Bacon's Rebellion

  • GOVERNANCE TRANSFORMATION

    Posted on

    by

    James A. Bacon

    WaPo is the Subregional print medium of record serving the Subregion that is the location of the capital of the US of A. Fulfilling its role, WaPo serves up a regular diet of federal Agency misdeeds.

    Today it is SBA on the front page – billions in contracts awarded to the wrong size Enterprises. Name a federal Agency that has not violated laws and regulations is the past few years – EPA, Interior, Defense, FERC, FEMA, DHS, ICE, the legislature, the court system – the list is exhaustive and exhausting.

    These violations of law and regulations are not problems of BIG government, they are problems of BAD government and dysfunctional governance structure.

    These violations of law and regulations are not violations of some abstract philosophical ideology of governance, they are violations the laws establishing the Agencies and the regulations they promulgate and are responsible to implement.

    Neither the Elephant Clan nor the Donkey Clan have shown they can govern under the current structure. Polls indicate that citizens believe the current administration is the worst in since modern communications made widespread knowledge of “national events” accessible to the majority in the Ziggurat.

    Nothing will change until there is a Fundamental Transformation in governance structure and that requires citizen understanding of the organic structure of human settlement patterns so that governance structure can reflect economic, social and physical reality.

    Without Fundamental Transformation the future of democracy with a market economy is bleak. The current trajectory is unsustainable.

    Did someone say that banks were going to use the bailout money to expand rather than unfreeze credit?

    EMR

  • FENDING OFF ’29 BY DOING WHAT MIGHT HAVEHELPED IN ’73

    Posted on

    by

    James A. Bacon

    Anyone still think the stock market is not a gambling venue?

    Great day yesterday! Today, not so good.

    “We have no idea where things are going.” Robert F. Engle, finance professor and director of the Center for Financial Econometrics at New York University.

    Is NYU near Wall Street?

    Cool graphic on the front page of WaPo’s Business Section portraying the Chicago Board Options Exchange’s Volatility Index (VIX) aka, the “Fear Index.”

    There is reason for fear. This is not your fathers recession. It is not your grandfathers depression.

    This is a punctuation in the 200 year equilibrium that has been based on the Agrarian to Urban Transformation. The punctuation is caused by the mass consumption of natural capital and borrowing from grandchildren and global trading partners.

    A technologically driven consumer based society costs far, far more than citizens have been paying. Even worse, the small percentage they have been paying – for goods and services and in fees and taxes – has been paid with debt and consumption of nonrenewable resources.

    Agencies run by pandering politicians and governance practitioners as well as Enterprises and Institutions run by self-serving “leaders” and all supported by MainStream Media have convinced citizens they can have it all for next-to-nothing. All boats cannot rise indeffinitely on escalating consumption in a finite environment.

    This was clear to many in the ‘20s and should have been clear to all in 1973.

    We have noted the lynchpins of the current Global Meltdown in prior posts. Tonight, we summarize two human settlement pattern indicators that show how Agencies, Enterprises and Institutions are preparing to address the need for Fundamental Change in settlement pattern.

    In summary they are creating plans to taking actions that might have helped in 1973 but are now just pipe dreams.

    We have suggested in columns and posts that rebuilding Tysons Corners around an armature of 19th century boulevards, retrofitted for early 20th century Large, Private Vehicles rather than a Balanced Community with Alpha Villages with Ziggurat METRO station-areas in foolish. See “All Aboard” and “A Picture is Worth a Thousand Lies.” Also see over a score of Jim Bacon and EMR columns on Tysons Corner and METRO to Dulles since 2003. (Note where the “Fear Index” cited above was going from 2003 to 2006. Bacons Rebellion was NOT Chicken Little speaking in settlement pattern tongues.)

    There are two paths to cut dependence on foreign energy, an imbalance of trade and consumption of natural capital:

    1) Fundamental Transformation in human settlement pattern, and

    2) Start a long recession / depression.

    The second path does not lead to safety and happiness, much less prosperity and the preservation of a democracy with a market economy.

    Now the second shoe drops. Maryland’s Montgomery County is planning to “improve” Rockville Pike by turning The Pike into a 19th century boulevard, retrofitted for early 20th century Large, Private Vehicles.

