Old Dogs and New Tricks
I don’t like thinking of myself as an “old dog,” but when I look around at some of the “new tricks” in the form of technologies coming into the marketplace, it’s difficult not to feel a little out of date. The advances embodied in everyday devices ranging from inexpensive toys to appliances to cars are nothing short of amazing to those of us who remember feeding computers punch cards, seeing a fax come over the line for the first time, or purchasing one of the early handheld calculators.
It wasn’t too many years ago when mobile telephones were the “latest invention” and lugging those heavy instruments around to be able to keep in touch at a moment’s notice was almost more of a burden than a blessing. In 1988, the “coolest” cell phone cost around $4,380 in today’s dollars, and a 150MB hard drive ran more than $8,750. The most popular lap tops ranged upward of $4,000. Today, when we compare prices and capabilities with the past, there are almost unlimited examples of better technologies at lower prices.
In looking at tomorrow, there are some significant changes that await us. I don’t believe we’ll be jetting around on personal transporters any time soon (much as I would like to), but (as usual) today’s technological “wonders” will quickly become so commonplace, we’ll have difficultly imagining how we ever lived without them.
Over the next generation or so, computers will grow even more potent, transportable, and linked, allowing us to have vast amounts of information and entertainment delivered to us wherever and whenever we desire.
In some cases, we might not even recognize computers, per se, because enhanced nanotechnology and microprocessors will substantially transform them in look and usage. Plus, when chips attain their limit in minuteness, the possibility may exist for transmission by use of light waves or various atomic particles.
Within reach already are cameras and GPS-capable devices which, when installed in business operations, homes, and in personal handsets, can analyze needs and direct the flow of practically everything from products to personal health services. The influx of wireless connections and the rapid increase in transmission procedures continues to draw the world closer together.
Being “always connected,” of course, can create privacy issues and information pirating, but with adequate safeguards, including education and legal remedies, these matters can be minimized.
Whereas the “latest in technology” used to be of interest only to “techies” or youngsters who grew up in the Information Age, nowadays older folks are getting into the act with many recognizing the value of being up-to-date, technologically speaking.
Even so, there are those who are resistant to change and would rather keep their original computer and related equipment until it breaks down. For example, some Internet users prefer to use dial-up services when faster and less expensive methods of communication are available. Comfort and familiarity often trump the need to update, even if such choices are considered archaic in some circles.
Even so, today’s toddlers are growing more knowledgeable about tech devices and are placing them high on their wish list. Many of the bigger toy companies profess to no longer be in the toy business. Rather, they note their products are designed to fill a niche in the family entertainment and leisure business.
Technology has been making its mark in the toy world over the past decade or so. Nowadays, the trend is rapidly accelerating. Recently, six of the nine best-selling toys for five- to seven-year-olds were tech devices. In 2006 (latest figures), one-third of the top toys for that age group were those with high-tech twists.
The technology industry, of course, seeks to continually introduce new products and services, along with painless one-click upgrades. That objective serves to provide a financial gain for the producers as well as benefit users by enhancing communications procedures and leisure and entertainment opportunities.
With the ongoing improvement in computers and specialized sensors and the increase of their intelligent capacities, new avenues are being opened for the development and manufacture of myriad associated items. Each new wave of technological discovery and implementation invariably impacts our lives in some manner and creates broad opportunities for economic benefits. Despite our skepticism of the political talk concerning “change” these days, those are changes about which we can be certain.
March Madness
Over the past several days, the eyes of the sports world have been focused on the selection of basketball teams for post-season play with predictions suggesting that practically any team could win it all. We call this whole fray “March Madness.”
At the same time, the eyes of the financial world and many a concerned investor have been trained on another form of March Madness – the unprecedented Federal Reserve (Fed)-mediated sale of one of the nation’s largest underwriters of mortgage bonds accompanied by fears of Chicken Little’s prediction that the sky is falling.
To some people the sale of Bear Stearns to J. P. Morgan Chase for $236 million was a reversal of the traditional rags to riches story because in this case, billions upon billions of dollars were lost by shareholders. Incorporated in 1985, Bear Stearns’ shares sold for about $170 a year or so ago (and $57 a week or so back). The sale price of $2 per share this weekend – and even that required the central bank to take the risk on certain assets – brought fears among some investors that more problems could be in store.
