Why American Cities Are Broke - The Growth Ponzi Scheme [ST03]

[FairAndUnbiased]

 

[Darius77]

To be fair all of AmeriKa is broke. The endless Jew fanned wars for the past 70 years have bankrupted the banana republic. US debt is greater than Greece on a per capita basis and pushing $32 TRILLION plus. The lost wars in Iraq and Afghanistan alone cost $15 trillion according to the GOA. They also greatly helped China's accelerated rise.


Is US a ‘financial zombie’ going bankrupt?

By Wang Wen Source: Global Times Published: 2020/10/12 17:32:03

Illustration: Liu Rui/GT

In an essay co-published by my colleagues and me in the latest edition of the renowned Chinese journal Contemporary International Relations, we revealed our findings that the US is becoming a "financial zombie."

If we took the US as a company, it would be on the verge of bankruptcy due to its long-term chaotic governance and high debt. It now appears that the national image of the US has almost gone bankrupt. The trend of "de-dollarization" has also taken shape. The main difference, though, is that the US is a sovereign country, supported by its imperial system.

From the perspective of economic governance, the US government is very similar to a corporation. In this system, the US federal government is equivalent to the management; the Congress is the board of directors; and the US president is similar to a CEO elected once every four years. In addition, every US citizen can be regarded as a minority shareholder holding "American equity." The US election is actually more like a company holding a general meeting of shareholders.

In terms of corporate finance, the US government has become "insolvent." It has to rely on loans and deficits to maintain operations. In the field of corporate governance, this is usually called a "zombie enterprise." In this sense, the US is allowing for a term to be coined: the "nationally financial zombie."

Australian economist John Quiggin first put forward the concept of "Zombie Economics," which means that the economy of most capitalist countries is facing the situation from heavy housing loans to mounting credit card bills; from expensive luxury list to health care bills; and huge personal financial pressure roaring like zombies, which drag the country into the mire of "Zombie Economics."

When the national fiscal policy cannot support the existence of "Zombie Economics," the phenomenon of a "financial zombie" will follow.

Since the outbreak of the COVID-19 pandemic in 2020, the US government has issued a series of fiscal and monetary stimulus policies to support economic recovery. The US Federal Reserve has also rapidly lowered benchmark interest rates to historically low levels of zero to 0.25 percent, launched unlimited monetary easing policies, and purchased a large number of various bonds.

The size of the US Federal Reserve's balance sheet has rapidly increased from nearly $4 trillion to more than $7 trillion in one year. The scale of US national public debt has also increased from $23.2 trillion at the end of 2019 to over $27 trillion in October 2020. It is expected to be close to $30 trillion by the end of 2021.

In just half a year, the Fed's balance sheet has increased by $2.89 trillion, an increase of nearly 70 percent - making it almost catch up with the total of the balance sheet growth between 2008 and 2014. The terrible economic situation has gradually plunged the US into an endless loop of "deficits." And now its fiscal and monetary policies are in a passive state of deficit spending.

Although huge increases in the US dollar supply temporarily alleviated liquidity crises in the financial markets, it also made a US asset bubble that should have been settled to re-expand rapidly. In the long run, this is just a hard time delay. It will eventually lead to a bubble in the US financial markets, with worsening results.

According to data compiled by Deutsche Bank Securities, nearly one in every five publicly traded US companies is a "zombie," this is double the amount compared with figures in 2013. The Fed's continued monetary policy support only serves to prolong the survival of American companies that should have gone bankrupt.

Under the impact of the financial crisis in 2008 and the COVID-19 pandemic in 2020, the so-called myths of US styled democracy, wealth, and values are shattering. Over the years, with the continuous expansion of the fiscal deficit and the rapid accumulation of the size of American debt, it can be argued that the US is accelerating its own national bankruptcy.

It is not certain whether the US is bound to go bankrupt. But it can at least be said that the rapid fall of the US into the abyss of "financial zombification" under the COVID-19 pandemic is well underway. One can see that major changes in the relationship between capital and technology are at a major "historical crossroad."

