No Direction Home

October 17, 2005
       When the Museum of Bad Ideas is built by Steve Wynn in Las Vegas (designed by Frank Gehry), surely one of its remote galleries will contain this week's cover story in the New York Times Sunday Magazine about the suburban homebuilding racket titled "Chasing Ground." The story focuses on one of the nation's leading large production builders, the Toll Brothers, based in Philadelphia, and "ground" is their own cute phrase for the parcels of meadow and cornfield that they magically convert into suburban housing subdivisions all over the nation.

        The Times brings its usual magisterial lack of critical thinking to the subject. Among the conclusions: that the suburban sprawl housing bubble will continue indefinitely into the future, and that the price of houses will continue to rise, probably forever, too.

"Indeed , Toll seemed certain that firms like his -- with an expertise at finding and developing land -- would become increasingly successful. The company expects to grow by 20 percent for the next two years and 15 percent annually after that."

     Philosophically, the story is grounded in Times columnist David Brooks's concept that suburbia is a good thing because people seem to like it. But it's the Times's ignorance of practical matters that's really breathtaking. The nation's oil predicament is barely mentioned (and obviously only as an editorial afterthought, since the story was no doubt filed before Katrina and Rita shredded production in the Gulf of Mexico). Anyway, the issue is cavalierly dismissed.  Missing altogether is America's even more dire predicament over natural gas, which is used to heat half the houses in America and 99 percent of the brand new ones. Since the story focuses on large luxury houses over 3500 square feet, featuring cathedral ceilings and yawning lawyer foyers, you'd think the question of heating these behemoths might arise, but no. The price of natural gas has quadrupled since 2002 and is still going up.

      But it's the story's willingness to embrace uncritically the Toll Brothers' credo of reckless and destructive greed that is most amazing

"What happens when New Jersey reaches build-out? 'We've been trying to build it out, but we can't get our hands on it,' [Toll] said. 'We could sell every square foot that we could build on. I mean, anything within 15 minutes of Interstate 78 could be built and sold. Allentown, Bethlehem, Easton, all the way to New York City. And it's all sitting there."

    The assumption, clearly, is that America will be a happily car-crazed society forever and that nothing might interfere with that. The interstates will keep humming along. The consumer sector will keep generating high-paying management jobs. The "boomburbs" of Arizona and Nevada, in particular, will continue to expand and thrive.

      Here's the real dope on the situation. The big corporate production home builders, including the Toll Brothers, are selling their own stock like mad lately because they realize that the game is over, that they are in a twilight industry. (The Times left this out.) Home heating costs are going to crush the public this winter, and even the supposedly well-off in big new houses are going to feel the pain, because the truth is that many of them are leveraged up to their eyeballs to be where they are, and supernatural utility bills will push them over the edge just when the national bankruptcy laws have been revised to make wiggling out of debt much more difficult and punitive. The price of gasoline will keep ratcheting upward from where it is now like a medieval torture device, and will combine with home heating costs to make the public's collective head pop like a winter melon.

       Meanwhile, the mortgage industry, a mutant monster organism of lapsed lending standards and arrant grift on the grand scale, is going to implode like a death star under the weight of these non-performing loans and drag every tradable instrument known to man into the quantum vacuum of finance that it creates.

       And is there anything to be said on behalf of the mutilated American rural landscape itself? Such as: might we actually need it to feed ourselves when the great Cheez Doodle sector of the economy craps out from a shortage of cheap fossil fuel "inputs?"

       It's sad to see a once-great newspaper go through the motions of pretending to be intelligent.

__________________________________________________________________________

        I recommend this excellent essay by my correspondent Dmitry Podborits:

ON DANGERS OF BEING AN INSECT WITH WINGS AND A MYSTERIOUS INSTANCE OF MASS MAILING

Comments

[cyclonaut]

"...the suburban sprawl housing bubble will continue indefinitely into the future," because everyone knows that we will innovate solutions to the decline of fossil fuels, right?

Wrong. At least according to one physiscist who undertook a study of such and has sucessfully defended the finding that "the rate of innovation peaked in 1873 and has been declining ever since."

