The president's plan does include one fascinating proposal that is warming the cockles of wonkish hearts everywhere: the establishment of an infrastructure bank.

Obama also called for a permanent funding mechanism, an infrastructure bank, to focus on paying for national and regional infrastructure projects. Officials provided few details of how the bank would work.

For non-wonks, an infrastructure bank is not a bank the way it is commonly thought of (except it will get its money from the government, so in that sense I guess it is like many modern banks). An infrastructure bank is -- as designed -- an independent entity that would receive federal dollars for infrastructure and then distribute them using a non-political evaluation. In theory, the money would go to the projects with the greatest return on investment, be they local, regional or national in nature. Projects would compete and our limited dollars would go to those most worthy.

In another wrinkle, the bank would be free to tap into private capital. The infrastructure bank would then function as an investor, seeking a return on infrastructure investments through the use of tolls, fees or other direct mechanisms. In this way, limited federal dollars could be combined with capital from the private sector to the benefit of all.

While the Obama proposal lacks specifics (it is just a proposal, so that is not a criticism), William Galston of the Brookings Institution explains some of the likely details:

There is widespread agreement that it should focus on large regional initiatives that cut across jurisdictional lines and that its decisions should be made by a board of governors insulated from traditional political pressures. To reach the scale at which it could make a real economic difference, it must be able to leverage a modest amount of publicly provided capital to attract much larger amounts of private capital, which would demand a reasonable rate of return. To provide it, most projects the bank funds would have to generate revenue streams from user fees and other sources. The bank could supplement these fees with subsidies that reflect the gap between the private goods projects generate and the public goods whose value cannot be recaptured from individual beneficiaries.

Reaction from the geek-o-sphere has been rather positive. The Christian Science Monitor had an overwhelming supportive piece, pointing out the populist appeal of taking the pork-barrel out of the hands of politicians.

Oddly, despite the political timing of Obama’s proposal just weeks before the election, such a bank would help remove some pork-barrel politics that now influence the construction of highways and mass transit. Projects would be decided on their merits by an independent board within an infrastructure bank – and for one simple reason. The bank would need to pay back its investors. 

Robert Puentes of Brookings, oft-quoted here and a long-time proponent of an infrastructure bank, actually suggested that the Obama proposal may not go far enough, although he too lauded the innovation of the bank:

First the good: there are several key reforms that promise to change the way transportation infrastructure projects are funded and chosen on the federal, state, and metropolitan levels. A merit-driven national infrastructure bank could be the vehicle for green-lighting projects that have the highest return on investment rather than the greatest political reward.

We have not discussed the concept of an infrastructure bank here on this blog, even though it would seemingly align with our emphasis on return-on-investment when it comes to infrastructure spending. The reason is simple: I have thought about it a lot, but I don't have a strong opinion on it. I suspect Jon and Ben are likewise disposed.

My initial reaction to the approach is skepticism. The first thought that crosses my mind is Fannie Mae and Freddie Mac, the quasi-free-market behemoths that have not only enabled destructive development on a massive scale, but have done it all the while privatizing the gains and socializing the losses to the tune of literally a quarter of a trillion dollars (and counting). The best laid plans....

My next hesitation comes from turning decisions on national priorities over to what essentially would be quasi-bureaucrats. The only thing scarier (and more dangerous) than a corrupt political class is a corrupt bureaucracy. At least the former has some accountability, if only nominal. The latter has none. This is one of the arguments made in The Economist:

If we generalise Mr [Steven] Pearlstein's [proponent of an infrastructure bank] reasoning, we end up with, at best, a ruthlessly rational and efficient Singapore-style technocracy, which wouldn't be so bad, but isn't anybody's idea of liberal democracy. More likely, we would end up with a system even more corrupt, corporatist, and inefficient than the one we've got, but with fewer of the protections afforded by democracy.    

These arguments being said, if I were stood up against the wall and asked to stick with the present politically-driven, pork barrel spendfest of projects that not only squander what wealth we have left but do it in a way that actually makes us financially weaker when the long-term commitments are calculated, OR support an infrastructure bank, give me the bank. At least with the bank we have a chance to have some return on the public investment, at least in the near term.

