Friday, January 30, 2009
This week's news that oil services firm Baker Hughes is laying off 1500 jobs worldwide and 200 jobs in Houston is unwelcome news and hopefully not a harbinger of things to come. It is a chilling headline.
As we have discussed here several times, there can be no broad economic turnaround without a) a stop in job losses, and b) net new jobs creation.
Today's headline from The Labor Department is that continued jobless claims are now at their highest peak ever since the data collection began in 1967. Continued jobless claims are people who continue their claims after an initial week, and the data is from the week ending January 17th, and stands at 4.776 million people nationwide.
However, it is important to note that continued jobless claims is more or less an indicator of current economic conditions and not a strong indicator of a longer trend - that's the silver lining I think.
Not All Bleak in Houston
Meanwhile, back in Houston, encouraging news still persists in the mix. Shell announced it has no layoff plans despite a weak 4th Quarter. Chevron is keeping its capital spending levels steady. Continental Airlines posts a loss, but beats analyst estimates. And huge Houston car-dealer AutoNation, which owns several area dealerships including BMW, Mercedes, Acura, Hyundai, GM, Ford, Nissan, Mitsubishi, Chrysler, and Toyota, has announced despite an historic challenging economic climate it nonetheless has booked a profit.
And on that note, I need to go pick up my car from the repair shop of a nearby AutoNation-owned dealership. I'm doing my part for the Houston economy, or at least my car is.
Thursday, January 29, 2009
Aside from that however, Maddow proves on her new hit show (which often beats Larry King in the time slot) that political orientation does not need to immunize anyone or any issue. (Her smackdown interview of Rod Blagojevich will go down in history. Anyone looking for some Blogojevich schadenfreude will enjoy her multi-part interview in which he seems to admit to his crimes in several trip-ups.)
More importantly however, were Maddow's opening remarks about the sad statement of the condition of American infrastructure revealed -- yet again -- by a normal winter storm putting over 1 million Americans in the dark, in the dead of winter, with no power.
Her most powerful remark is how we are accustomed to hearing about the unimaginable terrorist "force multiplier" threats that could target our nation's energy grid, and yet time and again, including what we experienced ourselves right here in Houston, the nation's energy grid shows just how frail a condition it is in and how it cannot stand up to even run-of-the-mill seasonal storms.
This commentary leads into a revealing and frustrating discussion with US Oregon Representative Pete DeFazio about his efforts to get the new stimulus bill to include more job-providing, long-term infrastructure projects that Americans overwhelmingly support.
On this issue there can be no legitimate debate about the broad outlines:
1. Economic stimulation policy depends on increasing demand. Any attempt to stimulate supply by providing tax breaks for producers and investors inevitably fails because if the demand doesn't exist, you can, as we have with banks, provide all the money you want, but that money will just sit on the sidelines until there are buyers to produce for. Scared money doesn't spend.
2. Economic stimulus to increase demand must increase both spending power and actual spending in the private markets. It's no use to give money to those who in fear will put the money under a mattress. Therefore targeting money toward those who need it most, who have no choice but to spend it, is most effective. Therefore stimulative policy must focus on low-income workers and families who will spend. In addition, without jobs, those who must spend cannot. Therefore the other prong of stimulative spending must focus on jobs: preventing job loss and creating new jobs, preferably private-sector jobs that can be sustained in a recovery.
3. Simple tax rebates to those who will not spend and tax cuts to those with incomes who pay the most taxes (and by definition do not need to spend immediately) are not stimulative in this kind of environment. Most economists suggest long-term policy should include a fixed tax policy and stimulative/arresting policies from the Fed. Tax policy, except adjusting to route money immediately into the economy to those who will immediately spend that money (such as through payroll tax credits, which take effect immediately), is not effective for immediate stimulus.
4. The best investments of government spending must provide for future returns on that investment enough to cover future debt repayments and instill confidence in global investors of American national debt. The entire stimulus bill will be borrowed money. In order to accomplish that confidence, foreign investors need to see the US increasing its production capacity. Tax cuts do not do that; that approach is what ballooned - along with unrestrained spending - the national debt in the past 8 years past $11 trillion in an economy that has been producing $13 trillion annually. However, infrastructure investments do work.
The most famous infrastructure success story came from the Eisenhower administration in the $500 billion National Highway bill that established the Interstate highway system in every state. The modern parallel, aside from repair and maintenance of our roads, would be creating new high speed rails ("bullet trains" that don't exist yet in this country) but will reduce demand of foreign fossil fuels and provide new much more reliable and convenient regional travel (think uber-convenient substitute to Southwest Airlines).
Nonetheless, the idea that Houston's evacuation efforts involve many many hours of gridlock on highways, and the midwest to northeast loses power in the middle of a standard winter storm for over a million people, and Houston and other gulf coast cities can lose power for weeks and even months in the wake of a mid-tier hurricane -- it's just unacceptable in America. It's incompatible with the American way of life, and it presents an enormous security risk.
Enjoy Maddow's opening segment (and then watch the Blagojevich segments in the link above for a good laugh as he crashes and burns under Maddow's withering, crouching interview worthy of any world-class legal team).
