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Looking on while the world takes the lead

The Olympics have provided a showcase for China’s real leap forward, from the edgy Bird’s Nest stadium to the huge new terminal at the Beijing airport, which is twice the size of the Pentagon and claims to be the largest building in the world. But you don’t have to look to a giant nation that has scarily fused capitalism and authoritarianism to see nations moving ahead. Dubai is building a  subway and Vancouver is working on an ambitious expansion of its SkyTrain.

And where is America? Our airlines are collapsing — have you read about the CEOs cutting back on fuel to save money, raising safety concerns, or United pilots worrying about maintenance standards? Amtrak is seeing a record demand due to higher gasoline prices and the sheer awfulness of flying — but years of underfunding are causing it to struggle. Cities face huge roadblocks and long timelines to build transit systems they should have had years ago. America, which once led the world in accomplishments, seems tired, decadent, gridlocked — especially in the face of new global realities.

This was especially brought home when I saw an article in Trains magazine about the two-year-old Central Station in Berlin. It’s an architectural landmark of the kind of modernism I find tedious, but never mind that. Built under difficult conditions, with budget fights and NIMBYs, it was nevertheless built. It serves 300,000 passengers and 1,100 trains a day. It also has 80 stores, travelers lounges and office towers. On display is a 21st century transportation network that can handle global warming and Peak Oil.

Meanwhile, we talk — talk — about repairing "our roads and bridges" in our 1965 transportation system. Our elected leaders include Republican Rep. Michele Bachmann of Minnesota, who said Democrats "want Americans to take transit and move to the inner cities. They want
Americans to move to the urban core, live in tenements, [and] take
light rail to their government jobs. That’s their vision for America."

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Oil prices falling — will IQs follow?

Gasoline at $5, $6, $10 a gallon over the next two years would have been a severe mercy for the United States. It would have forced changes that will eventually be essential: more transit and rail passenger service, a return to our core cities, an urgency to raise fuel economy standards and develop alternatives. At last suburban and exurban living would be properly priced and costly, and the enterprise to retrofit savable suburbia to transit could begin. Foot-dragging on reducing greenhouse gases would have been similarly eliminated.

I don’t think it will go down that way. Oil prices have been dropping in recent days, as I long predicted they would. The decline is because the nation that uses a quarter of the world’s petroleum is seen heading into a nasty recession, which will cut world demand. So prices will drop, and soon we can expect some to start saying the worst is over and we can get back to driving SUVs and other self-destructive behavior.

(I think of a story in today’s Arizona Republic about Lake Powell "recovering," and the ‘Zonies thinking "happy days are here again!" even though their water crisis is unabated — although a State Secret).

Yet the fundamentals haven’t changed. World oil production has either reached peak or will do so in a few years. That means half of this one-time resource will have been extracted and burned off — and it was the easy half, the cheap half. So the remainder will be more costly, and getting it will be more geopolitically destabilizing. So oil will fall a little, then rise more the next time; retreat a bit again and resume its upward climb. The major oil companies and oil exporting nations (which control most of the oil) know this. Most Americans still don’t.

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Leggy, blonde coed hooker wrecks world trade talks

Years ago, when I was a reporter in San Diego, we had a contest: Who can bore readers with the fewest words in the lede (the winner, at three words: "Otay Water District," as in, "Otay Water District directors voted Tuesday to…" — the reader would have moved on to the hockey scores after only three words).

Nowadays the winner is "world trade talks." A funny thing, that, considering how much globalization has revolutionized American lives, for good and ill, while most Americans haven’t been paying attention. So prop open your eyeballs as I note that world trade talks collapsed yesterday.

I suspect something more fundamental changed. The failure of the Doha Round of talks may well mean the end of the trade paradigm that has prevailed since the end of World War II. This is the biggest news story that will get the least attention.

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Meanwhile, in book news
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Meanwhile, in book news

My new mystery, The Pain Nurse, is set for spring publication from the Poisoned Pen Press. This is a break from the David Mapstone series set in Arizona. The Pain…
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Today’s must read

I must call your attention to one of Jim Kunstler's best posts in years, "The Coming Re-Becoming." Must reading. It includes this priceless passage:In the days when the Harmony Mill…
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R U raising stupid children?

When people tell me their children don't read newspapers, I usually say, "Wow, you don't seem like someone who would raise stupid children." This invariably takes them aback, perhaps if for no other reason than it's not the typical hangdog response from newsies of, "I know."

My point to that the people who will tell their children what to do as adults will get factual information, sophisticated analysis, in-depth context and investigative reporting, whether it's delivered online, on dead trees, or through implants in their Botox injections. The people who will rule the world will consume and read journalism. The most gifted of them will also have gained the singular insights into human nature and the world that come from literature and history.

It says something about so many American parents that they are content to raise stupid children into stupid young adults. So I pretty much knew what to expect from a Sunday front page story in the New York Times headlined "Literacy Debate: Online R U really reading."

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In Seattle, another chance to shoot ourselves in the foot and reload?

Seattle is the most backward city on the West Coast when it comes to mass transit. That still puts it light-years ahead of most American cities. Its bus system is quite good, the first light-rail line opens next year and a street car now links downtown to the burgeoning South Lake Union district. Sounder commuter heavy rail runs from Tacoma north to Everett. In addition, the Cascades Amtrak service provides convenient service between Eugene, Ore., and Vancouver, B.C., including Portland and Seattle. The ferry service is the best in America, despite recent underfunding.

But Seattle residents feel profoundly inferior to Portland, with its world-class light rail system, and Vancouver, with its SkyTrain. And its a sign of how much progress has been made in California that all the service I mention above is a fraction of what’s available in LA, San Francisco or San Diego. Yet Seattle is also the gang that couldn’t shoot straight when it comes to many transit projects.

A roads-and-transit measure was defeated last year. Now an all-transit measure may come to the November ballot, and already newspapers, powerful suburban developers and even the generally pro-transit King County executive Ron Sims are opposing it. Seattle’s misadventures with transit have lessons that apply to other cities, and will be more important in years ahead when a lifestyle based on long, individual auto trips becomes less viable.

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The danger to the economy: Size does matter

One of the biggest underlying problems behind the financial crisis is size. These are the wages of years of mergers and industry consolidation, combined with weak or non-existent regulation. Thus, Wachovia today posted a loss of $8.9 billion — enough to add to the public funding of Amtrak by nearly eight-fold. In a healthy market economy, a bank with such performance could simply be allowed to "fail," with depositors covered by the FDIC and the shareholders who enabled the disaster taking the fall.

But Wachovia is too big to fail. Like its cousin investment banks on Wall Street and Freddie Mac and Fannie Mae, its collapse could bring down the entire economy. If necessary it will be propped up, as the Fed and Treasury have done with those other giants. (The immediate damage: $25 billion). That’s your money. Of course, the executive class will continue to take home tens-of-millions paychecks as a reward for these disasters.

And yet, the brain surgeons in the executive suites of Wachovia are merely trying to fix the bank enough to sell it. Jamie Dimon’s JPMorgan Chase seems to be the last shopper standing at the garage sale of the American economy. The result, in addition to calamity in Wachovia’s hometown of Charlotte, will be an even bigger behemoth to hold taxpayers hostage next time.

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Charlotte faces its moment of truth

Around 1996, when I was the business editor of the Charlotte Observer, I provoked the ire of the president of the chamber of commerce — as I so often do with such caudillos — by pointing out an inconvenient truth: the city’s economy was too dependent on two big banks. Charlotte was in the middle of a historic boom that turned a sleepy, mid-sized Southern city into the nation’s second-largest banking center.

An Oz-like skyline shoots up dramatically from the flat treeline of the Carolina Piedmont. Signs of fabulous wealth are everywhere, from the expensive cars on the street to the beautiful people shopping at Dean & Deluca. It’s an amazing testmony to what money can do — to what being positioned at the heart of the capital markets can do. And it’s mostly because of the two money center banks, what are now Bank of America and Wachovia, that are improbably headquartered there.

Then came the subprime and credit crises, partly authored by the smartest people in the room in Charlotte. Now, as the Wall Street Journal put it, "Charlotte is fretting over whether it can remain the last great U.S. banking center outside of New York." It should be fretting over more than that.

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Speculators and oil prices: an idea running on empty

Some Democrats and even Republicans would have us believe that speculators are to blame for higher gasoline prices. A bill has been introduced to close the so-called Enron loophole that allowed some energy trading on unregulated "dark" markets. That and other "dark market" loopholes should be closed. But the affect on gas prices will be minimal.

Americans have often railed against speculators — the Revolution and Civil War come to mind — and sometimes with good reason. Unfortunately, you can’t have capitalism without speculation. The key is sound regulation. But the idea that speculation is the major cause of higher oil prices is evidence of the magical thinking going on in much of America. It’s deep denial about the real reasons for more expensive oil.

Thus, a war against speculators will be useless at best and could do real harm, both by gumming up the efficient mechanisms of the market — of which speculators are an important part — and distracting us from the real tasks at hand.

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