To strengthen the infrastructure bank proposal, we also need a plan to address the trillions of dollars of infrastructure already in the ground that has a negative ROI. How do we increase the return on these investments or, alternatively, wind down our long-term commitments in these places? Proponents of an infrastructure bank look at it as a way to get more money, but it really just redirects capital (perhaps efficiently) and in that sense does not address the long term gaps in funding that exist (in Minnesota the gap is $50 billion over the next 20 years).

An infrastructure bank may be a good first step, but we have to admit that it is an easy one. Figuring out what to do with the long tail of public commitments that have little or no actual value is even more perplexing. The reality is that these commitments will likely be "devolved" to the lowest level of government, with only token financial support to accompany the "gift". An infrastructure bank may hasten this process, which only makes the need for towns and neighborhoods to start working towards a Strong Towns strategy all the more critical.

Strong Towns is now ranked #17 on the Planetizen list of popular blogs. Keep spreading the word about the Strong Towns movement by inviting your friends to join us on Facebook and Twitter. Or sign up for a Curbside Chat and bring the Strong Towns message to your community.

The NY Times covered the event with the headline, "Policy Options Dwindle as Economic Fears Grow". The article covered the essence of the speech, which was, "how do we get Americans spending again?"

Early this year, some economists declared that the cycle was finally righting itself. Businesses were restocking inventories, yielding modest job growth in factories. Hopes flowered that these new wages would be spent in ways that led to the hiring of more workers — a virtuous cycle.

But the hopes failed to account for how extensively spending power had dropped in the American economy, and how uneasy people were made by every snippet of data showing that houses were not selling, employers were not hiring, and stock prices were foundering.

We're trying to create a "virtuous cycle" - get people spending again so that shelves get restocked, thus leading to more hiring and more people with money to spend....and on and on and on.... The problem is that people are "uneasy". This is written as if the "uneasy" mood is not completely rational, that somehow people with underwater mortgages, huge amounts of consumer debt, complete loss of mobility and a tightening job market should not be uneasy. 

The reality is that Americans are acting sane. Our consumer-spending-driven, consumption-based lifestyle hit a brick wall two decades ago. Our response was to dream up even more ways for people to access credit to keep things moving: interest only mortgages, home equity loans, credit cards for teenagers, etc...

Remember when we used to buy things on layaway? For those of you that don't, layaway is when the store owner would take the piece of merchandise, put it in the back in storage for you, and then you would pay for it over time. Once it was paid off, you could take it home. That just didn't drive the economy as fast as credit, which allowed you to take it home now and worry about paying for it later.

So it really should be no surprise - even if it is really depressing - that our country's policy makers think that the way to get things moving again is through even more credit. 

The primary way to attack deflation is to inject credit into the economy, giving reluctant consumers the wherewithal to spend. The chief deflation fighter is the Federal Reserve, which traditionally adjusts a benchmark overnight rate for banks that influences rates on car loans, mortgages and other forms of credit. The Fed pulled this lever long ago, and has kept its target rate near zero since late 2008.

The Fed has also been more creative. During the worst of the financial crisis, the Fed relieved American banks of troubled investments, many linked to mortgages, to give the banks room to make new loans.

Make new loans? Is this what our future depends on; the ability of all of us to take on even more debt? We need developers to take on more debt to build housing subdivisions, cities to take on more debt to subsidize infrastructure and consumers to take on more debt to buy it all, along with all the trimmings from the local big box retailer. 

This is what the smartest people in the country believe is our salvation? Are they insane? This Ponzi scheme is what got us here in the first place.

I feel like the American economy is a sick patient on the stretcher. We've just given multiple shots of adrenaline, shouted "clear" a few times while we defib'd the heart and now are all looking at each other in utter panic not knowing whether or not to just keep going with the only thing we know how to do or call in the priest to perform the last rites. 

At least Bernanke seems to understand the end result if we do keep on going: inflation. Fighting inflation is his top mandate, after all.

“The issue at this stage is not whether we have the tools to help support economic activity and guard against disinflation,” [Federal Reserve Chairman Ben Bernanke] said. “We do.” Then he added: “The issue is instead whether, at any given juncture, the benefits of each tool, in terms of additional stimulus, outweigh the associated costs or risks of using the tool.”