Wednesday, January 28, 2009
I just witnessed on Hardball With Chris Matthews one of those moments like when you see someone drop a match next to something really flammable.
Dick Armey, the former House Majority Leader from Texas (who infamously called Barney Frank "Barney Fag" and called it a slip of the tongue), was on Hardball discussing the stimulus bill and other matters alongside Joan Walsh, the editor of Salon.com and a Hardball regular.
After Joan vivisected her opponent's arguments in an emphatic and detailed fashion, Armey responded after muttering "Give it a rest!" several times:
I am so damn glad that you could never be my wife, 'cause I surely wouldn't have to listen to that prattle from you every day.WHOA. Which was only surpassed by Ms. Walsh's shocked reply:
Well that makes two of us!The transcript is not up yet, but I'll try to update when they get it up. The incident is however already referenced in his bio on Wikipedia.org.
A note to neanderthal men everywhere: never ever ever mention the word "wife" in close succession to a smart woman saying something you disagree with.
Me thinks Dick Armey is going to catch some flack not just from Ms. Walsh, but from a lot of his professional colleagues as well. Yikes. Watch the carnage for yourself:
Republicans can't hope for a comeback until they put these kinds of reactions and sentiments firmly to bed. Without spouses.
Sunday, January 25, 2009
While there is a ton of badly needed regulatory reform that will address many of the problems already laid out on this blog to be included in the package, I will focus in this post on the impact of these wide-ranging changes on the real estate buyer. But first, an example of the broader much-needed reforms:
The administration is also preparing to require that derivatives like credit default swaps, a type of insurance against loan defaults that were at the center of the financial meltdown last year, be traded through a central clearinghouse and possibly on one or more exchanges. That would make it significantly easier for regulators to supervise their use.Now to return specifically to real estate buyers. First and foremost, buyers will have to navigate a very new landscape of mortgage financing without necessarily understanding the recent history and context of the changes, which could lead to frustration and confusion. To wit:
Aides said they would propose new federal standards for mortgage brokers who issued many unsuitable loans and are largely regulated by state officials. They are considering proposals to have the S.E.C. become more involved in supervising the underwriting standards of securities that are backed by mortgages.Now more than ever before, financing is a huge complex piece of any real estate transaction. While it always should have been the starting point for buyers, in recent years when money was flowing freely, few people in the industry ever had to be concerned about a client getting financing for a deal, so long as the client had a pulse. Of course, things have changed dramatically, and directly as a result of that free-flowing period.
Therefore real estate brokers and agents of residential or commercial orientation, in order to fulfill their "market making" roles, will have to become far more involved in an ever-increasingly complex mortgage and finance environment to help buyers make their way through the complexity. We brokers can no longer just refer a buyer to certain lenders and leave them on their own. Doing so in this environment is a profound disservice.
As new regulations get rolled out, real estate brokers must stay at the leading edge to comprehend not just the rules, but their implications in any specific market. We must also help clients with their due diligence efforts when finding qualified lenders to help ensure clients find competent, informed, and ethical lenders with solid reputations. Bad financing is by far the most common reason a deal fails. This is a larger and far more complex obstacle than ever before.
The proposals that will come to pass in specific form are aimed, according to officials, at core regulatory problems and gaps:
They include lax government oversight of financial institutions and lenders, poor risk management efforts by banks and other financial companies, the creation of exotic financial instruments that were not adequately supported by their issuing companies, and risky and ill-considered borrowing habits of many homeowners whose homes are now worth significantly less than their mortgages.Even high level regulations that affect lending way upstream will have to be understood by real estate brokers, not just mortgage brokers, as we move forward to manage fully the implications for buyers on the ground.
The new trading procedures for derivatives could also enable regulators to impose capital and collateral requirements on companies that issue credit default swaps that would make them safer investments. American International Group, one of the largest issuer of such swaps, never had to post collateral and nearly collapsed as a result of issuing a huge volume of such instruments that it was unable to support.Going forward, real estate brokers and their agents who cannot understand the implications of such complex reforms for their clients in their specific market, and who cannot fully explain those implications to their clients if necessary, those brokers and agents will surely lead their buyer clients to failure, and that will undermine the market for everyone.
Bottom line: Brokers and their agents can no longer blindly refer buyer clients to a cadre of lenders they've used in the past. A higher standard for due diligence is required in this market, and while that responsibility falls principally on buyers, everyone assisting the buyer must support that effort. Those who don't understand the critical times and adaptation they require will not only be doing their clients a profound disservice, they will impede the progress and recovery of real estate markets for everyone.
Saturday, January 24, 2009
But in his recent blog post on the website of his company, I think his attempt to relate the presidential transition to business transition falls very short of the mark, and is thin in its analysis. But that happens when one tries to view the world from the perspective of any single discipline, and it happens to the best of academics and accomplished elite consultants.
