Pasadena Sub Rosa

MEMBERS OF THE POLITICAL CLASS NEED TO WALK A TIGHT ROPE

David Brooks - NY Times
"The Great Unwinding"
Excerpt:
The members of the political class face a set of monumental tasks. First, they have to persuade a country to postpone gratification for the sake of rebuilding the country. This country hasn’t accepted sacrifice in 50 years.

Second, political leaders will have to raise taxes and cut spending to get the federal fiscal house in order, and they will have to do it at a time when voters are already scaling back their lifestyles.

Third, they will have to refrain from doing anything that might further damage America’s fiscal position, which is extremely fragile. That means not passing a health care reform package unless it is really and truly paid for. That means forming a Social Security commission next year to tackle that entitlement problem.

Fourth, the political class is going to attempt the politically unthinkable. The U.S. is going to have to move toward a consumption tax, to discourage spending and encourage savings.

A WAY OUT OF THE FINANCIAL MORASS: PERSONAL SAVING

I sense that many Americans feel a sense of powerlessness that they can do anything to bring about real positive "change" to the future of our economy.  But economists Reuven Glick and Kevin J. Lansing of the San Francisco Federal Reserve have estimated that if Americans increase their household savings rate from 4 percent to 10 percent by 2018 balance will be restored to the economy. In the mid 1970's the savings rate was around 12%, but it dropped to about a negative three percent (-3%) in 2005 (see chart below).  So things aren't totally bleak. There is something we can do to right the ship so that it doesn't capsize.  Read economists Glick and Lansing's study at this link  

http://www.frbsf.org/publications/economics/letter/2009/el2009-16.pdf

WATER RATE HIKE IS DUE TO BAD PLANNING NOT DROUGHT

http://www.pasadenastarnews.com/letters/ci_12584476

The city of Pasadena is proposing to increase water rates 50 percent this year and another 30 percent next year.

With high rates of unemployment and harsh economic conditions in the economy, this rate increase proposal is unethical to say the least.

I would like the mayor to form a task force of economists and review the city budget to cut all nonessential services and free benefits the city provides. Once all avenues to save are explored and explained an increase can be substantiated.

City municipal service rates had a steep increase not too long ago. A substantial increase again within a short period only shows bad budgetary planning.

Ranjit Vishwanath

Pasadena

ADDITIONAL "STIMULUS BILL" FUNDS AROUSE PASADENA

The online Urban Dictionary humorously defines "stimulus bill" as the money owed to a hooker.  Joke:
 

Robbie: Hey can i borrow some money?
Joe: Why?
Robbie: I have to pay my stimulus bill from last night.

But it's no joke that the Obama Administration has allocated "another" $6 million to "cash-strapped" Pasadena according to the Pasadena Star News. Read: "Cash-Strapped City of Pasadena Receives Another $6 Million in Stimulus Funding" - here

http://www.pasadenastarnews.com/ci_12581182

However, the reportage of the Pasadena Star News, which has been making a comeback of late, is disappointing to say the least on this topic. 

First of all, Pasadena is not a "cash-strapped" City.  Last time the city reported its financial status it had over $675 million in cash, reserves, and investments quietly squirreled away in what amounts to an endowment fund for the City. 

Secondly, the newly-announced $6 million in stimulus funds, plus the previous $6 million and $1 million in funds to fight homelessness, totalling $13 million, amounts to only 1.9% of the city's total annual budget for 2009 and a mere 0.1% (1/10th of 1%) of the city's 2002 Gross City Product (sum total of goods and services).  The Star News failed to report how puny this stimulus amounts to. What the city needs is the economic equivalent of Viagara, not some placebo or impotent drug.  

Next, the types of monies that the city will receive are in the form of Detroit-style economic stimulus funds targeted for blue collar unions to be oddly spent in a service-oriented economy such as Pasadena. 

About $2.5 million in "Recovery Zone Bonds" are to be spent in economic development projects, which the Star News reports as "job training and educational programs."  Is Pasadena going to re-train all those laid off white collar mortgage industry workers from Countrywide and Indymac as solar panel installers, or what?  And last we heard, many of the solar panel manufacturers have moved out of California due to high taxes. 