Let me interpret that statement for you. The Chairman is saying that we can print enough money to make everyone's underwater loans solvent, give everyone enough money to spend on new cars and wash machines, and generally raise our Lazarus economy from the dead, but doing so will make that money near worthless. You might feel better about all the new equity you have in your home until you went to the grocery store and found out that a week's worth of food cost you $800. Or a tank of gas cost $250. 

The dramatic expansion of the national debt — which began in the Bush administration, via hefty tax cuts and two wars — has ratcheted up fears that, one day, creditors like China and Japan might demand sharply higher interest rates to finance American spending. Those rates would spread through the economy and inflict the reverse of deflation: inflation, or rising prices, as merchants lose faith in the sanctity of the dollar and demand more dollars in exchange for oil, electronics and other items.

We have too much debt. And I'm not just talking about public debt (which is enormous), but private debt in particular. Private sector indebtedness dwarfs public debt.

We can't jump start this economy using the false stimulus of borrowing and spending that got us into this mess. We won't see anything but long term liability from more infrastructure to maintain, especially if we pay for that infrastructure with even more debt. Doing so is the worst of both worlds.

Unfortunately, there is only one decent way out of this. It is not without pain, but it is much less painful than the alternative.

“The recession is the cure for the disease that affects the economy, but the politicians don’t have the stomach for it,” says Peter Schiff, president of Euro Pacific Capital, a Connecticut-based brokerage house. “They’re going to keep stimulating the economy until they kill it with an overdose. The hyper-inflation that results is going to be far worse than the cure.”

We need to stop trying to stimulate our way to prosperity and come to grips with the fact that the American Dream we have been sold over the past generation is not real. Towns and neighborhoods need to embrace a Strong Towns approach, our traditional way of building community alongside our balance sheet, to renew local prosperity, regardless of what crazy decisions are made in Washington.

Strong Towns is now ranked #17 on the Planetizen list of popular blogs. Keep spreading the word about the Strong Towns movement by inviting your friends to join us on Facebook and Twitter. Or sign up for a Curbside Chat and bring the Strong Towns message to your community.

I've had a little Minnesota guilt the past couple of months because I have not been able to keep up with all of the stuff sent to me. I don't want to disrespect anyone, but I've quite literally physically had a hard time getting back to people. I actually became worried because writing the blog was increasingly taking up a lot more of my time than it had in the past, not to mention doing the other work we are doing here as well as my full-time job at Community Growth Institute and, of course, I'm a husband and dad to some awesome girls.

Well, last week I was diagnosed with hypothyroidism. This is actually great news, because for many months I have felt myself physically (and mentally) deteriorating but was not really able to fully comprehend what was happening. Like the proverbial frog in ever-warming water, the symptoms kind of crept up. Having a diagnosis, especially for something that is such a common ailment and so easily treated and managed, is a relief.

I'm not a doctor, but this is what I gather. Hypothyroidism is a disorder in your thyroid, which regulates metabolism. In the hypo-version, things slow down like your body is trying to hibernate. The symptoms I had were mostly joint and muscle pain, really severe headaches, a detached mental state and - most debilitating - extreme fatigue.

I'm a guy that runs on four or five hours of sleep fairly routinely. Over the last two months I was getting ten or more hours a night and still having problems staying awake during the day. It is funny to think now that my assumption this summer was that I was just getting older and needed to slow down. For crying out loud - 37 is not old, no matter how many Mt. Dews one drinks (and I have cut down a lot).

Anyways, I have a prescription now and things seem to be going well. I am definitely feeling better, although knowing what it is has made me a little less resistant to the effects. Instead of fighting the fatigue and then falling asleep with my computer open on my lap, I'm giving in, shutting it down and heading to bed when tired. I've read that it takes up to a couple of months to get everything right, but I'm optimistic after this week that it will not be nearly that long.

Hypothyroidism is very common and the drug they have given me is the only medication I have ever seen that says on the label that there are no side effects. I'll bet it really pained some attorney to write that, actually. My writing all this here is certainly not to solicit any sympathy (please, no) but more to clear my guilt and let all the kind people that have emailed, tweeted, messaged and texted me know why I have been really slow on the response.

