As we point out in PART IV of THE PROBLEM WITH CARS, 15 May 2007 may be thought of decades from now as the ‘Ides of March’ of the Autonomobile – Large, Private Vehicles.

The week that proceeded and the week that followed the 15 th of March in 2008 may be thought of as the ‘Ides of March’ for the leveraged, securitized, subsidized Global Economy, as we knew it.

The last few days there has been a “too-numerous-to..” count, cite or link-to flood of MainStream Media coverage but there is no examination of the bottom line:

Two items get no press.

First the real cause of the current crisis. Behind (or perhaps underneath?) the current financial Enterprise meltdown is the very same problem that was the root cause of the Savings and Loan Crisis (mid-80s), the Banking Crisis / Commercial Real Estate Meltdown (late-80s to mid-90s). The problem?

Dysfunctional human settlement patterns.

We had dogs in all these fights. We also had friends who we had warned five years before they went under in every downturn since Boise Cascade was wiped out by raw land speculation in the mid 70s. Our personal, inside experience includes not just national poster children like Boise Cascade and Continental Illinois Bank but a lot of Regional ones as well.

The lesson for citizens is simple: Evolve functional settlement patterns or suffer the economic consequences.

Sure, the “cause” of the current crisis is said to be the securitized sub-prime loans and securitized credit card debt that kicked over the house of cards. There were many other sub-problems too.

However, those most who were convinced by MainStream Media ads and low initial mortgage payments to buy a $300,000 to $900,000 dollar house in the R = 25 Miles to R = 60 Miles Radius Band could have afforded a $120,000 to $500,000 dwelling in R = 2 to R = 20 Radius Band.

The cause of the Affordable and Accessible Housing Crisis is this: Agency regulation and Enterprise short term profit objectives resulted in the building the wrong size house in the wrong location. The cause of the Mobility and Access Crisis is the need to rely on Autonomobiles to get from where citizens are to where they need to be.

The second overlooked issue: The headlong rush to solve the wrong problem.

Some – the Lame Duck White House and the lame candidates who want to next occupy the White House – are pretending there is no Recession. Recent polls indicate that around 75 percent of the citizens think, and are acting as if, there is a Recession at hand With about the same percentage of the economy dependent on consumer spending, citizens and not Wall Street Titans or Federal regulators, are the ones who will make the decisions.

For most citizens, the past 10 years have been much like a recession as we point out in “Good News, Bad Reporting,” 5 March 2008.

At the same time as some some are in denial, others are focused on bailing out the leveraged, securitized, subsidized fools who got us here.

Steven Pearlstein quotes Nouriel Roubini: The current system has perfected a system of “socialized risk and privatizing gain.” E. J Dionne Jr says the Wall Street Titans have turned into “a bunch of welfare clients.”

Yes, there is a lot to be said for Groveton’s point that now that everyone in the boat is where they are, Agencies have to bail out the fat cats that caused the problem because if not far more citizens will suffer.

The point we make in “Good News, Bad Reporting” is that trying in vain to prevent a needed Recession may throw us all into a Depression.


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  1. Anonymous Avatar

    “Socializing risk and privatizing gain” That’s a good one, I like it.

    But, isn’t that what insurance companies do? The whole point of risk management is to spread it around, to do the least damage.

    In wrestling and gymnastics and football they teach you to fall flat, not land on an elbow or knee. You want to socialize the risk among the body parts. Bruises are easier to fix than compound fractures.


    I guess those who were convinced by mainstream media advertising to buy $300,000 homes are brainless morons with no self will at all. No wonder they got sold risky mortgages with terms they didn’t understand. No glossary, I guess.

    I’ll bet that $120,000 home at R2 in Southeast is a doozy. A quick search in Arlinton found one 1100 sq ft residence for sale at $201,000. The hawthorne, starting at $400,000. Waterview, staring at 694 sq ft – and $500,000. The Mercer $550 sq ft and $300,000.

    You can get a 1940’s era studio for around $125,000 and up.


