Here's my Top 10 links from around the Internet at 12 pm in association with NZ Mint.
I'll pop the extras into the comment stream. See all previous Top 10s here.
I welcome your additions in the comments below or via email to bernard.hickey@interest.co.nz.
Bumper crop of cartoons today. Last one my favourite.
1. The problems in Europe - Reuters reports Moody's has warned any form of 'soft restructure' or 'virtual default' in Greece would cascade across Europe's sovereign debt ratings.
Greece is threatening not to agree to a brutal austerity and asset sale programme. It may even stop paying pensions and wages. Another national strike has been called.
The EU will have to provide more cash next month.
The European Central Bank is threatening not to accept Greek debt as collateral.
Essentially the powers-that-be are running out of places to hide. No 'soft restructure'. No virtual bailout from the ECB.
The only options left now are politically unpalatable pure cash handouts/bailouts by German voters/taxpayers. See the story below to get a sense of what Germans think of this.
Chancellor Angela Merkel lost more regional elections over the weekend.
It's all building to a head now.
"A Greek default would be highly destabilizing and would have implications for the creditworthiness of issuers across Europe,"Moody's chief credit officer for Europe, Middle East and Africa, Alastair Wilson said.
Other stressed sovereigns could be downgraded from investment grade to junk as a result, he said, widening the gap with the currency bloc's strongest borrowers. Portugal and Ireland would be first in the firing line.
Crucially, the ECB and ratings agencies have told politicians that options they are exploring to lengthen the maturities on privately held Greek debt would be interpreted as a default-like "credit event," triggering further downgrades and disqualifying Greek bonds as collateral. A Greek default could take many forms, including changes in the terms and conditions or a selective reprofiling, Moody's said, adding it would consider all of these to be distressed debt exchanges.
2. 'We're so happy' - This is an excellent interactive tool from the OECD that tallies up all the factors in a 'Better Life'. New Zealand does relatively well vs others in the OECD, in large part due to our pretty good health, education, environmental and life expectancy stats.
Worth a click through for a play.
Here's the New Zealand profile too.
3. Nervous German taxpayers - Der Spiegel is speaking for German taxpayers when it warns the European Central Bank (ie the old Bundesbank with a few extras added on) is now chock full of dodgy assets. HT Andrew.
Here's Der Spiegel catching the German mood:
On the green fields near Carriglas, halfway between Dublin and Ireland's west coast, the wind whistles eerily around rows of half-finished houses. Most of these buildings are roofless, leaving their bare walls unprotected against the elements. Even the real estate brokers' for-sale signs and the project offices are gone. Hardly anyone in Carriglas believes that the houses will ever be finished.
There are many of these ghost towns in Ireland, including 77 in small County Longford alone, which includes Carriglas. They could end up costing German taxpayers a lot of money, as part of the bill to be paid to rescue the euro.
That bill contains many unknowns, but almost none of them is as nebulous as the giant risk lurking in the balance sheet of the European Central Bank (ECB), in Frankfurt. Many bad loans have now ended up on that balance sheet, including ones that were used to build houses like those in Carriglas and elsewhere. No one knows how much they are worth today -- and apparently no one really wants to know.
4. What's really going on in Spain - The political pain on the plains of Spain is intense.
Here's some on-the-ground reporting of what's happening with all these sit down protests.
5. 'Gold in them thar vaults' - Utah has become the first US state to accept gold and silver as legal currencies again.
It's mostly a political move, but it does give you an idea of how many in the red states feel about the US Federal Reserve's money printing and the US Government's massive deficits.
In a move designed to undermine the Fed's monerary policy, the new law would allow Utah's citizens to store their gold and silver in a vault and use a "debit-like card" to conduct financial transactions. Since businesses will not be required to accept coins either at face or market value, going through a vault would be way the only way to take advantage of the new law.
6. Australia's lending problem - BusinessSpectator has picked up on this problem in Australia where housing lending has been growing for the last three years while business lending has been falling.
Our statistics aren't that different.
7. 'They won't mind' - The head of the US House Budget Committee, Paul Ryan, has actually said he doesn't think too many people will mind if America has a 'technical default'.
He said this a few days ago on CNBC, but it's worth putting in here.
This debt ceiling debate is something to watch.
Bond markets seem remarkably relaxed about this. They are all assuming it's bluster and it'll all be alright on the night. The US is scheduled to default on August 2.
Holders of US government debt would be willing to miss payments "for a day or two or three or four" if it put the US in a stronger position to pay them later on, Rep. Paul Ryan told CNBC Tuesday.
