Friday's Top 10 with NZ Mint: Capital flight from China; US Postal Service may run out of cash in October; Who's afraid of Huawei?; 'It's the middle class, stupid; Clarke and Dawe

Here's my Top 10 links from around the Internet at 5 pm today in association with NZ Mint.

As always, we welcome your additions in the comments below or via email to

See all previous Top 10s here.

My must read today is #6 from Steve Keen on Australian house prices.

1. Exodus of cash from China - The Economist reports that more money left China than entered it in the second quarter for the first time since 1998 as very wealthy Chinese people nervous about losing their possibly ill-gotten gains in any blowup ran for the exits.

No doubt at least some of that money will end up here in New Zealand.

It is no doubt one reason why house prices in central and eastern Auckland are currently rising at an annual rate of 15-25%.

This departure of funds should be watched as a sign that not all is well in China. Capital inflows to New Zealand are also a factor in the currency being up near 81.3 US cents despite commodity prices having fallen 20% from their May 2011 peak.

This follows news that US banks are back issuing New Zealand dollar bonds for the first time in 5 years. It's a great way to funnel freshly minted US dollars into New Zealand dollars, thus pushing the currency higher.

Here's The Economist:

A SAFE spokesperson felt the need to say that these outflows did not amount to a mass rush for the exits. The exits are, in any case, partially blocked by China’s capital controls. Still, such regulations can stop neither multinational companies, which may repatriate profits, nor determined wealthy individuals, who travel frequently, hold foreign bank accounts and run their own cross-border businesses. Chinese individuals may take up to $50,000 out of the country each year without special permission. Victor Shih of Northwestern University reckons that the richest 1% of Chinese households own $2 trillion-5 trillion of property and liquid assets. If they took fright, they could overwhelm even China’s vast foreign-exchange reserves.

China’s rich often have inside knowledge of the economy’s condition, Mr Shih has pointed out. If their money is leaving, everybody else should take note. But Zhiwei Zhang, chief China economist at Nomura, a Japanese bank, is more sanguine. He thinks the capital outflow is not an alarming sign in itself, but just reflects economic worries that are already well-known. It is no surprise that firms and investors should reshuffle their portfolios given disappointments in China’s property market and the interruption in the yuan’s rise against the dollar.

2. US Postal Service defaults - CNN reports the US Postal Service has defaulted on a US$5.5 billion payment for retiree health benefits and may run out of cash by mid October.

While the Postal Service is in big financial trouble due to fewer people sending mail and the mandate to prepay retiree benefits, the default is largely symbolic. The agency will skip that payment and another $5.6 billion payment due Sept. 30, while continuing to pay employees and contractors to deliver the mail on time.

However, by Oct. 15, the agency's cash crunch could result in a $100 million shortfall, according to David C. Williams, the service's inspector general.

3. Capital flight from China - FTAlphaville points to some statistics showing significant capital outflows from China in recent months and explains why this may be tough for China to turn around.

It quotes the always excellent Victor Shih on how China might respond to these capital outflows, particularly once they get above the US$1 trillion threshold.

Even with this wide array of tools, an outflow of 1 trillion USD, roughly 30% or less of the wealth of the top 1%, would see the PBOC redeeming all of its bonds and bringing down RRR to the 6-7% range.  Any additional outflow would completely deplete banks’ reserves and force banks to halt credit expansion and even to recall loans, which would drastically increase bankruptcies and slow economic growth.  To support continual credit expansion, the PBOC can also print money on a large scale, as it did in the 1980s and 1990s (Shih 2004).  This likely would trigger very high inflation rates.  Inflation above 20%, however, provides strong incentive for the top 1% of households to reallocate their savings overseas.

In sum, once capital flight takes hold, the Chinese government will have few ways of forestalling it without either making the situation worse or without suffering massive economic costs.

4, Not all the hedge fund managers are doing well - Here's an ad in a New York newspaper.

5. Expensive subway systems - Xinhua reports that many Chinese state governments may have bitten off much more than they can chew with their plans for massive subway systems. Let's hope Auckland doesn't make similar mistakes.

The belief that a subway system is a symbol of a modern metropolis means smaller cities are also keen to build. "They see subways as their chance to polish their civic image and look like a modern city," he said. Amid the raging competition between many similar-scale cities, some lost their ability to think rationally. "Some cities are mapping subway networks that will cost their entire combined income for five years," he said.