    If Tysons had been rebuilt when it was obvious those 1,700 acres would not work as boxes in an asphalt desert – say in 1973,

    And if Rockville Pike had been rebuilt when it was obvious The Pike would not work as a string of boxes along an asphalt desert – say in 1973, then

    There would been open land outside the Clear Edge in Eastern Loudoun County, VA and in Frederick County, MD.

    Now?

    Too late.

    Every day the resources needed to evolve functional human settlement patterns and replace papier-mache infrastructure are melting away.

    According to a CNN pole released today, 75 percent of the citizens of the US of A think things are going badly in this nation-state. If they only knew how badly and for how long the voices of reason had been drowned out by the advocates of Business-As-Usual that supported an unsustainable trajectory, they would be even more concerned.

    EMR

  • Fleet Maintenance, Hokie Stone and Virginia’s Fiscal Crisis

    Posted on

    by

    James A. Bacon

    Running a cost-efficient government means paying attention to the details. In his latest column, Mike Thompson, president of the Thomas Jefferson Institute for Public Policy, describes one idea that has saved the state millions of dollars — and points to other reforms that can save millions more.

    Thompson serves on the Regulatory Reform Commission, a bi-partisan group appointed by Attorney General Bob McDonnell, and he sits on the infrastructure task force chaired by Lt. Gov. Bill Bolling. He reports this success story:

    The General Assembly transferred the responsibility for maintenance of the state’s automobile fleet of 4,669 vehicles from the Virginia Department of Transportation (VDOT) to the Department of General Services (DGS). The DGS then opened auto maintenance to private sector providers to compete with VDOT’s expertise in this area. Since this competitive sourcing process began, we have found that in only some areas does VDOT provide the best service for the best price, and in other cases the private sector provides the best service and best price. But far more importantly, the state has saved fully 25% on the cost of auto maintenance by bringing competition to the table of vehicle maintenance.

    Then Thompson turns his gimlet eye toward higher education. Building costs on Virginia campuses, Thompson had heard, were 20 percent higher than comparable buildings off campus — presumably the consequence of state regulations. The task force called in a Virginia Tech official for details, only to find out that the cost padding was far worse. At Virginia Tech, the per-square-foot cost of buildings on campus is 70 percent higher than buildings in the research park adjacent to the campus.

    One reason is a Virginia Tech specification that every building must be constructed of “Hokie stone,” a dolomite limestone that is a defining feature of the campus. From Wikipedia: 80 percent of the stone is quarried from a 40-acre, University-owned quarry a few miles from campus, the rest from a second quarry on a local farm. Some 25-30 Virginia Tech employees “use black powder each day to dislodge the stone into block sizes and finish the blocks by hand using hammers and chisels.” Sounds expensive.

    As expensive as it is, Hokie Stone accounts for only a portion of the inflated construction costs. It would be interesting to know what other factors are responsible for the bloat. The next time Virginians are asked to approve another $100 million+ bond offering to support higher-ed building construction, we might press for answers first.

    In his column, Thompson cites other examples of absurd regulations and easy savings. As long as legislators adopt the attitude that it’s easier to stick the costs on taxpayers than the review state regulations with a fine-tooth comb, Virginians will pay higher taxes than they need to, and our periodic fiscal crises will be worse than they need be.

  • We’re So Down-Home Country. You Betcha!

    Posted on

    by

    James A. Bacon

    John McCain’s faltering presidential campaign keeps grasping desperately at straws. The former beauty queen from Wasilla is one; NASCAR and country music is another.

    It amazes me just how the GOP scrapes for the support of the working classes it has so badly screwed over in the past eight years. And the McCain campaign and its party are trotting out just about every cliché they can think of.

    Consider Sarah Palin’s showing at Richmond International Raceway this week. According to the adoring – and so typically out-to-lunch – editorial writers at the hapless Richmond Times-Dispatch, Palin:

    “… drew a huge throng of enthusiastic red-state voters. Jerry Kilgore warmed up an already perspiring crowd by leading the Pledge of Allegiance and offering a prayer for the country — and for the safety and well-being of the Republican ticket. Not a moment too soon, some wags might respond.

    Country-music legend Hank Williams Jr. crooned the national anthem with gusto, if not entirely on key. This was an all-American crowd. The gaping chasm between the audience and those covering the event was illuminated by the British reporter who leaned over to ask, “Who is that?”

    “It’s Hank Williams Jr.” an editorial writer responded. “His son?” the Brit queried. “Well, he can’t sing.” The gentleman missed the point. Moments later, Williams launched into a revised version of his hit song “Family Tradition.” The first line? “The left-wing, liberal media are a real close-knit family.” The audience bellowed its approval.”

