Friday News Digest


This week, Justin (of podcast fame), office-mate Ross and I went to see the new Planet of the Apes. I had seen the reboot from a few years back and was less than impressed, but this prequel was really good. It was thought-provoking, suprisingly sensitive and had some good, fun action. I never thought I would cheer for the apes, but hey.... After Harry Potter, it is probably my favorite movie thus far this summer. Check it out and let me know if I'm a bad judge of cinema.

Enjoy this week's news.

  • Our good friend and super-tweeter George Osner (@gosner) tweeted me a link a while back when I was on vacation and it sat in my inbox until I checked it out more thoroughly this week. Wow! Thank you to CitiTank and, we agree, Natick looks very much like a Strong Town. I gotta get there.

The Boston suburbs are littered with similar small New England towns, but to me, Natick’s downtown stands out as one of the area’s best. Natick is the kind of place that advocates for “Strong Towns” drool over. Today, Natick is a highly auto-dependent town, but the solid downtown bones will help it adapt more successfully than most suburbs to the challenges of the coming decades.

  • I came across the site "We So Screwed" because they linked to our Growth Ponzi Scheme story and it made me laugh. Check out those menu links. You can choose topics under the headings: Environment Screwed, Financially Screwed and Generally Screwed. And you guys thought I was pessemistic.
  • The problems with the maintenance of roads and streets are very different from underground infrastructure like water and sewer. The former declines more quickly, but the latter costs more and can cause huge, systematic failures. As CNN reported this week, the worst time for your water pipe to fail is when that thermometer is peaking. Or as they call it, Murphy's Law.

High temperatures can dry soil so that it shrinks away from buried pipes. Increased water usage raises pressure inside the water lines. Both factors add strain to pipeline walls, making older pipes more susceptible to bursting.

It underscores the fact that much of the nation's underground water lines are 80 to 100 years old -- and approaching the end of their lives.

Experts call it America's "Replacement Era," when hundreds of water utilities nationwide will be forced to replace their aging infrastructure -- or suffer the consequences.

  • Over the next two months I am taking four airline trips, two of them out of the heavily-subsidized local airport here in Brainerd. In my engineer days, I worked on a rural airport project and was absolutely amazed at the financial racket rural aviation is. You can show me all the economic impact studies you want, I've seen first hand how a very small group of people have their hobby subsidized by the taxpayer. And as for the strictly commercial side, reporting by the Associated Press reveals just how far out of whack things have gotten.

Federal statistics reviewed by The Associated Press show that in 2010, just 227 passengers flew out of Ely [Nevada] while the airline got $1.8 million in subsidies. The travelers paid $70 to $90 for a one-way ticket. The cost to taxpayers for each ticket: $4,107.

Ely is one of 153 rural communities where airlines get subsidies through the $200 million Essential Air Service program, and one of 13 that critics say should be eliminated from it. Some call the spending a boondoggle, but others see it as a critical financial lifeline to ensure economic stability in rural areas.

Steve Smith, executive director of the Jackson, Tenn., airport authority, also has seen empty or near empty flights take off, since the airlines get paid per flight, not per passenger. The subsidy amounted to $244 for each of the 2,514 people who flew out of Smith's airport last year, though few if any passengers knew that.

"They fly the empty plane so they can still get the money," Smith said.

  • Speaking of my hometown, the boondoggle, Old Economy project known as College Drive (which we used this year as an example of a "Complete Road") is trying to die but public officials won't allow that to happen. This week it was revealed that the bids came in higher than expected and were rejected. Of course, the future prosperity of the city is so closely tied to our ability to move cars quickly and efficiently to the Walmart in the neighboring city that we must be prepared to bear any burden.

Council member Lucy Nesheim said reconstructing College Drive was important to the future vitality of Central Lakes College, Brainerd High School and the city. 

Nesheim said the council has discussed the issue for two years with every property owner and delaying the project further would boost project costs. The city, she said, needed to take advantage of state aid funds and federal grants available for the project.

  • Baxter's Walmart may actually need the traffic generated by Brainerd's multi-million dollar investment in College Drive. This week, Walmart warned of lower earnings and indicated that the slowing economy was hurting its operation. The Walmart model is clearly not financially viable in the New Economy, where higher energy costs are going to hurt the supply chain efficiencies they rely on and local governments give up on the most inefficient portions of their infrastructure systems. There is some really sad irony in how this is impacting the poor, who benefit from lower prices but suffer from the consolidation of employment opportunities. What is sadder is how Walmart spins their business as some type of poverty program.

Company CFO Charles Holley says comparable store sales will rise by the end of the year, but warns unemployment is topping high oil prices as the top concern among shoppers. 

"They are living paycheck to paycheck," Holley says, according to the Financial Times. 

"How long can the nation go forward with such a high unemployment rate?"

  • And for those of you waiting for commercial real estate to recover, keep waiting. Even the rah-rah crowd is now starting to come to grips with the concept that we have far too much capacity, not just too little demand.

"Even though we've been out of a recession for two years, there aren't a lot of jobs out there, and people are still risk adverse," said Ryan Severino, Reis senior economist. "That's depressing demand for both retail goods and retail space."

In addition to weak demand from consumers, landlords are grappling with competition from online sales, which reduces demand for physical stores.

"Halfway through 2011, it is difficult to feel optimistic about retail properties. Expect continued difficulties for the retail sector in the latter half of 2011," Severino said.

  • Most financial insiders seem to believe that Jefferson County, Alabama, is an anomoly instead of just the weakest link in a weak system. (Note that these are the same people that think Greece is an anomoly as well.) Much like Greece, Jefferson County bought some more time this week, delaying the inevitible bankruptcy. And much like Greece, the die has been cast and so the final outcome is not in question. Jefferson County poses no systematic risk, but will be the first of many hard and soft municipal defaults.

Alabama's Jefferson County on Friday held off from filing for bankruptcy over a $3.14 billion bond debt and allowed more time for talks with creditors to try to thrash out a restructuring agreement.

The decision means Alabama's most-populous county will not—for the moment—declare what would be the largest municipal bankruptcy in U.S. history over its sewer bond debt.

  • Steve Mouzon (Original Green) is blogging like a maniac and, since I can't get enough of his stuff, I wanted to pass on one of my recent favorites. In a piece on Gated Subdivisions, Mouzon walks you through the natural, logical and ultimately destructive evolution of building and design that brought about the gated subdivision. He also discusses the expert problem, something he elaborated on at length in his book.

This is a chain of perfectly logical specialists’ decisions, but it has has created an illogical result: a public realm so dreadful that people become consumed with fear. I’ll ask it again; this is where the specialists are taking us... do we really want to go there?

  • Earlier this year we wrote about the high costs of school busing and how school districts are taking money out of the classroom to subsidize transportation. Keep that article in mind as you read this piece in the NY Times about schools focusing on saving energy costs. I wonder if any of these "energy consultants" will identify the biggest source of energy loss: a remote location.

Schools, once known as energy wasters, are embracing conservation in increasing numbers. A desire to practice the environmentally friendly principles discussed in classrooms has been heightened by soaring energy costs and tighter budgets. With the help of a growing industry of energy consultants, school officials are evaluating every detail of their daily operations, like the temperature of the swimming pool and the amount of electricity the cafeteria ovens use, and are replacing energy-guzzling equipment with more efficient models.

  • Finally, I'm a huge Beatles fan, so when office-mate Ross told me about this clip from The Family Guy, I had a good laugh. Hope you do as well.

Enjoy your weekend.

 

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