According to Chen, a large proportion of the funds come from the government - usually around 40 percent - and bank loans. "Subways can barely attract investors, because the (low) ticket prices are set by the government to benefit the public," he said.

Local governments are likely to shoulder a heavy financial burden if they build subways, said Chen, citing figures indicating that provincial, city and county government debt had risen to more than 10 trillion yuan by 2010. "Large-scale construction of subways will pile more debt onto local governments, increasing the financial risks."

6. In line with Japan - Australian real house price deflation since its peak in early 2011 has been 9%, which is in line with Japan's slow deflation from its peak in the late 1990s, but less than the 20% seen in America Steve Keen reports at DebtDeflation

To cause a sustained rise in house prices, Australians would need to not merely not delever, but to lever up from the current historically high debt levels—since it takes accelerating mortgage debt to cause house prices to rise.

7. It's the Middle Class, stupid! - That's the title of a new book by James Carville and Stan Greenburg on America's political and economic malaise. Here's a review and one of their solutions.

Middle class voters don't see government as the solution because they consider it to be captured by elite interests. The focus groups showed that this view led to some tendency to paralysis and disengagement from politics. It is from this point that Carville and Greenberg pivot to their most important policy recommendation: Amend the Constitution or obtain a Supreme Court that will overturn Citizens United and end corporate personhood.

In addition, they call for public financing of elections, disclosure of campaign contributions, requiring broadcasters to cut the price of political ads, and ending the revolving door of office holders and lobbyists. All this is in support of a politics that makes rebuilding the middle class Job 1 for government, and for a consistent framing of all issues (including foreign policy) in terms of their impact on the middle class.

8. A frightening slowdown - Bloomberg reports Mohamed El Irian of PIMCO, the world's largest bond fund, reckons the global slump in factory production is frightening.

Pacific Investment Management Co.’s Mohamed El-Erian called recent declines in purchasing manager indexes in Europe and Asia “frightening” and said the world economy is suffering its severest slowdown since the global recession ended in 2009. “This is a serious, synchronized slowdown,” El-Erian said in an interview today.

His forecast highlights the troubles the global economy is facing as the euro area struggles to contain its debt crisis and growth in the U.S. and China slows. Separate surveys of purchasing managers released yesterday showed manufacturing in the 17-nation euro area shrinking by the most in 37 months while Chinese factories teetered on the edge of contraction.

9. Who's afraid of Huawei? - The Economist looks at the thorny issue of cyber-espionage and China's fast-growing tech companies, including Huawei. This is all very topical in the wake of Pacific Fibre's comments that US interests opposed significant Chinese investment in its cable. The magazine also makes a good point about where most telecommunciations equipment is now manufactured -- China.

Huawei inspires fear too—and not just among its competitors. The company is said to be too close for comfort to the PLA. Westerners fret that the networks the firm is building are used by Chinese spooks to eavesdrop during peacetime and could be shut down suddenly during wartime. They see the firm as a potent weapon in China’s burgeoning cyber-arsenal.

It is a view that some governments are taking seriously. Earlier this year Australia blocked Huawei’s participation in a scheme to build a national broadband network in the country. The company has also faced opposition to its commercial expansion in India. And in America, where Huawei’s attempts to grow have often been stymied, a congressional committee that focuses on intelligence matters is putting the firm under a microscope; suspicions have been aggravated by a recent spate of cyber-attacks attributed to Chinese hackers.

Western governments are also suspicious of the subsidies, low-interest loans and generous export credits lavished on favoured champions, including Huawei. The European Commission is considering opening an investigation. Some people suppose that the Chinese government is helping Huawei win overseas contracts so that spies can exploit its networks to snoop on ever more of the world’s electronic traffic.

The other reason for not banning Huawei is the dirty little secret that its foreign rivals strangely neglect to mention: just about everybody makes telecoms equipment in China these days. Chinese manufacturers and designers have become an integral part of the global telecoms supply chain. Blocking Huawei (or its rival Chinese telecoms giant, ZTE) while allowing gear from, say, Alcatel-Lucent or Ericsson on a network may make politicians feel good. But it is no guarantee of security. Huawei’s competitors have a vested interest in hyping concerns about it, while disguising their own reliance on Chinese subcontractors and on subsidies.

