Webinar: The Future of Rural America

New Geography publisher Delore Zimmerman will host a webinar next week discussing the future of rural america. The webinar is part of the Rural Broadband Initiative organized by Northern Minnesota's Blandin Foundation.

From Blandin:

If you are interested in rural community and economic development trends, this webinar is for you. Delore Zimmerman will provide guidance for rural community leaders about development trends and the steps communities must take to increase their investment attractiveness.

The role that technology plays in increasing economic vitality will be presented both in theory and practice, and Delore will include information about successful regional economic development strategies.

Here's more information and registration for this free webinar.

The IOC rejects Chicago in the First Round

The International Olympic Committee has rejected Chicago in the first round. A delegation of President Obama, Michelle Obama, Oprah, Mayor Daley and others failed to convince the IOC. President Obama made an impassioned plea to the IOC:

"Chicago is a city where the practical and the inspirational exist in harmony; where visionaries who made no small plans rebuilt after a great fire and taught the world to reach new heights," Obama told the IOC's members. "I urge you to choose Chicago."

This fell on deaf ears representing a major defeat for President Obama, Mayor Daley, and powerful Alderman Ed Burke (who was the point man to hand out the money).

Veteran Chicago journalist Ben Joravsky summarized the negative concerning Chicago:

the city hasn't completed a major construction project on time or on budget in recent memory. Pick a project, any project: the reconstruction of Soldier Field, the creation of Millennium Park, the redevelopment of the prime downtown land at Block 37, the expansion of O'Hare airport—they were all finished way over budget if they were finished at all. In Chicago, people know that the question isn't whether city projects will go over budget, but by how much.

Even though Chicago’s City Council voted 49-0 in a guarantee to support the 2016, public support has been on the decline all year. A recent Chicago Tribune poll suggested half the public didn’t want the Olympics. The IOC, undoubtedly, had to be concerned the lack of public support in Chicago when making the final decision.

The grass roots organization No Games Chicago deserves much credit for taking on the Chicago Machine with meager funds. Thomas Tesser of No Games ran an effective campaign in the media against the powerful Chicago interests. The Chicago Sun Times ran this Tesser attack which was quite effective:

The City Council voted to give oversight of the City's Olympic commitments to Ald. Ed Burke, chairman of the Finance Committee. This is the final cruel joke played by the Council on the taxpayers. Burke has become a millionaire doing deals with firms that have business with the city and has collected millions in campaign contributions from firms doing business with the city. Pat Ryan, the chairman of the 2016 effort, contributed $3,000 to Burke. Burke didn't mention that he has ten clients who are major donors to the

Will Chicago come back for another try in 2020? Only time will tell.


One Homeowner, Two Mortgage Holders, No Lien!

I’ve been following this for a while and writing about it on since March – not all mortgage-backed securities (MBS) are actually backed by mortgages. So when the homeowner goes into bankruptcy, there’s no way for the MBS holder to prove a lien on the house and the judge awards the bondholder bupkus. In April, a bankruptcy judge in California wrote that as many as one-third of all MBS didn’t have mortgages. No “M” in the “BS,” as I like to put it!

Well, this story just gets better and better. It turns out that even when the MBS has an actual mortgage underneath it, the same mortgage is backing more than one security. Last week I talked to Matt Taibbi, who wrote in Rolling Stone magazine (The Great American Bubble Machine) that 58 percent of an MBS issued by Goldman Sachs had nothing but a list of zip codes where the mortgages should have been. He told me about a lawyer in Florida who has a list of cases where two MBS holders showed up at the bankruptcy proceedings, both claiming that they owned the same mortgage. You can expect to read more on that here as the story develops.

Then it gets worse! Gretchen Morgenson reported in the New York Times on Sunday that there are about 60 million mortgages registered with the Mortgage Electronic Registration System (MERS) to keep track of who owns which loans and which MBS. Problem was that MERS, created by Fannie Mae, Freddie Mac and the mortgage industry, thought they were too good to have to register liens against land at the county level – real estate 101 for any sober realtor. The Kansas Supreme Court has now ruled that changes in mortgage ownership registered with MERS – and not registered with the local land authority – have no legal standing.

Don’t forget – MBS are the junk that Treasury Secretary Geithner wants purchase with tax-payer dollars; and Federal Reserve Chairman Ben Bernanke committed $1.25 trillion of freshly-printed dollars to buy up out of the marketplace this year. Here’s the math made easy – the median house costs $177,000, figure an 80% mortgage, times 60 million mortgages: it looks like $8.5 trillion worth of mortgages could have no real estate underneath them! If the repo man comes knocking on your door, remember these four words: Show Me The Paper!

Why the feds should stay out of high-speed rail (and most transportation)

Set aside for a minute whether high-speed rail (HSR) makes sense or not on a cost-benefit basis. Regardless of whether it does or not (and some smart people are arguing not), I'd like to make the argument that federal funding has no place in HSR. Instead, it should be left to individual states or regional state coalitions.

