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May 26, 2007

MIAMI, May 25 — As dozens of condominium towers conceived during Florida’s real estate boom near completion, investors who snatched up units in the preconstruction phase in hopes of turning a quick profit are increasingly trying to break contracts, even walking away from fat deposits.
Gregg Covina says 45 of 200 preconstruction buyers in his condo tower in Miami have resold their units.

“Motivated” sellers are flooding online forums like Craig list with   s for condo units still months or years from being finished. And lawyers have been inundated with calls from people hoping to avoid closing on units they bought during the speculative craze of 2004 and 2005.

“I get two or three of these calls a day,” said James Ryan, a lawyer in Boca Raton who said he had 40 clients looking to get out of condo contracts. One, Mr. Ryan said, abandoned a $340,000 deposit rather than close on a $1.6 million unit that lost its appeal as the market faltered.

The numbers suggest that it will only get worse. In Miami-Dade County alone, 8,000 new condo units will be completed this year and nearly 12,000 more in 2008.

But demand has dropped markedly, and people who thought they could “flip” condos — buying, then selling for a steep profit before construction is done — are parting with that fantasy. After years of stunning price increases — 25 percent in the West Palm Beach-Boca Raton area, for example, from March 2005 to March 2006 — condo prices have started dropping.

Condominiums in West Palm Beach and Boca Raton sold for a median price of $211,800 in March, down from $224,600 a year earlier, according to the Florida Association of Realtors. And in Fort Lauderdale, the median price in March was $195,500, down from $202,600 the previous year.

As a result, many buyers want out — not an easy prospect unless they are willing to forfeit the 10 percent or 20 percent they put down, from $15,000 for an inexpensive studio unit to hundreds of thousands of dollars for a waterfront penthouse.

“I see buyers unleashing all possible means to try to get out of contracts,” said Gary Saul, a lawyer in Miami for developers, adding that in some projects, 20 percent of buyers want their money back.

Frank Scarf one, a retired engineer who bought two preconstruction units at Hollywood Station, a complex going up in Hollywood, is seeking to cancel his contracts. Each unit is priced at $300,000. The developer promised a city view from both units, Mr. Scarf one said, but now another building in the complex is blocking it — a change that he said made the contracts unenforceable.

He sent a letter demanding his total deposit of $120,000 back, and after getting no reply, picketed the developer’s office. Then Mr. Scarf one called a lawyer, Matthew Schlesinger, who has been unable to recoup the deposit so far.

“If we have to sue,” Mr. Scarf one said, “we’re planning on suing.”

Tom Leon, a retired business executive who moved here from Illinois, said he planned to give up $200,000 in deposits on two condo units in Miami, priced at $500,000 each, after finding “no loopholes” in his contracts. He said he was not especially bitter, since he had made money flipping other properties at the height of the boom.

“I’m of the frame of mind that you have to be prepared in business or investments to take a loss,” said Mr. Leon, 72, adding that he never had any intention of living in either of the units. “There are some people that mentally can never bring themselves around to that, especially in real estate. But there’s a time to hold and a time to fold, and in my opinion, this is a time to fold.”

The condo mania of recent years also beset cities like Las Vegas, Phoenix and Washington, but while those markets are also full of resale's, analysts say South Florida drew the most investors.

“Between the Latin American influence and the out-of-state buyers who have a love affair with Miami because of its ambience,” said Jack McCabe, a consultant in Deerfield Beach who tracks the South Florida housing market, “they flocked to it and pushed it to the point where about 70 percent of all sales were to investors.”

Real estate analysts say South Florida’s housing market peaked late in 2005, and would-be flippers stopped buying in 2006. People who bought condos before 2005 might still make money or at least break even if they sell soon, the analysts say, but those who bought at the height of the mania stand to lose a bundle.

Ann Norman, a sales associate with Majestic Properties, said one of her clients, a New Yorker, bought 11 condo units in Miami starting in 2004 and has sold six — the last at a $40,000 loss. Ms. Norman and others said that with the glut of properties for sale, it might be more prudent to lose a deposit than hold onto a condo indefinitely.

Many speculative condo buyers were foreigners, especially Latin Americans looking to shelter their wealth from precarious economies in their home countries. Mr. Schlesinger said he was trying to help some Colombian investors get out of contracts in a project on the Miami River, a hot area during the boom, where prices are now languishing.

