By Doug Porter

It seems like we’re rushing from one crisis to the next these days on the world’s economic stage. Puerto Rico is flailing, Greece is on the brink and now the Chinese stock market is tanking. The first two are relatively minor in terms of their actual economic impact worldwide, the situation in Asia poses a threat to real estate markets, especially in California.

In just over three weeks Chinese investors have seen $3 trillion (that’s with a “T”) in equity vanish, despite increasingly desperate measures by the government.  That is six times Greece’s entire foreign debt, or 11 years of Greece’s economic output, according to the New York Times.

Hundreds of companies have halted trading, more credit has been made available and the state pension fund’s assets are being tapped, all to no avail. Much of the Chinese market boom has been fueled by stock purchases made on credit. Now that those stocks are worth less than what was paid for them, it’s reasonable to assume investors will be forced to sell off real estate assets to pay off the loans. And they’ve been buying in California in a big way.

According to the National Association of Realtors (NAR), Chinese buyers spent an estimated $22 billion on U.S. properties last year. More than three quarters of these transactions were all cash and 51% were in California, Washington and New York.

East-West Property Advisors, a company connecting Chinese buyers with U.S. agents, says overseas buyers from China have shown the most interest in the San Francisco Bay Area (34 percent), followed by New York City (22 percent), Los Angeles (17 percent) and San Diego (13 percent).

What this means in terms of the California real estate market remains to be seen. Much of the Chinese investment has been in luxury properties, which have driving new housing starts and existing sales over the past few years. High end sales ($2 million+) in Los Angeles were up 14% in the third quarter of 2014 compared to the previous year.

There is a good explainer on the Chinese stock market crash at Vox.com:

Chinese banks offer wealth management products (WMPs) that promise the security of a savings account but with higher returns. Some WMPs function like US money market funds, offering modestly higher returns by investing cash in safe assets like high-quality corporate and government bonds. But in other cases, banks invest WMP funds in ways that are a lot riskier than a conventional savings account.

For example, organizations called trusts buy up bundles of assets and then repackage them into “tranches” with varying degrees of risk. The lower-risk tranches are sold to WMP investors, while the higher-risk tranches are sold to others with a bigger appetite for risk. These financial vehicles sound eerily similar to the collateralized debt obligations that contributed to the US financial crisis.

Chargers’ Stadium: Good Money After Bad

Despite being told there’s nothing to negotiate by the Chargers, city officials are moving rapidly on environmental studies aimed at making a January special election on a new stadium in Mission Valley possible.

From the San Diego Union Tribune:

City officials said they plan to continue work on a new stadium — and spend up to $2.1 million — without cooperation from the Chargers based on conversations two weeks ago with NFL Commissioner Roger Goodell and other league officials…

“…So the city has continued to make moves that comply with an accelerated four-month timeline for a stadium environmental approval that City Attorney Jan Goldsmith laid out publicly on June 17, one day after presenting it privately to the Chargers.

The city issued a “notice of preparation” for an environmental impact report on June 22 and has scheduled a 6 p.m. public meeting on July 15 at Qualcomm Stadium to gather comments about the scope and content of that analysis.

The City of San Diego has, according to the Union-Tribune, assigned 30 staff members to work on the environmental impact report. Next Tuesday the City Council will be asked to approve $1.2 funding as part of the overall package so consulting firm AECOM can bring on an additional 60 “experts” and “consultants.”

The smell of desperation is in the air.

…[Chargers special counsel Mark] Fabiani said it would be a waste of money, reiterating his recent criticisms of the city for trying to pay for a convention center expansion with a hotel tax increase the California Court of Appeals unanimously declared illegal last summer.

“These are the same city officials who wasted four years and 10 million tax dollars on a blatantly illegal convention center funding scheme, so the waste of millions more here is unfortunately not that surprising,” he said.

It’s also important, according to various sources I’ve talked with, to note that the city’s study proposal attempts to focus solely on the proposed stadium and related parking and not the development of the remaining property, something that’s got to happen for any financing scheme to work.

LGBTQ Discrimination Allegations At E3 Charter School

The Advocate.com has published a story alleging hostility towards gay and transgender students by executive director Dr. Helen Griffith at the E3 Charter School, located within San Diego’s new downtown public library.

The headline and lede for the story suggest these allegations are somehow connected to recent student suicides. There are no known instances of students from this school committing suicide.

“It was the most heartbreaking thing I’ve seen in fifty years of activism,” City Commissioner Nicole Murray-Ramirez says just hours after attending what has been described as “a school board meeting from hell.” The topic was the school’s gay-straight alliance.

“Here you had these kids, some gay, some straight, all coming together to explain to a school board how they were being bullied by the principal,” Ramirez says. “You even had parents complaining.”