While I'm at it, I'm just going to again say thank you. Since the year started, our regular readership has grown by a multiple of twenty. WOW! I appreciate everyone who has talked about what we are doing, has spread the word to others, participated with us on Facebook and Twitter, etc.. We're attracting a lot of great attention thanks to you.

And additional gratitude to Justin, who has had to do some extra editing here with my decreased mental awareness (not to mention carry the load with the day-to-day work). Thanks for letting me sleep in the car on our way to meetings and site visits. I'm fortunate to work with such kind people.

Strong Towns is a big part of the answer to many of the problems that confound policymakers here in America. Let's all continue to do what we can to build Strong Towns.

-Chuck

P.S. Last night we had our first Curbside Chat and it was awesome! I can't wait to share the content with all of you.

Okay, so what do we do?

Of course, I always try to touch on this subject when speaking but my thoughts on it are complex and, admittedly, not as well developed as our analysis of the issues. My honest answer is that "it depends on the community", and I really mean that because the solutions are mostly local. Hyper-local, in fact. This is especially true since federal and state policies towards subsidizing our current development pattern don't seem likely to change anytime soon.

Our homogeneous approach to building communities masks a level of complexity that is difficult to fully comprehend. I laugh when each city's community plan has the obligatory statement about the "unique character" of that community, like their gas stations, strip malls and snout-houses are distinct from those of their neighboring town (let alone, a community on the other side of the country).

But the fact is, when one gets hyper-local, everything changes. There, the unique character of a community does matter. Regional centers have much different approaches than neighborhood centers. Auto-era communities have a different set of challenges than traditional neighborhoods. Farm communities differ from forest communities.

Today's approach of primarily greenfield development on the periphery has made zoning -- not planning -- the craft practiced by most planners. Changing that is not a one-size-fits-all solution.

For the sake of discussion (and please feel free to discuss - I would rather take the arrows here and have the flaws of this idea revealed), I would like to throw out a simple idea on assessments that may bring us closer to building Strong Towns on a larger scale.

In Minnesota (and I believe many other states), local governments are able to "assess" property owners for public improvements that are made that improve the value of their property. For example, if the property has no public water supply, when the city installs a new water pipe in front of the property and allows that property to hook up, the cost of installing the pipe and connection can be assessed to the property owner. The idea here is that the public purse should not be used to improve an individual's property values.

The catch that we use here in Minnesota, and I think it is applied elsewhere as well, is that the amount of the assessment cannot exceed the additional value added to the property. In my example, if the new water connection costs $10,000 but only increases the value of the property by $6,000, the remaining $4,000 would need to be paid by the city.

This all makes assessments for maintenance extremely difficult, if not illegal in most instances. If the property has public water service one day, and the next day the city installs a shiny new water pipe to replace the old one, the property is not going to sell for any more money. While a lot of cities assess some of the costs of maintenance -- typically just enough to bother but not enough to make it worth a lawsuit by the property owner -- most maintenance is paid from non-assessment revenues.

And that is the change I am mulling over; Let's authorize, or even require, local governments to assess the costs of infrastructure maintenance.

Right now, the initial cost of infrastructure is most often paid by one of the Mechanisms of Growth, thus masking the true cost for the property owner. In the transaction, the public trades a near-term cash-flow advantage for a long-term liability. The property owner pays taxes and user fees and expects the public to maintain the infrastructure indefinitely. 

Of course, the numbers ultimately don't add up.

If maintenance costs were assessed, there would be a more direct connection between the property owner and the long-term costs of the pattern of development they have chosen. We're all for choice - this would make that choice real. I suspect over time that a more efficient, more market-based pattern would emerge. I also suspect that pattern would be more dense and have better urbanism than the pattern of development we have grown used to in America.

Assessing for maintenance would also open up some options for Gov't 3.0 initiatives, like individual or neighborhood sinking funds for infrastructure maintenance (think of a 401(k) for fixing your street) and increased public involvement (or actual devolved decision-making) on things like level of service, the value of preventative maintenance and the urgency of specific improvements.

It's a simple idea. I'd love to hear the problems it would create and collectively find out if they would exceed the problems they would solve.

