The following articles about declining freight shipments -- from coastal ports to railroads to trucking companies -- raises an important question. In previous boom-bust cycles of speculative residential real estate investment, in the bust phase, capital flows into commercial real estate development. This was certainly anticipated here. The idea of finance, insurance and real estate (FIRE) was that you could create fraudulent mortgages, bundle and securitize them and sell them the whole world over...forever, in a constantly escalating real estate market that would provide and endless arena for speculation, because, as we all now know, the United States, having declared the end of history (political, economic, military, environmental), now created history any damned way it wanted to.
It didn't quite work out that way. What has happened is an economic depression, most keenly felt in areas like Merced, Modesto and Stockton, which for months have topped the national rollcall of shame for their astronomical foreclosure rates.
Now comes Obama, the cool president, with a stimulus package that has trickled down to us in the form of $2 million to pay workers to scrape burnt rubber marks off the Castle runways, seal cracks and repaint lines. This is presented in Sonny Star, the local McClatchy gigolo press, as a forward-looking move to transform the former Stategic Air Command airport into a commercial airport for Merced, i.e. a brilliant investment in infrastructure. In Sonny's line of work, asking questions is discouraged. The irony of the story is delightful, but the delight is muffled by the sense the story fell like a tree in a forest devoid of human contact.
Rubber marks occur on every commercial airport runway from JFK to Beijing and Suva, Fiji Islands. So, Dude, I'm not saying don't get out your putty scraper and go stand in line, but let's call this what it is, Works Progress Administration, putting people to work now doing what they can do now. You don't need a UC Merced education to do the job. And the job will last a whole "several weeks". That's Progress, Obama-style. Don't know how much you'll get paid to scrape rubber marks, but, hey, a job's a job, particularly in a depression.
The depression is what is causing the decline in freight shipments. But, if the stimulus package and the glorious Merced County leadership that earmarked Castle rubber-mark removal at a top priority can provide several week's work to some folks (if not entirely out-of-county specialists in rubber-mark removal), we been genuinely "stimulated."
We've gone from an economy in which you could borrow $250,000 on a house that cost you $90,000 before the boom started, to one in which if you're lucky you can scrape rubber marks off the runway for several weeks and maybe pay the rent on the duplex by the tracks for another month.
The political spin on the stimulus money is absurd. Infrastructure for what? A commercial airport for Merced? First, we already have an adequate one. People are leaving Merced in moving vans, not coming to it by air. Secondly, there is the question of the perpetually unstable feeder airline companies, who come and go to Valley airports according to the slightest economic breezes.
There was a recent announcement, also in the Sun-Star, that a new bank has come to town, with the interesting name, Rabobank. It describes itself in the business press as a "California-based community bank Rabobank, N.A." In fact, it is much more than that. It is a Netherlands-based international bank with assets of $800 billion, 9 million customers, and operations in over 35 countries worldwide. Although its flak (see below) presents it as a nearly humble (but very successful) Dutch farmers' cooperative bank, late last year Rabobank bought a 7.5-percent share in the Rothchild bank holding company.
The tie-up will see Rothschild and Rabo launch a joint assault on the food and agriculture industries. -- MailOnline (UK), 11-19-08.
But, again according to Raboflak, it will be "a classic community bank" assault on the food and agricultural industries. They've already established several offices in Tulare County, top dairy county in the nation. And down in Bakersfield, the land 'o cotton and oil, they got a Rabo Bank Arena and Convention Center. One of those branches is in Dinuba, one of three towns studied by Walter Goldschmidt in the 1940s in his critical work on how agribusiness destroys farming towns, As Ye Sow. They've also got one in Hanford, closer yet to King Cotton in Kings County. Rabobank is also established in Roseville, where every developer who is anybody, nationwide, has an office.
Rabobank is a very big deal. The moment of its arrival rhymes with the other depression, when A.P. Giannini bought up little one-branch Valley banks and created Bank of America, which eventually drifted back East to become a prominent zombie bank. It is a sad commentary on California and on the Valley that, in this crisis, we find ourselves without the energy and commitment to do what the Dutch-farmer founders of Rabobank did: create our own bank. We tried that and got County Bank instead. With commodity prices falling, every farmer in his right mind thinking more of real estate value than production value until recently, and farm parcelization going on all over the county, has Rabobank come to support agriculture or pick its bones?
Badlands Journal editorial board
Stimulus to deliver $2 million to Merced County for Castle Airport
Airport will use money to improve runway...SCOTT JASON
More than $2 million in economic stimulus money will be landing in Merced County to revamp Castle Airport.
The U.S. Department of Transportation announced $42 million for California's airports with $2.25 million to rejuvenate Castle Airport's 3.6 million-square-foot runway.
Castle Commerce Center director Mark Hendrickson said the work will help transform the airport from a former Air Force Base to a commercial hub.
