Don't waste that stuff! It costs more than four bucks gallon....

Had to drive to the airport this morning to pick up an arriving passenger whose flight from Boston got in at 7:40 am. I hit 1-94 east at Hwy. T in Waukesha with plenty of time, so I decided to see about making the trip at a steady 60 mph. I set the cruise control and moved from center lane (My commute-to-Milwaukee mantra has always been: get in the center lane and stay there) to the right hand lane, expecting to need to be out of the path of the typical 72 mph drivers on this stretch of road I've driven most days since 1973.

Over a five mile stretch, west of Moorland Rd, only three cars whizzed past. Virtually everyone else was going just about 60 mph. An F250 covered with racing decals (heading for Naptown and the 500, no doubt) was in the lane next to me, nursing every bit of mileage out of its gas tank, creeping along at 5mph UNDER the speed limit.

It seems that the price of gasoline has--at long-last--pushed MOST drivers to back off the throttle. Four bucks a gallon: that's the behavior changing number.

Fannie Mae caves to Realtor/Builder Pressure. Coming June 1st: More insanely risky lending . . .

I did my first looking for a savings and loan--to lend me money for a house--35 years ago. Things were quite different then. We searched for a couple months, found a nice bungalow about nine blocks from downtown Waukesha, made an offer, got the acceptance back on a Friday afternoon. We went shopping for a mortgage on Monday morning, stopped in at eleven lending institutions before noon. Most were not taking applications.

I finally arrived at First Federal S&L on the corner of Grandview and Summit, ten blocks from home. Jerry Groh, a business-like lender, told me that the loan committee had just finished its weekly meeting, that if I had arrived earlier they could have acted on my application that day. They were lending money at 7.75%.

In that week we had to wait, we had two shocks: first, after a little small talk, Mr. Groh wanted to dig into (excavate, actually) our financial situation:
o Stability? Married four years.
o Employment? Two incomes; combined annual gross was just about as much as we wanted to borrow.
o Debt? Two used cars, both serviceable, both purchased for cash. We had to show him the titles, free-of-liens. No other debts except for a small balance on one of those newfangled Master Charge cards and about seven hundred dollars my wife was still paying on a loan she had taken out for college.
o Down payment? We had 20% in cash for a down payment.

Then... the flinty, gimlet-eyed Mr. Groh looked at us skeptically and asked the big question: "Is that your own money, or is some of it from your parents"? "It's ours. We saved it," we replied. (We actually had even a bit more in savings that we were planning to use to move up to a higher class of rummage to furnish our new house).

And Groh explained: "We're coming into rough times, financially. If I'm going to loan you this money. I want you two in the tank with me".

The housing scene in America would be a lot healthier if we still had lenders like Jerry Groh. I liked him, really liked him. He was my kind of conservative. Then, two unpleasant-but-unavoidable things cropped up after our talk: at the one-week-delayed loan committee meeting, the mortgage rate was up from 7.75% to 8.5%. Three quarters of a point in one week. And four years later, Jerry exercised the escalator clause in our agreement to push up the rate to 9%, proving that Groh's estimation of the economic future had been realistic. Interest rates nationally were on their way to 18%.

It was an introduction to the real world, a conservative world of housing, lending, inflation and "being in the tank" with a cautious and up-front businessman.

Not like today....

Fannie Is Poised to Scrap
Policy Over Down Payments

WSJ

By JAMES R. HAGERTY
May 16, 2008; Page A3

Fannie Mae is expected to announce Friday that it is scrapping a policy requiring higher down payments on home mortgages in areas where house prices are falling.

The change comes in response to protests from vital political allies of the government-sponsored provider of funding for mortgages, including the National Association of Realtors, the National Association of Home Builders and organizations that promote affordable housing for low-income people.

Those various groups have said the policy is hurting an already feeble housing market by shutting out too many potential buyers.

The current policy, adopted in December and now due to end June 1, limits loan amounts in areas with declining home prices, including most of the densely populated parts of the country.

For instance, if a loan program normally allows people to borrow up to 100% of the estimated property value, the maximum is cut to 95% in "declining markets."

Under the new policy that is taking effect next month, Fannie will have the same maximum loan percentages across the country for people purchasing single-family homes that they intend to occupy, according to people familiar with the plan.

For borrowers approved by Fannie's automated underwriting program, the maximum generally will be 97%. For those approved by other means, the maximum will be 95%. (Fannie also has some loan programs, typically offered through state or local housing agencies or nonprofit groups, that allow certain borrowers to make no down payment.)

Pabst Farms can't line up a few stores for their floundering project.

In Siberia, Shopping Malls Are Sprouting All Over


The problem is with store owners looking for more profitable locations

Why ask the DA to investigate for abuses of the Wisconsin Open Meetings Law?