Getting out of real estate contracts is hard, Mr. Schlesinger said, because under state law, buyers have to prove that developers “materially” changed a project in a way that is “adverse” to the buyer. Many buyers want soaring property insurance rates to fall into that category. But a new state law says they cannot.

“About half the time I have to tell people, ‘Listen, there’s nothing I can do,’ ” said Mr. Schlesinger, adding that 20 percent of his clients end up forfeiting deposits.

Gregg Covina, a developer building Ten Museum Park, a downtown high-rise overlooking Biscayne Bay, said that none of his buyers had lost down payments, but that 45 out of 200 had resold their units before closing, often at the same price they paid in 2003 and to so-called vulture investors looking to scoop up multiple units at pre-boom prices.

Like many other developers, Mr. Covina requires original buyers looking to resell to do so through an in-house program, and keeps a 6 percent commission. Because his is one of the first boom-time buildings to be finished, he said — closings are taking place this month — he has had no problem finding replacement buyers.

“Right now, today, there is no shortage of end-users in Miami for finished, nice product,” Mr. Covina said.

Still, the few new buildings that have opened report many units up for resale. In Blue, a downtown high-rise that opened last year, 87 of the 330 units, or 26 percent, are back on the market, according to the Multiple Listing Service. In One Miami, which also opened downtown last year, 155 of the 800 units, or 19 percent, are for sale.

“When you drive by in the daytime, they are gorgeous,” Mr. McCabe said. “But when you drive by at night, there’s no furniture on the patios and only one light on out of 10.”

This being South Florida, some are figuring out how to profit from the downturn.

Mark Gilbert, a real estate agent, recently started CondoSuperCenter.com, a clearinghouse for people willing to resell preconstruction units at their original price. He said he expected thousands of listings.

“I ask if they’d be willing to sell at their 2003 price and walk away with their deposit back,” Mr. Gilbert said. “A lot of people are saying, ‘Yes, please, yes, please, yes, please.’ ”

You would be forgiven if you confused Al Gore's book signings for campaign events — with overflow crowds and a stream of will-he-or-won't-he questions.

One thing is for sure: The former vice president turned Oscar-winning crusader against global warming wants to get a few things off his chest.

His new book, called The Assault on Reason, reads much like a legal brief — an indictment, really — on current policymaking.

Gore takes a harsh look at the media's fascination with flash over substance and a lack of courage among politicians of both parties.

Most of all, The Assault on Reason is an assault on President Bush's use of power and his handling of the war. The White House has taken strong issue with Gore's book, both its substance and analysis.

Below, a transcript of Michele Norris' interview with Gore:

AL GORE: The point of this book is that our nation is so shockingly vulnerable to such crass manipulation. And it's happening over and over again – the censorship of scientific warnings about the climate crisis; the warrant less mass eavesdropping on American citizens; the overturning of a prohibition against torture that was laid down by General George Washington; and the fact that there is so little protest or outcry points to the much deeper problem not of just the culpability of those in the White House at the present moment, but at the fact that we are so vulnerable to these mistakes and that we allow them to occur with hardly any impressive outcry of resistance or protest.

You use the phrase crass manipulation. In the book, you actually use much stronger language to describe the Bush presidency and the Iraq war. You say the administration can't manage its own way out of a horse show. You say President Bush is, quote, "out of touch with reality," that his march to war characterized an abuse of the truth, that his view of Iraq was tragically at odds with reality. In essence, you're calling the sitting president a liar.

Well, that's your wording not mine; the ones you quoted are mine. But I have not used the harsher word. I think that ...

But it seems like you've stepped right up to the edge. You've almost gone there, just short of calling him a liar.

Well, let me defend the words that I do use in the book. The president seems to feel confident that he can ignore the best evidence of what should be done, and therefore follow his preconceived notions with impunity. And as we wrestle with the problem of how to ... get our troops home as quickly as possible without making a terrible situation even worse, we should pause to ask, how did this happen? Well, the warnings were ignored. Many days before Hurricane Katrina hit New Orleans, the warnings that the levies might fail and trap people in the city ... those warnings were ignored. When the CIA delivered a clear and forceful warning more than a month before 9/11 that – in their words, and I quote – "Osama bin Laden is determined to attack inside the United States," end quote, no questions were asked.