From Dr. Watkins' blog:
President Obama clearly understands that the moment demands heroism. He issued a ringing call-to-arms in his inaugural address: “Our journey has never been one of short-cuts or settling for less. It has not been the path for the faint-hearted - for those who prefer leisure over work, or seek only the pleasures of riches and fame. Rather, it has been the risk-takers, the doers, the makers of things - some celebrated but more often men and women obscure in their labor, who have carried us up the long, rugged path towards prosperity and freedom.”Dr. Watkins is definitely spot-on when he says "consensus-building-on-steroids simply isn't going to cut it." But where is the evidence that the actions of this administration will demand "consensus on steroids"? As an internationally accomplished diplomat, Dr. Watkins surely understands the tactical value of framing a strategy in public versus the actual strategy deployed, which can only be discerned in hindsight. It strikes me as imminently appropriate to call for unprecedented consensus in these times, but the call for consensus and the refusal to act in its absence are two very very different beasts. And while the call has now been made, the actual strategy deployed is far from clear.
But does our new President have the heroism within him to force (yes force) the nation to swallow some very bitter medicine? Because he strikes me more as a steward than a hero. This is potentially a big problem because consensus-building-on-steroids simply isn’t going to cut it.
Dr. Watkins' next comment, however, is a universal but not obvious truth that will surely come to bear, and that we can witness in our own lives and organizations with ease:
He and his administration can listen until the cows come home and what they will hear is a cacophony of conflicting agendas and parochial views.Yes. Just yes. A thousand times yes. And this is precisely the nature of the beast this administration faces, just as the last administration faced it. But the ability and determination of this administration to confront this timeless beast cannot yet be discerned.
Hence the closing line of the post I offered on this blog for which I hope Dr. Watkins will cut an old student some slack(!):
"I’m not sure I find Dr. Watkins' post convincing in its analysis. By that I mean that I could chew more on the claims if they were backed by specific examples in modern turnarounds or in history - there are plenty from which to draw.
I am also struck that it is way too early even to attempt a judgment about President Obama’s abilities in this context and at this time. Certainly we have strong indications of the quality of his judgment and management skills from his career and especially his two year campaign for the presidency, which was no small feat.
But as with all managers, the proof is in the pudding, and not in the rhetoric. And we simply don’t have enough of it (the pudding) to make any consequential conclusions. But as the post implies, that does not mean we can’t know what to watch for.
Right now I am struck by his strong and effective grasp of both the necessary rhetoric and imagery needed in this moment of time to communicate the great American turnaround (a “rebirth” seems more compelling, as it is a time to remake the nation, not just change course). And that is encouraging - this is not a man with a tin ear for political dynamics as his predecessor had.
And if we’re going to consider the promise of his judgment or future actions based on the inaugural speech, I don’t think any particular lines are quite as instructive (though there are many profound ones) as his obvious choice to deliver a sober, nuts-and-bolts, clear speech. We all know this is a man who knows how to deliver a barn-burner, or inspirational, or soaring speech without parallel. But nothing at this point can be said about the inaugural speech more profound than his particular choice of tone and subject, which was not at all an obvious choice to make.
With the inaugural speech, we begin to see the early makings of the pudding. His choice of tone and subject, his clarity and specificity about this moment we face, and his very telling lines that promise a clear break from both the style and substance of the preceding administration were more telling than any of the words.
That was not the “broad stroke” thin-on-substance-but-a-great-speech-maker caricature of him that was made (always without reason) during the campaign. In the inaugural, we saw a man capable of embracing this moment, a man clearly capable not only of inspiring hope as was his trademark during the campaign, but a man capable of providing clarity, and clearly capable of the arduous and grand task of map-making.
For the rest of it, we have no choice but to keep watching - and participating - with open minds and cautious optimism."
The wonderful thing about really smart, confident, accomplished professionals and good human beings is that they can take criticism with grace and relish. I have the utmost confidence in Dr. Watkins. But at any rate, the grading has long been done, so that confidence could be a little disingenuous I guess.
Thursday, January 15, 2009
But if I told you someone jumped off a 2-story building, you'd probably ask, "Did they survive?"
It's essentially the same thing though.
Granted, elevator travel really is the safest form of travel in the world. The best elevators in the world will only fall 6 feet, even if the suspension cables hypothetically snapped. There are redundancies upon redundancies, and aside from accidentally falling in an open door into the shaft, the danger couldn't be less given that the car travels along a fixed path cleared of all obstructions in only 2 directions.
But still, like anything, systems fail. When I first read of the failure in the linked article, I thought it would be a clear example of how our nation's aging skyscrapers are falling into extraordinary disrepair in an ever spiraling need for greater maintenance to fight against the ravages of physical aging. Skyscrapers weren't built to last 100 years on their own.
But the building in question, in downtown Houston, was only finished in 2003. Instead of being of comfort, it only alarms me more.
I am convinced that the era for central business districts consisting of dense roads and tall skyscrapers is fated for an end. Whereas prior to the telecom revolution, businesses required physical proximity for efficiencies of day-to-day business, this is just no longer the case. The falling costs of telecom technology, its rising efficiencies and capabilities, and the inevitably rapid rise of transit costs - auto or mass - point clearly to the future trend, which doesn't favor the downtown skylines of 20th century American triumphalism.