10. Totally Clarke and Dawe talk about the physical prowess of Australia's press barons.

"A lot of them have tapered for the event."

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.


anyone heard of the big dig? Coming to downtown AKL soon.

Closer to your home Andrew, and upstream, you are going to have an equally impressive 90 metre high Makaroro River white elephant irrigation dam (that will be known in future as FossKey's Folly). 

Looks like Fb has a problem or two,  below $20 now heading to?

Re #4 . Do you really expect your readers to swallow that, Mr Hickey?
View the central photo of the stairway, then compare it to this.   In the UK.
Which actually tells you who does, and used to own it.   Twitter, such a reliable source, aren't they? 

Agree ,  it must be pure BS ......
..... I looked amongst the names of the famous artists whose paintings are being sold , and there was no mention of Helen Clark .....

Oh dear, yesterday the revelation you on welfare, and today we find out its because of something Helen Clarke did about 12 years ago. Your life really if flumoxed in a quandry, going daily bad to worse.

I wouldn't keep needling him there Nic....yesterday it was  your less funny, more barbed....I think he just might kill your donkey......

Ahh, you think I underestimate the Gummsters intelligence (or maybe memory). I do my best not to, though you are right to accuse me of testing his patience.
Anyway I am just doing the guy a favour, trying to highlight how awful the impact of Helen Clark has been on his life. I mean look at all the awful things the guy got all hung up on. Signing her name to a fake painting for a charity auction we are talking about fraud here, I mean its serious. Who knows what she is doing now, she could well be defrauding Goldman Sachs to give the money to third world babies for all we know by now. Clark ain't no Mother Teressa that's for sure.

I think this post explains why the Gummster has to be receiving the welfare no matter how fervently he denies it, it's just basic deductive logic really.

I'm not saying whether any source is reliable or not but those pictures (on this site and your link) look like different houses to me. The ring in the marble floor is in front of the stairs in one and behind the stairs in the other along with many other differences.

I think your right about that. 
Had a closer look and there are many differences.
Do you think the ad is real though?

Keep doing what your doing Hugh...if we want balance, we'll listen to the bollocks trotted out by Parker and Brown lie.........
For the opportunist not withstanding  genuine incompetance...this is a killing field.

i suggested Ellen Brown was a better counterweight. It seems to me she is a much better fit. Not an economist either, doesn't get into economics arguments, talking about the housing bubble, likes to euthamise about a favourite US state at length, addresses directly the main thing Hugh thinks is irrelevant (e.g financial regulation).
Their sum being very fair and balanced in my opinion.

Hugh - as a fellow Cantabrian, can I say that whilst debate is always good,continual negativity about every aspect of the problem very quickly becomes tiresome...a better balance would be good

Defending Hugh P again - I think I am going to have a lie down this time.
I don't think Christchurch is going to hell in a hand basket BUT I am not very impressed by the performance of the politicians either.
Let's give credit to the various agencies for their work on recovering public infrastructure. No complaints there. But then this is their core work - what they would have been doing on a smaller scale anyway. They have skills, experience and processes to do this work.
What is not going well is the stuff we have no experience in. EQC is appalling and the private insurers are not exactly paragons of virtue. And now we have a very muddled initiative around a major brownfields development in central Christchurch. In an ideal world our politicians and other leaders would cut though the crap and keep agencies and others working to a clear strategic outcome.
We are not getting that but we are on the receiving end of a massive ratepayer/taxpayer funded PR machine. I applaud anyone who will work to keep all sides of the story in the public eye.

Oh economic activity turns down and boy oh boy the slope is steep...somewhere on the way down, NZ and all those refusing to accept that 'payback time' has arrived, will be swept down with the rest....
Across the ditch this new age of pain is gathering pace as property plunges in value...wait till you see the blood on the bank balance sheets...
Meanwhile here in Noddyland where 'flat Earthers ' prevail, banks are still advertising for morons to buy a new house with credit from sick is that.
Not to worry though if you are a roofer...the overpaid dept of Lab bosses have made up new rules to prevent you from falling to the ground from a get to crash into your 90 kilo mass will be halted by a scaffolding bar at the bottom of a steep slope....yeah sure...pity the dept of Lab failed to enforce the use of safety harnesses...wonder why!
Consents on new home builds set to continue their own slope slide...down down they go...saving for a new home now a recognised mental illness...
Look see the old coots are rushing to get their Kiwisaver surprise...if they are lucky they may not have lost too much with the debasement orchestrated by the RBNZ.
Notice how the focus of the public has been diverted to a stupid idea to allow unregistered (unskilled and dangerous) bodies to teach the name of John 'I can't remember' Banks. Keeps the eyes off the economic farce for a while longer...