Little need to explain how it all came about since the story is so well known because of the mortgage-related investment crisis the nation has been enduring, but perhaps a couple of thoughts on the matter might be appropriate.
While there have been rumblings over the past several months about the weakness of the subprime mortgage situation, it was the collapse of two internal Bear Stearns hedge funds, both of which had extensive investments in mortgage securities, which sparked near panic in the market.
Gradually, difficulties escalated until last week when financial markets began to turn against Bears Stearns and its cash position dwindled to just $2 billion. It was soon recognized that something had to be done to lessen the atmosphere of uncertainty.
Initially, it was hoped that the Fed would open its discount window and allow Bear Stearns time to swap bonds for the cash required by customers. Several factors, foibles, and feared possibilities nixed that idea and forced federal regulators, as well as Washington policymakers and Wall Street bankers, to seek an alternative solution.
Normally, in matters related to a troubled financial institution, the Fed prefers to find a private-sector answer such as a sale or the creation of a special financing agreement. At first, the Fed agreed to lend Bear Stearns money, going through J. P. Morgan, for up to 28 days. Almost immediately after the release of the news, virtually indicating that one of the nation’s leading investment corporations was near collapse, there was a drop in confidence that such a fix would work. An indication of grave concern was noted by the deep drop in the market.
Various other scenarios were discussed in myriad meetings and conference calls over the past several days until at last it was agreed that J. P. Morgan would buy Bear Stearns, but not on its own. Assistance was needed, and that is where the Fed guarantee entered the door. In taking the action it did, the Fed acted without precedent.
Over the weekend, decisions were made that resulted in the placement of Bear Stearns into the arms of J. P. Morgan. To make it happen, the Fed agreed to remove from circulation a significant portion (some $30 billion) of hard-to-trade securities and to offer Wall Street investment banks direct loans. This latter move is not receiving a lot of media attention, but it (along with drops in the discount rate (the Fed’s lending rate) and the Federal Funds rate that banks charge one another) sent a clear signal that the Fed is going to keep liquidity in the financial markets.
Such dramatic strokes seemed to be required because the more traditional tools at the hands of the Fed, such as dropping interest rates, had not made substantial inroads in solving the situation. While there is some fear in the financial world that the government has set a precedent for aiding flagging financial institutions, thereby leaving taxpayers accountable for losses, there has been relative little backlash of this sort because all players involved realized today’s unique situation required this kind of action. I, for one, give them high marks.
So is Chicken Little right? I don’t think do. The opening of the Fed to investment banks tells us that more loans may be necessary, but it also provides an automatic mechanism to avoid further meltdowns. Moreover, some of the large lenders have actually reported better-tha n-expected earnings in the ensuing days. Most important, the Fed is showing the commitment and flexibility to do what is necessary. We learned a long time ago that this was the proper thing to do, and those old lessons will serve us well in the future.
Impact of “New Urbanism”
Ongoing projects relating to “new urbanism” in Austin have resulted in that city being selected as the host for the 16th annual Congress for the New Urbanism scheduled next month. The assembly will focus on methods for enabling communities to expand living and business opportunities in a responsible manner.
Austin, with a variety of endeavors ranging from a new rail system to downtown high-rise residences, is typical of cities across the country that are facing population growth, employment expansion, and the resulting transportation and congestion issues.
New urbanism, which began a few years ago, is a movement that focuses on developing more compact communities, somewhat similar to small European neighborhoods. In these areas, pedestrian traffic is often preferred to automobile travel.
New urbanism also includes endeavors to provide diverse, vibrant, and pedestrian-friendly living and work environments. In almost all cases, along with the construction of specialized residences, generous space is allocated for multi-use purposes, including retail operations.
Currently, there are more than 4,000 new urbanist projects planned or under construction across the US. Nearly 50% of these endeavors are in historic urban centers. The ultimate goal is to enhance the quality of life and improve the standard of living for those who participate.
Until fairly recently, new urbanism had not attracted a lot of attention in the Lone Star State, even though it has been popular in other states for quite some time. However, last year, the demand for luxury living led to construction of high-rise apartments and condominiums in many of Texas’ major metros. Nearly $400 million was authorized for these kinds of facilities in just Dallas, Austin, and San Antonio. Commercial, public, and residential facilities recently completed or planned in Houston will likely far eclipse that amount.