    So let’s try to follow the logic: Palin equals redneck equals working class approval equals Hank Williams Jr. equals putting down the “left-wing liberal media” equals GOP victory in November.

    My, how smug. But let’s take the cliché apart. For one thing, every working class, pickup truck driving, deer-hunting good ole boy an girl in ole Virginny does not mindlessly go for every iconic symbol the khaki pants and Navy blazer GOP crowd can come up with. Certainly not all country musicians fall into the Hank Williams Jr. mindlessness set.

    Just after I read ther RTD’s editorial this morning, something I try to avoid normally, I was driving my car and heard bluegrass patriarch Ralph Stanley on the radio for Obama, noting that eight years of misery is enough. Stanley, for those of you who don’t know, is from the Dickenson County coalfields and has been a legend in Virginia bluegrass since the 1940s. Unlike Hank Williams Jr., who when sober merely grooves on his daddy’s aging karma, Stanley has some brains and serves on the local school board from time to time when he’s not on the road.

    I can think of a few other country music stars who aren’t exactly in the Bush-McCain-Palin just-us-folks camp. They include the Dixie Chicks, obviously, and Steve Earle whose powerful lyrics can really light a political fire.

    If you want a truly scathing attack on the financial mess and the Bushies who created it, take a listen to bluegrass mandolin star Del McCoury’s new CD “Moneyland.” It is dedicated to the working class who have been badly hurt by eight years of GOP mismanagement and, interestingly, contains a clip or two of an FDR fireside chat.

    My favorite song on the CD is “Forty Acres and a Fool,” which decries the exact, same suburban sprawl policies that have so defined development-happy, GOP-led boards of supervisors in such places as Loudoun and Prince William Counties. In the song, a newly-rich market trader buys a house in the country. Some lyrics:

    “He’s got a pretty trophy wife.
    Set her up in a McMansion
    But now he’s trying to wreck my life
    He’s driving out in his new Hummer
    I tell my kids don’t walk to school
    Took out my mailbox, squashed a possum
    Forty Acres and a fool.”

    Now that it’s a song even EMR can sink his teeth into. You betcha!

    Peter Galuszka

  • Bacon’s Fearless Forecast: Hard Times Ahead for Hampton Roads

    Posted on

    by

    James A. Bacon

    Presidential candidate John McCain drew a crowd tens of thousands strong at his campaign rally in Hampton Roads earlier this week, and it wasn’t just because the former naval aviator was once stationed at Oceana Naval Air Station. While his supporters share McCain’s flag-waving patriotism and his larger world view, material self interest undoubtedly lurks beneath the surface. Many Hampton Roadsters undoubtedly believe that local military establishment will fare far better under a McCain administration than an Obama one.

    I’m not making a partisan statement or casting a value judgment here. My point is not to dredge up the rights and wrongs of U.S. foreign and military policy. I’m simply observing that the Elephant Clan, for better or worse, funnels more money into the military than does the Donkey Clan. Commuities dependent upon military spending, such as Hampton Roads, fare better during Elephant Clan administrations.

    Back in the 1990s, the Hampton Roads economy lagged the nation in per capita income growth. That’s because the Clinton administration was spending the “peace dividend”: cutting back the size of the military and curtailing military pay. The Bush administration instituted a dramatic reversal, pumping up military expenditures and payrolls, and Hampton Roads prospered.

    As James V. Koch, former Old Dominion University president, writes in his 2008 State of the Region report, “DoD spending is responsible for more than 70 percent of the economic growth of Hampton Roads since the start of the new millennium and perhaps as much as 45 percent of our gross regional product. … The most important component of defense spending is military compensation, which accounts for 56 percent of spending in the region.”

    Koch does not speculate on what a Barack Obama administration might mean for Hampton Roads. But I will. Unlike Clinton, who faced no major perceived military threats in the 1990s and felt safe drawing down the military, Obama has promised to contiue fighting the war on radical Islam by escalaating the American presence in Afghanistan. There won’t be a “peace dividend” for him to spend. Still, he will likely look for ways to shave military spending — and that may impact the Navy, which is a less-than-critical player in the anti-insurgency wars.

