Month in review: February
February saw the unearthing of the oldest human ‘habitation’ yet discovered intact, as I posted in Tmb w/o view, all mod cons:
“All rent will be due in the first flood of every millennium ….”
Civilization comes from cities, and cities arise only in ambitious societies that seek to create new things. In the act of seeking to send a few to the eternal afterlife, Egypt innovated new skills, new social structures, new towns, all of them inventions of lasting value much more worthy than simply preserving a single pharaoh’s ka.
At the other end of the spectrum came this tongue-in-cheek Big Apple tale of the tiniest rentable space: a hanging pallet cubicle above a doorway: multi-family housing?
The complexities of securing permission to develop in urban environments featured prominently in February, first with a British fantasy, Developing in fairyland, worthy of William Morris:
“I’m staunchly opposed to the Mall At World’s End.”
Although the fairies themselves had no representation, they were beneficiaries of a neighborhood watch group that was vocal on their behalf:
“I went to a meeting of the community council and the concerns cropped up there,” he said. The council was considering lodging a complaint with the planning authority, likely to be the kiss of death for a housing development in a national park. Jeannie Fox, council chairman, said: “I do believe in fairies but I can’t be sure that they live under that rock.“
It’s hard to convey my delight in that disclosure: Ms. Fox wants everyone to understand that though she is multi-culturally tolerant, she does have a standard to uphold — but to where might one turn for an Elvish Impact Statement?
Closer to home, in a mall by any other name? I observed how calling development anti-sprawl was the key to happiness, and excerpted further from Bob Bruegmann’s book Sprawl, commenting on his case-study review of growth controls in Portland, Oregon: Sprawl: the Portland experiment, Part 1 and Part 2, which led to a Big Hypothesis that I advanced in March.
New New Orleans continues to a major topic, with explorations of Smaller is better, Part 1: the concept, and its followup, Part 2: the discouraging reality, which is that economic gangrene may be setting in because rebuilding is occurring in neighborhoods that have no chance of successful revival, leading me to this exhortation:
Mayor Nagin, please spend what is left of your political capital by making an unpopular but correct choice.
Deny building permits for everything below sea level.
Meanwhile, half-Bakered critiques such as a Wall Street Journal editorial have enabled the Federal government to shirk its share of the burden, so the state is tiptoeing forward, because if with Feds you don’t succeed, you must try by yourself. However, the best solution uses all levels of government — Federal, state, and city, as I set forth at length in a recipe for financial jambalaya, which laid out:
“How to do it”: Rebuilding
AHI’s proposal puts the city and state in first-loss position and follows the golden rules of finance:
1. Make Stone Soup. Everybody contributes, everybody benefits.
2. Nobody’s in it just for ‘goodwill’. Harness the law of economic gravity.
3. Align the incentives. I win when you win, and vice versa.
4. Closest decides. On the ground, smaller-scale decisions are better.
5. Control means risk assumption. Those who want control buy it at a price: assumption of risk. You want to drive, you sit in the crumple zone. An extension of this in a lending context is that the originator must take first loss.
6. Either a lender or an investor be, not both. Debt and equity are always in fundamental tension.
In the arena of life-as-primer, I reviewed a new paper on Tax Increment Financing in a tiff about taxes and showed the dark side of a strong African economy in a rising tide strands some boats. As for tax reform, we discovered another benefit of political vaporware in Tax reform: same time next year? And in appraisal, the valbots are coming, with the launch of an automated home-appraisal Web site, to which I asked the question:
Most importantly, any appraisal is an opinion. Can a bot perform one as well as a human?
“In my opinion, yes.”
Finally, with regard to the GSEs especially contritely behaving Fannie Mae, as a public service I translated Greenspan into blog in GSEs: Greenspan’s last testament:
Unlike the typical financial institution, which is as a fish in the sea, each GSE is like a whale in a swimming pool. It’s so big that it soaks up disproportionate space, and any move, any tremor, any twitch, sends shock waves throughout the pool, scattering the fish.
As Fannie and Freddie increase in size relative to the counterparties [The other half of any transaction. — Ed.] for their hedging transactions, their ability to quickly respond to changing market conditions and correct the inevitable misjudgments inherent in their complex hedging strategies becomes more difficult.
I mused on an unfortunate coincidence in there’s no G, S, or E in duopoly, is there?, and analyzed the Rudman Report on Fannie Mae’s sophisticated earnings management in botoxed earnings and the Holy Grail defense:
In response, Fannie Mae has expressed contrition and made leadership changes:
We have put in place a new management team, with a new Chief Financial Officer, Controller, and Chief Audit Executive.
We may call this the Monty Python and the Holy Grail opening titles defense:
We apologise for the fault in the
subtitles. Those responsible have been
sacked.
Mynd you, moose bites
We continue our quest for the Holy Grail of housing knowledge …