The federally-funded interstate system was originally conceived for defense purposes - rapid mobilization - after Ike saw the German autobahns. Freight and people movement were obvious beneficiaries, over short, medium, and long distances. It is a comprehensive network that crosses state lines, which argues for federal involvement. The government made the minimal investment it had to make - road beds - and people/companies paid for vehicles and fuel. Fuel was taxed to pay for it all. If EZ-tag technology had been available at the time, I suspect they would have tolled it all instead to pay for it.

Airports followed a similar arrangement: government provides the landing strips and terminals while private companies provide the vehicles and fuel. Passenger ticket taxes pay for the infrastructure. As airports are a local decision, they are (mostly) paid for locally, although regulated federally for standardization and safety.

HSR is targeted at medium distances only, making it more of a state/regional decision (i.e. a small collection of states). It also requires huge subsidies, as the government provides the track, cars, and energy. There is nothing directly related that can be taxed to pay for it (like fuel taxes for roads and passenger ticket taxes for airports). You could try to tax the rail tickets, but if they were fully priced they would not attract nearly enough riders. So no matter how you slice it, in the end the government (i.e. taxpayers) will be paying the majority of the cost of moving each passenger. The infrastructure cost cannot be covered by direct user fees, as demonstrated in other countries.

Rather than compare HSR to the interstate highway system, the better analogy would be airports. Imagine if California said, "Feds, give us money to build a few airports in key CA cities and provide a subsidized government-run airline to provide frequent intra-state service where tickets are priced way below cost." Put that way, people would recognize the idea as absurd, and tell California to do it themselves if they think it's such a good idea.

The problem is that a simple program that made sense at the time - a federal gas tax to build an interstate highway system - has evolved into a Frankenstein monster of massive federal involvement in enlarged urban freeways, local rail transit, and now high-speed rail - areas where they simply do not belong. Local transportation planners have shifted decision making from "What are the best cost-benefit investments we can make to move people in our area?" to "How to do we grab our 'fair' share of the federal pie, regardless of whether or not the project is something we would consider with our own money?" And that is leading to a lot of boondoggles being built around the country, culminating recently in the famous Bridge to Nowhere in Alaska.

The answer? The feds need to get out of the transportation business beyond minimal maintenance of the interstate highway system (the basic four lanes - not the expanded urban freeways). Let local entities make local decisions on transportation investments, including funding, and a whole lot of waste will magically disappear.

This post originally appeared at Houston Strategies.

Taiwan’s Failing High Speed Rail Line Faces Government Takeover

According to Railway Technology, Taiwan’s struggling high speed rail line, the only fully private and commercial high speed rail system in the world, will be taken over by the government his week. The line has been plagued by disappointing ridership levels totaling approximately one-third projected levels. The company has generated insufficient revenues to meet its debt obligations and had previously renegotiated its bank credit to substantially lower interest rates. The company lost $770 million in 2008 and has a debt of approximately $10 billion. The cost of the system was approximately $15 billion.

High Speed Rail in Springfield: "The Whole City Would Look Like Crap"

Not every local official is smitten with the romance of high-speed rail. Graphic evidence of this was provided by Springfield, Illinois mayor Tim Davlin, who expressed his concern that the proposed rail overpasses would slice the city in half. Davlin told the State Journal Register that the “Whole city would look like crap.” This is a problem faced not only by historic Springfield, the state’s capital and location of many Abraham Lincoln sites. Citizens and cities on the San Francisco peninsula are concerned that a proposed “Berlin Wall” will divide their communities if construction of an elevated high speed rail wall proceeds through their communities.

Driving for Popsicles: Kidnapping Hysteria in America

Not long ago, I saw an urban planner speak about the “Popsicle test” as a barometer for healthy urban design: in an ideal community, a child is able to safely walk a short distance from their home to buy a Popsicle. In such a community, kids have the freedom and independence to enjoy a carefree childhood walk without having to worry about traffic or neighborhood bullies.

But increasingly, allowing a child to walk those few blocks for his beloved Klondike bar is looked at as a gross act of parental negligence and child abandonment. As this NY Times article attests, allowing an unsupervised or unaccompanied stroll from school in many communities will earn you the admonishment of school administrators, the police, and of course, fellow parents. One Columbus, Ohio parent allowed her 10 year-old son to walk the mile back from school prompting several 911 calls by concerned drivers upon seeing the child walking alone. A police officer drove him home and reprimanded the parents. And it was an unusual sight: only 13% of children walked or biked to school in 2001 compared to 41% in 1969.

Overparenting run amok? Every time a stomach-churning story about a Jaycee Dugard breaks, it dominates the news for a good week. Coupled with the innumerable fictional depictions of kidnapping on television shows and it’s no wonder that American parents expect to see a dirty van with tinted windows on every suburban street.

