This week’s Reporter cover: The House Thornburg Lost.

Some reaction: “This is a great read and it reminded me of a well-done Vanity Fair piece…”

And an excerpt:

Last week, after 14 years of growth and two years on life support, Thornburg Mortgage announced its bankruptcy. The word came on April Fools’ Day. Nobody laughed. Two days later, the company laid off 130 of 150 employees…
“Here’s this guy, a Harvard Business School alumni: Why in the hell did he come to Santa Fe, New Mexico to start up an investment and real estate company? He expected to become—and he did—a big fish in a small pond. That’s a peculiar kind of person. That’s a personality profile that leads people to think they’re the master of the universe,” Patrick Collins, a retired Wall Streeter who campaigned against Thornburg’s new Ridgetop Road headquarters, says.

And this, from an accompanying interview with Eric Janszen:

Can you put today’s economic situation in a historical perspective? Is there any parallel?

More than one-quarter of all homes have negative equity in the US. That’s a bad problem. But there’s a worse problem developing.

I refer to the American housing market as “the big slum.” A slum is where the market value has fallen below the replacement value. It doesn’t make sense to fix anything. You don’t fix it, you just let it go to hell. There’s no way to get your money back.

So in a tangible sense, the country is falling apart?

Yes. I just got back from a trip to Florida. I’ve been going down there for 20 years. It’s pretty striking. In Miami, South Beach, 20-30 percent of the businesses are out of business. Hotels, restaurants are boarded up with “for lease” signs. You can basically see the area is not doing well.

What’s happened is, we had this finance-based economy that was very dependent on continuous debt creation. That’s suddenly dried up.

Have we had an economy like this in the past? Yeah, we did in the 1920s.