In a survey conducted among business owners by the Risk Insurance Managers Society, a troubling picture emerges:

(Click on image for full size; hat tip Paul Kedrosky)

The number one concern is “Political/regulatory environment.” Right behind that, and practically the same thing is “Regulatory Liability.”  Other items of a similar ilk include “Financial regulation,” “Climate change regulation” and “Interest rate/currency risk.”  Is it safe to say that Washington is scaring the hell out of the business world?


This past semester in my Real Estate Finance class at the Owen School of Vanderbilt, I was dissecting the housing crash in the United States.  One of the charts showed the run up in values in different markets around the country.  One of my Chinese students offered that they were experiencing the same thing in Beijing – his house, he said, had appreciated 50% in the last six months.  Here’s more evidence that a bubble is being inflated:

(From SF Gate) “An auction of land in Beijing was cancelled after bidding exceeded a price ceiling set for the lot as the Chinese government expands efforts to rein in the nation’s property market.”

There’s more: “Imagine a seller refuses your business because he thinks you are paying too much for his products?” Bank of America- Merrill Lynch analysts led by David Cui wrote in a report distributed today. “It demonstrates the type of pressure the central government is putting on local officials to get the property market right this time; this increases the risk of potential overshooting in the property market crackdown.”

According to Google Translate, the word for bubble in Chinese is 泡沫  or “paomo.”

Pretty powerful display of the impact social media has on us.  There is no arguing its explosive growth, but what about the efficiency?  (He said, typing on a social media tool known as a “blog.”)

Fortune Magazine has an article which picks up on the theme best put by a close friend of mine:  “Isn’t it weird how the stock market is crawling back just as commercial real estate is poised for its’ swan dive.”

I do think there will be another round of adjustment in the equities markets, probably regionally driven.  Unfortunately, this is part of the “destructive creation” trumpeted by Schumpeter.

Great piece for discussion over at American Digest this morning:

Long ago it was cool to live in a loft, and not one “designed” to be an “artiste’s loft” either. Or at least it was thought to be so. I once lived (off and on) in an old cigar factory loft way below Soho in New York and it was, in its way, pretty cool. You threw down the keys and ran up a half-dozen flights of stairs. When the storms came the clang of metal shutters slamming into brick walls made you think you were sleeping inside of Big Ben. The kitchen was a small fridge and a hotplate. The bathroom door was a shower curtain. But if you wanted to you could make really big paintings and have really big parties and nobody knew you were there. It was cool.

Great cities have to grow organically with small scale solutions fit for their sites.  Cool places that last can be made that way…building theme parks for people to live in are nice short-term solutions, but add little to the true cultural inheritance of the greater community.  Planners and developers should carefully consider what they bring forward.  Developments should add to the long term health of the community, not just a short term answer to a transient consumer demand.

A little over a year ago, I posted a column in our 1101 Eighteenth blog titles “Primurbia.”   Primurbia is a term we have used at M2H Group to identify the region we want to build our for-sale product.  The area has also been called the “trolley car suburbs.”  Basically, it is the first ring of development outside the urban core.  In the days before the Federal Government gave you a deduction on your taxes for the interest on your home loan, this was the area that people really desired to live in.  And the neighborhoods were “mixed use.”  The grocery store was usually a couple of blocks away and it was not uncommon to see beautiful brick apartment houses or streetscapes like the one pictured above.

When I wrote the original piece, gas stood at about $2.80 a gallon.  I just filled up yesterday, and regular was $4.08 a gallon.  The trend to move inward, I believe, will accelerate with that kind of price pressure.  The downtown core will become home to more and more condo and apartment towers even though the numbers on those transactions are not particularly good in light of enormous construction cost hikes.  But, I believe, the real winners will be the primurbites.  The folks that have invested in the Goldilocks solution of not being in the maw of downtown nor in the baking plains of vinyl-clad suburbia.  It’s the midtowns, where restaurants and amenities thrive and where transit is quick to all points that the housing desirability index will get pegged.

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