LOL.....though I wonder with all the PIs going bankrupt just where will the renters live?  will the banks become the new landlords?  If you are a bank and cant sell it, maybe thats not such a bad idea. 
un-registered teachers, URL?
NB home schooling has been allowed for decades....

"saving for a new home now a recognised mental illness..."  Priceless.

Like the new houses!...but will there be a benefit for those suffering from the illness....probably. Shall we call it the 'New First Home Benefit'.....hey no worries....the banks will lend the idiots in the Beehive the credit to slice the pork, to sell the houses, to bloat the bubble, to save the balance sheets, and the bonuses, and the fatter profits,,,,,

If you search the DSM-IV (DSM4) manual you'll probably find a name for it.

"For years, regulators overlooked what was happening right in front of their eyes"
Is this for real....salary bloated bureaucrats sat on their hands while the thieving took of course they didn't...they needed both hands to count their fat pay and bonuses....tisk tisk.

Incredible isnt it...if I or I bet anyone here was that bad at their job they wouldnt have it the next day.
For the BofE (Mervyn King) not to have known this was going on is grossly should be sacked...if he did know he should be sacked and jailed.

Here they are...have a gork...
Now as to which of them the blame, should be gun nailed to their arse, I cannot say.

You sound cranky ..... at Sir Swanky , the kinky King slinky ... at Ye Olde Banky ....
....  here , have a hanky , Spanky .

Here's a useful summary of the reaction to the European Central Bank's non-decision on Thursday night. The phrase 'all talk and no trousers' is used.
Well worth a read to get a sense of the pressure building in Europe.

The Germans will not allow it...but without the printing the piigs go bust...bust piigs will mean german govt bailouts for German banks....Germans lose...piigs lose...all is lost. it possible that the German banking loans to the piigs which they cannot finance yet alone repay, will bring German ownership of chunks of the piigs....compensation! us back in real value....
The Aegean islands from Greece...become  German!
The Balearic and Canary islands...become German
The Azores and Madiera....yes them too
oooh lala
The bankruptcy of thinking is the same as Key/English approach.

"A game of smoke and mirrors"....played by Tweak and Fiddle.

Strewth .. If you understood all that jingoism Bernard ... please explain
it appears the posters above did understand this list of un-intelligble nonsense

  • modalities to be discussed/decided
  • first of all governments need to go to the EFSF
  • notwithstanding his later comment on the issue of sterilization
  • the issue of sterilization is in fact a little bit moot
  • any ECB measures will be at the very front of yield curves,
  • implying EFSF/ESM would be the only mechanism for longer-maturity activity
  • if the ECB did deploy measures to alleviate front end pressures
  • in theory help to keep the unwinding of curve flattening
  • it would equally encourage heavier issuance at the front
  • dealing with the impairment of the transmission mechanism
  • further nonstandard measures will be taken in the coming weeks
  • revised collateral framework and more LTROs
  • ECB may also introduce a funding for lending scheme

LOL - I think you can safely ignore all the terms you list and stick with the one Bernard highlighted: Or as Marc Ostwald at Monument Securities called it “all talk and no trousers or action”
Because this is all a front to allow the bureaucrats and their buddies to get on with purloining what's left from the taxpayers. Much the same as we see here.
There are obviously no laws in place to curtail such behaviour or every NZ town would need a jail.

Reminded me of Alan Greenspan at a senate hearing famously saying "if you understood what I said I musn't have mumbled enough"

''extremely inefficient to do so'' else can Sir Humphrey be expected to avoid being blamed for stupid decisions!...."not me Minister"..

"not me Minister"..
Yeah and the minister is reduced to the same - It must be a deductive truth that nobody is running the country that we know of.