  2. Anonymous Avatar

    I just had lunch with a nice young couple new to the area, as yet unmarried. They are from L.A. and were casually tossing around number like $800,000 out in Reston. They thought that was cheap because a similar home in LA would cost $1.4 million. With a much smaller lot.

    Then again, they work in Reston, so I guess its OK.


  3. Groveton Avatar

    My issues with blaming the economy on “functional settlement patterns” is that I don’t see lesser problems in places with more functional settlement patterns. What US New Urban Region exhibits the most functional (least dysfunctional?) settlement patterns? Does that NUR exhibit only a limited exposure to the housing bubble? What is the most dysfunctional NUR? Does that NUR have the worst (or one of the worst) real estate collapses?

    I don’t see it.

    Dysfunctional settlement patterns cause a lot of problems. However, the proximate cause of teh current real estate collapse is a combination of prices that escalated too fast and credit that was given too easily.

  4. Anonymous Avatar

    My problem is that it will take hundred of billions and decades to achieve the one thing that will apparently solve any problem.

    What do we do with our immediate problems until then? What about mere mortals?


  5. Larry Gross Avatar
    Larry Gross

    “My issues with blaming the economy on “functional settlement patterns” is that I don’t see lesser problems in places with more functional settlement patterns.”


    I’m trying to understand why looser mortgage standards – across the board – no matter where – locationally tilts the scales one way or the other in terms of location…

    perhaps more explanation will convince me…

  6. E M Risse Avatar
    E M Risse

    At 4:08 PM Groveton said…

    “My issues with blaming the economy on “functional settlement patterns” is that I don’t see lesser problems in places with more functional settlement patterns.”

    The problem here is that there are no NUR’s in the US of A with “more functional settlement patterns.”

    There are some places with more functional physical patterns on Dooryard, Neighborhood, Village and even Community scale but no New Urban Regions and NURs are the fundamental building blocks of contemporary society.

    These more functional components of NURs are so much more attractive than other components within the Region (leaving aside for the moment comparisons with places of similar scale in other NURs) that the prices are bid up and the places do not function because they do not have a Balance of economic and social factors.

    For example no service workers can afford to live there.

    “What US New Urban Region exhibits the most functional (least dysfunctional?) settlement patterns?”

    There are none.

    The is why Planned New Communities, to the extent they were built out as planned, are so important to supply examples. See Chapter 18 of The Shape of the Future.

    The best one can do is compare with some Canadian NURs such as Toronto and Vancouver. The problem here is that the US of A economy has been such an 800 pound gorilla that even these places are distorted by the same forces that have shaped NURs in the US of A for the past 80 years. The same is true even in the EU NURs.

    “Does that NUR exhibit only a limited exposure to the housing bubble?”

    The best way to address this is to see how those Units in more functional Cluster and Neighborhood scales have weathered the storm. Check WaPo for places that have not felt the downturn. Some were noted last week in Real Estate as I recall.

    The problem with these places is that, as noted above, they are overpriced because Agency and Enterprise actions have prevented there from evolving enough of these better places to provide real competition.

    “What is the most dysfunctional NUR?”

    That varies from downturn to downturn. With all the Agency money pumped into defense in the Washington -Baltimore New Urban Region and the oil money pumped into the Houston New Urban Region it is hard to see that these two may be among the most dysfunctional.

    “Does that NUR have the worst (or one of the worst) real estate collapses?”

    They have in the past, unless there is an artificial prop as noted.

    I suspect there is enough data on the Saving and Loan bubble to make a determination for that event. It will be years before we know enough about this one. And, as we have noted in other contexts, there are two problems with the data:

    No Agency or Institution wants to know the answers to this sort of question. So there is no money for research.

    The Enterprises with the data and staff that understand the issues consider this insight and data to be proprietary, and in the current context, it is.

    “I don’t see it.”

    No one said it was easy.

    “Dysfunctional settlement patterns cause a lot of problems.”


    “However, the proximate cause of the current real estate collapse is a combination of prices that escalated too fast and credit that was given too easily.”