I expect that one day American history books will have a chapter with awesome skyline photos of American cities in the same way they now have photos of the 19th century American West full of buffalo herds roaming on open plains.
Whether it's an isolated instance of failure or not, this recent elevator failure foretells I think the kinds of infrastructure problems we are certain to see more as the next few decades unfold amidst ever-expanding telecom technology, rising transport costs, and declining urban and municipal tax bases.
Beyond that, how many horror stories like the following will the public tolerate?
From The Houston Chronicle:
On Dec. 9, DeRouen, who has been working as a contract consultant for Rosetta Resources on the 27th floor, said she finished work about 5:30 p.m.Oh, and there wasn't just one instance -- there was another one shortly after in the same building.
“I pressed one, and it started free-falling really fast,” DeRouen said.
Sent airborne during the descent, she slammed hard into the floor when the elevator suddenly halted at the 23rd floor.
Her tibia bone tore through her leg between her knee and ankle, creating a long wound. Her ankle and toes on her left leg were fractured.
The elevator door wouldn’t open, so employees on the 23rd floor could not come to her aid as she pierced the air with screams, Boutros said. They kept her talking, though, worried that she might lose consciousness otherwise, she said.
It took a half-hour for help to arrive, Boutros said.
She has undergone several surgeries on her leg and will undergo at least two surgeries to repair the fractured lower vertebra and ruptured discs, Boutros said.
Both incidents are still under investigation by the landlord and its elevator contractors (and where are the police?), while the other elevators are still in operation. Naturally, many employees are taking 25 flights of stairs now instead of using the remaining elevators.
Just this week, roughly one month after the first incident still under investigation:
On Monday, Carleen Naumann, a sales representative for Besco Tubular, and Allan Keel, president of Crimson Exploration, were injured when an elevator dropped precipitously from the 27th floor to the 25th floor.
They were trapped in the elevator for a short time. Keel said he suffered a minor back injury and declined to be taken to a hospital.
Later, called ambulance
Naumann, of Katy, also declined treatment Monday. But she said she called for an ambulance after she got up Tuesday morning and her nose was bleeding. Her ankle also was hurting, she said.
Staff at Memorial Hermann Hospital in Katy determined she had fractured a vertebra in her lower back, she said.
“The elevator was flying. I thought we went down 15 stories. I was shocked to hear it was only two,” she said. “I was airborne and then it was as if we hit bottom.”
The nation's urban infrastructure problems are piling up so quickly from accelerating deterioration and a long history of deferred maintenance -- one day the costs of renewing the systems of the buildings, water systems, roads, fuel, and air will exceed the capacity of the nation to pay them. This is one of the biggest secrets in American municipal government and civil engineering. Few yet appreciate the full scope of the problem.
And if anybody else gets killed in their car from an exploding old gas main, or falls to their death in an open road hole from a water main break, or simply plunges into a river from a failed Interstate bridge, or especially if other cities see executives with bones sticking out of their legs or crushed vertebrae after an elevator falls two or three stories -- well, let's just say the suburbs and exurbs and rural areas will suddenly find new federal resources to support low-rise commercial development, and brand new sewer, water, electrical, and gas lines.
One day telecommuting won't be an HR incentive - it will be our way of life. It is destined to become the only affordable option for the nation's economy.
Wednesday, January 14, 2009
But in the past 30 years as the northern boundary of the city of Houston reached FM 1960, and as the suburbs sprawled ever northward into the next county and past one of the nation's earliest and most successful master-planned communities, The Woodlands, the FM 1960 corridor - along its many large adjacent subdivisions, many once affluent - fell into total disrepair.
Now, driving from I-45 westward on FM 1960 to Spring Steubner at night reminds me of driving through Times Square in its worst years. The once neighborly strip centers have bars on the windows, the nice restaurants now long gone, obscenely bright flashing LED lights untolerated in any dignified residential area, pawn shops every other block along with other "low rent" small businesses, and the office buildings that once spared nearby residents from long commutes have fallen into office-slum status.
So now a group wants to create a special taxing entity to tax commercial businesses in the corridor to make "improvements." And here is where suburban politics intersects with traditionally "urban" concerns: the Republican state representatives are sitting on their hands, reluctant to create "additional layers of government", "new taxes", or to do anything local businesses -- even low rent ones -- might find objectionable.
Call it suburban blight. And we'll be seeing a whole lot more of this.
From the article:
Well this is certainly new territory for suburban Republican representatives, such as state Reps. Patricia Harless and Debbie Riddle.
That management district would provide a method to raise money, through an assessment on commercial property, to carry out improvement projects in the 1960 area. The annual assessment charged to commercial property owners would range between 9-15-cents-per-$100-property valuation.
In the past two years, Renaissance 1960 has been working on projects aimed at spurring revitalization, including the creation of an Urban Design plan for the community, group “bandit sign” removal efforts and community clean-up days, but work on larger projects would require a larger, steady source of income, management district supporters say. ...Many see signs of deterioration in vacant and abandoned buildings, graffiti, signage, heavy traffic and the perception that crime is on the increase.