The point is this, whether it's New Orleans or Iraq or the climate crisis, when evidence that any reasonable person can see and understand is completely ignored in favor of ideology and power politics, then our country suffers.

Now I am in Washington, D.C., and you are in New York, so I can't see you, Mr. Gore. But I have the impression of someone standing and wagging their finger at all this.

(Laughter) Well, I'm actually sitting back in a chair and I'm quite relaxed. And I ... think that the problem is, I'm not pointing a finger at Bush and Cheney. I am pointing to the cracks in the foundation of American democracy.

So what is your role then in trying to right the ship? You've spelled out what's wrong with the country. You argue forcefully in your book that the country needs to evolve to a place that is more hospitable to reason to move past the politics of fear, and what you call blind faith. So it seems like you are only minimally effective if you are sort of the thunder from the margins on political life, if you are just speaking from the sidelines.

Look, I am trying to play a constructive role in rallying people to solve the climate crisis. And in pursuing this task, I have come to feel ever more strongly that in order to solve the climate crisis, we're going to have to address these deep problems in the way we make decisions. You know, what led to the emergence of our country more than two centuries ago was a way of communicating freely that enabled individuals for the first time in history to use knowledge as a source of influence to mediate between wealth and privilege by presenting facts and asking others to look at the facts and – if they agreed – to join in endorsing the ideas that flow naturally out of a reasoned judgment on those facts.

I don't think it's naive or quixotic to believe that the truth still matters. I have heard millions of people around this country in one way or another ask the same question that I ask myself. What is it that's gone basically wrong in the way America is operating? This book is my effort to ... say exactly what it is and how we can fix it.

Now, I am going to take you at your word that this is not a pre-campaign book. You've said many times that you have no plans to run for president again. Is that no plans in 2008 or no plans ever again?

No plans ever again to do it. And the fact that I don't give the so-called Sherman statement is not an indication that I'm trying to ... be coy about it. I'm just being candid.

Just curious, how does the presence of Hillary Clinton as a candidate factor into your thinking about the presidential race?

Not at all. Nor the other candidates.

If I could turn this to the other side, who among the candidates in the GOP field would be most difficult for a Democrat to beat at this point? I'm going to ask for a bit of political analysis from you.

Yeah, I'm not very good at that, I'm afraid.

I don't believe you.

Well ... I'm involved in a different kind of campaign myself – to make sure that the climate crisis is the number one issue on the agenda of candidates in both parties. And I know that sounds like an unrealistic goal right now, but I will wager that by the time the elections of November 2008 come around, it will be the number one issue in both parties.

And you think that you'll have something to do with that, making sure that that happens?

Yeah, yeah, God willing.
Excerpt: 'The Assault on Reason'

Television's quasi-hypnotic effect is one reason that the political economy supported by the television industry is as different from the vibrant politics of America's first century as those politics were different from the feudalism that thrived on the ignorance of the masses of people in the Dark Ages.

Our systematic exposure to fear and other arousal stimuli on television can be exploited by the clever public relations specialist, advertiser, or politician. Barry Glassier, a professor of sociology at the University of Southern California, argues that there are three techniques that together make up "fear mongering": repetition, making the irregular seem regular, and misdirection. By using these narrative tools, anyone with a loud platform can ratchet up public anxieties and fears, distorting public discourse and reason.

There are, of course, many historical examples of vivid imagery producing vicarious traumatization that has been used for positive purposes. For example, the images of civil rights protesters being threatened with snarling dogs and being brutalized with fire hoses helped mobilize ordinary Americans to become part of a broader movement for social justice. In my own experience, I have learned that visual images—pictures, graphs, cartoons, and computer models— communicate information about the climate crisis at a level deeper than words alone could convey. Similarly, the horrifying pictures that came back to us from both Vietnam and the Iraq war helped facilitate shifts in public sentiment against failing wars that needed to end.

Even though logic and reason have played more prominent roles in the medium of print, they can also be used along with images to powerful and positive effect in the television medium. In fact, visual images of suffering are significant precisely because they can help generate empathy and goodwill. The horrifying pictures from inside Abu Ghraib prison communicated the essence of the wrongdoing there far more powerfully than any words could have. Even so, when such strong feelings are manipulated, the possibility for abuse becomes considerable.

