Guadalupe Improvement: Historical Narrative

5 02 2015

(handwritten transcription* from a conversation with Sinclair Black, who completed the original 2003 Guadalupe Street Transit Corridor Improvement Project, which was permitted for construction twice.)

“Original construction budget: $4 million

“Original master plan’s budget: $400 thousand (Capital Metro and City of Austin each contributed $200 thousand)

“When the project was shifted from CapMetro to the City (@2000), permits were pulled for construction. But then the City’s transportation department required either 14 or 17 variances, of which all but one** were being taken care of already, so these new variances were essentially bogus according to the City’s own green books. The City Manager at that time (2004) agreed with my assessment.

“In any case, a permit was pulled in 2004, and the project was ready to go to bid. But the City diverted the funding to Lamar and, by the time the City’s attention went back to The Drag, that permit was out of date. So we got a second permit in 2007, and it was ready to go to bid again, but the next prior identified by the City was the repaving of 45th.

“They already have $400 thousand in permitted drawings and now they’re spending about another $200 thousand to get the ball rolling all over again? And so here we go, reinventing the wheel and wasting more taxpayer dollars on something that’s already been done.”

* thus any omissions or errors should be attributed to this fair scribe.

** the radius of the curb at 21st (by the Scientology building) was called into question due to the fact that only one type of City vehicle couldn’t make the turn, being the sewage pumper.

Advertisements




Saw this coming a mile away

18 07 2011

Central Texas toll roads need more state subsidies than expected

Two-year-ish old Source: Even more perniciously, officials are expecting to use excess toll revenues as collateral for leveraging funding for new toll roads – as evidenced by the plan CAMPO recently approved to use the excess toll revenues from 183A, which has bond insurance, as a substitute for bond default insurance on 290E because bond insurance has now become unaffordable as a result of the credit crisis.  This is a financial tactic that Minsky might very well term “Ponzi Borrowing.”[vii]  Furthermore, “Standard & Poor’s experience indicates that optimism bias is a consistent trend in toll-road traffic forecasting.  Bondholders and lenders should, therefore, view these forecasts with some degree of caution as they attempt to identify the inherent risks that these forecasts pose for credit quality.” [viii]  And so it comes down to these questions:

  • Has TxDOT and/or CAMPO and/or CTRMA been cooking their traffic count books? [viv]
  • What happens if TxDOT defaults on its bond for 183A? [x]
  • What happens if toll roads, which are now so called Public-Private Partnerships, are fully privatized? [xi]

 





Next Recessionary Shoe to Drop?

4 03 2010

After being informed by several experts that oil has peaked on a global scale and thus us folks should begin conditioning ourselves for a rolling series of recessions that spike along faster and faster, we here at The Placemaking Institute endeavored to find what the next one may be. According to the Federal Reserve, “While the overall U.S. financial system is showing signs of stability, a rapidly rising tide of troubled loans for commercial real estate threatens the survival of hundreds of the nation’s small and medium-sized banks. Recent financial reports from federal regulators and industry analysts detail a new cycle of uncertainty that they fear could cripple the economic recovery. Billions of dollars in commercial debt will have to be paid back or refinanced at a time when property values have plummeted. About $500 billion will come due in 2010 alone and an equal amount every year through at least 2012.”

With that said, in its Commercial Real Estate: Exorcising the Shoe, UBS concludes that “The CRE market did not experience nearly the same increase in capacity over the past 20 years compared to the residential real estate market. While high unemployment continues to weigh on demand for commercial property, supply growth never materially outstripped demand…CRE-related credit losses are likely to remain high at regional and community banks, (but) a repeat of the 2008/09 severe credit crunch is highly unlikely…In terms of the direct economic impact, the drag from commercial construction on real GDP should moderate by mid-2010. However, we do not expect any positive growth contribution through 2011.”

During the dot-com boom and bust, Our Most Dismal Fellow was paid cash money by entities similar to UBS (such as Bloomberg and Thomson), who do and seek to do business with companies covered in their research reports. And subsequently he believes UBS’ analyses may very well indeed be too rosy because their analysts are thinking far too rationally while the Market behaves irrationally via, if you will, pagan consumerists. Money itself and thus Banks are backed by nothing but Faith. And when CRE loans begin defaulting mid-year at the rate the Federal Reserve expects, right about the time UBS predicts the Government will take off the economies “training wheels,” many small- to mid-sized community banks (which UBS thinks “are not systemically important”) will start going under. Folks, who have already lost much Faith, will panic and lose more Faith (a process that will be irrationally facilitated by Mass Media), forcing the Government to bail out those small- to mid-sized banks, sending our economy farther down that proverbial creek because it could be better invested elsewhere – Like by providing actual jobs. UBS is continuing to underweight this and the fact that (according to Leo Hindery, Jr.):

  • At least 50 million people are ill-fed — up from 37 million just a year ago — including 17 million children. Hunger in America is now at an all-time high.
  • 30% of the nation’s 50 million homeowners own a home whose value is below its mortgage balance, and this number could rise to an almost unbelievable 50% by year-end 2011. It would cost about $745 billion, more than the size of the original 2008 bank bailout, to restore these borrowers to the point where they were breaking even, which there is no obvious political will to find right now.
  • Despite the truly dismal ‘real unemployment’ figures with which most everyone now agrees — a staggering 30 million workers and 19% of the labor force — almost no one is acknowledging the sad reality that even the nation’s 130 million full-time workers have had an average economic loss of 15% just since December 2007 — an average effective work week of 34 hours rather than 40 — which means that the number of unemployed workers, measured economically, is actually as high as 50 million.
  • And 100 million people, fully one-third of the entire U.S. population, are at or below “200% of the federal poverty line of $21,834 for a family of four”, which is a needs-measure made lame by the fact that no family of four can actually comfortably live on such a low annual income.

