On 25 August the WaPo head line read: “As midterms loom, Democrats (the Donkey Clan) work to shore up faltering recovery.”
By ‘recovery’ it is assumed that the headline writer was suggesting that the Donkey Clan is hoping that ‘something’ will get ‘the economy’ back to Business-As-Usual in time to make citizens feel good by 2 November.
Forget that, in will never happen. Jobless stagnation is the very best one can hope in the immediate future. In spite of Richard Florida’s optimistic story title noted below, Fundamental Transformation takes time.
On 26 August the WaPo headline read: “Fed policy foggy as the economic picture clouds”
It would be nice if the Fed raised the interest rates. Low interest rates help some big financial Enterprises at the top of the Ziggurat but punishes those who saved over the past two decades.
But in the larger context:
How about a Fed policy and Donkey Clan platform planks based on HONESTY and on REALITY?
Jim Bacon sees Boomergeddon looming in the distance. There is a problem much closer at hand.
Car SALEs and home SALESs have pulled the economy out of the last seven recessions.
Not this time. Too many Wrong Size Houses in the Wrong Locations (which, by definition, are accessible by Autonomobiles) are the ROOT cause of The Great Recession AND the economic hurt that will follow, what ever it is called.
It is NOT just risky home loans to poor credit risks…
It is NOT just wild gambling on futures and derivatives driven by the unfounded assumption that house values will always go up…
It is NOT just that home owners used the speculative value as debit card to fund private debt…
It is NOT just that Agencies have increased public debt and tossed good money after bad to prop up shaky loans on dwellings in dysfunctional locations…
It is NOT just that Agencies, Enterprises and Institutions acted as if home ownership was an unquestioned good thing…
It is NOT just that those Wrong Size Houses in the Wrong Locations are only accessible by Autonomobile…
It is NOT just that Autonomobiles that most citizens can afford require cheap materials and cheap energy to build and run best on gasoline…
It is All those things and many more.
But mainly it is continuing economic policy that depends on unsustainable patterns of consumer consumption – Mass OverConsumption.
And it is about the location and pattern of human activities at, above and below the surface of the planet.
As noted in The Shape of the Future, LOCATION matters and national, state and municipal policy, programs, regulations and education programs have been guided by the Geographically Illiterate for 65 years.
It is time to pay the piper.
Sales of exiting homes are at a 15 year low. Sales of new houses are at a 40 year low.
CNN says: “Say goodbye to the McMansion.” That SHOULD surprise no one since Chris Nelson projected in 2006 that if the then current trends continued there would be 22-million Wrong Size Houses in the Wrong Locations by 2030. It is the demographics stupid (and the location and the economy.)
The housing news is BAD for home owners and land owners. However, declining house prices is NOT a bad thing in the long run. It will make shelter ‘affordable’ and that is GOOD but Only if the homes are ALSO ACCESSIBLE. See SYNERGY’s work over the past 15 years on the Affordable and Accessible Housing Crisis.
Home ownership itself is not ALWAYS a good thing for reasons Richard Florida spells out in The Great Reset. There is a short version of Florida’s perspective in “The Roadmap to a High-Speed Recovery” in the 12 Aug 10 The New Republic.
According to some like James Altucher home ownership is BAD thing. His 19 Aug 10 column in DailyFinance lists seven reasons. Many will not agree but Altucher provides food for thought. It is very clear home ownership is NOT for everyone.
But the BIG economic issue going forward is not just housing and Autonomobiles – it is human settlement patterns and what has been driving dysfunctional shelter locations. The question is:
IN THE NEW REALITY, WHAT WILL HAPPEN TO PROPERTY VALUES?
Well, it depends on LOCATION. Home values and property values have changed trajectory more significantly in the last three years than at any time since data has been available. In general, the farther from the Centroid of New Urban Region Cores and the farther from the Zentra of all Urban agglomerations, the more house values and property values have fallen and will fall. The reasons and research on this topic follow, but to put the issue in historical perspective:
For over 100 years Countryside land values have been irrationally inflated by speculation about the amount of land that can be sustainably and productively devoted to Urban land uses. As larger and larger percentages of the population shifted to Urban sources for their livelihood the unfounded assumption was that more and more land would be needed for Urban activities. See Chapter 1 Box 2 of The Shape of the Future for the reasons why between 1800 and 2000 the population increased by 50 times but the amount of land needed for daily human activity as a percentage of the total area of the US DECEASED by a factor of 10.
Much of the unfounded speculative increase in ‘value’ was based on the assumption that any land one could access with an Autonomobile would be a potential location of Urban land uses. The speculation accelerated in the 1920s when there was extensive growth in Autonomobile ownership. The speculation exploded in 1956 with the funding of the Interstate and Defense Highway System. See “Interstate Crime” Column # 50 28 Feb 2005 accessible from the RESOURCE page at www.emrisse.com
Now there is a new resource that allows anyone to check out location of places citizens can live if they want to lower transportation costs and have a smaller (and cheaper) carbon footprint http://abogo.cnt.org
But wait, these are the SAME places Florida says the Creative Class WANTS to live. AND, it turns out it is the ONLY place those at the bottom of the Ziggurat can afford to live.
Put another way, it is the ONLY place that society can afford to support Urban citizens no matter where they are in the economic Ziggurat.
