Month in Review: July 2007
I’m reflecting on my past
[Previous months in review available here: Jun 07, May 07, Apr 07, Mar 07, Feb 07, Jan 07.]
In July, we fixed the broken AHI links after our migration to a new posting platform:
Some day our backwards links will work
As the subprime shakeout continues to roil the financial waters, I finished up a three-part series (started in June) reviewing the Economist’s extended and informative survey of finance, with Capital markets: flashes of insight, Part 3:
The financial system, he says, has “become better at trading risk and pricing it, but maybe worse at holding it”.
Perhaps: perhaps not. After all, a truism of business is that risk migrates to the party best able to assess and bear it — that’s the central premise of all forms of insurance. And dispersing risk presumably reduces the chances of a cataclysm, like the 1929 crash, that stops the whole system.
When The Economist published a report similar to this one exactly 20 years ago, much of the argument concentrated on the risks posed by securitisation and the proliferation of new instruments, such as (back then) junk bonds and swaps. At the time, Alexandre Lamfalussy, one of Mr Knight’s predecessors at the BIS, aired concerns that now sound eerily familiar. “It’s not the risk to individual banks I’m worried about but macro-prudential risk … it is much harder to tell who is bearing what risk and where it is ending up.” He continued: “Transparency is diminishing. Some risk-takers simply do not know the risk.”
Risk: now you see it …
… now you don’t.
Mid-month, in Codifying the rule of Habitat?, I stuck up for Habitat for Humanity in the face of a curiously small-minded and thoughtless New York Times he-said-she-said critique.
Well, who’s right here?
Local markets figured in a pair of two-part essays: the eternal friction of propinquity in No adolescents need apply? Part 1, town and Part 2, gown; and also in the counterintuitive consequences of zoning and density in Looking to Washington for ideas? Part 1, Look more closely and Part 2, Don’t look up?
Yesterday I reviewed Steven Pearlstein’s column seeking a regional solution, and finished by rhetorically asking what was the one feature that distinguishes
“I’m staying under the height restriction!”
The height restriction.
Virtually unique among US — at least, I know of no other — the District has forbidden buildings taller than 160 feet. The reason, as anyone who’s spent time in
I spent a fair bit of time looking at housing developments around the world, starting with
Slumdwellers have to become knowledgeable participants. Time and again, I have seen that current residents are skeptical if not outright hostile to redevelopment plans of any kind —including those that offer substantial improvement in their situations. That’s natural enough, since up to the redevelopment moment they have been government’s castoffs. Remarkable indeed are their status quo rationalizations.
In many a scheme, the most difficult issue has been having the resident council become a knowledgeable and effective participant in the transaction structuring. Over the years, I’ve found that often residents immediately suspect anyone who dresses decently and talks as if educated.
Everyone in Dharavi had their own opinion about how and why the plan was concocted to hurt them in particular.
Education and any material success are seen as infallible indicators of betrayal, which also makes the residents easy prey for paranoiac demagogues.
People are smart; communities of people always have some very smart people. Communities can be even smarter than individuals,if the community is knowledgeable and participates constructively— not naively but with an ability to engage and debate and negotiate and learn. That takes some doing, and some time, and the right mix of community people in the community leadership. It’s hard to define how to achieve it, but easy to recognize when it occurs— when the community group or resident council is participating actively in the deal structuring with the explicit goal of making happen not the best possible result, but the best result possible.
“Today’s lesson is mighty important, remember?”
I similarly touted the benefits of harnessing individual enterprise, and conversely the economic crippling of working without adequate financial tools, in a three-part essay that began in Malaysia, Financial velocity and Islamic banking, Part 1, Part 2, and the conclusion, Part 3, the work-arounds:
Purity of doctrine does not succumb to forcible assault; instead, tolerance arrives by tiny stages, insinuating its way into the boundary between emotion and reason, changing minds one bank account at a time.
Now, Al Rajhi is thinking of bringing such savings accounts, and other financial novelties it’s testing in
Innovation flows two ways, and ideas, once unleashed, never come back.
No vaccination against knowledge
Efficient technology is like the flu; sooner or later everybody gets it.
— Science fiction author Alexander Jablokov
Among other profundities, my British colleagues observed that Things cost money
They were and are, of course, right. Affordable housing always costs public money. Everything my guests had seen, every bit of affordability, had come through one or more forms of public financial resources. In fact, I have become convinced that affordable housing is the most expensive domestic intervention there is, measured in dollars of outlay per household served.
That high cost-to-benefit ratio is one principal reason why elected officials, when faced with a housing-affordability crunch, instinctively reach to ask their government to manufacture a legal remedy (ban unaffordability) rather than a financing program (spend money).
“It’s surprising how expensive it is.”
While I entirely sympathize with Mr. Levine, the only thing surprising is that anyone in public office would think this could be done on the cheap.
Sherlock Holmes might call it “The Curious Case of the Sticker Shock.”
I also looked at changing consumer home desires and the continuing re-urbanization of America in A short walk to a longer life: Part 1, the buildings and Part 2, the financing, and the importance of communication and broadband in The fourth utility:
Extend these trends at all and pretty soon you have a house that can think for itself; indeed, as early as 1950, in “There Will Come Soft Rains,” Ray Bradbury was writing stories about fully automated houses, and now, fifty years later, we’re on the verge of having them:
Residents at Liberty Harbor — 10,000 in 250 buildings when the complex is fully built out in 10 or 15 years — will be able to do this from touch screens in their apartments or from any computer with Internet access, enabling them to make adjustments from miles away.
There’s a clear correlation and synergy between automating and smartening housing and scaling it up; if you’re going to run all that wiring and broadband, a cubical array is much more efficient to serve and to repair than a two-dimensional tangle of power lines and buried clay pipes.
Will our houses survive us, as Bradbury predicted?
The travails of an alien land closer to home —
Starrett City: Be careful what you wish for and its immediate followup, Paging a white knight:
What’s striking is that the obvious solution has yet to surface:
Answer coming up!
There are also a number of real estate groups interested in buying the complex, real estate executives said, including the Related Companies and Apollo Real Estate Advisors.
Current residents are worried that a buyer may appear? They should be rooting for the right buyer — the white knight — to come forward.
Won’t you rescue me?
The month ended in a strange alien land close to home —
Mr. Wiener is being, if not libeled, at least mislabeled; he is not a slumlord, because the word has a specific meaning:
A slum lord (also spelled slumlord) is a derogatory term assigned to some landlords, generally Absentee landlords, who maximize profit by spending little on property maintenance, often in deteriorating neighborhoods.
That’s not Mr. Wiener’s group; their properties are in appreciating neighborhoods, and they’re accused of spending more.
They may charge lower than market rent to tenants. (As many of these neighborhoods are often populated by poor minorities, the term ghetto landlord has also been used.)
The phrase slumlord first appeared in 1953, though the term slum landlord dates to 1893. [1]
1953: The year that gave birth to the Hudson Wasp, the term slumlord, and your humble blogger
The month ended on the same note that began it — capital markets shakeout, with a cautionary tale from
Urban land, to be productive, must be developed, and redeveloped to its highest and best use. Unforeclosed property cannot be redeveloped, damaging the city, which loses ground to its competitor cities — or countries:
As he picked at a tuna sandwich in a
The urban hulks remain, mute testament not just to development exuberance but to the failure to foreclose.
At least, Nop says, “the building won’t collapse.”
It would be better if it did.
The best thing for it