Yet, an examination of missing children statistics shows that the fear of kidnapping is rather disproportionate to the actual threat. Looking at the data from the California Dept. of Justice, for example, there were 114,000 missing children reports filed in the state last year (for comparison’s sake there were nearly 37,000 missing adults claims). Of this number, 108,000 or 95%, were runaways. There were 35 documented Dugard-type stranger abductions compared to 1,363 parental or family abductions. That is to say, in documented cases, a child is almost 40 times more likely to be swept away by a disgruntled parent wronged in a divorce settlement than a Philip Garrido whack-job. But when a child is missing, in 19 of 20 cases they have run away.

But such nuances of the data are lost on sites like the National Amber Alert Registry which announces, on its "statistics page" complete with a clock ticker, that 800,000 children go missing every year – one every 40 seconds. A more accurate ticker would say, “a child goes missing every 40 seconds, but most are runaways that end up returning home.”

It goes without saying that the value of parental diligence and responsibility should never be discounted and that the nightmare of child abduction does exist, but the fear of it has grown in recent years to a such level of hysteria that some of the pleasures and autonomy of childhood have been removed. Groups like Safe Routes to School are concerned by the decrease in the number of children walking and biking to school and are working on increasing the number of safe commuting routes for kids.

But as long as the fear of the "Popsicle walk" is pervasive, it appears that kids will be nagging their parents for a "Popsicle drive" for a long time to come.

Recession Job Losses and Recovery in Midwest Cities

The Windy Citizen pointed me at coverage of metro area job losses in the recession. Here is how the 12 cities I principally cover in this blog stacked up, sorted in descending order of percentage losses:

  1. Detroit; 139,600 jobs; -7.5%
  2. Milwaukee; 44,800; -5.2%
  3. Cleveland; 54,100; -5.1%
  4. Chicago; 206,200; -4.5%
  5. Indianapolis; 40,200; -4.4%
  6. Cincinnati; 42,200; -4.0%
  7. Louisville; 22,900; -3.7%
  8. Minneapolis-St. Paul; 63,100; -3.5%
  9. St. Louis; 43,900; -3.3%
  10. Pittsburgh; 32,800 - 2.8%
  11. Kansas City; 21,900; -2.1%
  12. Columbus, Ohio; 19,600; -2.1%

A couple things that jump out of me from this are that Chicago and Indianapolis are doing far worse than conventional wisdom views of their overall economic health. Both regions are getting clobbered. The Pittsburgh story gets some additional ammunition, as does my view that Columbus is the next Midwestern star.

Recession Job Recovery

So when will the jobs come back? Nobody knows for sure, but an organization called IHS Global Insight has predicted the year in which employment will match its pre-recession peak in various major US cities (via IBJ News Talk):

  • Kansas City: 2011
  • Columbus: 2012
  • Indianapolis: 2012
  • Louisville: 2013
  • Minneapolis-St. Paul: 2013
  • Pittsburgh: 2013
  • Chicago: 2014
  • Cincinnati: 2014
  • St. Louis: 2014
  • Cleveland: After 2015
  • Detroit: After 2015
  • Milwaukee: After 2015

Visit Aaron's blog at The Urbanophile.

American Hobbit Houses

Soon after President Obama took office, a proposed plan to “develop federal policies to induce states and local communities to embrace ‘smart growth’ land use strategies” was announced.

This “Livable Communities Program” is intended to save land and clean up the environment. It is seen as encouraging denser housing arrangements to deter automobile use and accommodate the transit industry, according to goals set by the Secretaries of HUD, EPA and Transportation.

One potential downside to this plan comes from the transit industry’s Moving Cooler study, which argues that the Administration’s greenhouse gas reduction proposals “may result in higher housing prices, and some people might need to live in smaller homes or smaller lots than they would prefer.”

If you want to see how this might work, look at the U.K., which imposed strict land regulations in the Town and Country Planning Act in 1947. This effectively froze the supply of land for a growing population, leading to soaring house prices, particularly in the area around London.

With the land available for development frozen, house size decreased as well, leading to new British homes garnering the nickname of “Hobbit houses.” New British homes are a little more than a third as big as new U.S. homes (818 sq. feet compared the U.S.’s 2,303 sq. feet).

The question is whether or not the Federal government should be granted the ability to limit housing standards. Currently, this responsibility lands in the lap of state and local governments.

Can President Obama afford to add the President of the (Hobbit) Homeowner’s Association of the United States to his title?


Don't Go Looking for Work in California

The current economic recession has tarnished the Golden State’s employment opportunities in a major way.

A report released on Sunday by the California Budget Project says that two of five working-age Californians do not have a job.

The level of unemployment has not been this high since February 1977. In fact, the study found that “California now has the same amount of jobs as it did nine years ago.” The only difference? In 2000, the state was home to 3.3 million fewer working age people than today.

The nation is not faring much better, as the U.S. Labor Department reported last Friday that the nation’s jobless rate had climbed to 9.7 percent, the highest since 1983. California’s unemployment stands at over 11 percent.