And $3.8 million has been allocated for "large manufacturing plants, distribution centers, and hotels."  Pasadena has no known land available for large industrial plants or warehouses. There is a site already primed for hotel development at Fair Oaks and Walnut Avenue, but which hotel chain would risk building a hotel in Pasadena in the middle of a depression? 

Unfortunately, Obama's "American Recovery and Reinvestment Act" is not being structured as a block grant that each city can apply as they best see fit. The funds are a square peg for a round hole.

One of the best fits for stimulus funds in Pasadena would be investments in upgrading the recharge basins for the Raymond Basin to keep water rates low for large businesses. Unfortunately, the stimulus monies apparently can not be flexibly applied to such projects. 

Maybe there is some truth to the above-described vulgar joke about the "stimulus bill." The joke would go like this: in Pasadena the stimulus bill funds will be applied to build yet another motel/hotel in East Pasadena.  At least that way the funds will trickle down to those at the very bottom of the economic ladder.    

SOVIET-STYLE BULLDOZING OF ENTIRE CITIES PROPOSED BY OBAMA ADMINISTRATION

President Barack Obama's "stimulus" program apparently is considering "de-development," not re-development, as an economic strategy.  They are considering bulldozing entire cities, mainly in the Rust Belt in the Mid-West, and returning them to nature.  What happens to people's property rights apparently not even a consideration.  Read here:

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5516536/US-cities-may-have-to-be-bulldozed-in-order-to-survive.html

THE PROBLEM IS NOT ENOUGH CARBON DIOXIDE - CAL TECH

Caltech scientists predict greater longevity for planets with life
Contact: Kathy Svitil
ksvitil@caltech.edu
626-395-8022
California Institute of Technology

Excerpt:
Earth maintains its surface temperatures through the greenhouse effect. Although the planet's greenhouse gases—chiefly water vapor, carbon dioxide, and methane—have become the villain in global warming scenarios, they're crucial for a habitable world, because they act as an insulating blanket in the atmosphere that absorbs and radiates thermal radiation, keeping the surface comfortably warm.

The problem, says Joseph L. Kirschvink, the Nico and Marilyn Van Wingen Professor of Geobiology at Caltech and a coauthor of the PNAS paper, is that "we're nearing the point where there's not enough carbon dioxide left to regulate temperatures following the same procedures."

Link:

http://www.eurekalert.org/pub_releases/2009-06/ciot-csp061209.php

L.A. TIMES TABLOID REAL ESTATE JOURNALISM NOW INFECTING PASADENA?

Stop reading the Los Angeles Times articles and blogs on real estate - they are distorting the true picture of real estate in Southern California and in Pasadena.  Most blameworthy is real estate blogger and writer Peter Y. Hong who continues to manufacture tabloid hysteria in his headlines and articles.

On Wednesday June 10, Peter Hong wrote a highly misleading article "Median Home Prices Drop Below 1989 Levels in Some Parts of Southland." 

http://www.latimes.com/business/la-fi-cheaphomes10-2009jun10,0,4802553.story

This article is based on the real estate sales data from highly selected zip codes in Highland, Palmdale, Lancaster and Hemet, all high foreclosure zones - see below.  Hong concludes that 20 years worth of price appreciation has been wiped out.

But Hong is not a qualified broker or real estate appraiser and should refrain from such misleading conclusions.  Most likely, none of the sales transactions reported by Hong reflect the definition of Fair Market Value - a willing and knowledgeable buyer and seller acting without duress.  Distressed sales are not "Market Value" - they are fire sale prices and are not comparable to the value of the house next door. 

Why is this so?  Here are a few reasons:

1. Foreclosure sale properties may have been stripped of all fixtures, such as sinks, toilets, kitchen cabinets, light fixtures, carpet, water heater, air conditioner, etc. 

2. Many banks sell foreclosure properties for "land value only" because of the above. Thus, Hong's reporting that a home bought in 1989 in Lancaster for $120,000 now has lost most of its appreciation because a house two doors away just sold for $66,500 is highly misleading.  The house two doors away probably sold for "land value only." 