Sign up for a Curbside Chat, our project to bring the Strong Towns message to towns and neighborhoods across America. You can also join us on Facebook and Twitter.

I have a story to share first. My oldest daughter is attending "kinder-camp" this week, an orientation program for kids that will be starting kindergarten after Labor Day. As I am pulling up to the school yesterday she asks me to drop her off at the curb and not walk in with her. I told her I wanted to walk in with her. She told me that it was okay if she could walk out in front. I asked her why and was informed that she was six now and didn't need a daddy to walk her in. Wow....she's breaking my heart and she's not even officially started school yet. Parents, what's it like when they go to college? Or get married? Does it get easier?

Enjoy the week's news.

• The little bit of financial news I have read this week has been dire. Is a double-dip a certainty now? Actually, a revision to earlier numbers may show that we've simply been dipping the entire time. The news that one in ten mortgages is in foreclosure, even after bailouts and programs to forestall it from happening, is a really bad omen.

"Ultimately the housing story, whether it is delinquencies, homes sales or housing starts, is an employment story," Jay Brinkmann, the trade group's top economist, said in a statement. "Only when we see a consistent increase in employment will we see an increase in sales and starts, and a sustained improvement in the delinquency numbers."

• I'm so geeked out on the concept of Government 3.0, the idea of actually applying technology to make our towns and neighborhoods more robust, alive and intelligent. This article draws some fascinating parallels between software systems and the systems we use to manage places. Dream big.

These being Silicon Valley types, it was clear what that solution should be. “Copying 20th century cities in Dubai and Shanghai is crazy,” said former Sony chairman Nobuyuki Idei in yet another session. “We need… a city OS” – a single platform managing power, water, traffic, security and any other urban system you can think of.

• Politically we are a diverse group here at the non-partisan Strong Towns, but I tend to be the conservative-libertarian of the bunch. Reconciling my fundamental principles with good urbanism and an opposition to our current centralized, homogeneous and government-subsidized development pattern has been easy. If you want another opinion in that vein, Stephen Smith of Market Urbanism had a great piece on his blog.

At least in North America, every great intracity mass transit system was build by private enterprise, almost without exception. From subways to streetcars, private enterprise showed a willingness and eagerness to build and profit from rail-based transit. Sure, the systems weren’t totally private and unregulated (exclusive franchise monopolies were often granted by municipal governments, among other interventions), but the system was far more “private” than the current mostly-suburban road/automobile transportation system that Reason and many other self-identified libertarians champion.

• I loved this article on Jane Jacobs, mostly for the conclusion, which I am going to gratuitously share with you here. Read the entire article - it is worth your time.

We don’t need acolytes of Jane Jacobs; we need people who will think as hard and as well as she did about “the kind of problem a city is.”

• The world is getting smaller, and so is the universe. I love the fact that we are closing in on some of the most spectacular discoveries imaginable. Excuse the diversion, but we all need to dream.

• Finally, James Kunstler still has not accepted my friend request on Facebook, but that won't stop me from sharing this video I just ran across of a speech he gave on The Long Emergency.

Sign up for a Curbside Chat, our project to bring the Strong Towns message to towns and neighborhoods across America. You can also join us on Facebook and Twitter.

Great work, Jake! We hope this helps with the discussion in Wahpeton.

 Editor:

Wapeton Mayor Jim Sturdevant's comments during the discussion of the 2011 city budget ("Council split on hiring new employees", August 24) that Wahpeton has "more miles of street to take care of, more miles of water lines, of sewer lines" despite its decreasing population should raise an alarming question to all residents: Is it realistic to think that fewer people can maintain even more infrastructure?

For quite some time, our approach to community prosperity and financial success has been to convert productive farmland on the edge of town to new development. This approach includes the extension of very expensive roads and public utilities, an investment paid by developers and/or by the assumption of new debt. In the short-term, this works well for the public, which invests relatively little but enjoys the increase in tax base and revenue.

So why has this not make us prosperous? The reason is simple: New development on the periphery has allowed the city to exchange near-term revenue for long-term liabilities. We now have to maintain this infrastructure forever, yet these investments have not generated enough wealth for us to do so.

