Wednesday, April 16, 2008

The Southampton Shuffle

Every decent man is ashamed of the government he lives under.
--H. L. Mencken (1880 - 1956)

The intelligentsia of the Southampton Town prosecutor’s office known affectionately as the team of Lombardo and Sendlenski have been busy attempting to extort cash out of the newest class of criminals in the Town -- New York landlords and property owners.
With the advent of the new Rental Law - a thinly disguised set of guidelines intended to rid the area of those pesky Latinos (in the absence of a national immigration policy) and at the same time, transfer responsibility for enforcing laws from the police to landlords – a whole new situation, what a normal person would think is a con job, has evolved.

Take the recent scenarios that have erupted in the Town Justice Court.

The Code Enforcement boys arrange a complaint from a neighbor who is just thrilled about having a Latino living next door with their extended family.
An anonymous phone call to the local gendarmes complaining of, say, garbage, becomes the excuse (probably cause) for a full-blown investigation. As was popular with Hitler Youth, that garbage complaint becomes the ticket to arrive at the front door with guns drawn and badges flashing.
Who could refuse a visit from your friendly, local, law enforcement officer? Tell Sally to put her robe on and invite the boys in for a beer.

Of course, this humor pales when confronted with the new realities of the Justice Court. Joe Lombardo and his pal Michael Sendlenski, looking to make a name for themselves with the locals, have started to hone the good-cop, bad-cop routine to a level where Abbott and Costello would be envious.

What has been happening folks, are a few of the following realities. For one thing, the Town needs money. Mostly for more salaries to enforce the laws against New Yorkers and other riff-raff. Too many people seem to have gotten the idea that investments are welcome in the Town and that they, therefore, should have some say in who rules and how the game is played. So, taxes have been jacked up – just in time, it seems. The tax revenues were about to decrease, so while values drop, tax rates go up. As the values continue to drop, don’t look for the taxes to drop. This year’s increase in the Community Preservation Fund, the transfer tax paid on big-ticket purchases of real estate, may be a very serious disappointment next year. There was enough money to go around this year, and for the politicians to “borrow” from – but this may not be possible next year. This year’s take was based heavily upon the performance of real estate for the first two-thirds of 2007. That was when financing did exist.

But, what the Town has traditionally fallen back on for money is the good old formula of ripping off the New Yorkers. You know, that elephant in the room that pays for everyone to have a job in Town government but does NOT get to vote, Yet.
Fines, penalties, and criminal summonses do very nicely. It’s the meat and potatoes of the Town Justice Court. It’s gets those white New Yorkers all squirmy when the idea of traveling 100 miles to court with the possibility of being arrested for things like not having a number posted on your house or, say, renting your house to someone the Town doesn’t like.

That brings us to Latinos and Rental permits.

Recently, a couple of landlords were dragged into court by the vaudeville team of Sendlenski and Lombardo because they had rented a couple of properties to tenants that were immigrants. Their “Paperz” were not in order – and by the way, we found numerous violations in your houses and you have not obtained a rental permit with the names of the people living in these houses. And, by the way, are they here legally? Now, that's your job, not our job.
But, we are concerned because they are not safe. But, are they here legally?
How about you give us $5000? No, make that $10,000.
Yes, and what about jail time?
Well, give us the money and maybe we'll just give you Community Service. For renting your house.

Judge Burke, of course, a recently re-elected jurist who is tough on crime adjudicates many of these cases. Perhaps with tongue in cheek. How could you keep a straight face when there are real criminals wandering about and landlords are being arrested and criminalized?

So, how humorous is this situation? How does a New Yorker logically deal with such an obvious sham. The previous Supervisor "Skip" Heaney even published a campaign ad in Suffolk Life describing in detail how he planned to get rid of immigrants. The plan, when Heaney, Kabot and Nuzzi were running on a Republican ticket (before Heaney and Kabot broke up) was to intensively inspect houses that the Latinos were living in and use the safety issue as a means to criminalize landlords -- disguised as concern for the very people the Town wanted to vanish. Of course, no house can survive a safety inspection if the inspector is instructed to find problems.

While Sendlenski and Lombardo are busy shaking down the landlords, and while Supervisor Kabot is clucking over the extra $4 million sucked out of New Yorkers pockets from real estate transactions, Judge Burke’s kid is creating a new business.

Ed Burke, Jr. is advertising in the Republican Town organ, the Southampton Press, which passes as a newspaper, for his services – to advise those pesky landlords on how to get those Rental Permits. Whether the Rental Law is constitutional or not is immaterial.

In "House of Games," Joe Montegna described a "Tell" as the most successful way to figure out what was going on. You have to watch these characters in operation. Sit in on a Justice Court session. All of the players have their game down with each other.

And, just as John Cusack mistrusted Annette Benning and Angelica Huston in "The Grifters," watch the Town play out this "Long Con." In addition to the entire corrupt process from Town Investigator David Betts, to Fire Marshall Cheryl Kraft and her Code Enforcement boys and girls, to the Town Attorneys in Justice Court in front of Ed Burke and Tom DeMayo (who signs most of the anti-Latino search warrants) – there will now be a charade played out with beleaguered landlords represented by Burke, Jr., in front of his father. It is a system of corruption poorly disguised as a campaign to enforce safe housing that is feeding upon your wallet. Can you imagine that they want you to believe that they want safe housing for people that they really want to kill? Visit Quogue if you doubt that. The police shot an unarmed immigrant to death.
Where’s the U.S. Attorney when you really need him?

The South Bronx during the Civil Rights Movement was a safer place for New Yorkers.