"That's what I'm hearing from most people," said the Wisconsin Republican, chairman of the House Budget Committee. "What is more important is that you're putting the government in a materially better position to be able to pay their bonds later on."
8. Housing affordability - TV3's Campbell Live reports two MPs earning more than NZ$130,000 a year, Labour's Jacinda Ardern and National's Nikki Kaye, say they can't afford to buy a home in Auckland.
“It’s pretty tough, particularly being single. You have to work twice as hard to pay the deposit, to pay the mortgage. So my attitude is that I want to make sure I’m very financially secure before I take that step,” says Ms Kaye.
9. Outsourcers coming home - The Washington Post reports on how Indian outsourcing operations are now setting up offices in America to service their American clients because Indian wages are getting too expensive and they can't easily import Indian workers.
India’s outsourcing giants — faced with rising wages at home — have looked for growth opportunities in the United States. But with Washington crimping visas for visiting Indian workers, some companies such as Aegis are slowly hiring workers in North America, where their largest corporate customers are based. In this evolution, outsourcing has come home.
10. Totally funny video - John Litgow reads out a press release.
71 Comments
#8. Of course they can. They just need to adjust their mindset on where they buy their homes and at what price.
“It’s pretty tough, particularly being single. You have to work twice as hard to pay the deposit, to pay the mortgage. So my attitude is that I want to make sure I’m very financially secure before I take that step,” says Ms Kaye.
Absolute BS. On $130k you don't have to work any harder. Someone on $65k has to work twice as hard. You are not paying any more or less than a couple earning $130k between them, although you will be paying more in tax.
I fully agree Hugh. I hadn't seen the the clip and was commenting purely on what I read.
I think it is more than just RMA reforms and I wouldn't expect Nick Smith or National as a whole to do anything about it. They talk the talk but yet to see them walk the walk. They already have a chance to address housing affordability but prefer to contribute to the problem (Hobsonville Point). Yes local councils need to open up more land but also need to reform the consent process and cost as well as development costs.
I guess someone has to keep hammering -
The RMA isn't your problem, neither are Councils.
They represent - but you're not big-picture enough to see it, obviously - the real limits.
You two should read the ling Gertraud supplied over on the other thread.
Read it well.
It epitomises why folk like me think that folk like the above two, are somewhat limited in their outlook.
It would be funny if it weren't so sad.
Hugh's logic is sound. The reason it will never be implemented (for a long time at least) is because it would pull the rug out on all the existing land values that are supported by the current system we have.
Any highly mortgaged home owner would likely go underwater, banks would have to revalue their loan books and they would have no where near enough capital to support their existing loans, and all of a sudden we'd be a few mortgagee sales short of financial collapse and a public funded backup on the private banking system.
PDK, are you referring to the Mountebank story? How does a load of codswallop epitomise your opinion? If not that link, how about being helpful and providing the correct one from the other thread.
Do you own your own home? Was it affordable when you purchased it? Is there affordable land available around your area for others to purchase? Is there affordable housing available around your area for others to purchase?
I acknowledge the limits to growth and I am not denying it but right now and in my immediate future my problem is the lack of affordable housing to meet my needs in Auckland and this is not related to peak oil.
It's about time you stepped down off your high horse and accepted that people are going to have a different outlook than you. You can rant about peak oil etc as much as you like but the holier than thou, "I discovered peak oil in the 70's" attitude is starting to wear a bit thin.
meh - you don't get it yet?
Energy underwrites everything. That includes everything economic. No energy, no work.
Peak energy, peak work. Peak work, peak income (global average, give or take efficiencies).
And you say 'affordable'.
How in hell is that not directly related?
Then you can go to the next level - energy required to maintain infrastructure, energy required to import (to Auckland) food, water, export effluent...... All made (physically) from oil.
My advice is that if the mountain won't go to Mahommed, perhaps Mahommed should look for somewhere within his (her) budget.
Remembering that the reduction of (or resultant increase in price because of) supply of energy will curtail future income.
No I'm not 'holier than thou', but I'm anazed and a tad frustrated with the lack of penny-dropping going on.
You have the excuse that the media failed to warn you, but after a while, that wears thin. Sooner or later, you have to be informed, or cop the consequences.
Oh - and I think the Mountebank nonsense epitomises Hugh's stance.
Meh - homework :
http://www.energybulletin.net/stories/2011-05-23/case-disorderly-energy…
The Catton piece at the end of it, is as good in itself. I've been to a couple of Catton lectures.