We may have been able to keep mill increases relatively low, but only because this Ponzi-scheme-like approach has not fully caught up to us. New growth has masked the fact that our development pattern costs more to maintain than we have the ability to pay. Now that this growth has slowed, like any Ponzi scheme, it is becoming increasingly difficult to hold together.

Wahpeton has long been saddled with – and seemingly accepted - decline in the heart of the city. Incidentally, this is where we currently have the greatest level of public infrastructure investment. Before another sewer line is dug or street is paved on the periphery, we should focus on strengthening our core and getting more out of these investments.

Come fall, we're going to have a new main street. This presents a tremendous opportunity to connect our walkable neighborhoods to a downtown destination in a way that allows both to blossom. Doing so would return us to a pattern of development that has served cities well for centuries. We would learn much from understanding why our recent approach has not worked and how a return to traditional small town values can strengthen our community.

Jake Krohn, Wahpeton

You can access the audio by clicking here. A special thank to Justin for forwarding this clip to me. Good stuff.

• Mille Lacs Lake Area, Garrison City Hall (get directions), Thursday, September 2 at 6:00 PM

• Pine City Area, Pine Technical College Auditorium (get directions), Wednesday, September 8 at 2:00 PM

• Crosby and Cuyuna Range Area, Crosby City Hall (get directions), Wednesday, September 8 at 6:00 PM

• Central Minnesota Royalton Area, Royalton City Hall (get directions), Monday, September 20 at 6:30 PM

• Baldwin Township/Princeton Area, venue TBD, Tuesday, September 21

• Minnesota Association of Townships District Annual Meeting, Anoka Ramsey Community College (get directions), Thursday, September 23

• East Grand Forks, East Grand Forks City Hall (get directions), Monday, September 27 at 6:30 PM

• Bismark ND, venue TBD, Tuesday, September 28

• Nisswa Lakes Region, Nisswa City Hall (get directions), Wednesday, September 29 at 4:00 PM

• City of Brainerd, Brainerd Public Library (get directions), Thursday, September 30

It's not too late to participate in the Curbside chat program. 

Host a Curbside Chat

If you would like to host a chat in your community, we would need you to provide enough meeting space for your public officials, members of the local media, officials invited from surrounding communities and others locally that may be interested in attending. Strong Towns will take care of the invitations, press releases and refreshments if you can provide the meeting space.

To host an event or to attend a presentation near you, please fill out the form below:

Oil is a commodity traded in dollars in a global market. The supply/demand curve applies so when the economy is slow, there is less demand for oil. This is particularly true when the slowdown is in the country that has the highest oil consumption rate in the world. As National Public Radio noted last week:

Crude prices have retreated nearly 8 percent in the past two weeks as the U.S. economic newsflow has generally underperformed. At one point on Thursday, oil prices fell to a six-week low below $74 a barrel after figures showed an unexpected rise in weekly U.S. jobless claims to half a million, and a big drop in manufacturing activity in the Philadelphia region.

Lower U.S. economic growth means that unemployment will remain higher and factories will need less energy than many traders had been predicting as oil prices recovered from the depths of recession.

Fewer jobs also mean fewer people filling their tanks to drive to work and fewer holidaymakers.

So the recession has meant lower oil prices. This does not automatically mean that an end to recession will mean higher oil prices, but there is reason for concern. As stated by Steven Kopits, a managing director for an energy consulting and research firm, the oil/recession feedback loop can set the conditions for a "continuous recession".

If Kopits is correct, so much for "green shoots." They will be trampled under foot over and over again unless there is a sudden spike upwards in GDP growth disproportionally more so than oil price increases.Here is the roller-coaster cycle he points out: Higher oil prices mean recessions, recessions mean less consumption then lower oil prices, which leads to less exploration and supply which leads to higher oil prices and recession again.

Kopits is an icon of sorts in the Peak Oil debate, which we are not going to get delve deeply into here. Regardless of what you believe in the peak oil discussion, Kopits' analysis is something worth pondering. If the economy picked up and, for whatever reason, we saw gasoline at the pump shoot up over $4 per gallon again, it is hard to see the recovery lasting. Without sustained high oil prices, there is little incentive for companies to spend capital on research, exploration and new drilling systems.

