New American Paradigm

Saturday Sanity

Life as a Cuckoo Clock Bird...

Friday Foto: Oh My God

No this isn't an illusion.  It's not a camera trick.  It's not computer enhanced.  It's a real machine.  Leave it to the Germans to design a saw big enough to cut the world in half.

Prosperity Without Growth

This is a big meaty report done by the UK's Sustainable Development Commission called Prosperity Without Growth that I plan on diving into over the next week and will offer some thoughts along the way.  It's interesting to me in that it attempts to answer an emerging and difficult question.  How do you reconcile capitalism and sustainability?

Along the way I think there's a dilemma that Americans in particular, but Western societies in general, will need to ask themselves.  Where is the line between capitalism and consumerism?  We almost intuitively understand that the latter is dangerous and perhaps even immoral but are also deeply suspicious of it as foreign or perhaps vaguely communist.  Ironically it also leads us to embrace anti-capitalist systems like China and become dependent on slave labor to pay for cheap goods.

Don't Paint the White House Black

George Clinton fans will probably be the only ones who get the joke in that headline.  Clinton, of Parliament Funkadelic fame, had a brief comeback in the 90's that included the cut "Paint the White House Black".

Well it turns out that doing so would miss a simple solution to climate change.  Use of white paint in sunny areas would reflect so much sunlight away from the Earth's surface it would have the effect of taking all cars off the road for 19 years.

Americans Saving More, Investing Less

We've mentioned before the marked increase in personal savings before.  This is, of course, a very good thing.  Low personal savings are unhealthy in the long term, so it's only natural that this trend reverse.  Usually though, there are opportunities for investment and that's eventually what brings economies out from under recession.  People start businesses, buy equipment, or otherwise develop the infrastructure necessary for making money.  Otherwise they supply capital in the form of stocks or bonds so that others can do so on their behalf.

Unfortunately, that does not appear to be happening now.  Paul Krugman notes:

That saving ought to be translated into investment, but the investment demand is not there. Housing is flat on its back because it was overbuilt; housing bubbles collapsed not only in the United States, but across much of Europe. Many businesses cannot get access to capital because of the breakdown of the financial system. But even those that do have access to capital don't want to invest because consumer demand is not there. Between the housing bust and the sudden decision of consumers to save, after all, we have a world with lots of excess capacity. The GDP report that just came out says that business-fixed investment, non-residential fixed investment, essentially business investment, is falling at a 40 percent annual rate.

Saturday Sanity

With all the talk about Cheney torturing people, the economy in the toilet, an environment on the brink, two wars still being fought, it's time to reflect for a few moments on the shining sun, Death Cab For Cutie, and a groovy amateur video that really shouldn't be free.

Death Cab for Cutie - Little Bribes from Ross Ching on Vimeo.

Happy Saturday and don't forget to say a little prayer for all of those we've lost this Memorial Day.

The Way We Were

Typically while suffering in the midst of a recession , Americans can take solace in the fact that the economy can get out of its funk by going back to doing what it was doing before.  Typically....

The problem for us right now is that we can't go back to what got us in this mess.  Unlike normal cyclical ups and downs, our economy for the last several years has been built on a massive expansion of personal debt.  Worse, that personal debt has now been socialized through government bailouts on the bad real estate loans that were used to finance this asset bubble. 

Economists View has the details:

U.S. Household Deleveraging and Future Consumption Growth, by Reuven Glick and Kevin J. Lansing, FRBSF Economic Letter: U.S. household leverage, as measured by the ratio of debt to personal disposable income, increased modestly from 55% in 1960 to 65% by the mid-1980s. Then, over the next two decades, leverage proceeded to more than double, reaching an all-time high of 133% in 2007. That dramatic rise in debt was accompanied by a steady decline in the personal saving rate. The combination of higher debt and lower saving enabled personal consumption expenditures to grow faster than disposable income, providing a significant boost to U.S. economic growth over the period.

We're all waking up with a hangover promising never to do THAT again which means people are dramatically changing their behavior.  That means saving more, taking on less debt, and in turn, buying much much less.  In a consumer driven economy, that means the economy will not be recovering any time soon.

Sometimes paradigm shifts are painful.

Going forward, it seems probable that many U.S. households will reduce their debt. If accomplished through increased saving, the de-leveraging process could result in a substantial and prolonged slowdown in consumer spending relative to pre-recession growth rates.

So how will this recovery look?  I think we're seeing the canary in the proverbial coalmine in Starbucks.  Is there a better example of the "spend today worry tomorrow" economy than an empire built on $5 flavored coffees?  Don't get me wrong, I've grown up in Western Washington so I take my espresso intravenously, though I still refuse to forgive Howard Schultz for selling our beloved  Sonics.  But it appears I'm not the only one who has trouble seeing how Starbucks fits into this shift in American spending behavior.

Maybe the worst nightmare is this: What if Starbucks is an artifact of an economy that's not coming back? A time of rising, if fleeting, American affluence as we moved from dot-coms and telecoms, to day trading and house flipping, all based on the biggest run-up of debt in the history of the world. For this venti, triple-shot America, it might have been the quintessential bubble drink.

Here's the part I'm having trouble figuring.  Each time things look bad we have some new whizbang industry to pull us out of our funk.  In the 90's we had the internet.  2000's the financial industry.  What is it going to be this time?  I haven't got a clue and that's frightening.  Worse, our political leadership appears to be so clueless about how to actually help create jobs, that they would rather through billions at a dying company that help support growing companies.

Go figure.

Friday Foto: Trippy Building

No this is not your eyes deceiving you, nor is it photoshopped.  This building in France is being renovated and instead of a drab old canvas wrap, someone decided to give its temporary coverering the Salvador Dari treatment.

Photo by Drewje

Transportation: A Tale of Three Cities

Miles O'Brien, former CNN spaceman/science reporter, teamed up with PBS to produce a series of documentaries on America's infrastructure crisis called Blueprint America.  It's a great series (editorial note: I've only watched a couple so perhaps the rest is all trash with crayon graphics and O'Brien on a cell phone) but one in particular stands out with a compelling narration of how transportation and land use choices affect cities.  To illustrate the impact of these decisions, O'Brien tells the story of NYC, Denver, and our bike-happy friends in Portland.

Perhaps most importantly, the series is done in a way that is easily digestible for people who are not subscribers to Municipal Government Monthly.

Alas, no video embed feature was available, so you'll have to go to PBS to see it here.

The New York Times review points out something that I think is true, but would have been lost on the target audience.  It wanted more depth on the differences in each community which might make certain changes impossible in others.

Mr. O’Brien ties the transportation situations in Denver and Portland to local attitudes toward suburban development. It is certainly valid but seems simplistic: what about geography, energy sources, differences in local economies? And what does any of this civic history have to do with the future of our infrastructure, which is supposedly the point? It often feels as if a longer, more discursive report on urban planning had been shoehorned into the “Blueprint” format.

What do you think?

New Urbanism: The Movie

A primer to New Urbanism, in a video with jokes and music.  What's not to like?

It even says "Yo!" when you're supposed to pay attention.