But while we are amidst this socioeconomic situation as well as a job-less economic recovery, “The economy is improving!” UBS extols before going on to say that “the prospect for a strong CRE recovery is unlikely given the sector’s sensitivity to the labor market and our expectation for the unemployment rate to remain elevated (above 9.5%) through the end of 2011. We continue to underweight small-cap stocks and the REIT industry – two market segments that have significant CRE exposure and high relative valuations.” And Our Most Dismal Fellow won’t even mention how states and municipalities are increasingly laying-off teachers, police officers and firefighters because of budget crunches that have them verging upon Chapter 9! Which UBS assures us “will not develop” while some folks are predicting a reality wherein 911 calls will soon be outsourced to Bangalore!

Is the economy really improving? Or are we once again being soft-shoed about this country’s state of affairs as well as what’s looming just over the horizon? These are the predictions for 2010 that UBS is predicating their analyses upon; if any don’t hold true then of course their opinions are subsequently devalued:

So which of these do or don’t or will or won’t hold any water?

Broadening Perspectives: The Housing Bubble Scheme

Choice excerpts from Commercial Real Estate – Exorcising the shoe

  • We conclude that while CRE-related credit losses are likely to remain high at regional and community banks, a repeat of the 2008/09 severe credit crunch is highly unlikely. This is consistent with the view that we first outlined one year ago in February 2009. We discuss nine reasons why we believe that CRE is not the “next shoe to drop”.
  • In terms of the direct economic impact, the drag from commercial construction on real GDP should moderate by mid-2010. However, we do not expect any positive growth contribution through 2011.
  • The CRE market is much smaller than residential real estate. As Figure 1 illustrates, the residential mortgage market is over three times the size of the commercial and multi-family residential (condos, co-ops) markets combined. The sheer size of the loans outstanding means that the likelihood that losses would be so great that it would materially impact bank capital is small.
  • Banks have stronger capital positions than before the residential mortgage meltdown and are more adequately provisioned for further CRE losses (Figures 2 and 4).
  • However, the prospect for a strong CRE recovery is unlikely given the sector’s sensitivity to the labor market and our expectation for the unemployment rate to remain elevated (above 9.5%) through the end of 2011. We continue to underweight small-cap stocks and the REIT industry – two market segments that have significant CRE exposure and high relative valuations.
  • Two reasons form the basis of our view for further moderation in the contraction of CRE construction. First, the level of non-residential investment relative to GDP was not much higher than its long-term average before the bust (see Figure 7). Moreover, since then, this ratio has already clearly fallen below its long-term mean. While excess capacity in the CRE space is still high and rising, the fact that the investment-to-GDP ratio is historically low and falling suggests that the rate of construction retrenchment should further moderate. Second, the NAR Commercial Leading Indicator (CLI) edged up in 3Q09, after falling since 3Q07.
  • Surprisingly, income producing CRE exposure has grown modestly since 2008. In contrast, construction lending comprised only 7% of total loans and has contracted significantly during 2009 due to charge-offs, pay downs, and a combination of lack of demand by potential borrowers and unwillingness by banks to lend in this area.
  • Clearly, construction has been the biggest problem so far. While construction loans represented only 7% of all loans, they accounted for 14% of total net charge-offs. Through 3Q 2009, CRE and multi-family have not been a major problem. Going forward, we think CRE losses will increase. But two years into the cycle, CRE, construction and multi-family losses have tracked better than expectations, which we believe will continue.
  • The relative slowdown in construction problem loan formation is an encouraging sign. However, the level of problem formation remains high, suggesting to us that losses over the next five quarters (through the end of 2010) could approach the 10-12% range as outlined in the Federal Reserve’s baseline scenario, which would be consistent with lower losses in 2010.
  • Implicit in 2009’s conventional wisdom that CRE would be the next shoe to drop was the belief that the capital markets would remain closed. This implied REITs would be unable to refinance or issue debt and would be unwilling to raise equity at extremely depressed prices. In fact, 2009 proved to be anything but conventional – it was truly a tale of two markets. As can be seen in Figure 22, the MSCI US REIT index declined in excess of 40% between 1 January and 15 March 2009. However, between 16 March and 31 December 2009, the index registered a total return in excess of 110% (see Figure 23).