"bit thin" maybe you should consider what that means for all sorts of investments, because getting it is the only sound basis for investment decision(s). So of course costs are related to peak oil.
ie its not so much a different outlook....as wrong outlooks (others). When you look at Peak oil alone you have to realise that without cheap energy and more of it every year the global economy will stagger and contract....its cant even do 0% growth its has to expand by 2% plus...but in the situation of no more more energy per year and a direct link of about 4% growth needs 2.5% more oil its going to be in a bad way. Think houses are too expensive, well so will most ppl within a few years....and buying a house is a lifetime commitment...the debt stays even if the value disappears.
regards
That was so good , Hugh , I had to read it twice ...... Good job you double posted it for me .
...... Re. JK : The guy is not a leader . He has risen above his level of competence . Many in his cabinet are MIA , or just plain dumb incompetent . They remind me of rabbits caught in the car head-lights , just before the tyres whack their brains out .
The NZ Debtanic is gonna be whacked ! ..... Our creditors will not extend money to us indefinitely , to prop up a swathe of Cullen's election bribes , of which English hasn't got the balls to eradicate .
...... We are living beyond our means . And we are borrowing heavily to maintain a grossly generous welfare state .
Gummy is a citizen of planet earth , a global child , unfettered by the constraints of nationalistic barriers . My physical absence from Godzone is a veil , a mere bagatelle , in the spiritual etheric within the world wide web of mankind .
...... Tch Tch , steven , is it not time that you opened up to the eternal " one-ness " that pervades , shapes , and inter-links us all ?
Disappointed , my friend , you're very much behind the esoteric 8-ball .... Get with the game !
regards
Only a small sum now , sadly since I took Michael Cullen's sage advice to supporters of Don Brash ( 2008 ) , to clear off to Australia if they didn't like the way he ( Cullen ) was running things . .....
.... But do tell me , steven , what has that got to do with anything ?
Considering in effect lack of energy will be THE thing ruling our lives for the foreseable future, I suggest you pay attention, ignoring it will put your financial health at peril IMHO, but then it is your money. Informed optimists such as yourself? thats really funny.....you demonstrate a complete lack of understanding of even maths it seems (hint expotential growth on a finite planet does not compute) let alone any science....infromed, no blind, yes. Im afraid your little planning fantasy and extremist politics is going to stay just that.
Key, blundering? no, I think he's done remarkably well considering the bad hand he's been dealt, in what is the worst circumstances since the Great Depression of the 1930s, in fact its probably going to be worse....I look on the bright side we could have had HC and Cullen for round 4.....or far far worse...say Brash for round 2...instead we have survived very well.
Consider this in context of your hopeless idea to build our way out,
http://www.youtube.com/watch?v=QVzjBlzCW8o&feature=player_embedded
regards
Malthusian environmentalists?
Thats a new one on me....kind of interesting combination....
Smith, no he's not impressive....but one of the best of a poor bunch...
In terms of eco friendly, no I dont support JK or National, in this respect....in fact Im dead against them....however I have my eyes open and recognise National and the RB steered a good course in attrocious conditions from the beginning of the GFC (or Great Austerity as I think of it we have a paradygm change ans its 1 or 2 decades of pain)....I will give them credit there, they were probably the best party to Govern for the last 2 years....Labour would have been clueless and would have lacked the backbone....to hold out against the unions etc....sadly they may be the best bet this time....provided ACT crashes and burns....they may yet get my vote.
"Malthusian" often much maligned by ppl who have not read him....he didnt avocate population control etc, he just commented on its inevitability given population expansion would one day exceed the capacity to support it.....kind of obvious, the only Q is when not if.
This is what you dont get....
Its interesting on how names can be used to put ppl down, for instance some years ago calling gay ppl "queers" was the in thing....so some in the gay community said big deal lets openly call ourselves queers....interesting idea....so based on that,
and yes based on my defination of Malthusian and hot yours I would be quite happy to be labeled as a "Malthusian environmentalist" because I recognise that there is a danger if not inevitability that the global population will start to decline in my lifetime if not yours (you look about 70ish so 10 ~15 years).....its not what I want but what I see.....if we do nothing voluntarily it will be done for us by nature.....
regards
Hugh - bollocks. Back to the real world, you say?
It's the real world I deal in.
Yours is - to put it politely - unattainable. From a physics point of view, indefensible.
I suggest you listen - carefully - to the Whitehead interview on Morning Report this AM.
I quote:
"You don't want to use up all your resources so that your children and grandchildren don't have any".