The author is professor and executive dean of Chongyang Institute for Financial Studies at Renmin University of China. opinion@globaltimes.com.cn

Is US a ‘financial zombie’ going bankrupt? - Global Times

www.globaltimes.cn

 

[retaxis]

prognosis of next 50years

China - continues to grow and becomes largest economy by far with military to match
US - Afro-latinos become majority race in America which faces an economic collapse and people no longer can afford basic utilities and rent.

 

[大汉奸柳传志]

having to drive a car to go somewhere and everywhere must suck, let alone on ill-maintained bumpy roads

 

[Hamartia Antidote]

The title actually is
Why American Cities Are Broke - The Growth Ponzi Scheme [ST03]

The others are:
Introduction to Strong Towns & Financially Insolvent American Cities [ST01]
How Suburban Development Makes American Cities Poorer [ST02]
Why American Cities Are Broke - The Growth Ponzi Scheme [ST03]
How Bankrupt American Cities Stay Alive - Debt [ST04]

 

[Hamartia Antidote]

having to drive a car to go somewhere and everywhere must suck, let alone on ill-maintained bumpy roads

You can always walk, take a bus, or subway..but driving is certainly more enjoyable than China's wall-to-wall crowded buses/subways.

 

[FairAndUnbiased]

The title actually is
Why American Cities Are Broke - The Growth Ponzi Scheme [ST03]

The others are:
Introduction to Strong Towns & Financially Insolvent American Cities [ST01]
How Suburban Development Makes American Cities Poorer [ST02]
Why American Cities Are Broke - The Growth Ponzi Scheme [ST03]
How Bankrupt American Cities Stay Alive - Debt [ST04]

They are broke because of the suburbs if you actually watch the video. It's the urban cores that are subsidizing the suburbs thanks to far more taxable value per unit area.

 

[FairAndUnbiased]

You can always walk, take a bus, or subway..but driving is certainly more enjoyable than China's wall-to-wall crowded buses/subways.

if you watch the other videos in the series, he shows that walking in the suburbs is potentially life threatening due to the explicitly hostile infrastructure, and how lack of rapid transit lanes makes it nearly useless. He compares it with Netherlands.

when I'm in China I don't need to take the bus or subway everywhere because Chinese cities follow the microdistricts (小区) planning method where everything except factory work is within 500 m so you only need to drive or take transit to work, nowhere else. Even jobs like accounting, architecture, small software, retail, restaurants, etc can be found in 1st floor strip malls with apartments or more offices above.

 

[Hamartia Antidote]

when I'm in China I don't need to take the bus or subway everywhere because Chinese cities follow the microdistricts (小区) planning method where everything except factory work is within 500 m so you only need to drive or take transit to work, nowhere else. Even jobs like accounting, architecture, small software, retail, restaurants, etc can be found in 1st floor strip malls with apartments or more offices above.

Yes, if you live in some cities here in the US that is true also. Massachusetts Ave goes on for miles with shops on the first floor and apartments above. It's been that way for 120 years..

But what sells is what people want. People aren't lining up to sell their home in the suburbs for that apartment conveniently above the Starbucks and the fancy restaurant. If people were then more would be built. It's as simple as that. Builders aren't skipping out on golden opportunities to make a ton of money because they have some aversion to building this particular way.

However the author does touch upon something. Many of those shops with housing above them were probably built using city loans and some urban planning. In their heyday they probably were considered the prime place to live generating extraordinary revenue for a city.

However with time people's tastes change and what was once highly desirable turns into yesterday's ho-hum. Next thing what used to be rented to an urban professional family ends up as apartments jammed with 10 low wage workers. What used to be a upscale restaurant is a laundromat.

You can't force people to live a lifestyle they don't want...unless they simply don't have any other options due to lack of alternatives like housing, money, or jobs.

I'm at my parent's house in Boston right now. As you said within 500M of me is everything (except big box places obviously). No reason to take my car. But I don't want to live here in the concrete jungle. That's basically why the suburbs are full of people like me. They don't want to live here either. 100 years ago their ancestors (who were likely low income) had no choice..but today they do. Living in some suburb in a single family home with maybe a pool in the backyard, trees and birds everywhere, nice and quiet is more appealing to today's tastes.

 

[Communism]

Cities are mostly obsolete in the United States and really should only exist in places where population concentration is still beneficial financially/economically.