Situated in the city’s sparkling new downtown library, an acclaimed architectural and public-use achievement, e3 Civic High School aims to teach civic engagement with a college preparatory curriculum, as well as social and cultural literacy. Yet according to critics, until very recently, its top administrator has been openly hostile to LGBT students.

“I am afraid for my job,” says teacher Valerie Stewart, who is also the school’s gay-straight alliance faculty advisor. “I feel I’ve already been retaliated against.”

According to Stewart, e3’s executive director, Dr. Helen Griffith, initially thwarted the formation of the GSA, called the Spectrum Club, allowing it only after Ramirez and the American Civil Liberties Union got involved.

Dr. Griffith denied the allegations in a phone interview, saying“I love them all and they know that. I’ll be attending the Harvey Milk Equality Breakfast with our Spectrum Club gay-straight alliance.”

According to a story on 10News, Stewart’s contract was not renewed at the end of the school year.

San Diego Unified School Board trustee Kevin Beiser posted a note on Facebook saying:

Charter schools are independent of SD Unified school board per CA State charter school laws. The board meeting in this article was the Charter board mtg, not San Diego Unified board.

2) I was still very involved since end of 2014 when it was first brought to my attention. I had several meetings and conversations with ACLU Jeff Wergeles, Charter board President Mel Katz, GSA adviser Valerie Stewart, Dr Griffith and the GSA students. I also accompanied the students at the coronation at the LGBT Center. I encouraged the GSA students to submit essays for the Harvey Milk Breakfast essay contest about their experience and suggestions to make their school better.   

3) There have been NO suicides that I am aware of at this school, the title of the article is factually not true.

DA Dumanis Involvement in Scandal Grows

via susamoazana.com

Both the Voice of San Diego and Union-Tribune are reporting on new documents filed in Federal court over the holiday weekend revealing new information about the relationship between County District Attorney Bonnie Dumanis and José Susumo Azano Matsura, the millionaire accused of illegally funding local political campaigns in 2012.

From VOSD:

Over the past 18 months, District Attorney Bonnie Dumanis has said repeatedly that she barely knew José Susumo Azano Matsura, who’s accused of making illegal campaign donations to Dumanis and other San Diego politicians.

But it turns out she knew Azano well enough to give him a nickname, hold a private conference call with him and personally email her campaign staff to tell them about Azano’s request that Dumanis use his preferred political consultant during her ill-fated 2012 mayoral campaign.

At the UT:

According to the documents, Dumanis — identified in court documents only as Candidate 1 — sent an email to her campaign staff in December 2011 informing them of a conference call she had with Azano. Also on the call were a Dumanis acquaintance, retired San Diego police detective Ernesto Encinas, who managed Azano’s security detail; and campaign services manager Ravneet Singh, the documents say.

In her email, Dumanis stated that Azano was very wealthy, and that Azano wanted her to speak with Singh because Singh was “a master of Internet campaign stuff,” according to the records. She stated that it was unclear whether Singh wanted “to do some volunteer advising or some form of paid work,” but that she mentioned “our budget issues” during the call. She then exclaimed that Singh “apparently flew to SD just to talk with Mr. A who wanted him to talk to me!”

In a previous interview with The San Diego Union-Tribune, Dumanis admitted to meeting Singh later on in her campaign. “I met him once, and he gave me the sales pitch,” she told the Union-Tribune. Prosecutors allege Azano paid for the social media and Internet services Singh performed to support her campaign, with payments being filtered through a Mexican company. Azano is also accused of using straw donors to support her election bid with cash.

“Candidate 1” has not been accused of any wrong-doing.

On This Day: 1776 – Col. John Nixon gave the first public reading of the Declaration of Independence to a crowd at Independence Square in Philadelphia.  1862 –  Labor organizer Ella Reeve “Mother” Bloor was born on Staten Island, N.Y. Among her activities: investigating child labor in glass factories and mines, and working undercover in meat packing plants to verify for federal investigators the nightmarish working conditions that author Upton Sinclair had revealed in The Jungle. 1881 – Edward Berner, druggist in Two Rivers, WI, poured chocolate syrup on ice cream in a dish. To this time chocolate syrup had only been used for making ice-cream sodas.

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Doug Porter

Doug Porter was active in the early days of the alternative press in San Diego, contributing to the OB Liberator, the print version of the OB Rag, the San Diego Door, and the San Diego Street Journal. He went on to have a 35-year career in the Hospitality business and decided to go back into raising hell when he retired. He won numerous awards for his columns from the Society of Professional Journalists in 2012, 2013, 2014, 2015, 2016 and 2017. Doug is a cancer survivor (sans vocal chords) and lives in North Park.

Latest posts by Doug Porter (see all)

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