Is dirty money the real culprit behind the housing crisis?

And where is Riley Park when you truly need her?

Unaffordable housing has become a lightning rod of an issue in the 2024 Presidential campaign with Kamala Harris blaming real estate investors and Donald Trump and J.D. Vance pointing fingers at illegal immigration.

Economists will say both are right – to varying degrees, depending on which one you ask. 

But they also point out that the picture is inordinately complicated, and that there is no single factor causing housing inflation, or single solution to what in the minds of many voters is turning into a “housing crisis”.

Now comes an article in the left-leaning and widely read online publication Politico that brandishes a major reason for the housing crisis that nobody really cares to talk about – dirty money!

The authors James K. Boyce and Léonce Ndikumana, who are economists, argue how the standard narrative that excessive housing costs are the result of deficient supply is misleading.  

What really is driving up prices is too much shady cash seeking safe harbor investments. 

The authors write that

…demand for real estate is not just about the number of people who need homes, it’s also about the amount of money buyers are bringing into the market. People without money cannot push up prices. It’s the people with money — especially those with a lot of money — who drive up prices for everyone else.

And those “investors” happen not to be the legitimate corporate behemoths Harris has vilified but Russian oligarchs, Islamist terrorists and their proxies as well as useful idiots in the financial industry, transnational drug lords, and of course rogue arms merchants.

The authors add:

There has been an enormous influx of dirty money from overseas into high-end residential properties in major cities like New York, Los Angeles and Miami. Some of this money comes from Africa, which has lost more than $600 billion to illicit capital flight since the turn of the century. More comes from Latin America, Asia, Eastern Europe and the Middle East.

Much of the currency goes into luxury real estate, which sits vacant while more and more lower income citizens can’t afford the rent on even a basic apartment.

According to the authors, the preference for high-end properties among those who conceal their ill-gotten gain through byzantine layers and loops of phony business entities and shell companies has a direct impact on the average home buyer or urban renter.

They note that “purchases of luxury units set off a cascade effect” with extremely deleterious downstream impact.

As would-be buyers are priced out of the top tier of the market, they bid up prices in the next tier down. Buyers priced out of that tier bid up prices in the next, and so on down the line. Low-income people — including many “essential workers” — are priced out altogether and wind up having to live far from city centers with long commutes to their essential work. Real estate in other cities and regions experiences knock-on effects, as workers who can do their jobs remotely move out of high-priced cities.

The porous American border during the Biden-Harris administration has created its own kind of “cascade effect” when it comes to undocumented immigration. 

It may not be the case that the excessive inflow of poor migrants from around the globe directly push up housing costs. Yet breakdown of immigration enforcement has opened wide the French doors for criminal gangs such MS-13 from El Salvador and Tren de Aragua from Venezuela to operate just about everywhere throughout what Mexicans have called el otro lado – the “other side” of the border.

These gangs not only prey on their fellow migrants in apartment complexes, as a series of incidents that made national news recently in Aurora, Colorado underscores. They have also moved into the lucrative business of sex trafficking, which has risen significantly during the Biden administration.

The Biden administration’s open border policies have fueled the growth of sex trafficking in the United States.

As investigative journalist Madeleine Rowley observes, “that gangs are sex trafficking women and girls who cross the border—and that the Office of Refugee Resettlement is making it so easy for them—is an open secret to everyone who is part of the system.”

Rowley explains that   

When underage migrants cross the border unaccompanied by a family member, they are sent to a temporary holding facility run by one of a number of nonprofit organizations operating at the border. The NGOs are expected to move the migrants out within a couple of weeks because there are so many more coming in right behind them. During the time the migrants are in the holding facility, both the NGOs and the government are supposed to vet the people who will take them when they depart.

However, such vetting rarely happens.  Underage migrants who don’t have family sponsors in this country are often turned over to the gangs and cartels because of pressure on the government and NGOs “to move the migrants through the system quickly”. 

The underworld power and prestige of Tren de Aragua has skyrocketed in just a few years because of human trafficking.  A major bust of the gang in Baton Rouge, Louisiana this past spring provided significant intel for law enforcement concerning how they operate.

Beside the apartment takeover in Aurora, which the mainstream media has gone out of their way to downplay, Tren de Aragua has wreaked havoc in numerous American cities, including San Antonio, Dallas, Atlanta, and New York.

All along the violent and vicious gang has been laundering its funds, presumably through real estate transactions, to such a significant degree that the U.S. Treasury has sanctioned them.

The International Consortium of Investigative Journalists (ICIJ) notes that the American real estate industry, valued at $47 trillion, is an attractive venue for international crime organizations seeking easy means for making dirty money look legitimate.

The ICIJ argues in regard to the US market:

Its long-term stability makes it popular with criminals and unscrupulous foreign investors seeking to launder money and accumulate wealth. This in turn warps property prices and limits supply for legitimate buyers.

Meanwhile, the burgeoning demand for money laundering has spurred the rapid growth of a whole new ancillary form of dodgy enterprise – the registered agents industry, which is in the business of creating phony business fronts that ingeniously veil the criminal identities of their beneficial owners.

A provocative article entitled “The Secrets Factory”, authored by William Turton and Dhruv Mehrotra, and published in Wired magazine last March brought this metastasizing scam into focus.  The authors build on an investigation in 2022 by writers at the Washington Post.

All states require businesses located within their confines to have an actual physical address and a “registered agent” who theoretically can be contacted, or even subpoenaed, when lawsuits or legal probes transpire.

In order to mask the identities of the company principals and related responsible parties, however, the same states normally allow the registered agent to be the employee of a third party concern. Thus the so-called “registered agent industry”, which according to Wired not only incorporates businesses, but is itself in the business of “preventing anyone who looks at state records from determining the real owner of a company.”

The Wired piece undertakes an exposé of a company known as Registered Agents Inc., which has registered thousands of businesses across many states.  According to Wired, most of the registered agents used by Registered Agents Inc. are actually fake personae.

One of the company’s “registered agents”, who has purportedly organized 1,463 companies,  is a woman named Riley Park.  However, Wired points out, “Riley Park isn’t a real person”.

A significant percentage of companies with registered agents that have nothing to do with real operation or ownership of businesses in the United States are real estate partnerships or limited liability companies investing in apartments, “flipped” residential dwellings, and commercial buildings.

There is no evidence at this time that Registered Agents Inc. itself is doing anything disreputable, let alone illegal. But it is a well-established fact among financial crimes investigators that the degree to which a a company’s beneficial owners are hidden from the public, the more likely they are engaged in something shady.

In any event you should draw your own conclusions.

Until the government, and the American electorate, itself gets serious about money laundering, the housing crisis  – not to mention other gross patterns of economic distortion –  is only going to worsen.

It may even morph into a shelter apocalypse.

Money laundering, like the outsize atrocity of human trafficking that increasingly fuels its furnaces, is a global scourge that aggrandizes itself through our routine habits of moral excuse-making and cognitive dissociation.

It is the real monster under the bed that in our progressive neoliberal political swoon we ignore at our own great peril.

The celebrated economist John Maynard Keynes, who created the theoretical frame for progressive neoliberalism, is often cited for his cynical quip that “in the end we are all dead.”

But now his progeny may have finally found a truly effective way to kill us.