Some interesting predictions for 2008 (Denver, Greeley: mortgage, environment, credit)

[Mike from back east]

Originally Posted by jazzlover

But is he some cute little lady's "stud muffin?"

Couldn't resist . . .

Mike from back east
One Studly Dude

[jazzlover]

Originally Posted by CareFreeAZ

That said, regarding the whole suburbia issue, I'll be the first to bring up two newsworthy television items I saw. Migration/relocation of United States Residents(Basically people moving to the Western and Southern United States) is at it's highest. The Airlines, despite rising fuel costs, had set an all time high in terms of number of passengers flying. With migration, not everyone can live in the "defined central core" of every city. Hence, suburbia will always exist.

Well, it's kind of like and old light bulb. It usually burns the brightest right before it burns out. The whole big "migration" to "exurbia" and to the western and southern US has occurred during a period when energy (in real inflation-adjusted dollars) was at its cheapest. That worm has turned--the inertia of people's cheap-oil-intoxicated psyches just hasn't quite caught up with reality yet. That doesn't count into the equation that, just about when the real effects of exploding energy costs (again in real inflation-adjusted dollar terms) really start socking Americans, this part of the country may also be running up against the brick wall of diminishing and ever more tenuous water supplies. The two together ought to give us a real good thumping here in these parts.

One comment about the airlines. Every time in the last 20 years that fuel costs have bumped up above historical inflation-adjusted lows, at least one major US airline has gone bankrupt--despite them doing everything from jamming people closer together in airplanes, cutting passenger "amenities" to the bone, to (as always) shifting costs for air traffic control, airports, etc. on to the taxpayers at every opportunity. So, when fuel costs get to the point that the airlines are losing money on every passenger they haul, what are they going to do?--try to make it up on volume? Americans better start making some alternative plans to air travel in the coming years because most of us either won't be able to afford it or many airlines won't be around to fly.

[sorryville]

Originally Posted by DOUBLE H

I appreciate the moderator cutting slack on this issue. Colorado is the poster boy for uncontrolled growth and has been for a long, long, time. It's time people wake up to this issue. Thanks Jazzlover!

Out of control growth...try Las Vegas. We have been ranked number one for growth for the last 19 years, other than last year where we were number 2. We just hit the 2 million mark after hitting the one million mark only 13 years ago. One million people have moved here in 13 years. It's cramped, crowded, the schools suck, traffic is horrendous (public transportation is a joke). This valley lacks the infastructure to hold this many people. We average opening one school per month and it's overcrowded with not enough teachers from the second it opens. I've watched it grow for 25 years. The house I grew up in was on the edge of town, it is now geographically the center. It's so bizarre to witness such a population explosion!

[tfox]

Well, I'm upset by sprawl as much as the next person, but if the sprawl industry dried up and vanished forever (as delightful as that prospect sounds), would that make much of a difference in Metro Denver's economy? Not too much, I'd guess -- certainly nothing like Florida, Arizona, or Las Vegas. How many people in metro Denver really make their living by developing and building new single family homes in the exurbs? Remember, real estate has been sluggish in Metro Denver since the year 2000.

Now, in the tourist-oriented mountain economies, that's a different story. That may may lead to an economic bust there in some areas, but on the other hand that may be more than mitigated by the energy boom.

[Sea Level]

Jazzlover, you always bring some excellent points to your post and I look forward to reading them. But, I think you see doom and despair coming from all directions. So yes, I have taken the bait. Let’s see if I can paint the other side of the picture.

The end of suburbia? Unlikely, let’s look closer. First off, Americans love sprawl. Don’t underestimate that. Almost every part of this country is built on our love for something. We love having our say and fought the British to have it. We love being the smartest and our country is the home of more innovation than any other country in the world. We love to eat and we are the fattest people on the planet. We love being the strongest and have built the mightiest military ever dreamt of. Etc. etc. Not all good, just pointing out that Americans love sprawl – the proof is in where they buy.

Why will high oil prices kill sprawl? People can’t commute to work – good. Telecommunications has exceeded most home workers speed requirements already and will only get faster. The internet is changing our work model and more people can work from home every day. Let that trend continue, I’d rather work from home than ride a train to the city every day. Oh it “… not only puts the schnitz on America's whole Happy Motoring / suburban nexus, but implies a pervasive trend for contraction in everything from the daily distances we can travel to the very core idea of regular economic growth per se -- at least in the way we have understood it through the age of industrial capital.” Well then explain the growth of towns before the industrial age? Most of it was due to geography – close to water ways for transport or natural resources to utilize. But it definitely happened. Even Feudal lords loved their land, why – everyone needs some. Even if everyone contracted back into 1 giant metropolis the population growth would require some expansion each year and someone will want that land just a little further out so that it will become more valuable soon. This is a predictable part of urban expansion, seen quite often here in New Jersey. Everyone wants the hot new community but then they realize that they are far away from everything. So at first the inner ring suburbs become depressed but then the congestion grows past them and the people say Hey if I have to have the congestion anyway, I may as well move closer to everything and the inner ring becomes quite valuable again. Will this always be? No. Why? Because eventually a new model of the American Dream will supersede it. And Colorado has some geography that people want. More telecommunications, more time (hopefully) and more expendable income (maybe) and the more desirable it is to live near some recreational geography that cannot be replicated: e.g. an ocean or a mountain.