That's the head of Treasury.
Makes you and your dwindling band, look a bit dinosaurish, dunnit?
Hugh, just picking up from what you were saying on Campbell Live, that the rules should be changed to enable more houses to be built outside the current Auckland city boundaries. Let's say they were, and were say extended by a couple of kilometres. What happens in two or five years when that space is all filled with housing? Do we do the same thing again? I guess what I'm curious about here is if we go with your proposal, do we ultimately end up with urban sprawl spread from Whangarei to Tauranga? And is that what we want?
So from that should I take it that you are happy to see Auckland continue sprawling on an ongoing basis? There's no limt to this?
I'm under 40 and have seen Auckland grow immensely in my lifetime already. I've also lived in Britain, which to me feels like an over crowded island. I don't want to see NZ end up like that. I've also lived in Japan, which despite its big population and relatively small size, has a surprisingly large amount of un-urbanised land.
It just seems to me that the ongoing, continuous sprawl of Auckland is not a great outcome and not in the best interests of the country or its already tarnished "clean, green image."
Aren't there other options as well?
Fair enough Hugh,
But do we really want American mid-west style sprawl cities where people live in their cars/trucks?
Do we really want our kids eating McDonalds for breakfast, lunch and dinner in the back seat of their SUVs, replete with 15 cup holders and DVD screens in the headrests?
cheers
Bernard
If we only think of this problem as mono-causal, we are only likley to concentrate on one solution and the associated intensity of singlular -ve's and objections. That is, let's relax city boundaries by a smidgeon, relatively speaking, equates to, hey what about sprawl and energy impacts.
However, if we recognise this as multi-causal and implement effort on a range of solutions, focused on affordability, including but not limited to:-
some movement on Hugh's suggestion,
implementation of suitable credit regs (Murray - we note that money is just a proxy for energy and it's exponential money creation that has led exponential energy demand,)
suitable taxation,
and noting that doing some of these will mean incomes could improve (because we help balance the economy,) then, we could achieve affordability without creating severe negatives in just one or a few areas. For example, too much sprawl, too much -ve transport impact, etc. The pain could be spread over a few parameters to a much less intense degree than if just imposed in one area, eg, just relaxing city boundaries, just implemeting taxes, just implementing credit regs. Instead, do the lot, by reasonable measure and the sum effect would mean the problem would get resolved.
Cheers, Les.
Hugh - fill your tank. Start driving. The wee warning light will eventually come on. You are suggesting that you can continue, because you have thus far? That on that basis, the warning light can be ignored?
Phil Best? No, last I remember, we mentioned Darwin and he hollered like a becomng- extinct dinosaur. There are dangerous skews in that kind of thinking - that a greater boing is in control, that a 'special book' written in bits a long time ago, can be used as a blueprint. And if that 'special book' doesn't mean depletion, then depletion can't exist. No, there are transport energy studies, and studiers. I can put you on to them......
This is a global village now - Texas started on the front foot with a cheap local source of high-quality energy - don't use it for comparison without first extracting the advantageous baseline. Note also, that just because folk repeat things - via whatever media - doesn't make them so. I've pointed out the flaws in your outlook.
If current public transport has it's problems, you correct them. You don't - because you instinctively are starting from a prejudiced base-line - put the concept down. You'd be better making constructive suggestions for improvement.
Just because you want cars, doesn't mean you can have them. As with the tank in the beginning sentence. You are right about the collection of villages, though. Social hubs within social interactive distance. That's where it'll go.
You seem to be making a grave mistake on oil/energy prices, you assume there is no fundimental price shift due to real scarcity? i think you do...so you are ignoring everyone from the IEA to ASPO down.....but then as a typical fundie type ignoring any inconvienient fact is par for the course.
Speculation, yes Im sure there is but you can only specualte and extract a monpoloy price where you have a significant lever on whats left....ie when something is really or artificially scarce you can chanrge a monopoly rent ~ speculate....if its abundant you cannot.
Oil will come down, and I suppose remain down in your view? The only way it will come down significantly is when we enter the second dip/recession/depression, then sure oil could get to $35US again or even $10....but it wont stay there and is this not borne out by its back up again?....This is a re-run of 2008....but as Matt Simmons said it will take three or four such events before most ppl see there is a fundimental change and energy will not only be expensive but scarce....some of course may never see it, such as yourself I suspect.