Harless said Renaissance 1960 and Houston Northwest Chamber of Commerce members worked the past two years to communicate the management district’s mission to property and business owners, and they sought letters of support from those constituents.Personally, I think all the smart "major property owners" bailed on this area years ago. Can anything be done now to lure those quality owners and developers back?
In the end, 39 businesses representing about 10 percent of the property value in the proposed district’s boundaries wrote letters of support. That is a substantial number, Harless said, but the questions remain about the overall level of support, and the district’s ability to raise enough money to make an impact on the area even if the bill is passed.
“So that leaves us at how do you create a new tax and new layer of government when several major property owners do not support it?” Harless said.
Hmmm... this is sounding more and more like a particularly well-known phenomenon... called urban blight.
Riddle said the management district option is not generating a positive response among commercial property owners who would pay the annual assessment. She said there is a misconception in the community that a management district would have the powers granted to a homeowners’ association, but that is not the case.Well now that's an understatement, Debbie. Welcome to urban, or post-suburban, politics.
Because of those limited powers, she said the vast majority of problems on FM 1960 could not be addressed by management district, and there are other ways the community could address those issues with that without creating a “taxing authority.”
“We are all in agreement that doing nothing is not an option,” Riddle said.
Sunday, January 11, 2009
If you can't see the embedded video: Click Here
This is an egomaniacal idiot who's dead wrong and severely misguided in his judgment. Many many people could see the current housing crisis coming; Schiff is no sage. Nobody wanted to hear a party-pooper though, as Krugman said. And too many people were getting rich playing the game to stop. It was a gambling addiction, pure and simple.
So it wasn't the housing bubble that needed foretelling. Who couldn't see it? Nobody knew when it was going to end exactly, and that was the problem. So what exactly really needed foresight that was nowhere to be found?
It was the $50 TRILLION DERIVATIVES MARKET.
We could solve the housing problem in no time if that's all it was.
The real economic threat was the shadow side-bets-with-no-bookie market of derivatives enabled by former Sen. Phil Gramm, a Republican congress with Democratic enablers, and a Democratic and then Republican administration. See the Commodities Futures Modernization Act of 2000, earlier discussed on this site.
Moreover Schiff thinks the U.S. is in isolated economic dynamics and pays no heed to the fact that the rest of the world is DEPENDENT on a U.S. RECOVERY, and so yes, the world will lend us whatever we ask for... for now.
You can bet this guy's firm is shorting the dollar and so he benefits by talking it down. In other words, if America loses, he wins.
He is only stating the obvious about the nature of the crisis without making any progress into what legitimate options we have to work our way through it.
That's always a fool's position. What we can't tell is whether he's really a fool or simply a traitor.
Thursday, January 08, 2009
I find the cold/allergy aisle to be absolutely stultifying. Not only are there hundreds of brands for the same basic problems, but there are dozens of variations on each brand, each as indecipherable as the next. All of this for cold/sinus/allergy problems that even doctors can't reliably differentiate in person. Then, what's even worse, if you read the ingredients in every single brand, it's the same 3 or 4 basic ingredients just in different combinations or amounts: Phenylephrine (nasal decongestant), Diphendhydramine (antihistamine), and Ibuprofen. That's it really, in all of them. ALL.
The secret behind Nyquil for knocking you out? Benadryl. 25mg.
Benadryl (Diphenhydramine) is actually what most "non-habit forming" sleeping pills are. That's it. Read the label.
Cepacol lozenges are fun because it contains 2 ingredients: Benzocaine (sounds good right?), and Menthol. The Menthol is listed as an "oral analgesic" but the Benzocaine is listed as an "oral anaesthetic," like it puts your mouth to sleep. Like tasting cocaine. Whatever, it works.
I am starting to feel better this evening, so hopefully I will have the clarity of mind to return to real estate and economics blogging very soon.
Financial disasters that once would have sounded like alarmist fantasies occurred on a weekly basis. Banks failed, oil and gasoline prices smashed old records, and the federal government agreed to pump trillions of dollars into the financial system just to keep it afloat. The upheaval helped elect Barack Obama president and may have ushered in a new era of tighter government regulation, ending more than two decades in which free-market philosophies reigned.The real kicker here is the connection between market "upheaval" and the election of Barack Obama, almost as if, as many cable commenters would say, that if economic matters are dominant, then Democrats get elected, and if national security or foreign affairs are dominant, then Republicans get elected.
Certainly we can look to limited historical patterns where this supposition holds true, but I do not think that's what happened at all this year. And so we shouldn't afford ourselves the false luxury of this conventional wisdom, lest we lose a deeper appreciation of what actually transpired.
The insidious nature about incorrect conventional wisdom ("CW") is that the reasons it may be incorrect correlates strongly to the complexity of the issue involved, thereby missing the deeper insight required to have a full and accurate grasp on that issue.
This year wasn't an election about "general climate" factors related to economics vs national security, for example. No, far from it. The nation was obviously reeling from years of bad news and a diminishing sense of the meaning of "America" in these modern and complex times.
