Friday, December 21, 2007

Reflecting on the failures of the Bubble Wonders

The real estate bubble of the last decade, fueled in the final years near its peak by a vast infusion of new suprime mortgage money, has collapsed as surely as if it fell into a sinkhole, leaving just a pale reflection of its former self floating near the surface.

The collapse of the subprime mortgage market was as predictable to some as it was surprising to others. Probably it was inevitable, since the bubble's expansion was presided over by some of the best financial minds of their generation, or at least people who thought they were the best financial minds of their generation. They were the geniuses I like to think of as the Bubble Wonders. First and foremost among them was Alan Greenspan, the free market ideologue and Ayn Rand acolyte who presided over the Fed during the bubble's emergence -- the Gray Eminence of the Bubble Wonders, as it were.

Paul Krugman reflected on the Bubble Wonders this morning. He took particular note of Greenspan's role as cheerleader for the bubble.
So where were the regulators as one of the greatest financial disasters since the Great Depression unfolded? They were blinded by ideology.

“Fed shrugged as subprime crisis spread,” was the headline on a New York Times report on the failure of regulators to regulate. This may have been a discreet dig at Mr. Greenspan’s history as a disciple of Ayn Rand, the high priestess of unfettered capitalism known for her novel “Atlas Shrugged.”

In a 1963 essay for Ms. Rand’s newsletter, Mr. Greenspan dismissed as a “collectivist” myth the idea that businessmen, left to their own devices, “would attempt to sell unsafe food and drugs, fraudulent securities, and shoddy buildings.” On the contrary, he declared, “it is in the self-interest of every businessman to have a reputation for honest dealings and a quality product.”

It’s no wonder, then, that he brushed off warnings about deceptive lending practices, including those of Edward M. Gramlich, a member of the Federal Reserve board. In Mr. Greenspan’s world, predatory lending — like attempts to sell consumers poison toys and tainted seafood — just doesn’t happen.
But some of Krugman's ire is bipartisan. If the Democrats didn't cause the bubble, they also didn't do much to stop it. And now that millions of families are in danger of losing their homes, are the Democratic presidential making an issue of it in their campaigns? Not that anyone can see.
Given the role of conservative ideology in the mortgage disaster, it’s puzzling that Democrats haven’t been more aggressive about making the disaster an issue for the 2008 election. They should be: It’s hard to imagine a more graphic demonstration of what’s wrong with their opponents’ economic beliefs.
Or a better example of how cautious the Democratic candidates all are being. Wouldn't want to be accused of "class war," I guess.

Thursday, December 20, 2007

Big Brother held a press conference this morning, and I ran screaming from the house

"Nothing But Blue Skies" -- Big Brother Explains the Forever War
I was getting ready for work and wasn't really watching, but I heard him say something like "citizens need to be able to take their crops to market." Amid visions of Bush's crumbling economy turning us all into a nation of poorly paid agricultural workers eking out a miserable existence from the globally warming earth, I fled. But apparently he did not, in fact announce a new program to put us to work on the farm and get those crops to market. Instead, he dodged a lot of questions about the destruction of the CIA tapes. Other bits of assorted wisdom:
“And so, it’s like I said about the presidency,” Mr. Bush went on. “People in America, you know, like the presidency, and sometimes they like the president. Get it?”


And he again defended the Iraqi government from critics who say that it has failed to seize the opportunity provided by improved security conditions to achieve the reconciliation goals laid out long ago.

“Are we satisfied with progress in Baghdad? No. But to say nothing’s happening just isn’t the case,” he said. “If you trying to judge the Iraqi Parliament based upon our own Congress’s ability to get things done — is that what you’re saying? — I’d be a little careful.”

Asked about foreign investments in the United States that have soared with the fall of the dollar, like the announced sale by Morgan Stanley of a $5 billion stake to a Chinese investment fund, the president said he had no reservations whatsoever.

“I’m fine with capital coming in from overseas to help bolster financial institutions,” he said. “Protectionism would be a huge mistake for this country.”
Right. Wouldn't want to restrict his Saudi friends' ability to invest in America, would we?

(Note: I've been trying to ignore Bush as much as possible. I put together the image the last time he drove me slightly nuts -- when he announced the surge. Click on the photo to go to my Flickr stream and see my commentary at the time.)

