Romney gains from U.S. housing crisis

[e-mail this page to a friend]

Sun Media, Friday, February 3, 2012

There are many reasons why Mitt Romney won the Florida primary by 15 points over Newt Gingrich, but the state of Florida's housing industry is a good place to start.

Since the housing bubble burst in 2006, home prices have fallen by 30% across the U.S. But in Florida, home values have plummeted by 40%. Millions of Floridians owe more on their homes than they're now worth.

The housing vacancy rate is more than 11% across America. But in Florida, nearly 20% of its housing stock stands empty.

For Canadians, it's a great time to buy a condo in Florida.

Now consider that Gingrich accepted $1.6 million in consulting fees from Freddie Mac, the mortgage lender that, with its sister institution Fannie Mae, owns half the mortgages in America, and you have the makings of a devastating attack ad that helped take Gingrich down in Florida.

If the American dream is that everyone is entitled to own a home, even when they can't afford one, then the two mortgage lenders were enablers.

There is a story, told in Michael Lewis's brilliant The Big Short, of a migrant worker in California who got a mortgage for $700,000 with no down payment.

That's the kind of stuff that was going on before the bubble burst. When the financial crisis struck in 2008, Washington was forced to bail out Freddie and Fannie to the tune of $450 billion.

The very thought of Gingrich taking all that money from Freddie would have been enough to take him down. But there are plenty of other reasons, including Florida being a diverse and cosmopolitan state with three times as many voters as the first three caucus and primary states--Iowa, New Hampshire and South Carolina--combined.

Gingrich won South Carolina as the candidate of the Tea Party and the religious right, even though he's been a Washington insider for more than 30 years and has been married three times. Go figure.

But it was his brilliant attacks on the liberal media in the two South Carolina debates that propelled him to a surprising 12-point margin of victory there.

It was really his savaging of CNN's John King in a debate two days before the South Carolina vote that put Gingrich over the top. By repeating a cheesy ABC News story that Gingrich had asked his second wife for an open marriage, King drove presidential politics into the gutter of a "he said-she said." There are emotional losses and casualties in every divorce, and everyone knows it.

Romney, an innocent bystander in that exchange, nevertheless took a huge collateral hit. But as he proved by bouncing back in Florida, he can take a punch.

"A competitive primary doesn't divide us," Romney declared in his victory speech in Tampa, "It prepares us. And we will win."

He certainly did on Tuesday across nearly every demographic in exit polling.

A Mormon, he won the Roman Catholic vote by 20 points. He won moderate Republican voters by a 3-1 margin. He won women by a 52-28 margin and men by a 41-36 margin over Gingrich. And he won the youth vote by 2-1. These segments add up to a sweep.

The cable news networks want a nomination campaign of attrition like the one between Barack Obama and Hillary Clinton in 2008. At the very least, they want the race to go to Super Tuesday in nine states on March 6. The Republicans want this to be over, so Romney can turn his sights fully on Obama.

  © Copyright 2006-2012 L. Ian MacDonald. All Rights Reserved. Site managed by Jeremy Leonard