Is growth inevitable?
There are a number of planning processes going on in the San Joaquin Valley at the moment. They include the California Partnership for the San Joaquin Valley, the San Joaquin Valley Blueprint dealing with transportation planning, numerous general plan updates of counties and cities including Merced County and whatever proposals UC/Great Valley Center is fomenting. Although these planning processes are formally uncoordinated, they are closely linked by the guiding ideology of finance, insurance, real estate and large landholding interests: "Growth is inevitable."
Isn't it more likely that death and taxes are inevitable and that growth is merely desirable to some people in society? In fact, recent news suggests that growth may not even be possible in the near future, let alone inevitable.
If you read the local papers, you will see that in September Merced had the highest rate of households in some stage of foreclosure in the nation (one in 68 households). In October, Stockton came on strong with a rate of one in 31 households.
If you read the financial news, you will see that when reset time comes on the mortgages loaned in 2006 at the height of the speculative housing boom, foreclosure rates will rise.
If you read further in the financial section, you will see that most financial news is bad at the moment and that the speculative housing bubble, having burst, is spreading to credit card debt and auto loans and in fact to all securitized loans and to the banks and hedge funds. You will note articles that attribute falling stock-markets from the US to Germany to Shanghai to problems in the US mortgage-lending industry. You will also note that oil is very close to $100 a barrel now, which among other things is a hardship on the hundreds of thousands of commuters in the north San Joaquin Valley who drive to the Bay Area for work every day. You will also note bankruptcies among nationwide construction corporations and falling stock prices for those still standing.
Countrywide Financial sank 20.1 per cent on the week to $9.65 after analysts said the company could be affected if GSEs stopped buying its mortgages in the secondary market. However, the company said rumours that it would seek bankruptcy protection were "absolutely false".Meanwhile the big banks once again suffered a torrid week, precipitated by a Goldman Sachs analyst note that forecast another $48bn in writedowns by the end of 2008. Citigroup shed 6.8 per cent to $31.70 after the note said Citi could take $22bn in writedowns linked to its portfolio of collateralised debt obligations, $11bn this quarter, and $11bn next year.Homebuilder stocks were also punished amid a deepening malaise in the US real estate market.The S&P homebuilder index was down 14.3 per cent this week at 318.07, declining for six consecutive days before buyers sparked a rebound yesterday.Shares in Pulte Homes , shed 25 per cent of their value this week at $9.63. With house prices plummeting, nervous investors are keeping a careful eye on retail sales amid fears that belt-tightening consumers may deliver a poor shopping holiday season...
Elsewhere, General Motors was the Dow's biggest fallers this week, down 7.2 per cent at $27.16.-- Financial Times, Nov. 24, 2007
Recession appears now to be a more likely outcome of the speculative housing bubble than growth.
But, planners say: Now that we have the rooftops (setting aside for a moment whether the houses are inhabitated), the commercial development will come. All we need is more federal highway funds in one of the top two worst air-pollution basins in the nation as oil prices continue to escalate, they say. They also say that nothing bad can happen in Merced because we have the UC campus.
But more and more mainstream economists are saying that there has been something quite wrong with the way both residential and commercial real estate investment is handled in the US, and this mishandling is leading to global financial problems of a magnitude no one quite understands. No one is talking about any other kind of growth around here but residential and commercial real estate growth.
The slogan, "Growth is inevitable," in the San Joaquin Valley, which contains cities with the highest mortgage foreclosure rates in the nation, seems a little silly right now. The planners, politicians and special interests should come up with another slogan. If they are too rigid to invent a new slogan, perhaps the public could help them with something less rigid and more open, perhaps even a question like: "Is growth inevitable?"
Bill Hatch
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Notes:
Financial Times
Ailing mortage lenders set tone on Wall St...Chris Bryant in New York...11-23-07
http://www.ft.com/cms/s/1df0301e-990e-11dc-bb45-0000779fd2ac,Authorised=...
ECB set to pump cash into money markets...Ralph Atkins and Ivar Simensen in Frankfurt and David Oakley in London...11-23-07
http://www.ft.com/cms/s/6a8adc9a-99b7-11dc-ad70-0000779fd2ac,Authorised=...
CounterPunch.com
"A Generalized Meltdown of Financial Institutions"
Take a Look at Professor Roubini's Crystal Ball...MIKE WHITNEY...11-24-07
http://www.counterpunch.com/whitney11242007.html
Nouriel Roubini's Global EconoMonitor
The Next Shoe to Drop in the Credit Meltdown: Commercial Real Estate and Its Massive Forthcoming Losses...Nouriel Roubini...11-14-07
http://www.rgemonitor.com/blog/roubini/226654/
The Housing Bubble
http://thehousingbubbleblog.com/index.html
Center for Economic and Policy Research: Housing
http://www.cepr.net/component/option,com_issues/task,view_issue/issue,11...