"Convienient mobility (i.e. cars) is a critical component of increased prosperity." and as I and PDK keep saying....we wont have increased prosperity as oil output declines and energy becomes a significant part of the cost of an endevour, be it household finance or business or a nation. You just have to look at the effects of $4US a gallon on US suburbia to see how ignoring this plays out.
http://www.endofsuburbia.com/ well worth a read.
"Cities should be thought of as simply a collection of villages." perfectly correct, except they will be dispersed to give enough distance between to feed themselves...the high speed links will be fibre.....or some public transport...and each village will be small enough to walk or bike around in a reasonable time frame....30mins or something. Im hopeful that there will be a national grid, otherwise each village will ahve to be significantly self powered, that will be far more difficult....
regards
.nope, looks like it's this far down.
Hugh - I suggest you come along to our open-to-the-public Energy Studies lecture series at Otago Uni.
My library has almost as much 'denial' content as 'warning', there's nothing like being fully informed.
I'll send you a timetable.
Half my family are fundie christian nuts...one of the things they are convinced of is god created the world about 10000 years ago and fossils are there to keep us "entertained".....they are not "real". Then if say a different sect comes knocking at the door they have a huge verbal battle about interpretating different portions of the same book, to the point of foaming at the mouth....
So, really Hugh wont take you up.....he's a fundie but of a different breed......
regards
Demolition of Christchurch's crippled Hotel Grand Chancellor will take 10 months.
Is this the govt's idea of job creation ?
Conventional demolition of the Hotel Grand Chancellor was predicted to take 35 to 40 weeks to complete, while the explosives method would take about 11 weeks. A report by US Army Corps of Engineers found that both conventional demolition or the use of explosives would damage or destroy the All Seasons Hotel and also damage half a dozen buildings to the east.
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10727868
Russian internet search engine Yandex ( NYSE : YNDX ) has a successful debut . The $US 25 shares from the IPO traded above $30 all day , and ended up 50 % at $US 38.84 .
..... Alike LinkedIn , investors have a thirst for internet stocks.... . But the Gummster can't help feeling that the ugly sisters are getting all the attention only because the far prettier younger sibling ( Facebook ) is not ready to go out on a date just yet .
Big problems with listed Chinese firms and fraud
Jim Chanos, the hedge-fund manager known for predicting Enron Corp.’s 2001 collapse, says he’d short sell Chinese companies listed in the U.S. if it were feasible to borrow shares to open the bearish positions.
The Bloomberg Chinese Reverse Mergers Index has plunged 41 percent since Nov. 8 amid speculation financial statements from companies such as China MediaExpress Holdings Inc. (CCME) can’t be trusted. The concern intensified this week after Longtop Financial Technologies Ltd. (LFT), whose initial public offering was underwritten by Goldman Sachs Group Inc. and Deutsche Bank AG, said its auditor quit because of false records.
Investors need to do some research before biffing money at any listed companies . Sure , there are alot of back-door shells re-listing onto the US bourses as Chinese companies , but there's also many genuine profitable PRC stocks listed too ........
......... And just how would we describe the con job that Watson & Hotchin pulled , in duping Rob Alloway of Allied Farmers , to take on board their toxic waste dump , also known as Hanover ! .... And the NZX ( a.k.a. " Weldonia " ) went along with the script , and said " yup , she's all good , list with us ."
Caveat emptor everywhere , not just " over there . "
Re #6 your own charts dont back up the statement 'Our statistics aren't that different'.
For the period Jan 08- Jan11
NZ Business Debt up 1billion (72b to 73b), Aust business debt looks to have gone down.
NZ Household debt up 13B (158 to 171) 8% and is slowing (3b in the last year)
Aust Household debt up around 300b 40% and still growing strong
Neville C
I agree the timing's a bit different. Australia bought in its first home buyer subsidy in 2008.
From the peak of business borrowing in December 2008, NZ Business credit fell around NZ$7 billion to around NZ$73 billion now. It has picked up slightly in the last couple of months.
Details here for business credit http://www.interest.co.nz/charts/credit/business-credit
From the December 2008 point, NZ housing lending is up around NZ$8.5 billion to NZ$171.5 billion.
Details here for housing credit. http://www.interest.co.nz/charts/credit/housing-credit
It's almost a one for one swap.
So much for a rebalancing from consumption/housing/borrowing/importing to production/investment/saving and exporting.
cheers
Bernard
Rumours of a snap election in Greece
http://www.fxstreet.com/news/forex-news/article.aspx?storyid=d4f903ad-21a9-4136-97e0-669308435cea
Looks like a run on Greek banks has started.