Choice excerpts from Investment Strategy Guide: 2010 Outlook

  • While there will be no shortage of opportunities or challenges in the year ahead, the sort of extreme directional moves that have characterized the past two years appear far less likely. Instead, we believe the normalization of financial markets and an unfolding economic recovery—albeit a tepid and shallow one—will prompt more moderate and less uniform performance across market sectors. After two years up on the high wire, 2010 will likely be the year of living less dangerously for most investors. (Quick note: What about those who are not investors?)
  • So where does this leave us for 2010? The acute dislocations that existed within most risk assets back in March have now largely been unwound as a result of the extraordinary actions taken by policymakers.
  • The economy is caught between two seemingly diametrically opposed forces—the tailwinds that typically accompany a post-recession recovery process and the headwinds generated from a structural deleveraging within the consumer and financial sectors. As our senior U.S. economist Thomas Berner points out, there is always a certain level of pent-up demand that accumulates at the end of any recession from consumers who have refrained from nonessential purchases, merchants who have pared down their inventories and businesses who have foregone capital investment spending. But as the recession draws to a close and business conditions begin to improve, these drivers start to reverse and contribute to both the breadth and depth of the recovery. The current recovery is no different. (Quick Note: Yes, these drivers may start to reverse. But for how long and to what degree?)
  • The U.S. consumer is now engaged in the process of deleveraging, following a massive build-up in household debt (see figure 8). While savings rates may have rebounded in the immediate aftermath of the crisis, consumer debt burdens remain near all-time highs. The ongoing repair of personal balance sheets is apt to take several years and will therefore limit the extent to which the consumer re-engages in spending. At the same time, financial institutions are undergoing their own purging process. Faced with hundreds of billions of dollars in bad loans and troubled assets, banks and other financial intermediaries are taking steps to shrink their own balance sheets, pare back lending activity and restore their capital base.
  • What this also means is that policymakers will likely opt to retain a decidedly supportive policy stance through at least the first half of 2010. Given the structural challenges that lie ahead, Fed officials will be reluctant to shift away from the near-zero rate policy that has been in place since the most acute phase of the crisis following the Lehman failure (see figure 10).
  • This will be a recovery with “training wheels” as government fills the void created by the continued retrenchment on the part of the private sector… While actual rate hikes are unlikely to materialize until June at the earliest, market participants will begin to discount some tightening moves before the Fed has ever actually lifted the target funds rate… The first of these measures—the program to provide support to the housing market through the purchase of mortgage-backed securities—is set to expire in the first quarter. In the absence of any additional stimulus measures, fiscal policy will also begin to be less supportive for growth by the fourth quarter (see figure 11). This does not even reflect the impact from any changes in the tax code resulting from either the expiration of the Bush-era tax cuts and/or any additional tax hikes planned by the Obama administration. So while policy will remain supportive during the first half of the year, things could get a bit more wobbly by year-end when the training wheels are gradually removed. (Quick note: And so right about when things are going to be getting wobbly in the second half of the year, the ramifications of defaulting CRE loans is also going to be felt…this does not portend well.)
  • Commercial real estate may reach crisis levels. The bursting of the bubble in residential real estate triggered massive losses at U.S. and global financial institutions and led to the credit crunch that essentially froze lending of all types. While early-cycle residential mortgage, home equity and consumer credit trends have shown signs of stabilization, late-cycle commercial real estate (CRE) credit trends continue to deteriorate. Considering that the size of the CRE market is far smaller than the residential market, even greater-than anticipated losses do not carry the same systemic implications. That said, unlike residential loans, commercial loan defaults are predominately recession-related—not the result of subprime lending or exotic lending products—and thus a weaker-than-expected economic recovery could have contagion effects and spark another “mini” credit crunch. (Quick note: Which, if based on past precedent, is probably going to be exacerbated into a more “maxi” one.)
  • Sustainable but sub-par recovery We have grown more optimistic on the sustainability of a near-potential growth rate in 2010. In October, we raised our 2010 real GDP forecast from 2.2%to 2.6%, with growth hovering around 2.75%q/q annualized each quarter of 2010. Thus, our prior fear of a visible growth moderation throughout 2010 has taken a back seat. First, we raised our consumption growth forecast to reflect a pretty flat instead of a rising savings rate. The recent gyrations of the savings rate suggest that U.S. households have probably done most of the adjustments needed regarding their savings behavior. If so, real consumption will likely rise in tandem with real disposable income, which we expect to grow moderately. Second, while we are acutely aware of the need for the government to put its fiscal house back in order, we doubt that government spending will turn negative at any point in 2010. Therefore, we now expect a moderation in government spending, rather than an outright drag. (Quick note: why are they equating sustainable with sub-par? The past sixty some odd years of greed-driven avaricious growth is exactly what has led us to where we are today.)
  • Housing construction is bottoming out, but inventory remains excessive
  •  House prices show tentative signs of bottoming




A “Truer” Cost of Sprawl?

15 01 2010

Several months ago Our Most Senior Fellow dusted off the teachings from a very, very long ago Econometrics class requirement and began delving throughout the Texas Transportation Institute’s statistical database. He learned a lot but, the more he grew familiar with the data, the more he grew frustrated. To him something wasn’t clicking, and he started likening his endeavors to golf – He’d rather spend four hours in a row banging his head against a concrete wall over and over and over again than play. Then “Eureka!” exclaimed he, “Their universe is predicated upon moving more and more cars more efficiently rather than moving actual people more efficiently!” And now that he has said pretty much all he’s needed to say in order to dispel the so-called ‘basic God-given Patriotic American right to drive the biggest vehicle one can afford on an increasingly extensive roadway system’ Myth/Lie that has been artificially inculcated into us virtually from birth (and benefits very few at the expense of many), Our Most Senior Fellow has decided to stick one of his very valuable toes back into statistical endeavors, hopefully doing so in a creative and meaningful manner. (Although first he must point out that it was neither Twain nor Churchill who made that famous comment but Disraeli before prefacing with what is sure to be much bloviation; let’s see what happens:)

After excavating and dusting off an eleven-year old missive from which, after clearing his throat, after an overdramatic pause, “The overriding value of steady economic growth is the foundation of American political ideology. If there is anything approaching dogma in the national belief system, it is the idea that economic growth is the key to solving all problems. In every election here in the United States, for example, votes are used to confirm the leaders of companies that use their lobbying power and campaign contributions to make sure the congressional committee that oversees its industry understands ‘oversight’ means ‘failure to notice’ financial or corporate shenanigans that are not truly in the public’s best interest. No one disputes that the aim of today’s society is to keep the economy growing while preventing inflation from getting out of control, and it is also a given that millions upon millions of people have to be unemployed in order for the system to work at its most ‘efficient.’ Using GDP as a system of accounting for real increases in material wealth is, at the very best, troubling,” with many flourishes Our Most Senior Fellow reads (very furiously and without looking up once).