    What can the inhabitants of Hampton Roads reasonably look forward to? Lower pay raises, for starters. Since 2002, compensation of military personnel has increased 63 percent, according to Koch. Even McCain would be unlikely to replicate such an increase. The prospect of Obama doing so is just about nil. Koch also raises the possibility of the loss of an aircraft carrier, which, along with accompanying task force and base support, could take $800 million a year out of the regional economy.

    One could reasonably argue that an Obama presidency would be better for the United States economy as a whole (I would not share that sentiment, but I concede that it could be reasonably argued). But that logic does not extend to Hampton Roads. There is every reason to fear that the region will turn from an outstanding performer of the 2000s decade into an economic laggard. The non-military presence there just isn’t dynamic enough to make up the difference.

  • “IT’S A WONDERFUL LIFE” REVISITED

    Posted on

    by

    James A. Bacon

    We have just had time to read a Sunday Op Ed from WaPo: “Not so Wonderful Now: Looking for someone to blame in the worsening crisis? Let’s go back to Bedford Falls.”

    Ross Douthat, coauthor of “Grand New Party: How Republicans Can Win the Working Class and Save the American Dream” spins a fine tale playing off of Frank Capra’s movie “It’s a Wonderful Life.”

    It is worth a read. Douthat nails the reality of evolving, ever more dysfunctional human settlement patterns from 1946 (when the movie appeared) until 2008. Douthat is on target, that is, up until the last three paragraphs. Then he falls into the abyss of Geographic Illiteracy and Spacial Obliviousness.

    You have to read to op ed to understand the details but Douthat demonstrates he does not have a grasp of functional human settlement patterns. Every one of the benefits he claims to value can be achieved – and can only be achieved – by patterns and densities he seems to think can be avoided in the future.

    For social (and from his other work one would suspect political) reasons Douthat suggests that after a period of crisis recovery, citizens will benefit from a reversion to settlement patterns dominated by Single Household Detached Dwellings and somewhat smaller but still Large, Private Vehicles to access them.

    This is a perfect example of political foolishness. Functional settlement patterns are not a partisan issue, they are not a sectarian issue. They are a condition determined by science. One might as well say “vote for the Elephant / Donkey Clan candidate and he will suspend gravity.

    EMR

  • WaPo AT IT AGAIN

    Posted on

    by

    James A. Bacon

    In a bold stroke of investigative journalism, WaPo has nailed the Washington Airports Authority for excess travel by Board members and their families at Agency expense. (“Airport Board’s Travel Spending Has Few Limits” 13 October)

    Great Work! Got them dead to rights…

    But where is WaPo on the big problem: Plowing $100s of millions into the wrong transport projects?

    • Overbuilding the Regional airport capacity and thus raising the cost of long distance travel

    • Overbuilding the Regional capacity for short flights that are inefficient, pollute the ground with noise and pollute the air excess atmospheric emissions

    • Dumping money into an airport that is in the wrong Regional location with short runways and cannot avoid creating world class noise pollution with the Core of the in the National Capital Subregion

    • Agreeing to build a ground transport system the does not serve the needs of air travelers and without insisting on functional settlement patterns in the station-areas that would help pay for the cost.

    But WaPo nailed those travel expenses …

    Why? See THE ESTATES MATRIX

    EMR

  • OBSESSED WITH ONE IDEA?

    Posted on

    by

    James A. Bacon

    Ugo Betti is right. ‘Mad’ IS a term used to describe a person who is obsessed with one idea and nothing else.

    We believe strongly in the economic, social and physical imperative of evolving functional human settlement patterns.

    On the other hand, we also believe strongly in the need to avoid large falling objects and toxic substances, the need to Balance nutrition and exercise, that the Earth is not flat and revolves around the Sun as well as the Periodic Table of Elements, the Electromagnetic Spectrum, the dynamics of complex organic structures. We believe these and most of the other science based theories and facts humans have articulated over the past 2.8 million years.

    The difference between these things and the exploration of functional and dysfunctional human settlement patterns is that there are many advocates and supporters of those facts, theories and realities.

    Many agree with EMR. The reason that it appears that many disagree is not the validity of attacks by those that disagree, it is the failure of those who agree to make that point, especially in the Blog context. Among other things they say:

    “EMR is (or may be) right about functional and dysfunctional human settlement patterns. However,

    • His ideas upset some of our key donors;

    • I could not get reelected if I took forceful stands on human settlement pattern issues;

    • My employer would fire me if I supported these ideas;

    • He is years ahead of us and we need short-term fixes;

    • We do not have to go as far as Fundamental Transformation, just implement this idea of mine and we will be fine, for now.