At SYNERGY we have been harping for over 25 years on the need to use Vacant and Underutilized land inside The Clear Edge and we have the position papers to prove it, so does Jim Bacon. Just so no one forgets, Mr. Bacon and EMR have also said – and continue to say: So long as they pay their fair share of location-variable costs citizens should be able to live where ever they want. A main driver of settlement pattern dysfunction are the hidden and neglected subsidies and externalities.
In addition, municipal regulations and many other forces have prevented the rational evolution of human settlement patterns. The what, how, why and WHERE is spelled out in The Shape of the Future. The misguided regulations and other forces have raised the cost of the built environment – shelter, employment, services and infrastructure – to the determent of citizens at all scales. In Clusters, Neighborhoods, Villages, Communities, SubRegions and Regions citizens are not well served by the existing land use CoMixture, the lack of diversity and unsustainability.
The simplistic “Abogo” tool linked above is still in Beta form but working out the bugs will just make it stronger.
What it shows is: If you are in a Household that derives its primary support from Urban
activities:
Live and work INSIDE The Clear Edge.
In fact the closer to the Centroid, the better. That is true for all scales of Urban places from the Cores of New Urban Regions to the Zentra of small Urban agglomerations in the Countryside that are the components of Balanced But Disaggregated Communities.
Housing and other components of the built environment to necessary to support Resilient, Sustainable Regions will continue to be sound investments. In fact inside R=5 the residential values dipped and rebounded over the past three years. “Regional” averages mask what has happened in the past three years in the higher radius bands. When the value of Urban ‘improvements’ goes down, the hot air will leave the speculative Countryside bubble that has been expanding for over 100 years.
This will help those who want to acquire land for contemporary farming close to the market but it will wipe out property tax as THE source of income for municipal jurisdictions. That is not a bad thing in the long term since revenue to support Agencies at all scales of governance should come from user fees and from taxes on consumption, not taxes on property. That is another story for another time.
SYNERGY has recently applied Regional Metrics and newly available data to document the current trajectory of house values. “Current” means through yesterday. The results are just what you would expect after reading Bill Lucy’s new book Foreclosing the Dream or any of the material produced to date by PROPERTY DYNAMICS, a program of 1000 Friends of Virginia’s Future.
Suffice it to say, that the invisible hand is FAR ahead of the current crop of Agency ‘planners’ (including those at the FED) and the political spinners in both dominant Clans. Strangely enough, the current market trajectory is NOT ahead of the best Regional thinking in the period 1960 to 1973. Inexplicably, the OPEC Oil Embargo resulted in the leadership of Agencies, Enterprises and Institutions to shift human settlement patterns in EXACTLY the wrong direction. You guessed it, that is yet another story for another time.
SYNERGY is working on a list of strategies that Community and SubRegional Agencies, Enterprises and Institutions can implement to achieve a sustainable trajectory for themselves and their constituents (the voters), owners (including stockholders) and members. There is a lot that ‘special’ places like Greater Warrenton-Fauquier can do but time is running out and it will soon be too late to change existing policy, regulations, programs, projects and education.
Now for that Donkey Clan and Ben’s Fed advice:
Stop pretending something – ANYTHING – will bring back the good old days.
Humans have burned through millions of years of stored natural capital, not just petroleum but concentrated minerals, marine resources, top soil, fossil water, a protective atmosphere.
There must be a shift from Mass OverConsumption to REAL conservatism – aka, conservation.
The focus must be on rational conservation objectives such as energy conservation, land conservation, air and water conservation, agricultural land conservation, species diversity and not exacerbating climate change.
The Wealth Gap must be closed. Does anyone need to be reminded that the major component of the wealth of the vast majority fo citizens WAS the ‘equity’ in their home? Larry G’s comment on Jim Bacon’s post is right on by the way.
The idea that making the rich richer will result in more trickle-down is DEAD. Things have been getting worse and worse for the majority for nearly four decades. It is time be honest.
There are strategies to address systemic problems which the majority to can come to embrace in intelligently presented: stop mineral dissipation, stop top soil loss, stop ground water depletion, recycle, reuse and share. Live on energy income, not on capital.
The party is over. Citizens deserve an opportunity to succeed, not a free ride and entertainment while they wait for the gravy train. There are adults in the US that will appreciate honesty.
If the Donkey Clan abandons those at the bottom of the Ziggurat they will not just run the federal, state and municipal agencies into bankruptcy, they will lose their base.
Elephant Clan has abandoned those in the middle of the Ziggurat. It is now faced with the defection by the Anger of Ignorance crowd.
By continuing Business-As-Usual, the Donkey Clan will lose the bottom of the Ziggurat to populist demagogues as has happened in Latin America and there will be no one in either Clan for those in the middle to support. A five Clan future?
The Donkey Clan must lay out the course toward a sustainable trajectory and be honest, be real. Or become a minor fifth Clan.
There are less than 10 weeks to sell a new message. Some Clanspersons may lose the next election but the whole Clan will lose its soul AND its constituency on the current path.
The times ahead will be difficult but there will be some entertainment too:
Let us see how fast the ‘property rights’ advocates who own speculatively inflated land stop complaining about how “government” is preventing them from “doing what they want with their property” and start whining for “government” to provide price supports for their speculative interests in land?
The Consumptionists have had the bull horn for 30 years. It is time for a new and sweeter tune from more refined instruments.
EMR
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