“Furthermore, according to the fundamental economic maxim in effect from the end of the seventeenth century up to right now, the only object Man should pursue is his very own pleasure. If he takes into consideration the happiness of others, it is only to keep his own happiness from being interfered with by the sanctions of society. By solely pursuing your own pleasure, it is thought that you add to the general happiness of society and, by pursuing this, you once again add to your own pleasure. Thus, a motive is only considered to be ‘good’ if it brings happiness to the person directly involved. Furthermore, individual consumers are increasingly essentially Walmart-ized from birth to care about Price rather than Costs, and the dominant economic theory says that they are autonomous entities except at those points at which they come together for exchange. A system predicated on human selfishness such as this not only recognizes but also encourages a selfish element in human nature, which frays the moral fabric of society.”

 (The Placemaking Institute’s staff’s much needed internal summation: In other words, special interests “win” while greater society as a whole “loses.”)

“The post-World War II American Era in particular, with its rigid, hierarchical and largely unsustainable economic and political system, is largely based on commodities that are finite in capacity, thus generating their great paradoxical value. Via our Powers That Be’s ignoring Adam Smith himself’s warnings by embracing the ruthless exploitation sanctified by the marriage of laissez faire economics and utilitarian pleasure principles, human welfare during this period is unable to keep pace with material prosperity. Beginning in the 1970s, with the U.S. reaching its peak oil production output plus the nascent economic threat of the Asian Tigers and, later, the world at large, U.S. firms began to cut the cost of production in order to be more efficient and thus remain as competitive as they had been since immediately after World War II. One of those costs they reduced was the cost of labor. From 1970 to 1990, while mean rents increased by 350%, mean incomes only increased by 180% – a discrepancy that was exacerbated and only keeps being exacerbated by the industrial shift away from manufacturing toward the high-end service sector.”

(Our Most Senior Fellow now makes us minions point out that all the way back in 2000 he wrote: “This kind of society cannot effectively house itself.”)

But while such things as the average annual growth in home prices nationally over the past 50 years was 5 percent, and over the past 30 years was 6.1 percent (see page 11), the price of gasoline, which is needless to say an increasingly finite product that consequently should be becoming increasingly costlier has, in fact, been kept artificially devalued by a high rate of subsidization.

“This figure shows that…relative to 1978, the price of regular gasoline has increased by 260 percent in nominal terms and 47 percent in real terms. However the price-to-income ratio has declined by 17 percent, i.e., it is more affordable today. (source)

“If we look at the average annual Inflation Adjusted Gasoline Prices (from 1958 to 2009)…the long term average price is $2.37 then in 1988 gas was very cheap and in 1978 it was only slightly below average but in 1981 and in 2008 it was extremely expensive on a historical basis. In 1998 gas had gotten really cheap by historical standards allowing people to buy gas guzzlers like SUV’s and Hummers. But that reversed in 2008 as prices rose above the long term average. As of this writing, the monthly average price of gasoline in November of 2009 was $2.61 just slightly above the long term average price of $2.37. With the Annual Average for 2009 at $2.28 being extremely close to the long term average.” (source)

According to the basic Law of Supply and Demand and consensus estimates, regarding commodities there are divergences between societal expectations and reality, which essentially means that, the longer we continue our tremendous subsidization of gas, the greater the subsequent negative impact will be. Let’s now take a look at the True Opportunity Cost of gasoline: “Estimates on the ‘true’ or ‘real’ cost of gasoline vary by study and by year — I’ve seen numbers ranging from $5 per gallon to $10 per gallon to $14 per gallon and higher. Over at the liberal opinion site AlterNet, Jason Mark notes that it is a conservative think tank whose research put real gas prices above $5 — and that was a couple years ago. Presumably that number would only have risen since.” (source)

Let’s apply the inflation adjusted long-term average cost of $2.37 as well as the various true costs of gasoline and perform a quick regression analysis to TTI’s national congestion costs (439 area average) for wasted gasoline:

 

Now let’s apply those terms to the Greater Austin Metropolitan Region:

These graphs speak for themselves. And we here at The Placemaking Institute believe that somewhere within here may very well be a good “true” cost of our oil ravening GDP-based sprawl mentality…You, dear reader, decide what’s worth what to you.





Wendell Cox: Intellectual Terrorist

4 01 2010

Our Most Senior Fellow (OMSF): “As those of us who have been following this blog know, we here at The Placemaking Institute are adament that the so-called ‘basic God-given Patriotic American right to drive the biggest vehicle one can afford on an increasingly extensive roadway system’ myth that has been artificially inculcated into us virtually from birth (and benefits very few at the expense of many) should most definitely not supersede our basic human right to live our lives in healthy manners.”

The Union of Concerned Scientists: “Transportation is the largest single source of air pollution in the United States. It causes over half of the carbon monoxide, over a third of the nitrogen oxides, and almost a quarter of the hydrocarbons in our atmosphere in 2006. With the number of vehicles on the road and the number of vehicle miles traveled escalating rapidly, we are on the fast lane to smoggy skies and dirty air.”

OMSF: “But beyond individual health, sprawl’s ravening need for consuming more and more oil faster and faster has also instigated national security issues that are adversely impacting us collectively, no?”