As I watched it, I thought the primary thrust of the election was about an intense public reflection about the future meaning of the word "American" with which we all identify.
From the bitter election battle in December 2000, to 9/11, to the threat of lethal homeland terror, to natural catastrophes including fires and especially hurricanes like Katrina, Rita, Ivan, and Ike, to the Abu Ghraib revelations, to extraordinary renditions and warrantless wiretapping debates, to critical and multiple intelligence failures, and of course most recently since 2007 to a crumbling economy in the midst of an official recession since 2007... it's just been a breath-taking period for America and Americans that has shaken us to our core deep down, I think.
In that light, it appears to me that the election season since 2007 was infused with competing visions of how to define America in the future. Broadly speaking, Democrats and progressives pushed for an idea of a "new" America based on values of inclusiveness, diplomacy, the collective well-being, and of course "hope" for better days and newer more successful ways ahead.
Broadly speaking again, Republicans seemed to offer a future America based on the proven successes of America's past, an American "restoration" of its strong traditions, international strength, the triumph of rugged individualism that helped build the nation to greatness, and American exceptionalism globally - the "shining city on a hill."
While each of the two major parties had strong and imperfect standard-bearers, these contrasting visions were on display since the early campaigns of 2007.
In normal times, perhaps these contrasting visions may have still been in play, however the extraordinary circumstances of the past several years and the current climate of both international and domestic complex challenges led to a greater urgency behind the choice of vision for the next Executive administration. And Americans had the historic opportunity to witness both parties campaign against that urgent backdrop.
It is false to presume the conventional wisdom that the competition between Republicans and Democrats is simply about where to focus the nation: domestically or internationally, where Democrats supposedly win on domestic and economic issues and Republicans on international and security issues. The visions advanced by each party encompassed a broader notion of the meaning of America and how the country should face the myriad challenges now at our collective feet. This was especially true in the most recent election cycle.
Business types often fall into the CW that in 2008 when the economy fell into an emergency in September, the election outcome was fated in the favor of Democrats. But one particular episode in September at the time the crisis exploded weighed far heavier on the election results, I think, than the emergence of the severe economic threat alone and traditionally held "advantages" of either party. Namely, we saw how each presidential candidate responded to the proposed immediate measures to shore up the financial sector.
In that episode, I believe John McCain acted in a way that clarified Americans' perspective about which candidate had the stronger ability to achieve their vision for America in the future. McCain now infamously "suspended" his campaign (while continuing campaign operations and advertising), flew to Washington D.C., and pledged to cancel the first presidential debate in order to "focus" on the crisis and produce results. But he didn't produce results, or at least not in a way that was apparent to most Americans. And without the legislation he promised as a prerequisite for the debate, he did in fact show up for the debate anyway.
In contrast, Barack Obama pushed the idea that the president must be able to do multiple things at once (the "walk and chew gum" argument). I don't think that idea won as much as McCain's actions failed.
I think that episode, at the exact time most Americans started really to tune into the presidential race, and during the exact time the economic crisis came into the full public spotlight -- in that moment McCain lost the confidence of the electorate. And therefore I think the election was less about which set of ideas about America prevailed, and was more about which candidate was better equipped to succeed in his vision.
Conventional Wisdom has a strong allure. It is common, well-established, accessible, and in the Stephen Colbert sense, "truthy." But CW can often be flat wrong and therefore dangerous in its complacency about issues that require deeper insight. And that's why anyone seeking accuracy in an ever-increasingly complex world should regard CW with a high degree of skepticism.
Perhaps I'm wrong about my view in this particular instance of CW. But it goes without doubt that CW is a threat to our individual judgment about important matters in our own individual lives if left unexamined.
The unexamined life may in fact be worth living, but perhaps it cannot be lived as well.
Wednesday, January 07, 2009
For many young families, floor plans with all bedrooms up offer a very good value -- they get a functional layout downstairs for family activities and 4 bedrooms or so upstairs including the master, which also usually keeps the footprint of the house small so that it fits well onto a small but affordable lot. Using upstairs space for livable square footage is also a good value because upstairs square footage is much less expensive to produce, since a house only has one foundation, one roof, one set of plumbing stacks, etc. On a per-square-foot basis, single stories are often priced higher than comparable two-story homes for this reason (and a few others).
Some young parents also feel reassured sleeping close to their young children.
[An often overlooked advantage to having a master suite upstairs is that it typically allows for a much larger master suite.]
But in a few decades, those young parents become empty nesters and their many years of hard-work may leave their bodies a little less forgiving with the stair climbing up and down all day every day.
So the lady at the party with whom I was speaking felt like now is not a good time to sell in the market, particularly because she paid at the high end of the market cycle in the early 80's and it's difficult to face a lousy investment return on a house, even though the house has served as the main family stage for those many years. Memories aside, the simple numbers are disappointing. I get it.
So I asked her if she wanted to stay in the same area, and she said yes because her adult children still live in the general area.
"No problem, " I said. "You may sell your house for less than you might have a few years ago, but you're also going to pay less for your next house."
This is the new rule for taking advantage of the current housing market: sell low, buy low.