    Proximate, yes. But the underlying problem is dysfunctional settlement patterns.


  7. Anonymous Avatar

    there are no NUR’s in the US of A with “more functional settlement patterns.”

    If no one has got it right yet, even with all the genius and resources at our disposal, thenit must be harder and more difficult than even I imagine.

    One would think, that if it really was more functional, it would happen somewhere, as a matter of societal evolution.

    Maybe there are stakeholders at work that have a different definition of functional.


  8. Anonymous Avatar

    “Agency and Enterprise actions have prevented there from evolving enough of these better places”

    Ah yes. The sinister forces.

  9. Anonymous Avatar

    “…trying in vain to prevent a needed Recession may throw us all into a Depression.”

    My Mom is a depression baby too. She’s been predicting a depression ever since I can remember. Eventually she will be right.

    For her, the result has been living her life in fear, never taking any risk, and never reaping the rewards.

    When she retired, she splured and bought a white convertible. It was so unlike her that I asked her if she bought it to match her hair. She laughed, but she explained as follows.

    When her hometown bank failed, the next week the former bank president bought a new convertible. She was jealous ever since.


  10. Larry Gross Avatar
    Larry Gross

    ““What US New Urban Region exhibits the most functional (least dysfunctional?) settlement patterns?”

    There are none. “

    is this a response that engenders a wider understanding of what settlement pattern criteria are elemental to fundamental change?

  11. Groveton Avatar

    ““What US New Urban Region exhibits the most functional (least dysfunctional?) settlement patterns?”

    There are none.”

    I would be very interested to read Jim Bacon’s take on this statement. If true, I’d wonder why the Fairfax County Board of Supervisors (and their zoning laws) get so much negative commentary on this blog. If every NUR (and major divisions within the NUR) are equally dysfunctional then it becomes hard to blame the Fairfax County BoS for much of anything to do with dysfunctional settlement. In fact, since the Fairfax BoS has been partially responsible for taking great advantage of the founding fathers’ decision to place Washington, DC where it was placed – I’d have to congratulate them. They have no more or less dysfunction than anywhere else but they have the highest per household income in the nation (including all the other areas surrounding the city of Washington (note: legal entity)).

    Jim – I’ll alert Gerry Connolly to expect your letter of apology in the near term. TMT – you too. I am drafting mine now.

  12. Anonymous Avatar


    A “Modest Proposal”



  13. E M Risse Avatar
    E M Risse


    Upon further review, we wanted to add a note to our response to Groveton posted last night:

    We are working on THE USE AND MANAGEMENT OF LAND, the third of the three major Backgrounders that are part of TRILO-G.

    THE USE AND MANAGEMENT OF LAND will include a discussion of Critical Mass and several subsidiary, supporting Myths

    Here is the key item I left out of the earlier post:

    It is not just the dysfunctional human settlement pattern that it the problem but the failure of citizens to understand the need for functional settlement patterns.

    This lack of understanding provides the fertile environment for sustaining Myths

    It is not just the Big Yard Myth and the Large, Private Vehicle Mobility Myth that thrive but also subsidiary, supporting Myths such as:

    The More Places Myth

    The It Would Take Forever and Cost a Fortune Myth

    The “EuroSprawl” Myth

    Luckily each of these subsidiary, supporting Myths is far easier to refute than the Big Yard Myth and the Large, Private Vehicle Myth. That is what we do in THE USE AND MANAGEMENT OF LAND.

    On your challenge to Jim Bacon above:

    There are some actions, many of them taken by Fairfax County, that are blatant affronts to any attempt to evolve more functional settlement patterns.

    We could list a hundred vis a vis Reston, Burke Centre and Fair Lakes. We once had a list of over 20 by Kate Hanley on her own. Ask her about the Oakton Bypass and the plan to evolve a Village focus for Greater Oakton. Or her role vis a vis Virginia Center, or about maintianing Neighborhood centers in the North Village of Fairfax Center, or….