Rand Corporation: “The United States would benefit from policies that diminish the sensitivity of the U.S. economy to an abrupt decline in the supply of oil, regardless of its import dependence. The United States would also benefit from policies that would push down the world market price of oil by curbing demand or increasing competitive alternative supplies. U.S. terms of trade would improve, to the benefit of U.S. consumers; rogue oil exporters would have fewer funds at their disposal; and oil exporters that support Hamas and Hizballah would have less money to give to these organizations. The United States might also benefit from more cost-sharing with allies and other nations to protect Persian Gulf oil supplies and transport routes. The United States could encourage allies to share the burden of patrolling sea-lanes and ensuring that oil-producing nations are secure.”

U.S. Energy Information Administration: “Total crude oil imports averaged 8.566 million barrels per day in October, which is a decrease of (0.657) million barrels per day from September 2009.”

OMSF: “And why are a majority of both U.S. political parties so apparently intent upon spilling blood by occupying Iraq and Afghanistan?”

U.S. Energy Information Administration: “Development of Caspian Sea oil and natural gas, along with the necessary export pipelines, has been slowed by regional conflicts, political instability, and a lack of regional cooperation…Most of these conflicts are in the Trans-Caucasus part of the Caspian region, where conflicts in Nagorno-Karabakh, Georgia, and the Chechen republic of southern Russia have hindered the development of export routes westward from the Caspian Sea. On the east side of the Caspian, the unstable situation in Afghanistan, following over 23 years of war, has stifled the development of export routes to the southeast, and the continued threat of Islamic fundamentalism in Central Asia, especially in Uzbekistan, may prohibit any new export pipelines involving that country. The threat of war between Pakistan and India serves as a further deterrent to Caspian export pipelines running southeast, either via Iran or Afghanistan.”

OMSF: “We as a society can no longer afford solely focusing upon and so very extensively subsidizing building more and more highways, each bigger than the last one, in order to relieve congestion and mitigate smog. Needless to say, blindly following this outmoded sprawl strategy will not provide any anecdote whatsoever to our societal illth and will, in fact, only exacerbate it both here and abroad. Not only that but it’s fiscally impossible to do so. Right?”

Texas Transportation Institute: “If a region’s vehicle-miles of travel were to increase by five percent per year, roadway lane-miles would need to increase by five percent each year to maintain the initial congestion level…(Our) analysis shows that it would be almost impossible to attempt to maintain a constant congestion level with road construction only.”

OMSF: “Yet there are still those so-called patriotic entities out there like the Heritage Foundation and the Reason Institute and Wendell Cox’ the Public Purpose – ”

Samuel Johnson: “Patriotism is the last refuge of a scoundrel.”

OMSF: “Yet these so-called patriots are still contriving ingeniously stupendously counterintuitive conclusions like we as a society should be driving more and that increasing urban density will only increase the amount of vehicle miles driven per capita and thus our multi-modality should solely be confined to building more and more auto-centric roadways, tollroads and flyovers to relieve congestion and mitigate smog?”

Texas Transportation Institute: ” Over the past 2 decades, less than 50 percent of the needed mileage was actually added. This means that it would require at least twice the level of current-day road expansion funding to attempt this road construction strategy. An even larger problem would be to find suitable roads that can be widened, or areas where roads can be added, year after year.”

OMSF: “Then why, someone please pray tell, when it has already been acknowledged that, largely because of our sprawl mentality, this young generation will fare worse than their parents’ generation, are mindsets like Cox still fabricating and perpetuating (at the very least) myths (if not outright lies) that only prove them more than willing to sacrifice future generations by keeping us on a bleed-until-bankrupt transportation plan Osama Bin Laden would be proud of?”

Taylor Bowlden/LightRailNow!: “(Cox and a gaggle of cohorts with far-right extremist agendas) are far from ‘neutral’, ‘scholarly’ experts. Instead, say critics, (they) are nothing more than highly biased crusaders for roadways and road-based transportation industrial interests (such as asphalt and rubber-tire vendors), who distort facts through misrepresentation and cleverly selective manipulation of data to mislead their audience… – all behind the facade of disinterested, altruistic, intellectual endeavor, of course.”

OMSF: “So it’s just because they’re afraid of losing some plum sinecure?! So abject greed is their overarching motive?”

TB/LRN!: “Wendell Cox, for example, has been on the bankroll of the American Highway Users Alliance, a lobbying group founded in the 1930s by General Motors Corp. And, according to a June 1999 Texas Observer article, the Wendell Cox Consultancy has done a lot of work for private bus companies who bid on the very contracts which Cox promotes after rail projects are scuttled.”

OMSF: “Shame on him.”

TB/LRN!: “Transportation planning, and the evaluation of options and alternatives, demands a nonpartisan, truly unbiased environment, where researchers and analysts – and their consultants – bring open minds and impartiality to bear on these problems and potential solutions. Clearly, both in their ties to highway-oriented corporate interests and their obvious political alignments, Wendell Cox and the Reason group have demonstrated that their role in such an open-minded environment is highly questionable.”

OMSF: “Again, all’s I can say right now is shame on him.”

Joel S. Hirschhorn: “Sometimes it is necessary to bring attention to terrible work because many people can be conned and believe its lies, distortions and misinformation. Wendell Cox is a sprawl shill-meister with a long history of presenting pro-sprawl propaganda in the guise of scholarly work. But as others have also concluded, his work does not stand up to scrutiny.”

G. B. Arrington (renowned transit expert): “In every instance, Cox’s statements are either inaccurate, distortions or claims not supported by the facts. Cox’s technique seems to be to start with a snippet of the truth and stretch it like taffy until it turns into something else that supports his position.”

OMSF: “Right now I would like to point out that Sophistry is a Greek-derived word that means subtly deceptive reasoning or deceitful argumentation apparently plausible in form but actually invalid. A person who employs such rhetoric is called a Sophist.”

