Sunday, December 06, 2009

Where is the economy headed?

Dubai's debt problems have many people asking whether the world economy is in for another downturn.

The Dubai crisis is related to the current downtrend in the commercial real estate market. We don't hear much about this in the mainstream news, which seems to be concentrating more on "good" economic news.

However, we have to remember there are still a lot problems there are still "on the books." For example, in the U.S. monthly mortgage rate hikes (resets) will begin climbing again in 2010. The resets will peak near the end of 2011 when the amount reset due to adjustable rate mortgages will exceed the level of sub-prime resets in late 2008.

Unfortunately a lot of the conditions that caused the economic meltdown of 2007-8 are also "resetting" as well. The higher end of the equities market is still largely unregulated and risk-taking is now back in style among the remaining big banks.

No lessons about risk seemed to have been learned because the people now in charge of financial institutions were all saved by the government and all of them have fattened bank accounts after giving themselves big bonuses.

They know that they can take risks because it makes them wealthier in the short-term, and when the cards fall, the government will step in to protect their interests.

Now getting back to commercial real estate, the cards are already starting to fall. There appears to be a lot of hidden debt out there. Much more than is declared publicly. I'm not making this up as it was the IMF chief who brought up the subject of this debt. Many corporations have been hiding the debt with accounting tricks in hopes that the financial environment will change.

However, this debt is now forcing its way to the surface. The Dubai debacle is just the first sign of this problem.

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Sunday, September 06, 2009

Obama's "Public Option"

The public option portion of U.S. President Barack Obama's health reform plan is key to the promises made by Obama during his election campaign. The president promised "universal healthcare," the proper definition of which was something the candidates often sparred over. The public option is the component of the health care program that provides something that can be considered relatively "universal."

The public option is brought on international comparisons -- first with Canada and more recently with the NHS public system in the United Kingdom. Conservatives have used the term "socialist" or "socialized" to describe these systems with the obvious intent of stirring up old Cold War sentiments.

Will Obama keep his promise?

Obviously Obama cannot force legislators to vote one way or another. However, there are many progressives who believe the president should stand firm on the public option even if it means risking losing out in the end.

During the campaign, Obama promised:

  • Universal healthcare, which is now represented by the public option
  • A health care option available to everyone that would be comparable to that he and other senators enjoyed in Congress.

Now, one of the options offered has been to use non-profit co-ops instead of a government-run insurance system. Such little information has been released on this idea that it's difficult to tell whether it could actually be considered "universal." Unless the co-ops were forced to accept everyone, then it cannot be considered universal. Also, whether the government would be able to maintain high quality using non-profit organizations is also a big question. It might be more cost-effective in the end run to use a government-run public option.

The lack of universal heathcare is one of the factors driving medical costs in the United States through the roof. Uninsured people are using expensive emergency rooms services currently as their healthcare "option." Low quality insurance is also leading to a large and rapidly expanding population of underinsured people who are going bankrupt in droves as they are unable to pay for their medical bills. A public option would help address these important issues that are weighting down on an already badly-bruised economic system.

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Wednesday, August 26, 2009

Suburbs need not be so bad

Suburbs have taken a lot of heat in the debate over sustainability and green living. Sometimes they are made out as the great enemy of all that is good and eco-friendly.

However, suburbs, specifically the green suburb is really not that bad of an idea. While the vertical structure of the city is extremely efficient in terms of its usage of land for human dwelling, the people in those structures generally do not produce their own food. You still need land to grow food, and then resources to store it, in some cases process and pack it, and then to ship it through gridlock to those efficiently compartmentalized city slickers.

While vertical farming may offer some answers to these problems in the distant future, it's debatable whether this is a practical solution in the near term.

However, the green suburb already exists in some areas. It's not difficult to do at all. By "green suburb," I'm referring mostly to people growing a good percentage of their own fruits, vegetables, and in some cases even staple crops, in their gardens. Every apple or orange that one eats right off the tree in your yard saves a similar fruit from having to be grown, harvested, stored, labeled, transported and displayed at your local supermarket.

Potentially in the green suburb of the future, we might even have a tilapia pond or raise our own chicken eggs in areas zoned as residential-agricultural.

The green burb creates its own ecosystem as well. Maybe not exactly what existed previously but often denser in biodiversity. In many cases, the native flora and fauna, or at least some of species of them, will also have a denser population than before. The green burb becomes a wildlife corridor for many species of birds, insects, reptiles, squirrels, chipmunks and other rodents, and sometimes for other animals as well. The green burb of the future might actually have specially designed corridors for larger animals.

All those trees, bushes and plants, rather than just closely-trimmed lawns, help process greenhouse gases and pollution, if they weren't already doing enough. Plants "inhale" carbon dioxide and, in some cases, carbon monoxide, and exhale oxygen. The more oxygen and the less carbon gases we animals breathe, the longer and healthier lives we live.

Green suburbs are great, but his is not to say that some day we will not be forced to live in vertical structures, and it is a good idea to start designing these in new innovative ways to accommodate those who still want a more natural way of life. But the suburb may have been given a bit of a bum rap. Maybe 50 to 100 years from now when vertical farming and green urban architecture have really advanced that may no longer be the case. But for now green suburbs are a good idea, methinks.

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