Sec. 19.81, Wis. Statutes:

A. The Legislature declares that state Policy is to

1. enable the public to have the fullest and most complete information regarding the affairs of government as is compatible with the conduct of government business,

2. ensure that meetings of governmental bodies are held in places reasonably accessible to the public,

3. ensure that such meetings are open to the public unless otherwise expressly provided by law.

I am a conservationist, a citizen mightily concerned about the problem of sprawl, the depletion of groundwater, the quality of water available throughout Waukesha County.

I believe that the Great Lakes Compact, when enacted, may be helpful and useful to Waukesha. But I believe that the mania for secrecy in the Waukesha Water Utility Commission serves no good end. This is a classic example of a small group of citizen-commissioners, serving for decades in relative obscurity on a low-status commission. With each passing year they become more persuaded that they alone know the secret, the path to solution to problems the water utility faces. Fearful of any dissent, the make their plans secretly, misapplying exceptions in the Open Meetings Law.

My theory is that they have persuaded themselves that since they are likely to be embroiled in lawsuits, both as plaintiff and respondent, that they can discuss any and all matters that might be remotely related to those lawsuits under cover of the exemption to the Open Meetings Law that permits, in limited instances, discussion of LEGAL STRATEGY with a lawyer in closed session. In light of Buswell, they appear to this citizen to be way over the line on "reasonableness" as articulated by the Wisconsin Supreme Court last year.

And, so, I have filed this complaint and details of what I see as violating the spirit and the letter of the law, with the district attorney of Waukesha County. It is a citizen's effort, without professional help. But, I believe I have hit the critical issues. This is, in truth, the the battle of development interests against more conservative, more cautious, more democratically-oriented citizen interests.

A memo from the boss:

To: All MJS journalists and editors
From: Martin Kaiser, Editor
Re: Icons and things iconic
Date May 12, 2008

Brett Favre is gone. No longer necessary to put "icon" in every story about him. It is time to let go.

Harley Davidson is a company that makes noisy overpriced motorcycles. Nothing "iconic" about them.

In the past six months, stories that have run in our newspaper have used the noun icon 38 times and the adjective iconic 75 times.

The next person who uses ICON I can.

Pabst Farms is looking like a bust...

I took a self-guided tour of Pabst Farms in Feb/March, around the time of the last snow. This could be a suburban slum-in-the-making.
Pay particular attention to the last twelve (mostly caption-free) shots. This little Towne Centre collection of empty store-fronts is an brutal commentary on suburban sprawl gone wrong. Roll the mouse over and click on the rectangular thingy in the lower left corner for the captions on the photos.



Several months back I posted a piece about Toll Brothers, a big east coast (Horsham, Pennsylvania) builder/developer. They are in the kind of serious financial distress that needs only a few more months of recession to do them in.

The principal reason for their dire straits was reported as partially completed work on developments, combined with options they had purchased on land for ever more development. That is the bane of anyone with big plans for "build out," based on rosy scenarios for the future of a real estate boom.

Locally, the general partners in Oconomowoc (and, presumably, lots of limited partners) committed huge amounts of capital to purchasing the raw land, surveying it, platting it, greasing the slow-turning wheels of government, creating marketing hype, bulldozing, laying sewer and water pipe, paving/curbing, advertising, lining up "preferred" builders, creating synergy through allied development of a hospital, a research park, and a bunch of corporate warehouses, And the real biggie-- snagging an adjacent Harley Davidson dealership. Then they had to cook up their naming schema (shops neatly tucked into a Towne Centre), and the evanescent promise of a regional shopping mall--a destination mall-- with "high end" anchors (we don't need no stinkin' WalMarts, contaminating our Bon Ton-like and Lord and Taylor-ish destinations). And, of course finagling a $25 million interchange on Interstate 94 to funnel customers into their subdivision and mall.

Once a project like Pabst Farms gets rolling, it needs to stay on a pretty quick, well-disciplined pace . If, heaven forfend, the untimely bursting of a real estate bubble intrudes, the general partners are in trouble. And their biggest trouble often comes from the clamoring of all those limited partners who put up much of the capital. These are, typically, country club fat cats, lots of orthopedists and plastic surgeons, professionals who have big incomes and are desperate for a sweet tax dodge. They have--in the usual scenario-- put up lots of money; they expect, in return, their share of the huge (dare we call them inflated?) expenses of the developers, including the marketing hype. When things slow down and there's little operating cash from the sale of lots, the general partners have to scramble, go back to the limited partners for cash infusions.

Pabst Farms is very likely in the unfortunate situation of being stuck right in the middle. They really can't justify continuing to lay sewer and water pipe, pave, plat and market overpriced vacant lots ($110 thousand and up, assessed value) in phase two and phase three. They are still trying to get some return on investment from the sale of the last of the lots in the low-rent, and --frankly, cheesy--Phase One. Meanwhile they,the developers, have to pay real estate taxes on the lots that sit there unsold.