If you have not run across the yet, submitted for your perusal:

http://www.timesonline.co.uk/article/0,,2099-1813695_1,00.html

[ross]

There are many things that can pop a bubble, but I think the crucial thing to keep in mind is that the bubble is already leaking air and the rubber surrounding our balloon economy (leaking air notwithstanding) is stretched paper thin. We have been getting by for years playing a game of "revolving bubbles", but it is very hard to see how the PTB can continue to successfully keep it up. All the bubbles were designed to a ton of wealth into the elite's hands and enough credit, credit mind you, into the average American's coffers to allow the consumer binge to keep the U.S. economy afloat. But the consumer is tapped out and the authorities know it.
The new bankruptcy (and other proposed) legislation amount to Hurricane preparedness measures. The storm is coming and none too late.

Indeed, confidence is the name of the game, but confidence has already begun to wane here and abroad in the future prospects of the U.S. economy. What's more, there is a desire on the part of many nations to rid themselves of dollar hegemony. Personally, I would say THAT it is about as effective an approach as one could take to the task many have given themselves (both criminal and non criminal) of ridding the world of U.S. global overlordship.

From Venezuela to Iran, to The E.U., to Russia and China, nations are taking a variety of steps, selling of U.S. assets, forming gold backed bourses, special economic and military partnerships etc. that are designed to remove the props that allow the U.S.
to operate as the world's hegemon. Winston Churchill said early in W.W.II

"This is not the beginning of the end but the end of the beginning." Old Winnie wasn't much with money apparently, but I wonder what timeline he would put the U.S. economic ship of state on now.

[Si]

Ive been off-line quit a bit as of late...BUT I have read up from the OilDrum about the NG crisis for this winter season in the USA. Seems rather scary Jim Popuvla from FS is has stated a few anylist are thinking 20 dollars per 1,000 cuft by Feb 2006..Ochhhh that will hurt in a big way!
I have freinds who moved from Ukraine to the USA..Just bought a $400,000 dollar 2,500 SQ FT home in Naperville , IL..of corse like Jim stated they are maxed out on credit and work from pay check to paycheck..with hardly any money left over for luxtury..Now imagine when that heat bill comes in around Feb time..They will probally buy time to place payments aon already maxed out credit cards.
I tend to agree with Jim on his thoughts I think people are maxed out in the burbs and at a very bad time to be.
Anyway how can you really feel sorry for people who go and try to live WAY beyond their means! If my friends in Naperville go bankrupt...well I cant feel too sorry..they made a foolish choice.I dont know why people cant be overly content in a 1,000 SQ Ft home in a small town...The finacial freedom aspect of that would make more sence if anything.

[steve duncan]

Oh, if Cartman were here to see the way you disparage cheese doodles!! For shame!!

[Daniel]

I've just got to put my two cents in today--sorry. Mr. Kunstler couldn't be more correct about the state of this country's dependance on a NON-renewable resource. It seems that most American's have been reduced to lemmings marching towards the cliffs of self-extinction--or at the least, self-irrelevance (is that a word--it should be). Why, just today I was reading an article in my local, southern (yeah, we're not all red down South)newspaper and they were taking on the issue of gas being so expensive (which on a global scale it isn't) with some of the locals at local gas stations. This article had to be the most blatant example of the public's collective ignorance I have ever had the distinct dishonor of having to lay my eyes on. Here's what some of them said:

“These gas prices are still too high. I’m driving a lot less. I don’t shop like I used to, and I don’t eat out like I used to. We’re cooking and eating at home now. I don’t know what’s causing the prices to stay high, but they shouldn’t be that high.”

Well, Jethro, obviously you slept in skoool (sorry, I just had to do it) the day the concept of "NON-renewable" was preached in Ecology. Because oil is of limited supply, #1: when it's gone, it's gone and #2: the price will go higher and higher until the end due to the worlds insatiable demand. Here's another Einstien:

“This price is better than over $3. It needs to go down more. I’ve been driving less. I only drive to work, and that’s all. What I’ve been paying for gas is more than a car payment. The greedy people here just want more money, I guess.”

Well, it seems obvious enough to me that the car (probably SUV) isn't worth it. If the fork costs more than the food, I would be eating with my hands. You too must have slept through the NON-renewable concept in Ecology class.

I just had to rant--You guys already understand all this. It's not news to you, or me. I'm yelling at sheep who's shepard (GWB) will never lead them to this site and my comment. It just seems more obvious to me everyday that people are so blindly ignorant. Even when the end is served up on a golden platter laid out for all the world to see. Oy Vey. Thanks for listening, friends.

[Deb]

A confession:

I have a Ph.D.in psychology, I've taught statistics and research methods and I am pretty fluent in economics. I am temperamentally and politically predisposed to believe in "Peak Oil." I've read TLE, heard Michael Ruppert talk and thought about it a lot.