Haynes Goddard (University of Cincinnati Professor): “(Cox and his anti-transit crowd produce) superficial, poorly thought out and misleading arguments;” (the work represents) “either intellectual laziness, or more seriously, intellectual dishonesty” (which results because) “all ideologues are blind to reality and to the vacuousness of their arguments.”

Hirschhorn: “(Americans) have seen the increasing attention to the high costs of sprawl development by citizens and policymakers. The terrible fiscal condition of most local and state governments has created more interest in replacing suburban sprawl with smart growth development. So scared are the sprawl shills that Cox has concocted this ‘junk science’ analysis as a counterpunch.”

OMSF: “Would any one like to provide an example that we here at The Placemaking Institute’s roundtable discussion can kick around?”

Kevin Libin: “It’s not that environmentally minded transit promoters are being dishonest when they argue that city buses are more efficient than private cars: It’s that they’re talking about a fictional world where far more people ride buses. Mass transit vehicles use up roughly the same energy whether they are full or empty, and for much of the time, they’re more empty than full.”

OMSF: “Perfect, thanks. You’re up first, Mister Cox, any comment?”

Wendell Cox: “Subsidized transit is not sustainable by definition. The potential of public transit has been so overblown it’s almost scandalousThe problem is that where the automobile has become the dominant form of transport, and where urban areas have become decentralized and highly suburbanized, there are simply not a sufficient number of people going to the same place at the same time to justify urban rail. As a result, it is typically less expensive to provide a new car for each new rider than to build an urban rail system(I) believe agencies should seek to obtain maximum value for every dollar of taxes and fees expended, using whatever transportation choices maximize ridership.”

OMSF: “Good day, sir.”

Cox: “(But I’ve yet to say that) a lot of what passes for a public process in this country is what I would call a dictatorship of busybodies (and) – ”

OMSF: “I said good day.”

John Norquist (former Milwaukee Mayor and current head of the Congress for New Urbanism): “I think Wendell Cox is one of the biggest advocates of big [government] spending I’ve ever encountered in my 28-year political career.”

Jarrett Walker (international consultant in public transit network design and policy): “Meanwhile, back in the real world, transit agencies have to balance contradictory demands to (a) maximize ridership and (b) provide a little bit of service everywhere regardless of ridership, both to meet demands for ‘equity’ and to serve the needs of transit-dependent persons…To describe the resulting empty buses as a failure of transit, as Cox does, is simply a false description of transit’s real, and conflicted, objectives.”

OMSF: “Diverting arguments with logical fallacies, which nowadays we call a ‘red herring,’ has no place whatsoever in any serious debate, and its usage indicates the medieval kind of mind that first comes up with a conclusion and then does everything in their power to reach that foregone conclusion, putting every premise of theirs up for immediate dismissal.”

Paul Milenkovic: “I looked up the 2003 figures for Madison Metro and Indianapolis along with PACE, the suburban Chicago bus network. The diesel-powered bus mpgs were 3.8, 4.5, and 3.9. The average numbers of passengers per bus were 7.4, 8.1, and 9.6. Taking into account that gasoline has less energy than diesel, the gasoline-equivalent passenger mpgs were 25.3, 32.9, and 33.3. The average trip length was 3.1 miles in Madison, 5.0 miles in Indy, and 6.4 miles for PACE. Only seven passengers on an average bus? On what planet? Every time I get on the bus, it’s standing-room only. Heck, there must be 60 people fighting for my oxygen. And if a bus gets three mpg, I reckon I’m getting 180 mpg on the ride home. What kind of car gets fuel efficiency like that?”

OMSF: “And so there we have it, folks, Wendell Cox: Intellectual terrorist – He gains from your loss.”





Contriving Multi-Modal Contrivances

16 12 2009

Confucious says “By three methods we may learn wisdom: First, by reflection, which is noblest; second, by imitation, which is easiest; and third, by experience, which is bitterest.”

The Placemaking Institute notices it has been duly noted here that “the draft reauthorization of the Federal Surface Transportation Program in the House of Representatives is filled with initiatives to reduce greenhouse gas emissions, often by seeking to encourage compact development (smart growth) policies. Dr. Ronald D. Utt of the Heritage Foundation discovered an interesting definition in the House of Representatives’ draft of the federal surface transportation program: ‘sustainable modes of transportation means public transit, walking, and bicycling.'”

And it is also therefore argued that: “This definition …is irrational and the worst kind of ideology… The wording may betray an agenda more concerned with forcing people to accept the favored (and anti-suburban) lifestyles that an urban elite has long sought to impose on others than it is to reduce greenhouse gases…Provisions that pick particular strategies, without regard to their effectiveness, have no place in a crusade so much of the scientific community has characterized in apocalyptic terms. Moreover, such disingenuousness, in the longer run, could whittle away the already apparently declining support for reducing greenhouse gas emissions… It is possible, of course, that this is simply sloppy legislative drafting. But given the persistence of the compact development lobby and its contribution to pending legislation in Washington in the face of respected research demonstrating its scant potential, something else may be operating.” In sum, according to certain sources, The U.S. House of Representatives is outright “contriving sustainability” with this housing and transit program.

But our Most Senior Fellow feels he must broaden this contrivance that’s being contrived in this manner by oh so strenuously contriving his patented: “Bosh! Because in fact this fair country of ours is one great big legislative contrivance! Everything we contrive today results from contrivances; each of us are nothing but contrivances (some much more so than others) and, of course, the auto-centric U.S. housing/transportation system as we know it today did not always exist and was itself contrived. If one mode of contrivance is so great, why can’t another be?”