In other words, in our current oil-dependent configuration, it is difficult to see how a recovery gets any long-term traction. Recession depresses oil prices. Low oil prices depress exploration and development. Lack of exploration and development means that, when a recovery happens, we'll be faced with shortage of supply relative to demand. The resulting higher prices will create another round of recession.

That analysis assumes an American-centric world. Let's ponder for a minute the impact of a place like China on this analysis.

The U.S. rate of oil consumption has fallen from peaks seen pre-recession.

This trend is not happening in China, which is in the process of transforming its economy from third world to first. Imagine 300 million Americans driving cars. Now imagine 300 million Chinese driving cars and understand: that is just one of four of them. Here's a chart of their consumption:

And China is just one of a number of developing countries. India and Brazil along a with a huge consortium of emerging markets are also increasing their energy consumption as their standard of living rises. Will these economies drive demand - and the higher prices - that justify the capital expenditures to bring more oil to market? Or, more ominously, what if these places drive up the price independent of the American economy, forcing higher energy prices upon us while our economy is still faltering?

There is one other interesting wrinkle here, and it ties back to the original NPR article we quoted at the beginning of this piece. As reported by NPR:

Oil industry analysts Cameron Hanover have even warned that crude prices should be substantially lower — below $35 and potentially as low as $10 a barrel based on the weak state of demand.

"Prices are near $75 instead because investors — gargantuan investors — are pricing oil more in terms of gold than in terms of the market's history, the euro, the dollar, or supply and demand," it said.

"It is good to see oil prices sell off on Thursday but it is a deck-chair off a cruise ship. Prices should be substantially lower, based on record supplies during a recession with no timetable for recovery," it added.

Let me state that in a different way. Our economic situation is so tenuous that "gargantuan" investors are buying oil because it will hold its value (like gold) when other things (like the dollar) do not. Gulp. That does not exactly inspire confidence.

What does this all mean for towns and neighborhoods? At the very least, the more oil-dependent the local economy is the less resiliency that town has. Local initiatives for economic growth can be overwhelmed by energy volatility that the community has no ability to control. And energy volatility looks likely. Places wanting to be Strong Towns need to be reconfiguring themselves to reduce their exposure to this obvious source of volatility.

Unfortunately, at the state and federal level we've used this recession to spend trillions on the current development pattern, doing little to address our oil dependency. From a land use perspective, the emphasis on "shovel ready" projects has meant that we've simply taken the existing auto-centric development pattern and given it an injection of steroids. This is a recipe for long-term disaster.

A final word on Peak Oil. I think there is little question that the theory behind Peak Oil is sound; all oil deposits peak in their rate of return as oil is removed and the deposit becomes diluted. This lowers the rate of return over time once the "peak" rate is reached. That part is simple physics and we've seen it demonstrated ever since we started extracting oil from the ground. The real debate is over whether we have reached global peak already, will reach it in a decade, in a century or longer. Depending on your belief in the timetable, you may or may not think we can drill/explore out way out of any oil shortage.

While important to policy makers looking at the economy over the next few years, resolving the Peak Oil debate is not critical to a Strong Towns approach. Our towns and neighborhoods in their current configuration are dependent on cheap fuel. No town can do anything to control the price of gasoline. Given these facts, a Strong Towns approach would have the community build resiliency against the inevitable volatility.

How? Grow the local economy through import-replacement (reduce import-dependency). Adopt living patterns that do not require automobile travel for everyone for nearly every trip. Develop alternative energy sources locally.

Our current homogeneous development pattern has made us all susceptible to the same shocks. Become a Strong Town and break the cycle.

The Strong Towns Blog; It's like reading Jim Kunstler, except you can share it with your mom. Sign up for a Curbside Chat, our project to bring the Strong Towns message to towns and neighborhoods across America. You can also join us on Facebook and Twitter.

Enjoy the week's news.

• I want to lead off with a passionate blog post from a friend of mine named Aaron Brown. He writes the Minnesota Brown blog and, while we have actually never met in person (hope that changes soon), we've spoken on the phone, emailed each other a lot and been on the air together on KAXE. What I enjoy most about Aaron is that, while we may disagree on politics, he is intellectually honest. You'll see in his post that his passion for his community is pushing him to speak out for systematic change. It as an example I wish we were all courageous enough to emulate in the places we love. And if you are interested, here is some Aaron Brown talking about applying Strong Towns principles (not his words, but mine) to Minnesota's Iron Range.