    • He said negative things about New Urbanists or ______ so we cannot support him;

    • He is holding his own, why risk having to catch spears aimed at him?

    • We will not make as much money if we change from Business-As-Usual so just ignore him.

    • If we endorse what he says, that means we have been wrong for years.

    EMR

  • RESCUE

    Posted on

    by

    James A. Bacon

    The WaPo headline says “U.S. to Invest in Country’s Banks In Effort to Revive Credit Markets.”

    We are not experts on how to rescue dysfunctional banking systems. Paul Krugman who just won the Nobel Prize in economics for his work 30 years ago says that the beefing up banKs strategy – first outlined by Prime Minister Brown a month ago (a Euro weenie in Bacon lingo) – is the right strategy. So for now we will go with that and see how it works.

    What we can tell you is:

    If this credit is used to invest in the wrong things – Wrong Size House in the Wrong Location, Large, Private Cars, Papier-mache Infrastructure and other drivers of settlement pattern dysfunction – the next crash will be worse and the next time Agencies will not have any money left to bail out anyone.

    In the short term the goal must be to create several strong, competitive banks in every New Urban Region.

    In the longer term? See the four Elementary Rules to save the US of A’s democracy and our market economy in IT IS ELEMENTARY.

    EMR

  • GROVETON’S BALLOON TALE

    Posted on

    by

    James A. Bacon

    Groveton spins an illuminating tale about setting a hot air balloon flight record from Miami to Seattle in the comments on “THE ROLE OF MAINSTREAM MEDIA.” This tale speaks volumes about almost every comments in response to the four IT’S THE SETTLEMENT PATTERN STUPID posts. Groveton may have heard the original version of this tale from a DotCommer who thinks that Seattle is the center of the Universe but it has some holes.

    It is not clear that it is even theoretically possible to fly any balloon, much less a hot air balloon, from Miami to Seattle. If it is possible, the flight would take one North and East over the Atlantic and the approach to Seattle would be form the West, thus if the balloon were over land and the balloonists had determined they were on course they would have set the record wherever they landed.

    There are, however, two more important lessons from this tale:

    If one does not understand the overarching Conceptual Framework – either the direction of prevailing high altitude winds or New Urban Region Settlement Patterns – they are lost before they start.

    So far not one negative commenter has demonstrated they understand – or are interested in trying to understand – human settlement patterns. It one does not know what they are talking about…

    Second, had the balloonists in Groveton’s story read the work of Bacon and Risse before they left Miami, they would know that wherever they found them, they would be in the right place. Get out of the balloon and start helping to evolve functional human settlement patterns.

    Next THE OBLIVIOUSNESS OF BLOGGER BOB AND THE PREGNANT MOTHER OF TWO.

    EMR

  • THE BOTTOM LINE

    Posted on

    by

    James A. Bacon

  • Design Your Own School Budget

    Posted on

    by

    James A. Bacon

    Jonathan Mallard, a Bacon’s regular and a candidate for the 4th District School Board seat in Richmond, has created a budget game, of sorts. Or perhaps it’s more of an experiment. Using data from the RPS he’s created a spreadsheet that shows where the money went. It’s a mind-bending list of numbers, to be sure. But it also offers an opportunity for anyone to go in and tinker with them and come up with a budget of their own.

    My results always come back as “0”.

  • Real Estate Roller Coaster

    Posted on

    by

    James A. Bacon

    It feels like we’re on an economic roller coaster these days, so why not plot real estate values since 1890 on a virtual roller coaster and go for a ride? Just remember to hold on tight.

    (cross-posted at Tertium Quids)

  • SWIFT BOATING THE MORTGAGE CRISIS

    Posted on

    by

    James A. Bacon

    There are both Donkey Clan and Elephant Clan partisans who try to make every problem that citizens face into something that is the fault of the other Clan. Most despicable are those who fain intellectual and academic objectivity in determining blame.

    Blaming the Donkey Clan for causing the mortgage crisis and triggering the financial meltdown because they connived to loan mortgage money to unqualified home buyers is a prime example.

    The rhetoric makes for superficially alarming partisan arm waving but has no substance. The core reasons for the financial meltdown are the responsibility of those in both Clans. The basic rules to achieve a sustainable economic trajectory are spelled out in IT IS ELEMENTARY.