Long established game Stephen...if it looks like it out to consultants for a fat fee...that puts the Minister and the mandarins at arms length....expect more of the same...
By the way...the banks are running the's a credit farm

Stephen Hulme: when reading someone else's scribblings it's easy to trigger off a stream of thought that is tangential and irrelevant to the purpose of the original writing. For a long time BH has been campainging here on this site against the BB generation and supporting the Boomerang Generation. His assumption is the Boomerang Generation are his audience and actually read the written news media whether it be print, digital, fringe media or main stream. Because very few youngsters read the news I have often thought he's p*ssing in the wind. Their news comes from television sound bites. It is reasonable to assume his audience here contains very few of the people he is trying to attract. They are the twitterati who talk in sound bites and accronyms. This Draghi article is bamboozling.
An active practitioner in this game of international finance, (without your depth and length of experience), when the GFC started to unfold there were these acronyms thrown around that were completely new to me. CFDs and CDOs. Had never heard of them. After all these years. What were they? Where did they come from? I find out they weren't new. Had been around for a while. Now, today they are part of everyday understanding (except I still have trouble with swaps, trying to insert my translation into an item I'm reading). (there seems to be a cross over between swaps and spreads) Then set out to obtain a thorough understanding of these new instruments. In doing so, discovered another one TRS (swaps) that just never appeared in the news. One of my "hot buttons" is stock-brokers and hedge-funds, and fund managers using "broker-sponsored" holdings to hide their share activities. In researching the TRS's discovered this court case which "was" an eye-opener at the time and it was the best real-life documented example of their use and abuse ... but it was never, ever reported in the press .. all too hard .. and you have to search real hard to find it .. Court Case it's about 60 pages long .. entertaining .. most enlightening .. BH should read it .. how to gazump the market and remain hidden.
Back to the Draghi jingoism and cyphered prose and Bernard's prolific publication of articles containing twitter style alphabet soup .. I ask who is the audience here .. do they really understand what he sees ?

The attempted denial of ownership for purposes not disclosed to all owners of a listed corporation is an age old crime more recently attempted by the legal definitions of ownership enshrined in a Total Return Swap and Asset Swaps in general. I believe some interesting cases have been deliberated upon in NZ courts.
I also remember back in the late 70's the same denial of ownership was achieved by registering shares in numerous lawyer's trust A/Cs over wide geographic areas of NZ.  
In respect of the proliferation of acronyms in all branches of professional discourse it is thoroughly annoying as it takes too long to become familiar what they stand for and then the underlying meaning.  I guess it acts as an entry barrier to perceived inner club status, possibly a human failing designed to mask inferiority complexes or just a necessary time saving device for the txt generation. I am not sure.
But which generation Bernard seeks to attract I have no idea. I bat for the retention of the rights of what I consider my cohort no twitter ,no facebook, but certainly an avid user of skype chat.

 I ask who is the audience here .. do they really understand what he sees ?
A fascinating question Iconoclast. I would suggest J.P. Guilfords model of intelligence as maybe useful here. If you look to 'content' then those strong in semantics or symbols are those most likely to make sense, probably at the expense of the others. Being strongly visual myself not much appeals. Quite frankly I my eyes tend to glaze over with a lot of the terminology. What keeps me going is relations, systems and implications. So I skim or skip most of formal content and look to the forums. Possibly in part to see how others interpret the information, or perhaps 'evaluating' others content for that translate it into a form more legible to me. 
The greater question I guess is do others give up, where my drive for 'cognition' keeps me going. I wonder if marketing people study this stuff, or if it is more a case of a stab in the dark to see what works.

I would just buy it then and keep your knowledge of it's existence to yourself.
Then we can all relax and not have to second guess whether you are such a big player you need to spoof the market to get your short sales away. 

5) Is the auckland city rail tunnel, of what a few kms really comparable to thousands of subway kms in China?