3. There is a large contributory value for what appraisers call "competent management" of property. An empty house that has been stripped of all fixtures and is prone to be occupied by squatters is a liability. A fully occupied home under "competent management" (not bank or government management) can not be compared to such "trashed" properties sold at fire sale prices for "land value only."

4. Banks and secondary lenders (Fannie Mae) may qualify for tax writeoffs and Federal bailout monies if they write-down existing loans to "land value only."

5. Hong reports in his article about real estate speculators buying up foreclosure homes and renting them as investments.  No mention how much money went into fixing up these foreclosed homes. Nor is there any mention of the risk, however remote, that a foreclosed property owner could redeem his old loan and reclaim his former home within a year after the foreclosure under State law. The risk of redemption is not factored into the sales price.  

L.A. Times real estate tabloid writer Peter Hong is now reporting on home sales in Pasadena with his typical tabloid style - "Smart Move in Pasadena?"

http://latimesblogs.latimes.com/laland/2009/06/smarter-move-in-pasadena.html

On June 11, Hong reports on his blog. LALand.com, that a craftsman home in Pasadena has more debt than value and has been foreclosed by the lender.

Hong reports about an apparently much smaller nearby home in escrow for about $580,000 that previously sold for $218,000 in 1994.  That's called "price appreciation," which elsewhere Hong erroneously says has been wiped out. Hong questions whether it is a "smart move" to buy this nearby home at such an appreciated price.

To be more precise, the above-reported transaction would reflect price appreciation of 6.74% per year on a compounded basis. He doesn't tell us if this nearby home has been renovated as has the craftsman home. And he does not consider that the nearby home is not burdened by excess debt or a distressed short sale by a bank. Stop reading Peter Hong in the L.A. Times.  His tabloid real estate journalism could negatively affect real estate values in Pasadena.     

• 

  Reversal

• 

  Goodbye, appreciation

FAMILY WELFARE CASELOAD IN CALIFORNIA VERSUS OTHER STATES

PETER DREIER ON CITY GOVERNMENT

Pasadenan Dr. Peter Dreier, sociologist at Occidental University (or is that Obama University?), has written a rebuttal in the Jewish Journal to the LA Weekly's recent cover story about the "failure" of Los Angeles Mayor Villaraigosa.  This line caught my attention:

The article expressed disappointment, even bitterness, that Villaraigosa didn’t accomplish all that he pledged to do during his 2005 campaign. “Your progressive platform,“ the magazine reminded the mayor, “if enacted, would cleanse the city of its toxins: street crime and failing schools, the evaporation of affordable housing and the carcinogens in our skies.“

The reality is that no city on its own - even with the most progressive people in office - can accomplish those goals. Cities lack the financial resources and the legal authority to solve these problems. In other affluent countries, national governments take responsibility for addressing these and other issues. (see "Judging the Mayor" at JewishJournal.com) 

Another sociologist and politician, Patrick Moynihan, made the following statement to the Americans for Democratic Action in 1967:

“Liberals must divest themselves of the notion that the nation—and especially the cities—can be run from Washington . . .  The old-time Tories had a point when they said you can’t change human nature—for good or ill—with a bill-signing ceremony in the Rose Garden.”

Some social problems can't be addressed, let alone solved, at the Federal government level, because Federal policies have created the problems.  Read "One God, Two Cultures" in today's LA Times here:
http://www.latimes.com/news/local/la-me-watts-priest12-2009jun12,0,1148722.story?track=rss  

LIKE PASADENA, EAST BAY RAISES WATER RATES DUE TO FALLING NEW HOME HOOKUPS AND LESS WATER USE

The San Francisco Chronicle is reporting that the East Bay Municipal Utility District (East Bay MUD) has been compelled to raise water rates, not due to the drought, but due to a lack of water service connections and less water usage.  This is similar to the apparent situation in Pasadena, although some local public officials and many in the public erroneously believe that new real estate development has caused a water shortage. Pasadena, like the East Bay, is suffering from a water revenue shortage, not necessarily a shortage of water (yet).  Read here:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/06/11/BAKC184FR7.DTL