    First to clear the air:

    Yes, lowering the loan standards for home buyers to qualify was done for political purposes. It was done by both parties and has grown worse in recent years with no Agency oversight

    Yes, governance practitioners were trying to beef up home ownership on the assumption it was good for those at the bottom of the Ziggurat and was good politics.

    Yes, ACORN and others may have undertaken illegal activities (See note on this topic in IT IS ELEMENTARY)

    But get real:

    If a prospective buyer got a loan that they could not afford and the dwelling is sound when it is foreclosed is a personal / Household tragedy.

    But what happens? The bank / Fannie / Freddie resells the dwelling to someone else. If the dwelling and its Dooryard, Cluster, Neighborhood, Village and Community have real value the financial system takes a hit for administrative costs and moves on. This happens all the time.

    If there are a lot of those foreclosures in any one component of a Community it can pose a significant problem because there is a problem with the Dooryard, Cluster, Neighborhood or Village.

    What is a nation-state tragedy is that from the start Fannie and Freddie did not set standards — as FHA (and later VA) have done since the 30s — for the quality of the dwelling and its location, design, context and services.

    There has been much that was not good about the cumulative, Regional impact of those old FHA standards but there were standards. By the time Fannie and Freddie came along there should have been real standards that supported functional human settlement patterns at the Unit, Dooryard, Cluster, Neighborhood, Village and Community scales.

    Standards were imperative because of the amount of money pumped into the housing market. Without standards, those billions of dollars leveraged dysfunctional settlement patterns. The lack of standards and intelligent regulation resulted in massive “Wrong Size House in the Wrong Location” problems.

    Call it subsidy, call it bad investment, call it what you please, this vast oversupply of money distorted the market and resulted in dysfunction at the Community, Subregional and Regional scales.

    Now add bundling, derivatives, no oversight, greed, and global trading – the result is an InterNational disaster.

    Since 1973 Agency and Enterprise leadership in the US of A – aided and abetted by both political parities – has been moving toward an economy based on burning up natural capital, importing energy and cheap labor and borrowing from foreign lenders.

    In “IT IS ELEMENTARY,” we noted that if a nation-state wants to expand dwelling ownership then:

    1) The Houses need to be near Jobs and Services and sized for those who need shelter rather than encouraging the Wrong Size House in the Wrong Location.

    2) Agencies, Enterprises and Institutions must discourage speculation on home value.

    Both 1) and 2) are directly related to that fact that there is too much land held for urban land uses and that which has been developed is dysfunctional.

    Over the last 60 years owner occupied dwellings have increased in value at about the rate of inflation. When the current wave a write downs is complete the values will be below inflation.

    It is worth repeating that the internal rates of return on many investment strategies are much higher than on real estate, especially owner occupied dwellings. Depending on ones Household circumstance it may be wise to buy a dwelling for living.

    From a financial perspective, it is almost never wise to buy an owner occupied dwelling as a speculative investment. Speculating on ones dwelling degrades the living experience, encourages Abandonment (See Wild Abandonment” 8 Sept 2003) and most speculators end up losing money. One hears about the bonanzas in house speculation hyped by real estate agents not from careful analysis of regional data.

    It is important to note that the excuse that impudent loans were created as a way to break “red lining” is a red herring. Almost every upscale component of urban fabric was at one time a place that could be “red lined” — Georgetown, College Hill, Society Hill, Old Town, Vieux Carrie, the list is endless.

    What is needed to enhance residential settings is a Regional strategy to improve settlement patterns Region-wide.

    Implementation of this strategy may entail making loans to some who would not normally qualify for a mortgage but the loan decision must be made within the context of a strategy to ensure that the Unit, Dooryard, Cluster, Village, Community is a good investment.

    The mortgage crisis did not arise because of loans made to prospective home owners with a high risk of defaulting. A foreclosure of someone who had poor credit may be a risk worth taking and if they default it can be a Household tragedy, it is not a banking Enterprise tragedy. If the dwelling is in a functional location, is well built and not too big there are many of potential buyers who desire shelter.

    We have pointed out for years that the real problem with Fannie and Freddie is not the bad accounting or insane compensation but rather that they pumped billions into dwellings that were held to no settlement pattern standards beyond municipal controls.