It is no doubt one reason why house prices in central and eastern Auckland are currently rising at an annual rate of 15-25%.
In a statement to the Sunday Star-Times, Coleman said: "Department of Labour research shows there is no strong link between immigration and house prices and migrants provide a net gain to the New Zealand economy of around $1.9 billion a year. If migration stopped today, the economy would contract by 10% over 10 years."
We find that areas with relatively high population growth over a five-year period also tend to experience relatively rapid appreciation in house prices. A one percent increase in the population of a local area is associated with that area having house and flat sales prices and weekly rents that are between 0.2 and 0.5 percent higher. Although international migration flows are an important contributor to population fluctuations, we find no evidence that the inflow of foreign-born immigrants to an area are positively related to local house prices, despite there being a strong correlation over time at the national level. On the other hand, there is a strong positive relationship between inflows of New Zealanders previously living abroad into an area and the appreciation of local housing prices, with a one percent increase in population resulting from higher inflows of returning Kiwis associated with a 6 to 9 percent increase in house prices. These findings remain when we use instrumental variables estimation to control for the fact that individuals may choose locations partly on the basis of expected house price growth.
Food For Thought
 the documentary, Inside Job, contained startling reports of how senior economics professors had been paid large consultancy fees to report that economies such as Iceland’s were fundamentally sound. From the 1990s onwards, a number of senior American economists repeatedly ‘discovered’ that financial derivatives were reducing risks within the financial system.
We now know that the financial crisis has produced a depression in many Western economies, which will destroy lives and many cherished public institutions. According to the figures of the UK government, living standards in 2015 will be lower than 2002. One of the ingredients of this crisis was that the financial system (including its regulators) was a mineshaft crammed with canaries, scarcely any of whom had any inclination or ability to sing. Those that did, such as Nassim Taleb or Nouriel Roubini, have since acquired the status of gurus for this single reason.

Step through the looking glass into the EU-world where the rule of the people is dictatorial, but the rule of unelected experts is democracy.
Part 1
the European Commission wrote three separate letters of warning to Hungarian President Orban charging him with bringing in ‘undemocratic’ laws. By ‘undemocratic’ they meant that the new constitution put the Central Bank under the control of the democratically elected government, instead of leaving it in the hands of the expert technocrats,

Ex-sixties radical Daniel Cohn-Bendit stood up in the European Parliament to demand that Orban’s constitution be investigated for breaching the EU’s Lisbon Treaty. The man once known as Danny the Red ranted on that the Hungarian leader was striving to beEurope’s equivalent of Hugo Chávez or Fidel Castro (Guardian, 18 January 2012).
Part 2
They think that the EU is attacking democracy so that it can push through its spending cuts. So it is. But much more so it is using the debt crisis to push through the abolition of national sovereignty
Quite why sovereign states should choose to bind themselves and their successors in obligations that they cannot change or renegotiate is a conundrum for students of international relations
Well worth a read


Great news : (Houston) Developers form PAC (political action committee)
As my colleague Mike Snyder reports, it bears the typically generic, feel-good name "Houstonians for Responsible Growth," and it's backed by some of the city's biggest builders
Links to Demographia
Why is this good news, you ask?
Because it's a historic development for developers and builders to have to lobby City Hall.
It means they no longer own it.
Houston was founded by real estate developers. The city has, with few exceptions, elected mayors who were either very pro-developer or who were developers.
Good, bad and ugly
Mayors such as Bob LanierJim McConnOscar Holcombe and Roy Hofheinz.
With Sun Belt sensibilities, they kept regulations and development costs to a minimum, even warding off pressures to join the vast majority of American cities with a zoning system.
They sometimes subsidized development by getting government to build major roads into sparsely-populated areas.
The result has been housing costs that are among the lowest in any large American city. What's more, some of the best developers have produced beautiful neighborhoods, from centrally located River Oaks and parts of Montrose and the Heights to model suburbs such as The Woodlands.
The result has also been frequent flooding, clogged streets and freeways, gas-guzzling sprawl, large stretches that promote a national reputation for ugliness, and rapacious gentrification that in many cases has infected historic Victorian and craftsman neighborhoods with looming, poorly designed and built condominiums.

No 'no-growth mayor'
So what has happened that makes the developers worry?
It isn't a crusading mayor.
Bill White does have green credentials. He served for years on the board of Environmental Defense, a national group that seeks market solutions for environmental problems.
The major change is not the man at City Hall. It's the people in the neighborhoods.
Houston's political landscape is being transformed by adding a sophisticated urban core. Affluent people with urban sensibilities have been filling the neighborhoods inside Loop 610, an area that had been slowly emptying since 1960.
Many of these people, young professionals and baby-boom couples and families in between, came from other cities and have urban sensibilities that reach farther than their lawns. They are comfortable with laws and regulations that protect them from their neighbors — and their neighbors from them.
"People are buying nice homes," said Rice University political scientist Bob Stein. "They want to buy nice views."