"This is another step in our evolution," he said.
The county ultimately hopes to host a commercial passenger airline service. It wants Castle, which was an Air Force base until 1995, to thrive as an economic hub for Merced County.
The Federal Aviation Administration received $1.1 billion through the American Recovery and Reinvestment Act.
The money is meant to fund safety, security and other issues at airports.
For Castle, the money will pay to have workers scrape off burnt rubber from landings, reseal the concrete and repaint markings.
The county will award the bid before June 16 and expects the work to last several weeks.
Hendrickson said the county approved spending $394,000 on design studies so that more projects can be eligible for funding.
It's looking to land about $5.5 million in stimulus funding for Castle as more money becomes available.
Weekly US rail shipments fall 14.7 percent...The Associated Press
WASHINGTON Shipments carried by U.S. railroads fell 14.7 percent last week compared with a year earlier, a major industry trade group reported Thursday.
The Association of American Railroads said freight carried on the tracks for the week ended March 21 totaled 276,030 carloads.
Volume tumbled 13 percent in the West, where cargo is primarily carried by Union Pacific Corp. and Burlington Northern Santa Fe Corp. Volumes plunged 17 percent in the East, where freight is mostly hauled by CSX Corp. and Norfolk Southern Corp.
Intermodal volume fell 12.9 percent from a year ago. Intermodal involves moving freight from one method of transportation to another, such as truck to rail.
So far this year, shipments on U.S. rails are down 15.6 percent compared with the same period in 2007.
Harder to Keep on Truckin'...John Lindt
Visalia - With fewer goods coming in and out of West Coast ports, freight haulers large and small are seeing a decline in business in the 25 to 30 percent range, idling trucks and forcing some truckers to look for work elsewhere.
A Plaza Avenue trucking firm in Visalia, TLN Inc., will put on hold a planned new warehouse in the industrial park because of the slowdown, despite the fact this week the city is expected to give the project a green light.
“There's so much warehouse space in the Visalia industrial park it makes no sense for us to build more even though we would like to,” says company President Kathe Newsome. “You can get all the space you need at 25 cents a square foot,” says Newsome. “We will put the project on hold for two or three years and hope it gets better.”
TLN Inc. is a small company with 22 trucks and 46 trailers. The company had plans to build its office at 1212 N. Plaza where it parks its trucks. The company, operating here for 15 years, employs 35 and earlier this year told the Voice it hopes to grow to add another 15 employees.
Newsome says local trucking firms have simply parked their fleets in many cases – some with for sale signs on them.
Newsome says trucking rates are down about 25 percent with a fierce scramble for business among those who are left. She has scorn for middlemen and brokers who undersell the guy who does the hauling.
Newsome says drivers are walking through the door every day looking for work – some who have given up on their rigs. “That's where we get some of our best drivers.”
Big firms are in trouble too with the slide in demand hurting profits, including publicly traded Knight Transportation that has a big hub in Tulare.
According to a recent survey, 21 percent of truckload carriers suggested that they were likely to consider liquidating in the coming six months.
In its most recent financial statement, Knight said “a substantial number of small and midsized carriers have been forced into bankruptcy due to tight credit, high and volatile fuel prices, and challenging industry pricing. “We believe that this dynamic could eventually set the stage for tighter industry capacity,” the company said.
Heartland Express – another large carrier – said, “High fuel prices, a tightening economy, and tight credit drove many in the industry to bankruptcy. This, along with the harsh realities of declining freight volumes, will make it an even tougher operating environment and more difficult for the weaker carriers to survive.”
Container traffic shipped from the big ports of the state has collapsed in recent months. The L.A. and Long Beach ports, for example, account for 40 percent of U.S. inbound container movements. Business is the worst it has been in 25 years.
The L.A. port has announced that container traffic through L.A. fell 33 percent in February with ports down 35 percent on imports and inbound traffic just 28 percent.
Rail traffic is down 22 percent at Union Pacific through March 7, the company announced.
Trucking firms that once had a presence in Visalia, including Condor, are now gone. Real estate broker Doug Burr says the company-owned by DATS Trucking has relocated to Fresno, leaving a 16,000-square-foot trucking terminal at Plaza and Goshen Avenue vacant.
Rabobank, N.A. to Open Branches in Merced, Atwater, Turlock and Los Banos
California-based community bank Rabobank, N.A. has applied to establish two branches in Merced. The bank also filed applications with the Office of the Comptroller of the Currency (OCC), its federal regulator, to open branches in Atwater, Turlock and Los Banos.
“With all of the recent banking changes, we saw the need for a strong community-oriented bank in this region,” said Jim Lokey, president of community banking. “It has long been our goal to expand northward in the Central Valley to complement our existing branch network and to better serve our agricultural and business customers here. Now seemed an opportune time.”