    The overarching problem is that the forces that drive dysfunctional human settlement patterns go far beyond what municipalities can or should do.

    For this reason, in spite of “better management” which you and I agree is sometimes found in the Free State of Maryland, the settlement pattern is not that different, including in the much praised “agricultural reserve.”

    As we say, from 20,000 feet it is hard to tell the difference.

    Howard County, MD did as much to cripple Columbia as Fairfax did to thwart the fullfilment of Reston’s potential.

    That takes me back to the main point of this post about the lack of understanding of the need for fundamentally different settlement patterns.

    By the way, Groveton, did you note that WaPo Business has a Page One GLOSSARY item on “Moral Hazard” today?


  14. Accurate Avatar

    What I found funny (for me) was two paragraphs into the posting, even before EMR’s favorite phrase ‘dysfunctional human settlement patterns’, showed up. I thought, this sounds just like something EMR would write. I was right and per usual EMR, you see (or seem to see) virtually all problems coming from your favorite imaginary whipping boy. Also, as usual, I couldn’t disagree with you more.

  15. Anonymous Avatar

    Functional human settlement pattersn will solve all our problems – by definition.

  16. Anonymous Avatar

    The ides of march for cars, huh?

    “Chris Goodall is no right-wing nut; he is an environmentalist and author of the book “How to Live a Low-Carbon Life.”

    Tierney writes:
    If you walk 1.5 miles, Mr. Goodall calculates, and replace those calories by drinking about a cup of milk, the greenhouse emissions connected with that milk (like methane from the dairy farm and carbon dioxide from the delivery truck) are just about equal to the emissions from a typical car making the same trip. And if there were two of you making the trip, then the car would definitely be the more planet-friendly way to go.”

    From Freakonomics. Predictably, the responses are hilarious.

    I was especially interested in this because it matches perfectly something I spotted elsewhere. It was a study of various locations in Scotland to study their environmental footprint.

    The way it was done was to examine the consumption of each household and track backwards the energy stream of every product consumed and calculate an enevironmental footprint.

    It turns out that the biggest single energy consumption comes form electricity use. (Pretty much independent of location). The second largest was the energy associated with foodstuffs. Energy associated with the land and structure were pretty high. Everything else after that totals to less than one percent.

    And, very stangely, the additonal cost of affluence is not all that high. Lower income families use a higher proportion of their income to buy energy intensive products. Wealtier famileis use the same stuff, but their additional urchases over and above basics seem to be lower in energy intensiveness and environmental impact.

    I guess, if you buy an expensive fur coat, at least it comes from a renewable resource.

    So the whole thing came down to a simple equation:

    Impact = Affluence to some power, + size of family to some negative power + population density to some small negative power.

    In other words, population density DOES help reduce your impact on the planet, but it is the least important factor. How much you earn and spend is the biggest one, by far, regardless of where you live. And how many people you share your house with is more important than how dense your area is (and presumably how many people you share your vehicle with).

    Energy consumption and envronmental footprint is not all there is to a functional society, but this shows that maybe we need to measure more and postulate less.

    Remember paper vs plastic bags?


  17. Anonymous Avatar

    Groveton — my problem with Gerry Connolly has nothing to do with dysfunctional settlement patterns — whatever those are. My problem with Connolly is that he (and others) approve more development when the infrastructure cannot support what we have. I don’t care whether people live in single family homes, townhouses, garden apartments or high rises. I don’t want kids eating lunch at or before 10 am. I don’t like going to a park at noon and finding all of the parking spaces full. Etc.

    Save Fairfax County; develop the Piedmont!


  18. Groveton Avatar


    I am bitterly disappointed by your comment.

    “develop the Piedmont” is a terrible statement.

    Very unlyrical.

    It should be “pave the Piedmont”.

    And, once paved, there should be electrical wires run all over – even if they aren’t carrying any electricity. Just in case they are needed some time in the future by those who are actually trying to keep the US economy growing (even those in New Jersey).

  19. Anonymous Avatar

    I’ll be a Pariah forever for saying this, but if the choice is that or nothing for the next two hundred years…..