But there is something about trying to INTRODUCE the idea with a discussion of Hubbard, supply vs. demand and graphs that makes my eyes glaze over. There's something about the whole idea that the inflection point in the graph is a crucial point that makes my synapses shudder.

So to me, there is an interesting question of how to REFRAME the whole issue in a way that is easier to understand.

I really, truly think that one obstacle to awakening the sleepwalkers on the edge of the abyss is that the way the issue is described is unnecessarily mathematically vexing.

[Weaseldog]

I tried, to explain it once as if you were given a supersized soft drink.

You can suck it out slowly through a straw.

You can remove the lid and gulp it down.

You can turn it upside down and spill it all out at once.

But no matter how fast, or what method you use to empty it, you always get the same amount out. And when it's empty, it doesn't refill itself.

Usual reply, "Oh if it's empty I'd just buy another one."

[Weaseldog]

Oh yeah in 2000, one woman explained that if we ran out of oil, God would just make more. Because he doesn't let bad things happen to us.

[Mike Church]

"Oh yeah in 2000, one woman explained that if we ran out of oil, God would just make more. Because he doesn't let bad things happen to us."

If more oil were to be made in the world, it would probably be us.

[Matt Holbert]

I had a chance to see JHK in action here in Spokane last week. One of the events was hosted by a local community college and had a sustainability theme. I was struck by how little the dialogue has changed since I participated in a Sustainability Conference hosted by the Idaho governor in 1993. While Jim is funnier than any presenter at the 1993 conference, it still seems that for the most part, people just want to talk the talk. Speakers come and go and nothing changes. While better than your run-of-the-mill sprawl, New Urbanism is not the answer. I live within 15 blocks of the largest employment center in the area, within two blocks of two supermarkets and within 10 blocks of a couple of parks that would have Andres Duany swooning. It makes no difference. The neighbors have fleets of vehicles and seem to be hell-bent on using them for every little thing. Let's be real. It will take a major collapse -- 25 million or more severely impacted in the U.S. -- of some sort before many more people will walk the talk.

[Weaseldog]

The trains are becoming increasingly crowded in the D/FW metroplex.

New this week..., there were no seats left when I boarded my morning train.

Folks that have been riding it for years say it started picking up a few months ago. Before that, the trains were relatively empty.

[Edgar Cave Urbanus]

Our new national song!

Performed by Jiminy Cricket

When you wish upon a star
Makes no difference who you are
Anything your heart desires
Will come to you

If your heart is in your dream
No request is too extreme
When you wish upon a star
As dreamers do

Fate is kind
She brings to those to love
The sweet fulfillment of
Their secret longing

Like a bolt out of the blue
Fate steps in and sees you through
When you wish upon a star
Your dreams come true

How bizzaro!

[kd]

Excellent post, Jim.
Ditto the comments.

I just returned to from two days visiting family in Houston.

Setting out for Austin this morning, I decided to drive through suburban west Houston. I wanted to see how far the sprawl had advanced since I was last in the area. As I rolled past the new neighborhoods, gazing left & right at grand entries with large castle-like gates ("gated communities" I believe they are called) & street names that echoed an "English" sense of privilege--Nottingham this, Buckingham that, Kingsway, Queen's Court, etc--I was astonished at the size each & every house. Mansion after mansion tightly packed behind high red brick walls. But it wasn't the size of the houses alone that amazed me. It was the sheer quantity of them. Where is all the money coming from? On what foundation does all this wealth stand? Real estate? Information processing? Shuffling astronomical amouts of debt? Images, ideas, dreams? It all looks so "substantial" but it also seems to be appearing out of thin air. Weaving throught the SUVs (in my old Toyota Corolla), I kept wondering: What is the nature of the "work" these people do? What do they "produce"? Surely, the information they possess, the projects they "oversee" & "manage" are corporeal...or is it a kind of mind-boggling sleight of hand trick, a vast hallucination?

After miles & miles of this I finally came to a freeway & headed back to Austin, stopping to rest in the small town of Columbus. There I walked around the town square for awhile, & gazed at the single largest building, besides the courthouse. It was the Stafford Opera House, circa 1863. Opulent, Victorian, built by a rich cattle baron-- people came from miles around to go inside it & see the likes of Lillian Russell & Harry Houdini.
Next door was the cattle baron's own mansion. But it was smaller than any of those countless McMansions I past in west Houston. It was also more beautiful.