As soon as they switch from corn to platted/ready-to-build-on lots in phase 2 and phase 3, they are out of low-tax farming and into high tax subdivision territory. How high? The taxes one pays on a 1/3 acre lot valued by the assessor at $110,000. Continuing to plant corn on most of the Pabst Farms acreage is nothing more than a weak attempt to hold off a looming day of reckoning.

And all that costly-though-tax-deductible Everything Else Is Just Another Subdivision marketing hype, going back to 2003 and before, is beginning to fade in the sun, just like the signs for Interlaken. That's the name of Phase Three out at The Farms, a phase that looks more like a hallucination than a real possibility.

Update: Drove by PF last week. No more subdivision development. They're planting--YOU GUESSED IT--corn, lotsa corn.

Dave Barry on the Economic Stimulus Payment

Q. What is an Economic Stimulus Payment?

A. It is money that the federal government will
send to taxpayers.

Q. Where will the government get this money?

A. From taxpayers.

Q. So the government is giving me back my own
money?

A. Only a smidgen.

Q. What is the purpose of this payment?

A. The plan is that you will use the money to
purchase a high-definition TV set, thus
stimulating the economy.

Q. But isn't that stimulating the economy of
China?

A. Shut up.

Helpful "signage" at Tokyo Narita International Airport. . .

No doubt about where you can go if you wanna smoke...

A new president comes into office in eight months . . .

All talk of bitterness and lapel pins will be put aside, in the interest of getting to the ISSUES:

o Gasoline costs four dollars a gallon.

o Airlines--most of them--are in the tank. Airports barely functioning for lack of landing fee revenue.

o Recession that was supposed to end in June has gotten worse in the last 6 months. When the numbers are released at the end of January it will probably be 4 straight down quarters. Unemployment surging with the collapse of retail. Service industry workers hardest hit. Many of the shops (including anchors) in shopping malls are shuttered.

o Detroit on life support. They mostly don't have the cars Americans need. Americans mostly don't have the money to buy anything with four wheels. Nobody can get a loan. Countryside littered with parked SUVs and big honkin' F250s, because the costs of repo are hardly justified by value of the carcass. (Tiny bright spot: bike sales and repair are brisk.)

o The housing/mortgage/banking nexus worsens as hints of the full enormity of the losses in the financial sector continue to dribble out.

o Families doubling and tripling up in suburbia.

o Corn/ethanol bubble is losing air fast. Farmers are back in the hole.

These are the minor problems that will take a back seat to . . .

The Biggies:

o Ending the war in Iraq.

o Universal Health Care.

A new President must do these two things, or the voters will turn against him/her, just as they did against G.W. Bush. Iraq is first on the list.

Closing out the Iraq fiasco will be a nightmare for American troops, nearly as bad as continuing. Look at the detail of a map of Iraq and the Persian Gulf. The only way out is the north/south route, down the narrowing terrain of that cinder of a country, toward the seaport where the tip of Iraq meets the tip of the Persian Gulf. The retreating Americans will either leave behind hundreds of billions in war materiel and equipment, or try to load the stuff on thousands of ships--all trying to maneuver in that bottleneck-within-a-bottleneck, the Straits of Hormuz.

Even with all the training that gets done by the Army, I get a feeling nobody has been practicing the art of orderly retreat. Actually, there's no such thing. Think Dunkirk, or--even worse--Bonaparte's Moscow disappointment.

A retreat, at the beginning of the end of an empire.

The Grande Armée Crossing the Berezina

Napoleon and a remnant of the Grand Armée trudged west, in retreat, out of Moscow and across Russia and Poland during the winter of 1812-13. Even though his army had been reduced from 422,000 to 150,000 by the time Bonaparte reached Moscow--only to find it empty (nothing to pillage; nothing to eat)--the worst part was the retreat. Imagine the heartbreaking scene on the banks of the River Berezina. Fifty thousand men waded into into an insignificant (but freezing) river in Poland; twenty eight thousand made it to the opposite bank. Where another eight thousand were killed by the Cossacks. Thousands of camp-followers presumably died as well, but nobody kept track of inconsequential collateral losses of the "comfort women" of Nap's officers' Corps.


"Probably the best statistical graphic ever drawn, this map by Charles Joseph Minard portrays the losses suffered by Napoleon's army in the Russian campaign of 1812. Beginning at the Polish-Russian border, the thick band shows the size of the army at each position. The path of Napoleon's retreat from Moscow in the bitterly cold winter is depicted by the dark lower band, which is tied to temperature and time scales".
Edward Tufte.