Wednesday, December 19, 2007

'Tis the season for a temporary moratorium on discussions of gloomy weather and winter sadness

Festive Floral Wreath Embedded in Snowy White Softness
There's enough of that already. Instead, rejoice -- the Year of Living Irrelevantly is almost over. Soon enough we will be making decisions about the future of the nation and the world. For now, let's join Madison's Olbrich Botanical Gardens in celebrating the season with some festive and snowy white softness.

Tuesday, December 18, 2007

In this brutal winter, architecture gets its revenge, flinging darts of ice like Brutalist spears

Flinging Darts of Ice Like Brutalist Spears
You have to pick your way carefully these days around Vilas Hall and its cousin across University Avenue, the George L. Mosse Humanities Building. Shards of broken ice litter the icy pavement. Vilas and Humanities are two of the University of Wisconsin's Brutalist icons. Their stark concrete architecture has dominated their surroundings so long that, now that the University has plans to eventually demolish Humanities, they've generated a kind of nostalgic, protectionist backlash after years of being reviled by occupants and passers-by.

This fondness is, however, being tested by the the unseasonable amount of snow and ice Madison has had this year. The meteorological nastiness seems to seek out areas of heat loss like the rooflines of these old buildings, only to coalesce into huge icicles that hang from ledges and overhangs high above ground level. And then they fall, as if propelled by angry Norse gods throwing frozen thunderbolts. The price we pay, apparently, for living with memorable architecture -- dodging Brutalist spears thrown from on high.

Monday, December 17, 2007

Are you feeling Lucky? In the Madison real estate market, it's all in the roll of the dice.

The other evening you could see the partially completed Lucky, the huge mixed use student apartment complex near the UW campus campus on Madison's University Avenue, rise into the night behind Vilas Hall in the foreground. On their website is the tagline, "You only live once. Live Lucky," which seems to be a pretty realistic reflection of how the local real estate market has turned housing into a crapshoot.

The University of Wisconsin student newspaper The Daily Cardinal recently turned a skeptical eye on the Lucky project in particular and real estate development in Madison in general.
The upscale transformation of Madison is underway, and if you blink, your eyes may open to a completely different place. As Madison’s skyline changes, the city’s identity also undergoes a transformation.

Madison’s eccentric culture is in danger of drowning in a mass of pre-fabricated housing that brings Madison’s identity closer to that of nearly every other developing city in the nation. The campus is also in danger of further socio-economic segregation in housing as the price gap widens with the establishment of new, more expensive apartment buildings.


The newest high rise in the campus area is Steve Brown’s building, Lucky, which is the largest mixed-use project in the history of the city of Madison, according to the building’s website. Lucky continues the trend of new high-priced apartment buildings along University Avenue and West Gorham Street.
Several miles to the west, the Hilldale Shopping Center developers, Joseph Freed & Associates, have not been as lucky. The Wisconsin State Journal reported that The Heights, an 11-story condo, has been put on hold due to market conditions, to await "a date that more appropriately and effectively meets the supply and demand of the Madison condominium market."
That date could be months from now, or it could be years from now, said Ald. Tim Gruber, District 11, who represents the area.

This is the second time the developer has delayed plans for condominiums at Hilldale. In September, Freed & Associates swapped a 90-unit condominium building for a six-story hotel. Plans for Hotel Indigo will go before the Madison Plan Commission for approval Monday.

The Heights building is part of the second phase of redevelopment at Hilldale that also includes a Whole Food Store and a parking garage.

Freed & Associates may modify its designs for the building so that it houses office space, rather than condominiums, Gruber said. But any changes would first need to be submitted to the city and approved.

At least 15 percent of the condo units have already been sold. But Gruber said sales had stagnated.
All in the roll of the dice, apparently.

Sunday, December 16, 2007

When the weather forecasters can't help but traffic in euphemisms

When the Weather Forecasters Start to Traffic in Euphemisms
It snowed lightly in Madison most of Saturday afternoon -- light fluffy stuff, just enough to be irritating and make even more of a mess of the streets. The forecasters can no longer bear to face reality. They're starting to traffic in euphemisms, not wishing to aggravate their viewers' already oppressive seasonal affective disorder. They said we would get a "dusting" of snow.

The verdict in our household, where we felt provoked beyond endurance: "That was no dusting -- I shoveled that s**t!"

12.19.07 UPDATE: Too dark? Check out Letter from here's Holiday Moratorium on discussions of gloomy weather and winter sadness.

Driven by the winter wind

Kite Snowboarding on Lake Wingra
Last year at this time, ice boats flashed across the mirror-like surface of Madison's Lake Wingra. This year, with all the snow we've had, snow boards and kites are better suited to tapping into the power of the wind.