These and other cities are also considering further needs and opportunities for the future. Included are those designed to rebuild neighborhoods to stave off decay, diminish crime, and provide economically-attractive living quarters. While most new urbanism developments tend to focus on public transit and pedestrian movement, not all do so. Automobile transportation is still a required convenience in some areas.
Recent housing problems in Florida, California, and elsewhere have tended to slow urbanism activities in those areas. As a result, greater interest and investment is being directed to the Third Coast, the name by which the Texas Gulf Coast area is sometimes called, because beachfront property is still available at more reasonable costs compared to the other coasts.
This wave of new urbanism spans ocean front sites from Galveston to South Padre Island. The total amount of expenditures projected is upwards of $3 billion over the short term. Many of these communities, which will virtually transform the Texas coasts, are expected to attract those from out-of-state as well as individuals and families currently residing in Texas.
Some of the Texas Gulf Coast projects feature complete new communities or villages while others are directed more toward improving historic areas and expanding multi-use opportunities. The majority of housing being provided in the coastal environment is single-family dwellings, but high-rise and mid-rise condominiums are also included. In these areas, caution is being taken to make certain that developments are controlled and that they include retail and restaurants, which will significantly enlarge the tax base for these areas.
As baby boomers begin to search for investments and select retirement homes, the Texas Gulf Coast is receiving closer examination. Foreign investors are also considering the coastal regions of the state because of current affordability.
Although the housing crisis and credit crunch have gripped much of the US, developments in various Texas metros, plus those in open spaces that define the state’s coast, are defying the trend and bringing a wave of optimism for new economic opportunities in the future.
posted @ 08:10 AM CST [link]
Friday, March 7, 2008
And the Winner Is . . . .
In the entertainment industry, there are several events at which individuals are lauded for their talents. Most notably is the Academy Awards which was held recently. One of that event’s most famous lines is “May I have the envelope, please?” The second and most anticipated is “And the winner is . . . .”
While this event occurs annually, there is another special occasion that enthralls our nation every four years—the presidential election and the build up to it. This year is most unusual because it is the first time in 40 years that the campaign has not involved a candidate who is either a sitting president or vice president.
Even though we know who will carry the Republican banner, we are still uncertain as to who will be the Democratic nominee. We do know, however, that a winner in Texas has been declared. I’m not referring to any particular senators. Rather, I’m referring to the state’s economy which has benefited greatly from the political spending that has occurred during the past several weeks.
Since campaigning began about a year ago with a double handful of hopefuls, the choices have narrowed immensely. Candidates from both parties raised a total of more than a half a billion dollars in 2007 alone to further their campaigns. Since January, Senators Barack Obama and Hillary Clinton, the two most prolific fundraisers, have added over $130 million to their campaign coffers. Senator John McCain, the leading Republican candidate, and Governor Mike Huckabee received a combined total of about 20% of that amount during the first two months of 2008. So, how does the candidates’ money raising make the Lone Star State a winner?
Of the many millions collected and spent during the weeks leading up to the Super Tuesday event on February 5, very little of it saw its way into Texas. However, when that vote failed to determine a nominee for either political party, money began to pour into the Lone Star State as candidates sought to woo voters to their side. Large amounts of cash were also put into the economies of Ohio, Vermont, and Rhode Island in anticipation of those four states’ primaries which also were held this past Tuesday.
Normally, about 43% of the expenditures from all president candidates goes for administrative purposes, which includes salaries, supplies, equipment, furniture, miscellaneous materials, rentals, special events, and postage and shipping. Another 28% is designated for media expenses. A specified amount of money is used in each state in which candidates focus their attention for a particular primary.
In the case of this week’s primary in the Lone Star State, the money spent by the candidates was a welcome infusion into a variety of business enterprises, ranging from pizzerias and printing companies to publicity and promotional generators.
Almost $17 million went for television advertisements, and millions more were spent for radio and newspaper ads, along with direct mailings. Even the amount expended on food and lodging for the paid staffers and volunteers in the more than 50 campaign offices scattered across the state was substantial.
Currently, there are approximately 240 days before the general election in November. After the nominees for each party are officially chosen at their respective conventions in August and September, the campaign to secure Texas’ 34 electoral votes (second highest of all 50 states) will get underway. Although generally regarded as a “red” state, the turnout and excitement of the recent primary has put the state back in play. Thus, in a few months, the politically induced expenditures will once again flow to the Lone Star State.