Developers fight back
So groups in the Heights organize to fight condo builders.
Groups in the Third Ward organize to fight gentrification.
And the entire neighborhood near Rice University organizes to oppose the proposed 23-story Ashby apartment tower.
Others organize to fight billboards, or to block the demolition of historic buildings. TMO has organized to bolster both regulations and funding to fight flooding.
These groups have learned how to put pressure on their elected officials.
That the developers feel the need to organize against them is a sign of their growing power.
I'm not worried about the developers. They have too much savvy, power and money to be steamrolled at City Hall.

Compromises important
Houston will never be Portland.
And Austin and Houston have already shown what happens if Texas cities get tough with developers.
The developers get legislators from other cities to help them push through legislation overruling the offenders.
Still, if citizen groups maintain the energy to organize and good leadership at City Hall brings the various groups to the table, compromises can be hammered out to make Houston a better, more workable city.

Letters to the Editor Houston Chronicle:

The lie of regulation
Regarding the Page One story on Jan. 8 "Lanier puts his weight behind builders / Ex-mayor joins campaign against development regulations he says hurt city": As I have asked different builders and developers time and time again: How much money do you need?
For 14 years, I have had to listen to the frustration and disbelief of professionals with major companies who are transferring to Houston ask me, "What do you mean you don't have zoning?" Incoming homebuyers have become increasingly cautious about their purchases because our regulations are weak. To suggest that Houston is in danger of overregulation in development is laughable if not an outright lie.
When potential buyers see three- and four-story town-homes and four- to five-story midrises adjacent to and crowding one- and two-story single-family homes, they take a pass. It then becomes a challenge to find a relatively "safe" neighborhood with deed restrictions, or a separate city such as West University or Southside with a property that meets my customers' needs.
Unregulated residential construction on top of active railroads, freeways and busy commercial streets is the norm at this time, not the exception.
Excessive regulation is an economic danger? If I may quote the great poet, John Milton, "License they mean when they cry liberty!"
Realtor, Houston


Ex-mayor awakens
Why is it every interest group that is against any type of forward thinking always adopts a name that is the antithesis of its intention: "Houstonians for Responsible Growth"?
I was wondering when former Mayor Bob Lanier would awaken from his slumber and come to the aid of his builder friends. He never hesitated to assist his concrete-pouring friends when dismantling any hopes for mass transit in the city by axing voter-approved rail plans and standing aside as existing rails were ripped up and replaced with concrete so any future hopes of rail transit were made inconceivable.

Looking out for ... ?
The last statement in the Jan. 8 article said so much for exaggeration: " 'Houston-ians for Responsible Growth' includes bankers, architects, construction project managers and others concerned about the economic 'ripple effects' of excessive regulation."
Current and hopefully more stringent building regulation does everything for healthy city growth. The only ones who "suffer," albeit in a minor way, are those who are looking out for themselves first and the city second.

Developing concern
I read with interest the article regarding our ex-mayor's concern about possi-ble restrictions on developers proposed by City Council. I see stated in articles that develop-ers are concerned with the in-creased cost of housing prices if there should be limitations put on their redevelopment of inner-city neighborhoods.
If their concern is so great, can they please explain why the cost of a housing unit in one of their redeveloped neighborhoods is hundreds of thousands of dollars? How many residents in these areas can come close to affording the new homes in their old neighborhoods?

His Sixth sense
Richard Weekley (brother of David) and other developers, along with Bob Lanier, are ready to knock down the Old Sixth Ward historic district and put in low-cost housing? Where were they 20 or 30 years ago when Lanier was mayor and that neighbor-hood wasn't as hot?
Now that the homeowners there have started a revitalization effort that has made their neighborhood much more desirable, I guess it's time for them to step aside and let some authentic Houstonian builders take over.

 Because they don't have any answers.
A flat terrain and cheap local energy. is all they had.  What they've created is soil degradation, a depleting Ogalla aquiter, an unsustainable-post-oil tract sprawl, unfeedable by post-oil Big Ag.
And I bet the place is full of sweltering climate-deniers wondering why the free-market hasn't delivered.

Hugh you have to give the Houston system credit where it is due, however, most of us haven't been there and there are two sides to everystory . While Woodlands looks great the lack of ordinance protection for homeowners is like having no fences in a lion park. 
As for affordability despite economic efficiencies, how can we have affordability when immigration fuels our urban economies; that is a matter of government policy which (co incidentaly) is also the subject of intense lobbying.