Translation of this Der Spiegel article published today
http://www.spiegel.de/wirtschaft/soziales/0,1518,764629,00.html
Customs officers reported repeatedly that they had caught passengers with large packets of money in their luggage at random in the airports of Athens and Thessaloniki.
cheers...
Bernard
Steve Keen on youtube
http://www.youtube.com/user/ProfSteveKeen
By the time this is over it wont be a double dip it will be a quadruple dip...
regards
steven Enjoyed your Steve Keen linked so much watched 3 X ,
However I have to disagree with you regarding less council restrictions and bureaucrats not being part of the issue in Auckland.
I think its quite evident that if their was no artificial restriction Auckland house prices would fall as more supply comes into the market and fall into line with other parts of the county
Its very comparable tor London’s green belt
Granted its not the only issue : the biggest of course is too loose monetary conditions and too much leverage; i.e. I cant understand why Reserve Bank just doesn’t tell trading banks that they are limited to providing 75%-80% . when I bought my 1st house you had to raise 25% of price before you could get finance. This was a big factor in keeping pricing stable and limiting speculation.
cheers
Why not to buy Greentone shares....Peak oil.....why does this moron think Shell and Exxon have bailed from retail FFS? for the fun of it? he's deluded.
"Demand drops off, so we sell less, so we've got less litres to pay for all our fixed costs, and it costs us much more to fund our business because we're having to buy oil at US$120 a barrel, not the US$75 we bought the company at.
"So we had to inject $150 million more into stock between the day we bought the company and where we closed the year at. Not too many companies can come up with $150m to run themselves.''
regards
'Cyrenaic Syndrome'
You stated on Cambell Live that the Council favours dairy cows over Aucklanders. The Savings Working Group blames immigration combined with urban limits. The views of the SWG are at odds withHughe and his supporters.... it is clear that Hughes side has a vested interest (not sure about SWG).
Immigration and tax breaks for investment in residential property are being cited as the underlying causes of steep increases in the cost of housing over the past decade.
New Zealand now boasts one of the highest rates of home unaffordability in the world as a result of prices rising far faster than incomes, and the government's Savings Working Group blames that squarely on the policies of successive governments.
Although "the favourable tax treatment of property investment" accounted for about 50% of house price increases between 2001 and 2007, the working group said, there was also strong evidence that rapid swings in immigration brought about price-rise "shocks".
There was a sharp spike in immigration in 2001, 2002 and 2003 and, said working group committee member Dr Andrew Coleman, it appeared that property prices did not fall anywhere near as greatly when immigration fell again.
The report added that there was little evidence that immigration boosted local incomes. In fact, the need to build roads and schools meant that net migration contributed to the national deficit.
http://www.stuff.co.nz/business/4622459/Government-policies-blamed-for-…
The policy choices that favour high immigration increase wealth in the property sector but not incomes of those removed from the process where benefits are outwieghed by house price increases.
What a pathetic blog in a pathetic country. The Green doomsaying nutters backed up by the "economist" blog host. Common sense and facts down the tubes.
Bernard, the USA is the world's most efficient economy. The way their cities have evolved is an integral part of this. The decentralisation of employment is the big paradigm shift of the last few decades. This factor is a REDUCER of commuting distances. Other factors are responsible for increases in VMT. The increase in 2-income households, which means that every location will be a compromise. The increase in incomes. The increased efficiency of automobiles and the reduced real cost of automobility. The increase in NON commuting trips.
We are about to experience a further paradigm shift in favour of mobility, because of all the research and investment taking place. Even so, right now, MOST of the petrol consumption is DISCRETIONARY; people do not NEED to use anything like as much as they do - V8's still sell. There is SO MUCH FAT in the system, that we can retain our mobility for eons yet just by increasing efficiency of cars. Incidentally, this is much quicker to do, than to change urban form.
Mobility is what keeps urban land prices affordable and proves Marx wrong about the incumbent property owning classes becoming ever richer while the poor get poorer. Mobility and low land prices underly productivity. Britain's productivity has declined thanks to their urban planning system, inflated land prices, and low mobility.
Rising incomes WILL capitalise into land prices UNLESS mobility allows for an unlimited supply of further land to be brought into the urban economy. Karl Marx was probably right about incumbent land owners getting richer while the poor get poorer, back in his day before cars and suburbs. It is ironic that left-wingers today, ignore Marx on this. As urban economies have developed, and the proportions of the workforce in each of the categories of employment have changed, the nature of cities has changed. 100 years ago, high density included a lot of "industry" in very unhealthy conditions, as well as living, in very unhealthy conditions. "Industry" has dispersed, being priced out of inner city locations by competition from high-intensity offices.