It is well documented that humans are especially fearful of threats that can be easily pictured or imagined. For example, one study found that people are willing to spend significantly more for flight insurance that covers "death by terrorism" than for flight insurance that covers "death by any cause." Now, logically, flight insurance for death by any cause would cover terrorism in addition to a number of other potential problems. But something about the buzzword terrorism creates a vivid impression that generates excessive fear.

The flight insurance example highlights another psychological phenomenon that is important to understanding how fear influences our thinking: "probability neglect." Social scientists have found that when confronted with either an enormous threat or a huge reward, people tend to focus on the magnitude of the consequence and ignore the probability.

Consider how the Bush administration has used some of the ¬techniques identified by Professor Glassier. Repeating the same threat over and over again, misdirecting attention (from al-Qaeda to Saddam Hussein), and using vivid imagery (a "mushroom cloud over an American city").

September 11 had a profound impact on all of us. But after initially responding in an entirely appropriate way, the administration began to heighten and distort public fear of terrorism to create a political case for attacking Iraq. Despite the absence of proof, Iraq was said to be working hand in hand with al-Qaeda and to be on the verge of a nuclear weapons capability. Defeating Saddam was conflated with bringing war to the terrorists, even though it really meant diverting attention and resources from those who actually attacked us.

When the president of the United States stood before the people of this nation and invited us to "imagine" a terrorist attack with a nuclear weapon, he was referring to terrorists who actually had no connection to Iraq. But because our nation had been subjected to the horrors of 9/11, when our president said "imagine with me this new fear," it was easy enough to bypass the reasoning process that might otherwise have led people to ask, "Wait a minute, Mr. President, where's your evidence?"

Even if you believe that Iraq might have posed a threat to us, I hope you will agree that our nation would have benefited from a full and thorough debate about the wisdom of invading that country. Had we weighed the potential benefits of an invasion against the potential risks, perhaps we could have prevented some of the tragic events now unfolding there.

Terrorism relies on the stimulation of fear for political ends. Indeed, its specific goal is to distort the political reality of a nation by creating fear in the general population that is hugely disproportionate to the actual danger that the terrorists are capable of posing. Ironically, President Bush's response to the terrorist attack of September 11 was, in effect, to further distort America's political reality by creating a new fear of Iraq that was hugely disproportionate to the actual danger Iraq was capable of posing. That is one of the reasons it was so troubling to so many when in 2004 the widely respected arms expert David Kay concluded a lengthy, extensive investigation into the administration's claim that Iraq posed an enormous threat because it had weapons of mass destruction with the words We were all wrong.

As we now know, of course, there was absolutely no connection between Osama bin Laden and Saddam Hussein. In spite of that fact, President Bush actually said to the nation at a time of greatly enhanced vulnerability to the fear of attack, "You can't distinguish between them."

History will surely judge America's decision to invade and occupy a fragile and unstable nation that did not attack us and posed no threat to us as a decision that was not only tragic but absurd. Saddam Hussein was a brutal dictator, to be sure, but not one who posed an imminent danger to us. It is a decision that could have been made only at a moment in time when reason was playing a sharply diminished role in our national deliberations.

Thomas Jefferson would have recognized the linkage between absurd tragedy and the absence of reason. As he wrote to James Smith in 1822, "Man, once surrendering his reason, has no remaining guard against absurdities the most monstrous, and like a ship without rudder, is the sport of every wind."

I spoke at the Iowa Democratic Convention in the fall of 2001. Earlier in August, I had prepared a very different kind of speech. But in the aftermath of this tragedy, I proudly, with complete and total sincerity, stood before the Democrats of Iowa and said, "George W. Bush is my president, and I will follow him, as will we all, in this time of crisis." I was one of millions who felt that same sentiment and gave the president my total trust, asking him to lead us wisely and well. But he redirected the focus of America's revenge onto Iraq, a nation that had nothing whatsoever to do with September 11.

The fear campaign aimed at selling the Iraq war was timed precisely for the kickoff of the 2002 midterm election. The president's chief of staff explained the timing as a marketing decision. It was timed, Andrew Card said, for the post–Labor Day advertising period because that's when advertising campaigns for "new products," as he referred to it, are normally launched. The implication of his metaphor was that the old product—the war against Osama bin Laden—had lost some of its pizzazz. And in the immediate run-up to the election campaign of 2002, a new product—the war against Iraq—was being launched. For everything there is a season, particularly for the politics of fear.