So for many people who might want to downsize or even buy a bigger house, if the goal is to stay within the same general market area, then it would hold that however much the market may be depressed, it's depressed on both the selling and the buying side. So yeah, you might not get to sell for as much as you would like (nobody ever does in Houston), but you will get to buy for less in the same market!
Not to mention the historically low interest rates right now for qualified buyers. (Well qualified buyers have no excuse not to be in the housing market right now. Move up, refinance, whatever, but now is your time.)
Think of the California market circa 2005, for example. What use would it serve for a couple to sell their 1200 SF home for $1.5 million if all they could do was buy another comparable 1200 SF home for $1.5 million?!? This is why Texas saw so many people relocate from California and other areas, because cashing out was only possible by selling in the high market and moving to buy in a market that wasn't so wildly out of control (ie, Houston).
It occurs to me that the reverse is now true in most housing markets. Sure prices may be a little down year-over-year, which makes the thought of selling daunting if one doesn't have to sell. However the market also has good buying opportunities coupled with historically, ridiculously low 30-year fixed interest rates.
In conclusion, it is not a buyer's market. It is not a seller's market. The forces affecting each side are relatively balanced when you think about it. So it's not a bad time to sell if what you want to do is turn around and buy. So don't give up, the opportunity to get what you need or want is still very much available in this market.
Tuesday, January 06, 2009
There was a lot of talk in the presidential campaign about earmarks. An infamous earmark was "the bridge to nowhere" introduced by former Alaska Sen. Ted Stevens. And nominee Sen. John McCain promised to gut earmarks and pledged to expose their sponsors, thundering in rallies to raucus applause, "And you will know their names, my friends, I will make them famous, and you will know their names!"
So this is a bit of a tremor under Washington D.C. today, I think. PE Obama said more details would be announced tomorrow on the subject. This is very encouraging news if it is successful and does bring serious budgetary discipline to Congress and the White House going forward.
[UPDATE 1/7/09 7:06AM: It appears I may have been too broad in my original take. Now it appears to me that Obama has promised that the proposed stimulus package bill will not contain any earmarks. Still, that's promising because the package is likely to be about $750 Billion or more. And hopefully it will herald a trend if successful.]
Last night my business partner (my mother also) and I went to one of our regular "conference rooms" -- IHOP. I love IHOP because there is never a bad time of day for a fantastic omelet, not to mention those Harvest Grain n' Nut pancakes.
Nonetheless, even my ferocious appetite has its limits. The kid waiting on us approached our table and in as friendly a manner as he possibly could muster, he introduced himself and asked for our drink orders. Nothing wrong with that. Friendly, hard-working guy.
But he also sounded like he was just out of a hospital bed with pneumonia. Sniffle, sniffle, sniffle...
I saw in my mother's eyes that she would not be eating anything... or touching anything that poor guy tried to put on the table. At about the moment he walked away to get our drinks, the restaurant manager walked by our table and let out an echoing loud, hacking cough that almost made me grab my cell phone for help.
That was it. My mom and I were torn about the ugly prospect of being one of "those" types... to leave just after sitting down, and we debated it. But neither of us wanted to eat anymore. Or drink. Or sit there and risk it... So we waited for our drinks to come, and I told the waiter we forgot an appointment and couldn't stay. He was very polite and offered the drinks for free, but I did lay down a $5 that I hoped he would pocket, and we left (and had a wonderful meal at a new Mexican restaurant in The Woodlands).
Why do sick people go to work?
Obviously, people who rely on hourly wages or tips often feel compelled to go to work sick because if they don't work, they don't get paid, and that is certainly understandable. Debatable, but understandable for sure.
It's also part of our crazy health care system in this country that hard-working people who really need the money are least likely to have adequate insurance or insurance at all for when they do get sick and need basic care, such as for strep throat, a sinus infection, or a cold that threatens to get worse.
It seems everyone's favorite refrain this time of year, as more and more of us come down with nasally voices from stuffed sinuses and endless sniffles, is "it's just my allergies."
But the truth is that it's very difficult to tell the difference between allergies and a common cold. (The link has a great comparison chart.) In fact, treatments are much the same because the symptoms are much the same. The difference: with a cold, the body's immune system is reacting appropriately, whereas with allergies, the body's immune system is reacting inappropriately.
Hence, several over-the-counter and even prescription medicines are branded as "cold & allergy" relief, because they contain some combination of antihistamine, nasal decongestant, and perhaps a little ibuprofen. If you can get it, and if you can stand it, Pseudoephedrine works really well to dry things up (including your tongue though).
The Inexcusable Working Sick
There is one inexcusable type of "working sick" people. These are the people who have paid-time-off but don't want to "use up" a personal day, and so in exchange, they go to work and risk infecting all their coworkers and colleagues (who invariably do get infected in a nasty chain reaction lasting for weeks). Yeah, have a nice time on that extra day of vacation this summer, thanks a lot.
