On Good Friday, I find myself catching up on some sleep with the Pack while the girls play. The morning nap on the couch is why this edition is a little tardy - sorry team, was up really, really late working on Strong Towns stuff. But speaking of the Pack, this might be a good day to annouce the newest addition. For those of you that remember my post on our good friend, Misha, and his last hours, you can join me in celebrating the addition of Avalanche to the Marohn household. We rescued him from a shelter. He came to us with the happy Samoyed disposition but with a terrible double ear infection. After three weeks of medications and ear cleanings and following a seriously overdue meetup with a comb, brush and tub of water, he's fitting right in around here. That's him on the left. Koshka, who understands the meaning of relaxation better than most, is on the right.
Enjoy the week's news.
- I have to start this version of the News Digest by bragging. My wife is a journalist and last year I passed along a tremendous piece of investiagtive reporting (Gambling on Growth) that she and some colleagues had put together detailing the ridiculous schemes cities had undertaken in an embrace of growth and how those bad decisions impact people today. It was brilliant reporting and was recognized as such this past Monday when she was awarded the Premack Public Affairs Journalism Award, the most prestigous journalism award in Minnesota. If you know Kirsti, you know someone really special, so go ahead and give her a congratulations. You can follow her reporting, which deals with environmental, county government and investigative issues, on both Facebook and Twitter. And read the series - it is time well spent.
- And speaking of excellent reporting, our friend Kaid Benfield on Monday revealed the Environmental Protection Agency's hypocrisy in their move from their current offices in downtown Kansas City, KS, to a rural campus in Lenexa, KS. The story was so impactful and dead-on that it quickly caught the eye of the New York Times, who did a follow up story on Tuesday. Great job, Kaid. I hope that it forces a change in direction.
"[The lease] is totally inconsistent with what the national office has been saying and doing," said Kaid Benfield, director of the smart growth program at the Natural Resources Defense Council, in an interview. "EPA has been a government leader in thinking about sustainability and the importance of cities in relation to environmental issues. For some reason, in this particular case, all of that was apparently disregarded."
- More Tactical Urbanism this week, starting with this great piece from the UTNE Reader. Will Wlizlo pulled together various reports on the web into one nice piece and also added a video I had not seen before. I love the actual "bombing" depicted in the clip and how the woman sitting on the street reacts. A shout out to Ryan Newhouse at Make It Missoula as well for his coverage of Tactical Urbanism.
- One thing new that has been happening to our content is that it has been showing up in comment threads as a friendly reference and to move the conversation in a Strong Towns direction. An article on a new bridge in the Boise Garden got a reference to our Conversation with an Engineer video. A post by the Urbanophile got hit with a Strong Towns reference (see comment #7), which I've excerted from below. Even the discussion boards at the Kunstler Cast have had a couple of threads about our podcast Not Good Enough and last Monday's blog piece on car seats. This is really incredible. My first reaction is to say "thanks" and, as a follow up, "keep it up". We may have to come up with a word for this phenomenon. Suggestions?
The solution is not “building better suburbs.” An unsustainable model cannot be fixed with a few tweaks. You’ve got to stop hiding behind your “I don’t hate the suburbs” mantra that gets you so many gigs in the Midwest. It’s not helping anyone but you. If you want some guidance in how you can be helping the conversation along by talking about the truly difficult choices our region needs to make, you can visit http://www.strongtowns.org/
- The last governor in Minnesota (disclaimer: I did not vote for him the first time - voted for Tim Penny - but did cast my ballot for his reelection) had this truly awful initiative called JOBZ. It was truly rote dogma applied insanely. Essentially, if you moved your business from an efficient urban area to an inefficient rural one, we'd give you huge tax breaks in the name of creating jobs. A recent article in the Star Tribune contained some interesting numbers on the cost of this program. I and other fiscally conservative individuals were very critical of the cost/job ratio of the Obama stimulus bill, but if I am doing my math right here, the T-Paw JOBZ program cost $22,620 per job created (or moved). I was involved in applying JOBZ on the ground in many communities and, from the inside view, it was a ridiculaously inefficient approach that will cost us many times over as some serious malinvestment is unwound over the coming years. It is adding to the current pain.
As job creation stalled, the program's subsidies rose to nearly $34 million, the highest ever. The subsidies include breaks on income, sales, property and other taxes. Tax breaks over six years totaled $144 million to 379 companies, including 77 that were eventually booted from the program for not meeting job goals.
"It is further evidence that economic development subsidies cannot defy gravity," said Greg LeRoy, executive director of Good Jobs First, a nonprofit group that tracks business subsidies in Minnesota and other states. "They are not countercyclical."