“In 1949, President Harry Truman convinced Congress to break with the past and inject the federal government into the process of developing cities and financing housing. The 1949 Housing Act expanded the availability of federal insurance for home mortgages, igniting the growth of new suburbs farther and farther from the centers of our cities. Together with federal highway funds that came a few years later, the 1949 law started what we now describe as ‘suburban sprawl.’ The two initiatives put Americans on the path of long commutes, heavy traffic, air pollution, water shortages, and a long-term increase in carbon dioxide emissions.” Or, unlike Truman, is one merely afraid of breaking with the past because he’ll lose some plum sinecure or fulcrum for emotional well-being? (Martin Luther King: “The ultimate measure of man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.”)

Because the whole Federal Housing Act (1949) plus Federal Aid Highway Act (1956) what can only be termed “experimental contrivance” has always been heavily subsidized (contriving schools on the fringe, contriving sewer and water lines to sprawling development, contriving emergency services to the fringe, and contriving direct pay-outs to developers; one case in point) and has only been increasingly unsustainably contrived, especially beginning in the early 1970s (which is when the U.S. production of oil peaked, forcing us to contrive ourselves farther abroad), and now we as a society can no longer afford contriving ourselves like this anymore – Just look at the costs being accrued in Iraq and Afghanistan over our ravening thirst-driven need for contriving our oil supply! One should consider that veritable payment in blood nothing but an American-lifestyle subsidy, no?

The former chairman of the Texas House of Representatives Transportation Committee Mike Krusee himself recently contrived this: “What we found was that no road that we built in Texas paid for itself. None.” And the Texas Transportation Institute contrives this: “If a region’s vehicle-miles of travel were to increase by five percent per year, roadway lane-miles would need to increase by five percent each year to maintain the initial congestion level;” (our) “analysis shows that it would be almost impossible to attempt to maintain a constant congestion level with road construction only. Over the past 2 decades, less than 50 percent of the needed mileage was actually added. This means that it would require at least twice the level of current-day road expansion funding to attempt this road construction strategy. An even larger problem would be to find suitable roads that can be widened, or areas where roads can be added, year after year.”

But let’s please never mind, dear audience, arguing about constructing new roadways; we can’t afford to maintain the already existing roadways. The infrastructure is quite literally falling apart, which means that among other things freight (one main component in the recent spike in freight costs is the increasing need to maintain eighteen wheelers and VMT upticks due to such things as dilapidated bridge closings) will no longer be able to move in its current manner. Nor will people. Furthermore, most of our foodstuffs are imported as are most other goods, and our whole global system of economic growth is predicated upon GDP (Simon Kuznets: “The welfare of a nation can scarcely be inferred from a measure of national income” ) and subsidized-so-it-can-be-cheap consumption of energy. The global production of oil has nearly reached its peak point (some illustrious thinking folk well-connected in the biz argue that it already has in Saudi Arabia), which is going to have extreme ramifications, one of the effects obviously being our society becoming much less global and much more local in nature.

Most economists are asserting that this young generation of ours will fare worse than their parents’ generation, the first time that that has happened in American history. (Thomas Jefferson: “No generation can contract debts greater than may be paid during the course of its own existence.”) And it still amazes this Most Senior Fellow how entrenched plutocrats and their minions have been and are still willing to sacrifice another and yet another generation upon future generations (Henry Kissinger: “90,000 people, well, that’s not that many people in the greater scheme of things.”) even when staring at the End Game of this un-sustainably contrived, heavily subsidized contrivance our society calls “sprawl.” When oil production peaks then subsequently dwindles, our whole economy will also begin doing so as will thus our whole contrived so-called American Dream way of life.

It was nice seeing PriceWaterhouseCoopers’ recent market analysis: “Next-generation projects will orient to infill, urbanizing suburbs, and transit-oriented development. Smaller housing units-close to mass transit, work, and 24-hour amenities – gain favor over large houses on big lots at the suburban edge. People will continue to seek greater convenience and want to reduce energy expenses. Shorter commutes and smaller heating bills make up for higher infill real estate costs;” and Robert “Boom-burb” Lang’s recent observation that “bedroom communities now must rethink their future and become a little less sprawly, a little more village-like with clustered development, denser housing. The irony is that if they want to keep growing, they must grow as cities, which is diametrically opposite of how they got so big in the first place.” But and alas, however, we here at The Placemaking Institute wonder?

Even our starting to do something about rectifying these past mistakes first thing tomorrow may be a case of too little too late, which is a crying shame…It’s a shame, how those towns beyond a fifty mile proximity to Interstates have been allowed to die (i.e. America’s Heartland). It’s a shame, how both our domestic agricultural and industrial capacity has been so extensively desiccated via outsourcing. And it’s a shame, how our intraurban and Interstate Rail System was destroyed, an act that among others General Motors and Standard Oil were convicted for conspiring against the public’s welfare. At this point, arguing ourselves blue in the face about such things as which is better at reducing greenhouse gas emissions, a gas-based tax or a VMT-based tax or congestion pricing or free public transit for all? (Malcolm X: “Don’t let the power structure maneuver you into a time-wasting battle with others when you could be involved in something that’s constructive and getting a real job done.”) We are very quickly nearing if not already beyond the point where those arguments amount to nothing more than rearranging the deck chairs in order to keep this ship of ours from sinking. Because much sooner rather than later we the people are going to have no choice but more compact development.

And this session of ours shall close today with a quiet echoing of the words Truman used when signing the Federal Housing Act: “We must break from the past…”

… – But as always our Most Senior Fellow must get the last word: “Now. Either that or we should just go ahead and let the government dissolve the people altogether and then appoint another one.”  After ripping off Brecht in this manner, “That is all,” concludes he.