Excerpted from The Assault on Reason Copyright 2007 by Al Gore.

For almost 140 years, the purpose of Memorial Day has been to pay tribute to those who have died in our nation's wars. Memorial Day 2007 brings more heartbreaking news from
Iraq and fresh evidence of the disparity of the burdens being borne in this war.
 

The lives of soldiers fighting in Iraq - or headed there, or just returned - have become tapestries of sacrifice not easily fathomed by Americans preoccupied this weekend with barbecues and holiday sales. The least we can do is set aside time to appreciate the young men and women, and their families, for the prices they are paying:

•As of this weekend, more than 3,430 U.S. troops have died in Iraq since the war began four years ago. Among the latest victims is Pfc. Joseph Anzac Jr., whose body was found Wednesday in the Euphrates River. Anzac, of California, was one of three soldiers who vanished after their combat team was ambushed May 12 about 20 miles outside Baghdad. He was just 20 years old. For many Americans, that tragedy will go unnoticed amid the numbing drone of carnage in Iraq. But Anzac's family is left grappling with an inconceivable loss - one of 83 families to get such shattering news so far this month.

•More than 25,000 U.S. service members have been wounded in Iraq since 2003. Many survived only because medical care has advanced. While that's a blessing, frequently they and their families will have to cope for the rest of their lives with severe disabilities. They include Army Sgt. 1st Class Jeffrey Mitt man, whose face was shattered by a missile in July 2005. He and his family in Indiana are enduring rounds of plastic surgery. He lost his left eye in the attack and has only peripheral vision in the right. He can't taste sweet things and has to drink through a straw. "You know, it could be worse," says his wife, Christy. "He could be in the ground. … We'll take what we can get ."

•The longer soldiers are deployed in Iraq, the more likely they are to suffer mental health problems. About one in five soldiers in Iraq is experiencing depression, anxiety or stress. Post-traumatic stress disorder is common, sometimes only manifesting itself weeks or months after a deployment. It can last a lifetime and shatter everything from marriages to job opportunities. Even those who escape death, injury or illness endure wrenching separations from family.

It's fair to ask why the administration failed to call on Americans back home to bear more of the sacrifice in Iraq, as they did in earlier wars. The rush to war and the mismanagement of the occupation have added to the soldiers' burdens.

But those are subjects for another time. On this Memorial Day, as the conflicts in Iraq and
Afghanistan rage on along with the political debate in Washington, those sacrificing so much to fight are deserving of the nation's profound gratitude.

Let's start with the obvious - there is no free market when it comes to oil.
 
The
OPEC oil cartel dictates production levels and prices. The petroleum futures market is an orgy of speculation that adds substantially to the price of every barrel of oil. The big oil companies themselves are bigger, stronger - and fewer - because of mergers. Real market competition among the oil giants disappeared years ago.

Then there's the issue of refineries and the oil companies that own them. It's odd, isn't it, how the need to shut refineries for maintenance coincides with peak demand?

And what about the shortage of refinery capacity? The big oil companies haven't built a refinery since the 1970s. Why should they? The resulting bottlenecks push prices up and help generate billions in new profits without the bother of doing a thing.

We have to have a free market in oil before we can "let it work." Clearly, the problem isn't at the gas station. It is with the big interests fattening their bank accounts at ordinary Americans' expense.

The willingness to assume "all is well" is puzzling given recent history. Remember when West Coast electricity prices skyrocketed a few years ago? "Relax," the "let the free market work" crowd told us.

I led the Senate Commerce Committee's investigation into that price run-up. What we found was not a free market, but a criminal enterprise by Enron and others in which energy prices were manipulated at a cost to consumers of tens of billions of dollars.

Today, it's gasoline prices setting all-time records across America. We need to know what's going on. Yet the Bush administration has shown little to no curiosity about what's driving prices to record levels.

Sen. Maria Cantwell (news, bio, voting record), D-Wash., and I are working to change that. Our legislation, approved by the Senate Commerce Committee, would put teeth into the effort to investigate and prevent price gouging. It would authorize the Federal Trade Commission, an independent agency, to conduct investigations and impose fines for price gouging.

That's not too much to ask.