    The first stage of the mortgage problem is tens of thousands of bad loans on dwellings that cannot be resold for anywhere near the loan amount. This is compounded by fraud induced by front line lenders who do not have to worry about the loan going bad because Fannie and Freddie would buy it and roll it into a package to sell to gamblers. Add to that the fabrication of definitives to ‘spread the risk’ and you have the first leg of the financial ‘meltdown.’

    EMR

    Note to Jim Bacon: Swift Boating the Mortgage Crisis is a Commonwealth of Virginia issue because:

    1) This is a prime example of a case where the logical Community and Regional responsibility has been overwhelmed by federal action

    2) Part of the Commonwealth is in the National Capital Subregion where these policies are made

    3) A lot of the Swift Boating is coming from partisan Institutions with addresses in the Commonwealth.

    4) The governance of the Commonwealth has done nothing to help citizens address reality.

  • Is This Any Way to Run a Government?

    Posted on

    by

    James A. Bacon

    As I argued in my last post, fiscal crises call for emergency measures. Gov. Timothy M. Kaine has no choice to resort to whatever short-term expediency he can find to close a $2.5 billion revenue gap in the current biennial budget. But it would be nice if Virginia’s fiscal exertions resulted in some lasting gains in productivity.

    Read the governor’s press release, and you’ll see that, at most, there are only $175 million in enduring efficiencies contained in the governor’s emergency financial plan. From the press release:

    The Governor’s reduction strategies include

    • $100 million in improved business practices and efficiencies
    • nearly $32 million in the reduction or elimination of current services
    • over $27 million in reduced personnel costs
    • over $13 million in reduced discretionary expenses

    For example, the Department of Forestry will save $50,000 by sharing the cost of a hydrologist with Virginia Tech; the Science Museum will save $100,000 by closing for an additional day each week; the Department of Taxation will save over $1.7 million by reducing technology costs; and the Department of Mental Health, Mental Retardation, and Substance Abuse services will save over $2 million by consolidating certain targeted administrative services regionally for their mental health treatment centers.

    The other measures represent fiscal business as usual: withdrawing $400 million from the rainy day fund, borrowing $250 million for capital outlays, delaying pay raises for state employees, a hiring freeze and even 570 layoffs.

    The layoffs sound like a real cut. But how lasting will they be? I went back to the Commonwealth of Virginia’s official employee count and deleted any line items pertaining to higher education in order to get pure numbers on state administration. Here’s the track record since 2001:

    2001….. 66,927
    2002….. 64,908
    2003….. 64,044
    2004….. 64,368
    2005….. 63,099
    2006….. 63,486
    2007….. 65,309
    2008….. 66,193

    However, these numbers don’t tell the whole story. I suspect that the big drop from 2005 to 2006 represents the transfer of many state IT employees to Northrop Grumman — someone please correct me if I’m wrong. Also, I’m not clear about whether these numbers include “contract” employees. Whatever the details, after the temporary austerity budgets of the Warner administration shrunk state payroll, the numbers have crept back up to where they were at the peak of the dot.com prosperity (or even higher, depending on how the state counts IT and contract employees).

    The moral of the story: Freezing positions and laying off employees without re-engineering government processes is a temporary expedient only. These moves will not create any lasting improvements to the cost of administering state government.

Now Available

Book cover of 'Dust Mites: A Second American Revolution' by James A. Bacon, featuring astronauts planting a flag with a blue and white emblem on a lunar landscape, with Earth visible in the background.
For sale on Amazon.com

The year: 2075. The American colonies on the Moon are getting restless under Washington’s tyrannical rule….

This second edition of “Dust Mites” has a snazzy new cover, includes helpful lunar maps, and is 5,000 words tighter than the original. The sequel, “Trogs,” is scheduled for publication this summer.

Advertisement

Advertisement

Advertisement

Advertisement

About

Bacon’s Rebellion is Virginia’s leading politically non-aligned portal for news, opinions and analysis about state, regional and local public policy. Read more about us here.

Fund the Rebellion

Shake up the status quo! Your contributions will be used to pay for faster download speeds and grow readership. Make a one-time donation by credit card or contribute a small sum monthly.

Can’t wait until tomorrow

For your Bacon’s Rebellion fix?

Enter your email address to receive immediate notifications of new posts by email.

SUBSCRIBE

Search Bacon’s Rebellion

Categories

Archives

The Jefferson Council

Protecting Thomas Jefferson’s Legacy at the University of Virginia

Forgot Your Password?

Shoot me an email and I’ll generate a new password for you.

Latest