[Deb]

Usually, the dismal scientists ignore peak oil and blather on about social security, GDP, etc. But here's a libertarian economist at George Mason University trying to debunk peak oil.
http://cafehayek.typepad.com/hayek/2005/10/the_fake_energy.html

[Genious Realtor]

It's a new paradigm, and everybody who doesn't buy, now, will be priced out forever. Anybody who does buy will be rewarded with a lifetime of riches, as their property will continue its 30% yearly price increase.

Renters, and anybody born in a future generation, will not be able to afford a $10,000,000 starter home in 15 years. They will live in tent cities, and Hondas.

This asset bubble is different than all of the others - it will never slow down, or pop. The gains are permanent.

[seebee]

Interesting, deb. I like that Roberts mentions T. Boone Pickens as someone who can always find more oil. Yet, if memory serves correctly, Pickens believes that peak oil is very likely and has been talking about it.

Mr. Roberts' post reads pretty much like the spewage from the trolls' peanut gallery on this blog. Actually, here, I guess it's more childish taunts with absolutely no facts or intelligent counter-propositions to JHK's. It'd be nice to have those for a change. Instead, we're just given vague assurances by the "whistling past the graveyard class" that nothing bad is going to happen... how could it? My favorite recent baby talk was the poster, using a different name for each of two posts, who insisted that "better jobs" would fix everything. The problem with those who oppose PO (they can't simply disagree), and can't be bothered to even consider it, is that they completely ignore that, like Boy Scouts, we should "be prepared." We should hope for the best and prepare for the worst. Instead, Roberts waves his hand at the "worrying class" for dismissal, much as the posters with grade school vocabularies and mad scientist's laughs do here.

I have no desire to keep the non-worrying class tossing and turning. Frankly, I hope that the market will fix everything. I hope that technology will kick in. I want cheap and safe fusion reactors. I want nanotech solar panels that can be made with minimal fuss and environmental contamination. I'd like to think that things can be greened up, while greening pocket books as well. I just think that's a fairy tale we're telling ourselves, as we don't want to think about what might happen if we DON'T get the happy ending.

Finally, I do like Roberts' statement that "human creativity is the ultimate resource." An article claiming that even THIS hallowed and treasured resource may be on the decline is here:

http://www.timesonline.co.uk/article/0,,2099-1813695_1,00.html

Hopefully, it's wrong.

[seebee]

GR, I'm buying now!

I should say about my last post, that, upon thinking post-click, I goofed. There are people who disagree with PO and who don't "oppose" it. It just seems like most of the contrarian posts to this blog, like the Roberts blog entry deb found and posted, are more opposing (with almost nothing to back them up other than sunshine) than disagreeing (with reasonable, intelligent arguments against PO).

[Edgar Cave Urbanus]

"It all looks so "substantial" but it also seems to be appearing out of thin air."

KD,

The money that finances make believe comes out of thin air as well.

The only thing substantial about these cheaply made English Squire homes are the waist lines of the "Squires" that live in them.

For three years I've been involved in retrofitting homes in orginal sub divisions. I have been in hundreds of homes. I have noticed that almost all these homes seem to have a major theme in common. No books! There are plenty of TV sets, but hardly any books if any at all.

[ross]

With respect to getting across the concept of PO, I have seen reasonably intelligent people who are, probably for psychological reasons, immune to
really grasping the implications. Then there are those who can not understand because the relatively simple concept is somehow beyond their intellectual capacity. There isn't much one can do in the face of such obstacles.

That was a very funny, GeniousRealtor. I will pass on your "Irving Fisher Permament Plateau" post to folks who have recently sold their homes at a sizeable discount.

[ross]

The last two times I have been in McMansions, (one those times the house was a mega McMansion) there was a large flatscreenm T.V. over the oversized livingroom fireplace. Ah, home sweet sterile home.

[Die for the Elite]

Thinking of growing your own food? Big brother is watching:

http://www.dailykos.com/story/2005/10/17/01223/213

[ross]

Here's an excellent piece, starting at paragraph seven, on why technology can't save us.

http://www.timesonline.co.uk/article/0,,2099-1813695_1,00.html

[lowdown]

Peak Oil is a myth. People like big houses. Deal.

[kd]

http://mrzine.monthlyreview.org/wolff151005.html

[kd]

Thanks, Ross. Very interesting link.