Broadening Perspectives: The Housing Bubble Scheme

8 12 2009

Robert Penn Warren: “Historical sense and poetic sense should not, in the end, be contradictory, for if poetry is the little myth we make, history is the big myth we live, and in our living, constantly remake.”

One asks, “What has brought us here today?”

Well, unfortunately recently we here at The Placemaking Institute were for some reason regaled by then forced to relay about our Most Senior Fellow harkening watching Alan Greenspan on Capitol Hill in 2000 or 2001[i] assuring US that the housing market could never become one big bubble that bursts because it was like a glass of champagne comprised of tiny little bubbles that upon reaching the top would burst, always to be followed by yet another bubble and yet another and another and so forth; how he subsequently started thinking, “But what happens when the champagne goes flat?”; and how he “waited and waited and, being the dismal economist I can be, waited some more, always expecting each passing year to be the year it happened when, after almost eight years…Kaflooey!” He then went on to observe that while some good straightforward pieces have been written about the so-called Panic of 2008, they tend to lack any historical perspective whatsoever and can be most definitely broadened beyond the past two years to at the very least a decade.[ii]

All in unison, “How so?” The Placemaking Institute wondered.

And that is how we learned come to find out that that Greenspan fellow lowered the Fed Funds Rate (FFR) from 6.5% to 1.0% during 2001-2003, which he argues did not cause the housing bubble. It would be overly simplistic to argue that the Fed’s interest rate manipulations during the early years of this decade caused the housing bubble, and so in a sense he is correct; it would be more appropriate to view the Fed as the “great enabler” of the range of monetary excesses that led to the bubble and subsequent bust. But it is clear that the Fed set and kept its official target rate too low for too long during much of 2001-2005. Such mistakes inevitably occur when you give a person or a group of people too much power.[iii]

“So well before the bubble burst Housing had been an unsustainable mirage of wealth for Americans.”

Exactly. Because in no way should the, if you will, “masses” and/or especially so-called “experts” have construed subprime mortgages to be a safe investment. These ever-risky lending practices led to – or, better, expedited what Minsky termed “Ponzi Borrowing,” which occurs when an entity is unable to pay either the principal or the interest and yet they are able to borrow more and more. This is pretty much the root cause of the recent housing market crash as well as other historically delusional investments like tulips and selling shares of stock for gold mines in Mississippi. All at once together we here at the Placemaking Institute interrupted, “Tulips? Mississippi gold mines? How the heck did banks get away with their subprime mortgaging practices for so long?” Because Greenspan deregulated the industry, which he himself acknowledged to be a mistake: “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief.”

According to our Most Senior Fellow, this means that that Greenspan person, although he has most definitely indeed consumed his Ayn “Infallible” Rand, hasn’t read his Adam Smith, who would in no way have been shocked: “[The capitalist class] ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.”

“The Federal Reserve had broad authority to prohibit deceptive lending practices under a 1994 law called the Home Owner Equity Protection Act. But it took little action during the long housing boom, and fewer than 1 percent of all mortgages were subjected to restrictions under that law…In 2008 the Fed greatly tightened its restrictions. But by that time, the subprime market as well as the market for other kinds of exotic mortgages had already been wiped out. Mr. Greenspan said that he had publicly warned about the ‘underpricing of risk’ in 2005 but that he had never expected the crisis that began to sweep the entire financial system in 2007.”[iv]

Representative Henry Waxman: “You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others. Do you feel that your ideology pushed you to make decisions that you wish you had not made?”

Greenspan: “Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact…This crisis has turned out to be much broader than anything I could have imagined. It has morphed from one gripped by liquidity restraints to one in which fears of insolvency are now paramount…The evidence strongly suggests that without the excess demand from securitizers, subprime mortgage originations (undeniably the original source of the crisis) would have been far smaller and defaults accordingly far lower.”

Then our Most Senior Fellow bloviated forth: “The funny thing is that some people are ignoring all of that so they can continue perpetuating their pet argument about growth management leading to the burst of the housing bubble and, rather than ‘we the people’ learning from our past mistakes, they espouse that we should continue focusing literally upon pushing our society farther along the broken down highway of sprawl. (Eudora Welty: “When you are looking for what is lost, everything is a sign.”) Arguments like these that focus blame upon such adamantly precise minutia indicate an aversion to inconvenient facts and historical precedents and a predilection for promulgating myths that have long legs and slogans that are repeated often and fit on bumper stickers. (Voltaire: “History consists of a series of accumulated imaginative inventions.”) When short-term memory losses such as those they exhibit become un-indictable then so do long-term memory losses; in other words, Generations Sprawl has collectively squandered what once could have made this country pretty nifty, and most economists are asserting that this young generation will fare worse than their parents’ generation, the first time that that has happened in American history. And following sprawl-driven GDP in such manner any longer will only hinder social advancement for generations to come.”

Thomas Jefferson: “No generation can contract debts greater than may be paid during the course of its own existence.”

“Exactly, Tommy, and but alas when the ramifications of oil production peaking then subsequently dwindling are felt? That’s going to be all the growth management that we need because we as a society are going to have no choice but more compact development.”

____________________________________________________________________

[i] He is fallible!

[ii] (“And if I had the time,” our Most Senior Fellow side-noted, “I could broaden it to the past sixty some odd years.”)

[iii] Although we are positive the above is a paraphrase of something somebody wrote, our reference has somehow disappeared.

[iv] http://www.nytimes.com/2008/10/24/business/economy/24panel.html?_r=3&hp&








%d bloggers like this: