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

[FairAndUnbiased]

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.

the author shows it using actual taxes from the same city for dense vs suburban developments on equal lot sizes on the same street. The dense region produces 40% higher tax revenue at equal lot size. It pays for itself, suburbs don't. Suburbs aren't collapsing - yet - because there's still developmental growth going on and most of all because federal government subsidizes the initial infrastructure. it all comes down to debt, which as we know eventually comes from USD as reserve currency.

 

[letsrock]

the author shows it using actual taxes from the same city for dense vs suburban developments on equal lot sizes on the same street. The dense region produces 40% higher tax revenue at equal lot size. It pays for itself, suburbs don't. Suburbs aren't collapsing - yet - because there's still developmental growth going on and most of all because federal government subsidizes the initial infrastructure. it all comes down to debt, which as we know eventually comes from USD as reserve currency.

Infra needs for cities are also quiet complex and expensive. its far expensive to tunnel subways or expand city roads or provide piped water or gas to tall buildings. Cities also have higher policing needs due to far higher population density. Again i am not being dismissive of cities - they indeed provide a lifestyle seen as desirable by a lot of people. As i said its a matter of choice not affordability.

 

[FairAndUnbiased]

Infra needs for cities are also quiet complex and expensive. its far expensive to tunnel subways or expand city roads or provide piped water or gas to tall buildings. Cities also have higher policing needs due to far higher population density. Again i am not being dismissive of cities - they indeed provide a lifestyle seen as desirable by a lot of people. As i said its a matter of choice not affordability.

the author used a lot with dense but lowrise structures to account for that. a dense lowrise region doesn't have complicated tall buildings but is still dense enough to support regular transit and is much more efficient than suburban single family homes or suburban businesses. and even in urban regions the cost of piped water and gas to tall buildings is tiny (per capita) compared to having to build out over 30x more area for equivalent people and most of all the parking lots which are ridiculous. Subways move far more people per unit time than cars do, especially considering traffic and the wasted time idling in your car that you could've spent getting work done or relaxing in the subway.

I do put my money where my mouth is and I live in a relatively dense lowrise city that is not too bad in terms of safety and wealth. Unfortunately this sort of place is difficult to find in the US and you do pay a premium in cost per unit area of housing for it.

 

[letsrock]

the author used a lot with dense but lowrise structures to account for that. a dense lowrise region doesn't have complicated tall buildings but is still dense enough to support regular transit and is much more efficient than suburban single family homes or suburban businesses. and even in urban regions the cost of piped water and gas to tall buildings is tiny (per capita) compared to having to build out over 30x more area for equivalent people and most of all the parking lots which are ridiculous. Subways move far more people per unit time than cars do, especially considering traffic and the wasted time idling in your car that you could've spent getting work done or relaxing in the subway.

I do put my money where my mouth is and I live in a relatively dense lowrise city that is not too bad in terms of safety and wealth. Unfortunately this sort of place is difficult to find in the US and you do pay a premium in cost per unit area of housing for it.

Yes lowrise region is more affordable (the operative word is "more") but single housing is also affordable for americans. Infact if capital controls (in their countries) are removed plenty of foreigners will lap up american housing. Again 17-18% americans live in apartments or condos.

My point is unaffordability should have been realized in 80 years. But while we have seen cities go broke i dont remember anycase where suburbs went broke.

 

[FairAndUnbiased]

Yes lowrise region is more affordable (the operative word is "more") but single housing is also affordable for americans. Infact if capital controls (in their countries) are removed plenty of foreigners will lap up american housing. Again 17-18% americans live in apartments or condos.

My point is unaffordability should have been realized in 80 years. But while we have seen cities go broke i dont remember anycase where suburbs went broke.

single family housing is not really affordable. you have to take out 30 year mortgages. in 30 years the entire world can change. in China the typical mortgage length is 15 years with an average of 15.6 years.

in addition, the first postwar suburbs have already begun to become insolvent as predicted when growth is no longer possible. as the article points out, when the first postwar suburbs begin to fail, tensions rise, like in Ferguson.

 

[Communism]

Once the kinks are worked out of 3D printing steel reinforced concrete housing, cities will well and truly be dead in the United States.

The cost of building single family homes is inflated currently by steep labor costs as one would expect from the richest country in the world.

The unaffordability you talk about is mostly from property (land) cost instead of building cost.

 

[tower9]

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

As long as the USD stays the reserve currency, the government can get away with their fiscal recklessness.

But the second the USD loses reserve currency status, it will be an unmitigated disaster.

 

[Bilal9]

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.

It's important to mention that "Cities are not failed concepts universally" and more importantly "Americans with their habits failed cities". WE SCREWED IT UP.

These habits were established when the US Big 3 Car makers destroyed public transport in cities like LA in cahoots with the LA city fathers who were basically on the take from these companies and lobbied the federal govt, to build In-city and Interstate expressways (Extensive Red Tram system was gone by the 70s and so was the bus system). Google it all, you will see. In-city expressways and extensive car usage is what killed the inner city and made it abandoned and crime-ridden.

Cities like Tokyo and Amsterdam even with Multi-zoned areas are still clean and successful because people are RESPONSIBLE and they have devised to keep their neighborhoods clean themselves. On top of it, they have consciously chosen not to use cars and use bikes to get to publicly funded public transport options, of which there are plenty, which are clean and safe. We as Americans have failed ourselves in cities like LA.

The Canadian guy doing that video makes the case of Amsterdam and generally all Dutch cities where people have plenty of clean, safe public transport options. The scenarios are not unlike that of Tokyo.