To be fair, however, some blame must be given to the common corporate practice of granting generic "paid time off" days to employees in lieu of separate "vacation days" and "sick days." At first blush, it seems nice that if you want to take a day off, you don't have to give a reason or call in fake-sick (which is inexcusable also). But I think what's really going on is that corporate HR departments decided that to avoid employee abuse of "sick days" with fake-sick call-ins, they would just lump everything together and probably wind up doling out fewer paid days off in total.
Talk about unintended consequences. This has been all the rage for at least 10 years or more in the Fortune 500. I don't know of a single study that has examined whether giving employees an unintended incentive to come to work sick has had any impact on how many sick days the entire workforce requires in any year. I wouldn't be surprised if the total number of days has actually risen. And unlike vacation days, being sick is not something people can plan, which makes the impact on productivity even worse.
In my company, we are pretty good and flexible employers. We try to pay honestly for an honest day's work, and we never expect employees to check their humanity (or their family) at the door when they come to work. However, an employee showing up for work while sick is a terminable offense in our office. Zero.... tolerance.... Anti-tolerance.
Of course, in this economic environment, people may not only need the money, but they could also need the "face time" with the bosses to maximize their chances of just keeping their jobs. Ugh. Why must everything be so darn complicated? Why can't we just live in a black and white world? It sure would make being sick easier.
No matter. For me it's time for another dose of Benadryl, Flonase, and Pseudoephedrine.......
Monday, January 05, 2009
In 2006, Moulitsas wrote about his entry and service in the U.S. Army.
Six weeks shy of my 18th birthday, I reported to Fort Sill, Oklahoma, to train as an MLRS/LANCE Operations/Fire Direction Specialist, managing operations and logistics for a missile platoon.From his bio:
I was a mess of a human being. I was 5 feet 6 inches tall, weighed just 111 pounds, and didn't have a shred of self-confidence. In high school, I had been the short, skinny, Salvadoran war refugee with the funny accent who looked half his age (still do) and read books in the (then) lily-white Chicago suburb of Schaumburg. A deadly combination.
I was also a Republican. As a 17-year-old precinct captain in 1988, not even old enough to vote, I helped deliver one of the district's best precinct performances for Henry Hyde. I had a framed picture of me with George H. W. Bush.
The son of a Salvadoran mother and Greek father, Moulitsas spent his formative years in El Salvador (1976-1980), where he saw first-hand the ravages of civil war. His family fled threats on their lives by the communist guerrillas and settled in the Chicago area.Markos Moulitsas is not the proverbial kid in his pajamas, blogging from his mother's basement. Far from it, bloggers and their blogs (at least the prominent ones), are the new and dominant political medium. Moulitsas has much to do with that. I am not a veteran, so I have come to my appreciation of the military as an institution from listening to veterans of all kinds, including Moulitsas, who writes movingly:
Military service is a sacrifice from the beginning. The cheap combat boots assigned to new recruits blister the toughest of feet -- after one particularly grueling 20-plus-mile road march with a 100-pound rucksack, I literally squeezed out blood from my socks. But basic training was the best thing to ever happen to me. They say they break you down in basic training so they can rebuild you into a real man. I was already broken when I arrived at Fort Sill. For me, it was all building.Many people go through life and find themselves at varying times on either side of any particular fence or another. Fences are, after all, simple and rather arbitrary constructions. No matter what labels we may assign ourselves over time, there is, at our core, something more solid, unmovable and real that transcends any label we'll ever come across.
Eight weeks later, I emerged a brand new person, this one weighing 140 pounds. And after my three-year stint, while I was stationed in Germany and missed deploying to the Gulf War by a hair, I emerged as a Democrat.
The military is perhaps the ideal society -- we worked hard but the Army took care of us in return. All our basic needs were met -- housing, food, and medical care. It was as close to a color-blind society as I have ever seen. We looked out for one another. The Army invested in us. I took heavily subsidized college courses and learned to speak German on the Army's dime. I served with people from every corner of the country. I got to party at the Berlin Wall after it fell and explored Prague in those heady post-communism days. I wasn't just a tourist; I was a witness to history.To be fair, Moulitsas goes on to suggest that the Army and military today is not the same as it was then, but his testimony certainly shows the potential of the institution, its history that produced most veterans with us today, and how our nation's international presence and even war offers transformative experiences for really the entire nation. Exactly what transforms and to what end is certainly worthy of reflection.
Not coincidentally, many of my favorite clients are veterans, and whether we talked about their service or not, I always learn a lot from them as human beings.
Markos Moulitsas Zuniga may have been a scrawny kid entering the Army, but he emerged as a ferocious force that continues today as he serves his country earnestly in different and prominent ways.
Moulitsas earned a JD from Boston University, near where I earned my MBA. Moulitsas is also a pianist and composer, and while there, he recorded a CD with a track named, "Along the Banks of the Charles," a reference to the Charles River, which divides the city of Boston and the city of Cambridge. It runs past downtown and along the campuses of MIT and Harvard. Moulitsas does a fantastic job of capturing what it feels like to be in Boston as a graduate student and break away from arduous study to retreat to the banks of the Charles... feelings of headiness, frightening momentum, and desperate optimism tempered by the high stakes of it all...
An appropriate way to begin blogging in the New Year of 2009.