The tendency of city centre land prices to rise as incomes grow, drives further decentralisation of employment. Traffic congestion also drives further decentralisation of employment. The continual savings on land costs, of employers decentralising, is a major cause of US cities remaining economically competitive. Prof. Peter Gordon has been saying this for decades. Residential areas "sprawl" as incomes and land prices rise, because there is incentive for people to get affordable homes. The cost of "automobility" has remained steady or even fallen, in real terms as incomes rise and cars become more efficient and reliable. (These effects swamp the celebrated rises in the price of oil). The cost of providing infrastructure has also been much less than the cost of inflated land prices that are the alternative to NOT providing the infrastructure.
The "sprawl" of labour forces makes the decentralisation of employment all the more efficient. If a city remained monocentric, growth would ALWAYS cause rising vehicle miles travelled. Decentralisation has enabled US cities vehicle miles travelled to remain remarkably consistent (controlling for other factors such as the proportion of 2-earner households) even as they increase in population and production. "Land" being a factor of production, and the principle of "factor substitution", means that in most industries, labour productivity is enhanced by the use of "more land" and more space per worker. High land prices equals low labour productivity and reduced economic competitiveness.
The ONLY "cause" these anti-sprawl ideologues HAVE against this perfectly natural, efficient, free market trend in land use, is that "decentralisation" is incompatible with mass public transport. This whole thing hinges on a kind of religious belief in trains and public transport. In debate, none of the ideologues can deny that decentralisation actually IS a factor in FAVOUR of achieving every objective they desire, OTHER than "increasing the mode share of public transport". It reduces congestion, it reduces commute lengths and times. It reduces the need to expand already long-built highways in already built-out areas. The cost of greenfields infrastructure for edge cities, especially if rights of way are established early, is competitive.
But the ace card these people play, is that running public transport to the various areas of an ever-decentralising city, will be prohibitively expensive. It is simply "off the table" for discussion, that we should just abandon MASS public transport as we know it. (What we really need is a totally deregulated market in "public" transport - "dollar vans", "jitneys", etc). The cost of mass public transport subsidies is the BIGGIE in local govt cost over-runs. The decentralisation of urban form IS making public transport more and more expensive to subsidise. Add to this, that the provision of public transport is labour intensive, and rising incomes, while they make "automobility" relatively cheaper in "real" terms, tend to make public transport more expensive in real terms.
Local politicians threatening a "blowout of costs for infrastructure" if "more sprawl" is allowed, are indeed fudging the fact that you have long pointed out, that infrastructure costs were the whole reason councils and rates EXIST at all in the first place - trouble being that they have "spent the money on something else instead in the meantime". While there is a whole host of activities on which councils waste money, the BIGGIE is the public transport subsidies. THIS is what the public SHOULD be getting told, is responsible for pressures on council revenue. These people are in denial over the fact that they are up against a whole PARADIGM in urban economics. The modern economy needs steady "decentralisation" of cities to remain competitive and to keep generating wealth. Attempting to restrain decentralisation with "regional" urban planning, merely kills the economy at multiple levels, mostly via inflated land prices.
A major problem these people have, is that they are like gamblers on a losing streak, refusing to "cut their losses and run". Instead, they are "doubling down", trying to spend MORE AND MORE money on making public transport slightly more viable as an "alternative to car use"; plus relying on traffic congestion to "encourage" people not to use their cars. Fran Wilde can't admit now that she was wrong to buy a whole lot of shiny new trains. We can't have the trains incurring even bigger losses in the future because fewer and fewer people are going to live on the rail routes if we allow our urban form to decentralise. The cost projections are ALREADY the stuff of "brinkmanship" and wishful thinking, without admitting that the future lies in decentralisation and assuming that Wellington CBD will retain its 37% share of regional employment (already a world high).
Infrastructure for decentralisation MIGHT be able to be described as costly if "spun" the right way; but roads and drainage and so on, are largely "one off" expenditures, wheras labour intensive public transport is an "ONGOING". The cost of MAINTAINING EXISTING non-public-transport infrastructure is also significant, and is ALSO being squeezed out by the cost of public transport subsidies. Ironically, decentralisation also takes the pressure off the infrastructure in the areas where it is MOST EXPENSIVE to maintain.