Friday, April 04, 2008

The Other Shoe

Lack of money is the root of all evil.
-- George Bernard Shaw (1856 - 1950)

Now that Manhattan real estate has started to drop – both the number of sales and the dollar amounts – it is abundantly clear to all those who enjoy reading the tea leaves that we are in for a difficult few years. Real Estate Intel is that the condo market has already seen 15 to 20 percent drops in prices and that 30 percent reductions are in the future.
And, Hamptons brokers who tell you the truth describe the one remaining selling season that is left (there used to be spring and fall) as “quiet.” Some brokers have used the word “spooky.”

For the last few years, the SoHo Journal has been describing what was about to take place and we have now arrived at that point. But, the conflicting information emanating from Wall Street columnists leads some to believe that we are arriving near the bottom – both in stocks and bonds and real estate.
Don’t believe it. We are just at the beginning.
The people to listen to are not the gurus or the reporters or the brokers involved in the marketplace.
The people to listen to are the money guys. They’re scared.

What they know, they learn from talking to hedge fund managers, underwriters, investors, and banks. They know that there is a lot more pain to come in the real estate debacle – from write-downs and foreclosures – to massive layoffs on Wall Street. The workers who are laid off, incidentally, would be the people who buy condos in Manhattan and summer houses in the Hamptons.
And, the money guys also know that Europe is about to be hit as well.
How many people know, for example, that buyers in London typically could buy that Townhouse in the right neighborhood with 100% financing?
Germany is now having trouble – Deutche Bank just wrote off $7 Billion.
Switzerland’s UBS just wrote off $19 Billion. The Eastern bloc is not far behind and less well capitalized.
So much for the much-vaunted cheap dollar theory behind real estate sales in Manhattan and the Hamptons.

The most realistic prediction about where we are headed is a serious recession that could take 5 years to play out. The most pessimistic approaches a meltdown of 1929 proportions.
If there is not another MUB (monster under the bed) similar to the Bear Sterns bailout, the next 5 years may only be a severe recessionary period during which lots of people lose their jobs and their homes and cash is hard to come by.
If the economy becomes unhinged by a serious lack of cash worldwide, which could be precipitated by a bad bet in the shadow economy, which has a total leveraged debt of $516 Trillion dollars, – all bets are off.
Essentially, derivatives are bets whose ultimate payday is guaranteed only by the party holding the paper -- if you can figure it out.

So, as the party winds down, a few things will change substantially. There will be a severe shortage of cash, even the weakened dollar. There will be little mortgage money outside of Fanny Mae government paper with a limit of $550,000 (which gets you nothing in the Hamptons or Manhattan), and will replace the “liar loans” with the kind of loan application that the Feds can prosecute you for.
There will be substantially less in tax receipts. This will cause some Village, Town and County coffers to dry up to the tune of a Chapter 11 filing – lest you were thinking of buying some municipal bonds.

Prices for real estate will continue drop fueled by the lack of cash, the lack of mortgages and the lack of qualified buyers. Foreclosures will soar and vacant houses will grow, along with the number of properties on the remaining real estate broker’s listings.
While Towns and Villages in the Hamptons will continue to dip into the Community Preservation Fund, the tax base will continue to dry up. Even East Hampton Supervisor McGinty’s “loan” from that Fund, currently being investigated by D.A. Spota, will be looked upon as a necessary evil as municipalities start to go under.

The fact that the Town of Southampton has chosen to operate their racist immigrant witch hunt at this point in time – criminalizing landlords for renting houses to Guatemalans, Mexicans, Ecuadorians – will only exacerbate the problem in the Hamptons.
It will accelerate the rate of foreclosures, hasten a landscape of boarded up houses and force even more properties on an already bloated market. The Conservative Republicans will bring down an already damaged economy to satisfy a racist agenda.
The “Prime” borrowers who have been holding on in this real estate market will be pushed over the edge.
This has already been reported by brokers who complain that houses which were formerly only on the market for sale – are now also on the market for rent. And, the rental prices reflect the numbers needed to pay a mortgage -- not the realities of what people in the marketplace will pay. The new rental law, which is unconstitutional and racist, will fix the rest because the only tenants who can afford to rent (or who will actually pay once in the door) are the targets of the Town. They want Latinos gone and they want young people to go to New Jersey. The line of politicians dipping into the Preservation Fund will grow quickly.

For those of you who do not get any news in the Hamptons from the local media, there are a few election notes worthy of reporting.

George Motz is described as a Mayor running for re-election in Quogue.
What is left out of the crib notes by the Southampton Press reporter who did the original story when it was mistakenly covered and almost got him fired – is the fact that Mayor Motz was indicted for playing games with client money at his investment firm. According to the S.E.C. complaint, a little ploy called “ticket-switching,” was alleged. His wife is still the Quogue Justice Court Judge but they are rumored to be holding on to each other by a thread – partly due to the fact that he has a girlfriend.

Conrad Teller, Mayor of Westhampton Beach, known for wanting to keep the Village like a set for Mayberry RFD – replete with tumbleweed rolling down the street during the winter – is being challenged after his first term.
Currently one of the hottest issues defining his time in office is whether the religious people will be allowed to have markers in the Village allowing Orthodox Jews to benefit from placements that guide the path to the synagogue. Some Villagers have described the Mayor as someone who is anti-Semitic and during a recent Village Board meeting, derogatory comments were tolerated from the audience.
Some of the members of the audience decried the fact that allowing these ervuls would bring more Jews to the Village.
Well, hello, for a Village that is anti-business, wouldn’t that be a godsend?

The challengers are reportedly former newscaster John Roland, who lost by only 6 votes in the last election – and Mark Raynor, a retired police officer who is business friendly. One will run for Mayor and the other will run for a Trustee position.