• We have not talked housing in a while. That's because nothing has changed. Mortgage rates continue to be at all time lows, yet foreclosures are up and it looks nearly certain that housing is headed for a "double dip".

"As long as people hold back, whether realistically or irrationally, or rationally,' Lawrence Yun says, "then naturally there will be too much supply in relation to the demand, and that could lead to some over-correction in home prices in some markets."

• As we have discussed here in the past, there is a strong correlation between housing prices and unemployment. As the Economist points out, the long anticipated jobless recovery is here.

• You have to check out the graphic on this NY Times opinion blog about the creative economy in the Rust Belt. If you watched that video of Aaron Brown above or read our post last week on Richard Florida, you are hearing the themes expressed in that opinion piece: our way out of this recession is by empowering the most creative elements in our society.

For decades, people like Mr. Destito — young, skilled, motivated — were exactly the sort who left Rust Belt cities like Syracuse. But recently, in numbers not yet statistically measurable but clearly evident at the ground level, they’ve been coming back to the city, first as a trickle, and now by the hundreds. In some ways it’s a part of the natural ebb and flow of urban demographics. But it is also the result of a new attitude among the city’s leadership, one that admits the failure of the re-industrialization efforts of the last decades and instead invents ways to attract new types of residents and keep current ones from leaving. Call it urban renewal 2.0, gentrification on a citywide scale.

• This week Tom Friedman had a solid opinion piece hitting on Ben Bernanke's weird statement that things are "unusually uncertain." I hear a lot of political junkies say they don't like Friedman. We love him.

America’s two big parties still cling to their core religious beliefs as if nothing has changed. Republicans try to undermine the president at every turn and offer their nostrum of tax-cuts-will-solve-everything — without ever specifying what services they’ll give up to pay for them. Mr. Obama gave us expanded health care before expanding the economic pie to sustain it.

You still don’t sense our politicians are saying, “Wait a minute; stop everything; we have got to work together.” Don’t these people have 401k plans of their own and kids worried about jobs?

• Speaking of Friedman, here is an idea he suggested in his latest book Hot, Flat and Crowded that is so simple and obvious that it is maddening. Electric companies are in the business of providing energy - why does that need to simply mean power plants and wires? Leasing solar equipment to customers makes everyone better off. Decentralized energy production is the future of energy. We need to change the system of regulations and incentives that prevent programs like these from being the norm.

Leasing — common in the car business — is almost unknown in the solar industry. Only a couple of solar-system installers across the country offer it on a regular basis for systems that use photovoltaic or PV cells to make electricity, according to the Solar Energy Industries Association.

"It's a great way for homeowners who otherwise wouldn't be able due to the upfront costs (to) install solar PV systems," SEIA spokesman Jared Blanton said. "Leasing and other innovative financing options are a big reason that the residential solar market has grown so much in the last couple years."

Solarflow Energy, a small Minneapolis installer of solar-energy systems, has the state's only solar lease program.

• I LOVE when cities apply technology to their planning processes. Here is an example of a community generating ideas online for their master plan, then using a voting system to identify those with the greatest support. And Beth Noveck, author of Wiki Government, gives a great overview of how technology can, and needs to, transform our public decision-making processes.

The Internet enables a new kind of equality of power that allows us to think about how we can reengineer our institutions - not simply for the sake of talk, but as a means to an end of achieving things in the world better, faster, and in new and creative ways to attack the complex problems that we confront.

• Finally, because it is my blog, I am going to reminisce a little about the day six years ago when I met a little girl that changed my life in ways I never could have imagined. I did not know I was capable of such joy from her smiles, such sorrow with her pain and such love towards anyone. Having grown up on a farm with a house full of men, I never dreamed that Fridays at home putting ribbons in her hair, playing dolls, reading Fancy Nancy books and dancing in the living room would always be the happiest day of the week. I call her my padawan, but it is she that teaches me every day how to be a better man. Happy birthday, Chloe.

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