- A couple weeks ago we ran a piece that looked at the ability of the U.S. government to sustain its debt (Our Unfaithful Partner - April 11) and in it I pointed out that an interest rate of 5% would be traumatic. If you want to get a feel for what I mean, check out Greece, which is now seeing its 2-year notes trade at 20%. Greek officals, of course, are blaming the ratings agencies, which is a little a student blaming a teacher for a bad math score. Actually, it is like a student cutting class all year and pinning all their hopes on acing the final exam and then blaming the teacher for having concerns that they will be able to pull it off. A quite anti-resilient approach.
George Papandreou in a written statement posted on a government website early Friday said the agencies, instead of elected governments, "are seeking to shape our destiny and determine the future of our children."
Major rating agencies have all relegated Greek bond status to below investment grade amid the continuing debt crisis. The move has angered the government which argues the fiscal benefits of its austerity program are being ignored.
- Speaking of ratings agencies, everyone caught the news on Monday that S&P finally issued a warning that the U.S. could face a downgrade in its credit rating. If you need further evidence that the credit ratings agencies are a joke, consider this: A country's credit rating is an estimation of its ability to pay back its debt. The United States is in huge debt - $14 trillion and growing daily. Even the most aggressive plan for tackeling this (Ryan plan) only reduces the deficit - there is no plan to pay off the debt except by taking on more debt. On top of that, we are in the process of devaluing our currency, have high unemployment and politically look unable to make any decisions of consequence. China, on the other hand, has no debt, trillions in cash reserves, a growing economy and a huge trade surplus. Yet S&P has given the U.S. its highest rating - AAA - and China is rated only AA-.
- And as long as I'm calling out hucksters, on what rational basis does our Treasury Secretary suggest that S&P is not going to downgrade the U.S. credit rating? "No risk"? I'm not one given to conspiracy theories, but I don't trust any of these ratings agencies to actually do the job they are expected to do.
Tim Geithner, the US treasury secretary, shrugged off warnings from a leading ratings agency about the US public finances as he sought to reassure Wall Street that the world's biggest economy would be able to maintain its highly prized AAA rating.
In a media blitz following the announcement by Standard & Poor's that it had revised its outlook on the US from stable to negative, Geithner said there was "no risk" of a downgrade.
- I'll show you how silly this shell game is, here is a quote from Geithner from the Guardian:
Geithner told Bloomberg Television that both domestic and foreign investors are still confident in US debt and the stronger growth prospects of the US economy. "You can see that in the price at which we borrow every day, but we have to earn that confidence," Geith- ner explained.
- And now here is an article explaining how Ben Bernanke and the Federal Reserve may continue buying treasuries in order to keep interest rates down.
Federal Reserve Chairman Ben S. Bernanke may keep reinvesting maturing debt into Treasuries to maintain record stimulus even after making good on a pledge to complete $600 billion in bond purchases by the end of June.
The Fed chief’s top two lieutenants said this month the economy and inflation are too weak to warrant the start of a monetary-policy reversal. Investors and economists including David Kelly at JPMorgan Funds see that as a signal the Fed will keep its balance sheet at current levels by replacing about $17 billion a month in maturing mortgage debt with Treasuries.
- So on one hand you have the Fed doing everything it can, including taking revenue from the sale of TARP assets and using it to buy treasuries, to create demand for dollars and thus keep interest rates down. Then you have our Treasury Department pretending that somehow it is the market setting the rates, suggesting that the low rates reflect a worldwide demand for more U.S. debt. I'm not stupid, and neither are you. There may be "no risk" of an S&P downgrade, as Geithner says, but it is not because the ratings agencies are doing their job.
- And if you want some understanding of how all of this impacts us, just go and fill up with gas. One financial strategist estimates that the weakness of the dollar is a large part of our current gas price problem.
Using a model that combines "subtle rates of change" with movements in the dollar index [.DXY 74.11 0.12 (+0.16%) ]and commodity prices, [Richard] Hastings [strategist at Global Hunter Securities] figures the low dollar is responsible for about one-third, or $1.31, of the total gas-at-the-pump cost. Regular unleaded Wednesday was $3.84 a gallon nationwide, according to AAA.
- Of course, we officially have no inflation here in the U.S. But somehow our neighbor to the north - a real banana republic if there ever was one - is experiencing high inflation. Again, I'm not a conspiracy person, but I believe our collective ability to lie to ourselves about what is going on, and then seek confirmation of that lie, is really strong.
- Finally, while we'll be observing Easter here over the weekend, I want to express our sincerest wishes to all for an enjoyable, peaceful weekend and a renewed feeling of being as we head into the spring. Peace to all.
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