Another point that it is well to be informed of. Official analyses of households "cost of running a car" are always based on aggregates. Included in this will of course be brand new cars and their attendant depreciation, petrol-hogging V8's and light trucks. BUT what proportion of this cost was "discretionary"? NOWHERE will you find a "best case" comparison of the typical cost of owning and running a 10 year old 4 cylinder Japanese car, versus public transport. I tell you, I think I have now seen it all, for "wrong data" being used for wholly invalid comparisons and assumptions. Another favorite of the Todd Litman school, is to show that the people in California who drove the furthest to work experienced the most mortgage foreclosures, therefore the cost of transport caused the foreclosures, urban sprawl is bad and should be regulated against even more strictly. The price of homes and the cost of servicing mortgages in a high land price city versus a low land price city, does not enter their reckoning; nor does the practical OPTIONS for location, facing households in a high land cost city.
You wouldn't believe just how MUCH totally wrong policy has been adopted simply because computer MODELS of urban form were over-simplified MONOCENTRIC models. Anas and his colleagues have steadily refined a much more complex model that actually resembles real life, shock, horror; and even reflects the effect of land costs on location decisions. The resulting summary paper, Alex Anas' "Discovering the Efficiency of Urban Sprawl", is like the paradigm shift in science when Einstein proved the existence of "the ether" to be unnecessary.
Our obstructionists are up against a paradigm that will ultimately spell death to their ideas, but unfortunately will spell death to our economy and our future in the process. Churchill even said of Lenin, way back in the 1920's, that "he is getting the world's most expensive economics lesson". It cost the Russian people an awful lot.
Steven - some advice.
You can flesh your message out easily. First, you open up with invective, always good for a para or two.
Then you quote irrelevant historical figures, and even past political styles. This may have - no - this will not have any connection to the subject in hand, although it may be indicative of your frustration.
Then, you could use CAPITALS more. That wAy IT LOOKS AS IF YOU'RE SHOUTING AT PEOPLE and it's much more impressive.
See?
I've said nothing, and I've taken up so much more space......
mudgards :)
Hah, I don't need to respond to the neo-Malthusians desperate gutter tactics, reasonable people can read my posting and make up their own minds. Even if they merely remember in a few years who was right.
Let's talk about item 9 now, Bernard. "Outsourcers coming home - The Washington Post reports on how Indian outsourcing operations are now setting up offices in America to service their American clients because Indian wages are getting too expensive and they can't easily import Indian workers. India’s outsourcing giants — faced with rising wages at home — have looked for growth opportunities in the United States. But with Washington crimping visas for visiting Indian workers, some companies such as Aegis are slowly hiring workers in North America, where their largest corporate customers are based. In this evolution, outsourcing has come home."
Hah, where are they going to, Bernard? Texas or California? High land cost cities or low land cost cities? The low land cost cities of heartland and Southern USA are on their way to becoming the econ powerhouse of the world. India and China are going to collapse because they are not going the way of automobility and urban expansion. High land costs and nil social mobility will finish them. Even if they are not Green loonies, they are too corrupt and proscriptive in their approach to urban land supply, for political and cultural reasons. Actually, culture is 99% of the reason for the success of the West. Marx will be proved right everywhere people are deprived of freedom of movement and freedom to build.
I have been largely absent from this blog for a while. This is because I have been participating in dialogue with some really bright minds (for a change), on international forums. I have high hopes for young Greenies in the USA, they seem to be far more susceptible to evidence and reason than ours are. OLD greenies are just closet Communists.
Tell ME I am stuck in the past? My posting above was all about the LATEST understanding in urban economics. It is PDK and stephen who are stuck in fallacious thinking that never WAS true, and is rapidly dating like a stupid teen fashion.
ppl can indeed read, youtube it or watch DVDs, and indeed remember, it wont take long...so they wont have to remember far back.
eg
The end of the American Dream PB.
It only worked as long as America could get its energy cheaply....its not sustainable....energy is no longer cheap.
"North Americans have invested much of their newfound wealth in suburbia. It has promised a sense of space, affordability, family life and upward mobility."
This was your dream it seems PB, so its toast.
regards
OK, Christov, you are one of the guys on here I respect. That was me coming back after a bit of an absence and venting a bit of my newer knowledge. I assure you that was the short version. If you see something in it, I am glad. Interest.co.nz is actually a bit of a waste of my time. (As I just said).
Please share some of your new reading with Bernard Hickey , because since his " I've been thinking " moment , last year , he's turned into a Malthusianiacal Monster .... As if this country needs any more of that ilk .... Oooops , spoke too soon , Winsome Peters has just lumbered into view .
........ Oh , goody !
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