds to pay rent. Likewise, retail tenants depend upon their customers having enough money to buy their products.  In fact, even larger businesses like Ralph’s are at risk as more and more wealth is funneled to the 1%.  

EBT Cards to the Rescue 

EBT Cards are the prototype solution towards which the City Council seems to be working with its new tenant’s protection ordinance. While EBT cards look like their purpose is to prevent the poor from starving, they also support Ralph’s and all the other grocery stores in the state.  A small downturn in sales can have a devastating impact on a grocery. 

(1) Their profit margin is 2.2%.  When 10% of Angelenos cannot afford food, the grocery chains are imperiled.  Food banks may help the poor, but they harm the grocery chains.  When Ralph’s etc. lose 10% of their customers, their employees suffer.  Thus, it is only rational to provide EBT cards so that poor people can buy food. When EBT cards help the grocery chains, their employees benefit, and a downward spiral is averted. 

(2) When there is a significant drop in shoppers, stores buy less from suppliers. While Ralph’s might survive by cutting its purchase of cereal by 20%, cereal wholesalers may lose two years’ profit with a 20% reduction in Ralph’s purchases.  Whenever retailers save cash by not buying, their suppliers lose sales, i.e., income.  Thus, they are forced to slash their purchases, which due to the multiplier effect can bankrupt wholesalers’ suppliers.  The downward spiral can even impact the manufacturers of farm equipment. Thus, a relatively small reduction in spending at the retail level can wipe out more basic industries. 

If Los Angeles Stops its Insane Densification, the Drop in Construction Imperils the Entire Economy 

Labor would be hardest hit, which may help explain why the Los Angeles County Federation of Labor took to secretly tape-recording councilmembers.  If these three councilmembers should oppose destruction of RSO units in their districts (6, 1, and 14) their opposition could interfere with gentrification on which the construction industry depends. This fact may also be related to why the LAPD has been unable to find out who made the illegal audio tape even though my GOOGLE map shows a gigantic star with a caption over 2130 W James M Wood Blvd, Los Angeles, CA 90006, saying, “Illegal Tape Recording Made Here!” 

Los Angeles’s Nightmare Is More Complex 

Los Angeles has had a glut of housing for over a decade as it cannibalized its lower-class housing, i.e., rental control apartments (RSO) in order to construct more high-end projects, e.g. mixed use projects.  The decision to destroy RSO units so that billionaire developers could reap more profit from constructing high end density units cannot be easily reversed.  Catering to the international money laundering class complicates assessing the nature of Los Angeles production of the wrong type of structures (mixed-used projects) in the wrong places (high density cores).  We cannot tear down Bunker Hill. We cannot tear down all the Infill projects in Hollywood, or could we? 

Investment Has to Go into Productive Assets 

From a macro-economic viewpoint, when a recession looms the government’s shelling out cash is necessary.  Otherwise, the lack of cash in consumer hands will destroy basic industries. (The multiplier effect always lurks behind the scenes.)  If workers only dig ditches and then fill them up, that is far better than constructing crap.  The gigantic developer frauds which funneled hundreds of billions of dollars to developers may have kept the economy going, e.g., Bunker Hill, Century City, Hollywood densification, but it devastated Los Angeles residential and office markets by destruction of desired structures in favor of unwanted structures.  Wokers favor supply side economics because it conceals the economic folly behind its central planning philosophy.  They use Newspeak of “equity” and label sound economics as “racism” to prop up the construction industry.  Chinese and other Asians have become Los Angeles’ new White Supremacists! 

One basic fact facing the Los Angeles City Council is that affordable housing has been destroyed. It is gone and it cannot be reconstructed.  Also, it is mathematically impossible to construct affordable housing until there is a near total economic collapse; land in dense areas is the most expense.  The cheapest housing to construct is the house which is already there. A poor family does not base its Thanksgiving dinner on caviar-topped filet mignon.  Having destroyed the homes of LA’s poor and manufacturing a gigantic Homeless Crisis in order to transfer hundreds of billions of dollars to the 1%, Los Angeles is locked into a structural disaster.  The housing it needs is gone and it cannot get off the merry-go-round of destroying more homes to construct more unwanted high end projects. Stopping this construction cycle will implode LA’s economy. 

The Most Insane Economic Proposal In Mankind’s History 

Along with State Senator Scott Wiener, LA City Councilmember Nithya Raman thinks it is a good idea to destroy Los Angeles’ single family neighborhoods. Why? Racism. According to federal judge David O. Carter, Blacks are homeless because White Angelenos are racists living in detached homes.  Nithya Raman thinks all areas should share in helping the homeless by constructing four story project projects in single family areas. 

The Real Reasons for Developers to Abandon Dense Cores 

Even Wall Street sees the structural nightmare LA’s corruptionism has caused by building unwanted mixed-use projects in dense areas, but the billionaires do not want to stop their mania.  Single family homes are cheap to buy compared to a 12-unit apartment RSO complex in the Basin.  Adhering to the Buy Low and Sell High maxim, Wall Street figures that it will be cheapest to buy up single family homes and construct 24 to 48 small apartments with federal funds.  Then, with an expanded Section 8 funding, the federal government can guarantee rents. 

Will This Plan Work? 

Only if you want to drive out the remaining Family Millennials by ruining the only housing stock they desire!  No one, who wants to raise a family, will risk paying LA prices for a single-family home, knowing what within a year, a four story poverty project may be erected next door. 

Where Do We Go from Here? 

Since 2001, corruptionism not only misallocated Los Angeles’ physical capital but also mitigating its adverse consequences exceeds the city’s financial capacity.  Angelenos need a theme song to tell the corrupt city council and its developer cronies where to go.  Ingrata, Café Tacvba English lyrics

(Richard Lee Abrams has been an attorney, a Realtor and community relations consultant as well as a CityWatch contributor. His opinions do not necessarily reflect those of CityWatchLA.com.  You may email him at [email protected])