With the switchover to white collar jobs for most of Americans, one can simply live in small town U.S.A. instead which requires far less sophisticated planning which translates to higher economic efficiency in general.

Cities primarily traditionally existed due to increased efficiency of white collar work due to population concentration.

 

[Hamartia Antidote]

Cities are mostly obsolete in the United States and really should only exist in places where population concentration is still beneficial financially/economically.

With the switchover to white collar jobs for most of Americans, one can simply live in small town U.S.A. instead which requires far less sophisticated planning which translates to higher economic efficiency in general.

Cities primarily traditionally existed due to increased efficiency of white collar work due to population concentration.

Certainly suburbs are killing many cities. As the people with money leave they are replaced with others who can't support the existing infrastructure. As i have said before the Boston subway is underfunded and not sustainable anymore. The professionals Boston was counting on to keep it running are leaving. Those left complain about every penny rate hike. So if they raise the rates the ridership goes down..so they are in a budget battle that can't be won.

 

[FairAndUnbiased]

Yes, if you live in some cities here in the US that is true also. Massachusetts Ave goes on for miles with shops on the first floor and apartments above. It's been that way for 120 years..

But what sells is what people want. People aren't lining up to sell their home in the suburbs for that apartment conveniently above the Starbucks and the fancy restaurant. If people were then more would be built. It's as simple as that. Builders aren't skipping out on golden opportunities to make a ton of money because they have some aversion to building this particular way.

However the author does touch upon something. Many of those shops with housing above them were probably built using city loans and some urban planning. In their heyday they probably were considered the prime place to live generating extraordinary revenue for a city.

However with time people's tastes change and what was once highly desirable turns into yesterday's ho-hum. Next thing what used to be rented to an urban professional family ends up as apartments jammed with 10 low wage workers. What used to be a upscale restaurant is a laundromat.

You can't force people to live a lifestyle they don't want...unless they simply don't have any other options due to lack of alternatives like housing, money, or jobs.

I'm at my parent's house in Boston right now. As you said within 500M of me is everything (except big box places obviously). No reason to take my car. But I don't want to live here in the concrete jungle. That's basically why the suburbs are full of people like me. They don't want to live here either. 100 years ago their ancestors (who were likely low income) had no choice..but today they do. Living in some suburb in a single family home with maybe a pool in the backyard, trees and birds everywhere, nice and quiet is more appealing to today's tastes.

Suburbs are actually legislated. Look up how much of any given region is given to R1 density housing which makes building anything other than single family homes illegal. Look up FHA design guidelines or the history of Levittown, the first postwar suburb.

It's not a market phenomena, it was literally ordered by the government.

 

[Hamartia Antidote]

Suburbs are actually legislated. Look up how much of any given region is given to R1 density housing which makes building anything other than single family homes illegal. Look up FHA design guidelines or the history of Levittown, the first postwar suburb.

It's not a market phenomena, it was literally ordered by the government.

Towns can easily change their zoning laws. There's nothing stopping them other than the vote of the residents (who are the OWNERS). These lot sizes and zoning are intentional. They adjust them to suit their needs. Some towns here require you to buy two acre plots. That pretty much keeps the median income of the residents high.

Boston notoriously changed their zoning laws in ~1930's allowing plots to be subdivided. This increased the density as suddenly narrow buildings started popping up.

 

[letsrock]

If suburbs are a ponzi scheme one would think 80 years is enough for it to blow up? instead millions more suburban houses are being built. I think this is as sham as the constantly hyped ghost cities in china. The choice between "vibrant compact" cities and spread out green and verdant suburbs is a lifestyle choice for Americans - because they are rich enough to afford both.

 

[FairAndUnbiased]

Towns can easily change their zoning laws. There's nothing stopping them other than the vote of the residents (who are the OWNERS). These lot sizes and zoning are intentional. They adjust them to their needs.

Boston notoriously changed their zoning laws in ~1930's allowing plots to be subdivided. This increased the density as suddenly narrow building started popping up.

they were set in the 1950's and are costly and difficult to change. coincidentally at the time a major concern of the FHA was preventing minorities from moving into suburbs.

I would say the inefficiencies of the suburbs aren't my problem. but the export of pollution and conservative politics from suburbs are my problem.