There was a massive influx of population to the west at two different times in American history and neither followed energy prices. The first was when Washington sent Wayne to conquer the Indian tribes of the “West” soon after the constitution was signed. The second was in the middle of the 19th century. They both followed two things – Freedom and Economic opportunity. We want our own space. The Pilgrims came here to do just that and we’ve been doing it ever since. It has nothing to do with energy. It requires no more energy to be in Colorado or Nebraska than it does to be in Massachusetts or Georgia. I may be closer to a lot of things here in my neck of the woods but I may use more energy to get to them because I sit in congested roads at all times of the day to go anywhere. A 5 mile drive from a suburban home to a food store in Colorado is faster and easier than a 2 mile drive here in NJ. I can’t wait for the school year to end so I can get to Colorado and start saving gas.

“Every time in the last 20 years that fuel costs have bumped up above historical inflation-adjusted lows, at least one major US airline has gone bankrupt” And yet the number of airline passengers has increased almost every year since 1980: http://www.euromonitor.com/pdf/imdas_samples.pdf. And all major US carriers, aviation companies and the government predict a 5% growth per year in this industry for the next 20 years. I know, pretty pie in the sky but still it means something. Sooner or later, someone will figure out how to make money on air travel, or they won’t and a new means of transportation eclipse it.

Colorado is not the poster boy for sprawl. NJJ is worse and South Jersey has no one to blame since they are repeating the same mistakes they saw North jersey make decades ago. Florida is worse. Texas is worse. California is way worse. Yes, I have seen these places and statistics will back me up too. I chose Denver specifically because they have a master plan for mass transportation, did an excellent job with their airport and have roads to handle growth. Ye, I predict it will all become sprawl eventually, but it will take more than my lifetime for Colorado to replicate southern California.

Jazzlover, you are so right when you point out all the environmental issues we face, especially our dependence on oil, foreign or otherwise. It needs to stop and we need to take better care of our planet without a doubt. But people are not going to volunteer to die and the population will always grow (we can have another discussion about why that is the best case for everyone!) so let’s see how that affects us. People will need that clothing, housing, etc. that is so bad for us now. Well we needed that in the past too. So people found a way to get it. So will we. Our forefathers wore togas or skins. We evolved to natural fiber cloth. We will need to find a means of clothing ourselves that does not rape the planet and is plentiful enough for everyone. Oh yeah, affordable too. So how? I don’t know but I know someone will figure out because I doubt nudity will become that popular. So not only will someone figure it out and save our planet, they will become rich and develop a wholly new economic position at the same time! I sure hope they do it in Denver and it becomes the hub for all this growth.

Water is scarce? No, MFBE is right – there is no shortage of water only a shortage of pipes. Again, regardless of where the population is it needs water. There is only so much but it has to be enough to go around or we start to die. So we make it go around. LA found a way top get water using 1920’s technology. Las Vegas finds a way to get water today. Colorado wastes way too much water – true and that will need to change but I am quite sure that we can find a means of getting what we need to survive. How will we get it here? I don’t know but see the above paragraph.

Things may indeed turn to recession – it definitely does happen. But the dust bowl did not kill family farming - technology and better prospects did. High energy costs did not kill manufacturing in this country – high wages and better prospects did. Being far from everyone and everything didn’t stop people from emigrating across this country by wagon train – economic prospects outweighed all risks. Americans originally clustered in cities (see the northeast) or spread across the countryside (everywhere) because that is where their economic prospects were the best. Sprawl didn’t happen because of cheap gas prices, rather the other way around. Look at Europe, their growth was pretty maximized by the industrial revolution and their gas prices and costs are significantly higher than ours. Gas, or diesel, is a required product like water and food: you have to pay what you have to pay because you need it. Gas companies need to make so much. If they can only sell so much, they charge more. When everyone drives all over the country, they can charge less. I know, competition is in there too but I am trying to simplify this.

Change is inevitable, progress is not. Problems become someone’s fortune – the one who can solve it. Our great hope is that we as Americans continue to be the great problem solvers of the world and not cede this to anyone else. Because that alone will signal the end of our economy.