Headquartered in California, Rabobank, N.A. has 83 branches serving the non-metropolitan areas in the state -- in the Central Valley, along the Central Coast, and in the Coachella and Imperial Valleys. The Central Valley branches are in Roseville, Fresno, Visalia, Reedley, Dinuba, Hanford, and Bakersfield (3). The bank employs more than 1,600 California residents throughout its network.
“Rabobank is a community bank in the classic sense,” said Lokey. “Our employees are deeply involved in local organizations and non-profits and the bank supports their efforts with donations to those community groups. Local advisory boards help keep us in touch with community issues and each region of the bank is overseen by a regional president so that decision-making is as close to the customer as possible.”
“On the banking side, money that customers deposit at Rabobank is invested back into the community through loans to local businesses and individuals. We look forward to being part of the community here in Merced.”
The bank’s applications are subject to the approval of the OCC after a 30-day public comment period.
Rabobank had deposits of $4.8 billion and assets of $8.7 billion at year-end 2008. The bank had a capital ratio of 13.87% at year end. Federal regulators consider banks well-capitalized when the ratio is 10% or greater.
“We are proud to say that we are well capitalized and can meet the lending needs of our customers without government assistance,” said Lokey. “Our reputation as a safe, sound and secure bank is built on conservative policies and prudent decision-making.”
Rabobank, N.A. is part of the Rabobank Group, which is triple A rated by Standard & Poor’s and Moody’s Investors Service and was rated one of the world’s safest banks in February by Global Finance magazine.
Rabobank, N.A. is a California community bank and a leading provider of agricultural financing and banking products to California farmers, ranchers, input suppliers and agricultural manufacturers. With 83 retail branches and 14 commercial banking centers, we serve the needs of communities from Sacramento to the Imperial Valley through local decision making and active community involvement by our employees. www.rabobankamerica.com
Note: N.A. stands for “National Association,” designating that the bank is nationally chartered.
VP/Advertising and Communications Manager
Rabobank was founded as a finance cooperative over a century ago by Dutch farmers. What began in the 1890's as a collection of small rural banks financing local farmers in the Netherlands has since grown into one of the world's 25 largest banks. Today, we are one of the largest financial services providers in the world, with over USD 800 billion (Euros 570.5 billion) in assets, 9 million customers, and operations in over 35 countries worldwide.
Rabobank's name is derived from two cooperative banking groups which operated in the Netherlands throughout the 20th century: the Cooperative Central Raiffeisen Bank, and the Cooperative Central Farmer's Credit Bank (or 'Boerenleenbank' in Dutch). In 1972, they merged and formed one central cooperative bank - the Cooperatieve Centrale Raiffeisen-Boerenleenbank, or Rabobank.
Rabobank first expanded outside the Netherlands in the 1970s, in order to continue serving our clients as they conducted business overseas. Rabobank's presence in the Americas began with the opening of our Curacao office in 1978. Our New York office opened in 1981, and since then Rabobank has grown to become a leading financier to the entire pan-American food and agriculture sector, and the bank of choice for thousands of local customers in California and Chile.
Reflecting our heritage, Rabobank today remains a cooperative membership institution, much as we were 110 years ago. We are not a shareholder driven institution - rather, Rabobank is a self-owned company, owned by the central Rabobank, its subsidiaries, and local cooperative banks in the Netherlands. We do not distribute dividends, but instead reinvest profits in the growth of our local businesses.
We have also remained true to our agricultural roots and have continued to finance farmers while extending our financial strengths to all segments of the agriculture industry, as well as select retail and business banking markets.
At Rabobank, our core focus is to create value - for our clients, our employees, and our local communities. With our tremendous financial strength, century of agricultural experience, unparalleled global expertise, and unshakeable commitment to customers, it is no wonder that Rabobank is the bank of choice to clients across the Americas and around the world.
Dutch bank Rabobank buys 7.5 per cent stake in Rothschild...Simon Duke
The Rothschild dynasty has sold a stake in its 200-year-old investment bank to one of Holland's largest financial institutions.
Rabobank is buying 7.5 per cent of Rothschild Continuation Holdings, the parent company for the family's British and Swiss operations.
The Dutch bank joins Jardine Matheson as the sole outside investors in Rothschild.
The Hong Kong trading house bought a 20 per cent stake from Royal & Sun Alliance three years ago.
The tie-up will see Rothschild and Rabo launch a joint assault on the food and agriculture industries.
Rothschild bankers have given advice on a myriad deals in the food and drinks sectors.
Last year they advised on the takeover of British brewer Scottish & Newcastle by Dutch rival beer company Heineken.
Figures unveiled yesterday showed that Rothschild, which does not finance big corporate deals, has emerged relatively unscathed from the financial crisis.
Pretax profits rose by over 30 per cent to £458.7million in the year to the end of March.
Rabo's Sipko Schat will also join the board of Rothschild.