Watch these by another Canadian who lives in Tokyo now...

 

[FairAndUnbiased]

Once the kinks are worked out of 3D printing steel reinforced concrete housing, cities will well and truly be dead in the United States.

The cost of building single family homes is inflated currently by steep labor costs as one would expect from the richest country in the world.

The unaffordability you talk about is mostly from property (land) cost instead of building cost.

lmao 3D printing is trash for mass production. actual engineers understand that 3D printing is good for reducing cost of low volume complex parts, not high volume simple parts. don't believe me? get some quotes for injection molded vs 3D printed of 100000x of anything plastic or quotes for machined parts vs. 3D printed parts for moderate complexity metal parts like gears.

and you can already get manufactured homes anywhere in the US. They're considered low class and unsafe. lol if people don't want to live in a cheap trailer who wants to live in what is essentially an expensive trailer?

 

[Communism]

lmao 3D printing is trash for mass production. actual engineers understand that 3D printing is good for reducing cost of low volume complex parts, not high volume simple parts. don't believe me? get some quotes for injection molded vs 3D printed of 100000x of anything plastic or quotes for machined parts vs. 3D printed parts for moderate complexity metal parts like gears.

and you can already get manufactured homes anywhere in the US. They're considered low class and unsafe. lmao if people don't want to live in a cheap trailer who wants to live in what is essentially an expensive trailer?

You seem to have a high opinion of the garbage piles of sticks that most American houses are currently.

It's important to mention that "Cities are not failed concepts universally" and more importantly "Americans with their habits failed cities". WE SCREWED IT UP.

These habits were established when the US Big 3 Car makers destroyed public transport in cities like LA in cahoots with the LA city fathers who were basically on the take from these companies and lobbied the federal govt, to build In-city and Interstate expressways (Extensive Red Tram system was gone by the 70s and so was the bus system). Google it all, you will see. In city expressways is what killed the inner city.

Cities like Tokyo and Amsterdam even with Multi-zoned areas are still clean and successful because people are RESPONSIBLE and they have devised to keep their neighborhoods clean themselves. On top of it, they have consciously chosen not to use cars and use bikes to get to publicly funded public transport options, of which there are plenty, which are clean and safe. We as Americans have failed ourselves in cities like LA.

The Canadian guy doing that video makes the case of Amsterdam and generally all Dutch cities where people have plenty of clean, safe public transport options. The scenarios are not unlike that of Tokyo.

Watch these by another Canadian who lives in Tokyo now...

You say cities are viable and then bring up every example that glows of massive government subsidies.

If cities were still viable, they wouldn't require insane levels of government subsidies to break even.

 

[FairAndUnbiased]

As long as the USD stays the reserve currency, the government can get away with their fiscal recklessness.

But the second the USD loses reserve currency status, it will be an unmitigated disaster.

it already is a disaster for postwar suburbs as the examples of East Cleveland, Vallejo, Ferguson, etc show. As the first postwar inner ring suburbs can no longer expand, they fall into decay. you can always just say '**** them' and neglect the infrastructure but that results in massive rise in crime and violence like Ferguson.

the 1970's-80's suburbs are next.

 

[Bilal9]

You say cities are viable and then bring up every example that glows of massive government subsidies.

If cities were still viable, they wouldn't require insane levels of government subsidies to break even.

Do Tokyo public transport systems require "insane levels of government subsidies to break even"?

Jury's still out on that one. They may not make a profit, but I don't think they need massive subsidies. Some of them may even be private for-profit entities.

But I do get the fact that the Japanese are not the littering vandals that we in LA are. Neither are they inveterate law-breakers. The Japanese even clean up the sidewalks outside of their homes. Daily.

 

[FuturePAF]

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.

Perhaps there is another way, new urbanism style walkable neighborhoods with detached townhouses. Cheaper to maintain on the tax base and a quick walk to shops; all the benefits of a city without most of the density.

Sort of like your Brookline part of Boston I visited a few years ago.

 

[FairAndUnbiased]

Do Tokyo public transport systems require "insane levels of government subsidies to break even"?

Jury's still out on that one. They may not make a profit, but I don't think they need massive subsidies. Some of them may even be private for-profit entities.

and even with subsidies, so what? private cars are subsidized by public roads. as long as transit cost is lower than the additional public road required for lower density housing then it's worth. also the value of time - wasting 1 hour less per day due to lowering traffic with transit is like being paid an hourly wage for that 1 hour every day for every person in the city.

remember that 1 subway train can transport 50 people per car just sitting, 150 people with standing, and there's 8-10 cars per train. let's say with maximum comfort and lowest capacity, 400 people can be transported per single subway train 1 stop, 5 miles away, in 15 minutes. that's 1 train, you can run 3 trains in that 15 minutes.

If those 400 people all drove, the traffic jam alone just to turn onto a 4 lane street in accordance with traffic signals would take 20 minutes never mind actually driving for 5 miles.

 

[Communism]

and even with subsidies, so what? private cars are subsidized by public roads. as long as transit cost is lower than the additional public road required for lower density housing then it's worth.

remember that 1 subway train can transport 50 people per car just sitting, 150 people with standing, and there's 8-10 cars per train. let's say with maximum comfort and lowest capacity, 400 people can be transported per single subway train 1 stop, 5 miles away, in 15 minutes. that's 1 train, you can run 3 trains in that 15 minutes.

If those 400 people all drove, the traffic jam alone just to turn onto a 4 lane street in accordance with traffic signals would take 20 minutes never mind actually driving for 5 miles.

What part of most American white collar jobs don't require leaving home all that often in actuality do you not understand?