Thanks for all your time and sorry to be so wordy.

[New England Yankee]

Sea Level,

I just wanted you to know I thought your wordy post was excellent!

[Mike from back east]

In the ENTIRE world, fully 20% of the WORLD supply of fresh water sits up in Canada, and flows out to sea....

Run some pipes down here and all our water woes go away. Run a set further on down to Mexico, a dry nation sitting on some of the richest soil on earth, and the North American Union becomes the OPEC of wheat, corn, grains, etc.

We have some less than glamorous days ahead economically thanks to the sub-prime credit crunch. You can bet that as furious as JazzLover is about sprawl, I'm equally furious that our elected leaders FAILED to provide at least of modicum of oversight to the mortgage, banking and securities communities to remove that ragged edge of capitalism that so often lays us low with all sorts of abuses (like the 1986 de-reg of S&L that led to the S&L debacle of the 1989-1992 era).

Overall I'm optimistic, betting on the ingenuity of mankind to solve its collective ills.

All we need is honest tough leadership and a Congress that isn't for sale.

[steveco.]

Originally Posted by tfox

Well, I'm upset by sprawl as much as the next person, but if the sprawl industry dried up and vanished forever (as delightful as that prospect sounds), would that make much of a difference in Metro Denver's economy? Not too much, I'd guess -- certainly nothing like Florida, Arizona, or Las Vegas. How many people in metro Denver really make their living by developing and building new single family homes in the exurbs? Remember, real estate has been sluggish in Metro Denver since the year 2000.

Now, in the tourist-oriented mountain economies, that's a different story. That may may lead to an economic bust there in some areas, but on the other hand that may be more than mitigated by the energy boom.

You might also want to note that while normal real estate has been sluggish the high end real estate has been a bit more upbeat. More and more the market is being drivin by these wealthy types who are putting up some fairly large sums of money for condos, penthouses, estates and so on. These types are also driving a boom up in the ski areas also. Just take a drive through vail and you will see what im referring to. The entire resort is undergoing a renovation and new highend hotels are springing up everywhere. (Not sure if this is good or bad since wealth types are big spenders and help keep the economy afloat)

[dj32]

I agree Steveco- I"m amazed everytime I drive through Vail at all the cranes. development is not hindered up there, and I think a bunch of overseas money is pouring in.Same can be said about cherry creek right now. The high end market is not that bad. all this illustrates to me is the divide btwn rich and poor becoming greater and greater in this country.

[jazzlover]

Much as I would like to be as optimistic as Steveco and others, three decades of studying economics, agriculture, and natural resource issues lead me to other conclusions. I could write a book to justify my opinions (and maybe I will), but I am sorry to say that I think time will prove me right. I don't take much pleasure in that, because I think it portends some very rough times ahead for Americans, and an absolute humanitarian catastrophe in the poorer countries.

Contrary to the views some may have of me, I am also not some sort of redistributionist socialist, either. Several posts in this thread have alluded to the "high end" real estate markets, etc. chugging right along through what is happening right now in the rest of the real estate market. Unfortunately, I think that will precipitate the exact kind of redistributionist policies that I personally don't like. This will happen for the simple reason that when an overwhelming majority of middle-class Americans feel like they have no longer have any chance to join the "club" of the wealthy, and the wealthy themselves become (as they are) a very small, but very rich minority in America--well, that large middle class will cease being the apathetic electorate that they are and they will elect people who will "level out the playing field." That "leveling out" will mean an idealogical shift toward steeply graduated income taxes, "luxury taxes," a return to confiscatory estate taxes on large estates, and other redistributions schemes. This is not a scenario that I personally would like to see, but--to put it in a local perspective--when normal middle-class Coloradans can no longer even afford the fuel to go to their favorite mountain area, while they watch the super-rich cavorting about their trophy homes, I think those middle class Coloradans are going to say, "This is b******," and they are going to do something about it.

Another quote from the James Howard Koestler website that I cited earlier:

"Which leads me to my penultimate observation of the moment: 2008 will be the year that celebrity wealth goes into hiding. A land full of people crying into their foreclosure notices will take a dim view of the Donald Trumps and P. Diddy's luxuriating out there and may come looking for scalps . . ."

"Conspicuous displays of wealth will be so 'out' that Mr. Diddy might take to club-hopping in a 1999 Mazda. Lindsay Lohan and Paris Hilton may have to double-up living in a minuteman missile silo to keep the angry mobs of fans-turned-vengeful-berserker's away."

This hyperbole may be a little over the top, but I do sense an already growing anger in the American middle class--when the mortgage meltdown, price inflation, and souring pension funds and investments start cutting a little deeper, they are going to look for somebody to blame.