    IF the power guys pay the going rate for the damage they cause, and what they get out of it, then its a fair deal. IF not, then it is stealing, on behalf of New Jersey and NOVA.

    Economy, Environment, Equality.

    It’s that simple.

    You cannot have a good Environment without a good Economy, because it is expensive. If you haven’t a good Economy or Environment, then Equality will be the least of your worries.


  20. Anonymous Avatar

    Better than 95% of all mortgages are still being paid, so you would think there would be some underlying stability in mortgges and the mortgage backed securities. So, what’s all the panic about?

    It isn’t about the mortgages per se. It’s about the Wall street guy who has million to invest, but he uses leverage to buy 20 million in mortgage backed securities. When you have tht much leverage out, it only takes a small change in the value of the underlying securities before you get a margin call.

    It’s not the guy who extended a little to get a bigger home, (or ANY home), that is causing the bulk of the problem.

  21. Larry Gross Avatar
    Larry Gross

    it’s not only the Wall Street high-rollers and gamblers…

    Most of your pro-growth folks were thoroughly on board with the concept that residential home ownership – growth – is sold gold – good.

    A substantial part of the economy from Home Depot sheet rock to swimming pools to granite counter tops and asphalt driveways was based on the ever increasing housing market on steroids by tapping a previously untapped source – subprime mortgages.

    When you add all these new folks to the existing pool of homebuyers -you end up with fast rising housing prices based on that new demand.

    It all goes way overnight – when the subprime market craters.

    That’s why you hear folks saying that we now have a 2-3 year supply of “inventory” – because without the sub-prime home-buyers.. we have way more houses than the rest of the market can absorb.

    and Home Depot and company are all looking at much lower growth rates.. also…

    I note in our little town of Fredericksburg that developers are changing their products offerings from Condos to “luxury rentals” due to “market” changes.


  22. Anonymous Avatar

    “Most of your pro-growth folks were thoroughly on board with the concept that residential home ownership – growth – is sold gold – good.”

    I don’t get it. What has being pro-growth got to do with thinking that home ownership is good?

    Is there really a constituency out there that is OPPOSED to residential home ownership?

    Opposed to new homes and new owners in my neghborhood, maybe. But opposed to home ownership in general, I don’t think so.

    Therefore, if most people are in favor of home ownership, you would naturally expect that pro-growth people would be in favor of home ownership.

    You could say that most people who are not church goers are in favor of home ownership. You culd say most people who masturbate are in favor of home ownership. Or Most people who understand that housing drives 25% of the economy are in favor of home ownership.

    You would be right every time, but it doesn’t follow that any of those groups would be resposnsible for what happened, any more than the pro-growth folks would be.

    What is the point of a statement that attempts to both malign people who are in favor of growth and dismiss the idea of home ownership as a mere concept?

  23. Anonymous Avatar

    The subprime mortgages are less than 5% of the market for mortgages, and they exist on less that 2% of the outstanding stock of homes, because many are owned outright.

    If you think that this results in a 2-3 year inventory, it implies that less than 1% of homes get sold every year, meaning most families stay in a home for over a hundred years.

    I don’t think so.

    You might be partially right, but there are a lot of other reasons for fast rising house prices. We have already seen that in some areas, even after you take ordinary inflation into account, 44% of the increased cost of new homes was due to increased governmet restrictions.

  24. Anonymous Avatar

    In a couple of days, EMR is going to go off on a tirade concering the article in today’s post about the ring of fire on forclosures. He will point out that they are all way out there at R25 or some such and the who problem would go away if we had functional settlement patterns.

    I hope he will include in his analysis something about the reletive price and income levels of those areas relative to other places.

    In the “ring of fire” modest homes that sold for $400,000 two years ago are now going for $150,000 which is much nearer their intrinsic value – what the structure could be replaced for.

    Where are those people living now? Are they better or worse off? Whee sould they live under EMR’s world view? How many of them are living in or around Burke Center?


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