Friday News Digest

Welcome to the first news digest of 2014. This year was off to a strange start with my return to normal operating conditions given a two day delay by the extreme cold. And no, my new friends in Mississippi, I mean real cold. My girls had their winter break extended by two days due to temperatures that didn't rise above double digit below zero. I went outside a little bit -- nicely bundled up, of course -- just to get a good feel for it, but really....that's cold. It feels like a heat wave now with temperatures poised to rise above freezing. Where's the Curbside Chat in San Diego when you need it?

Enjoy the news.

  • This one was so kind I needed to share it with The Final Edit. When she didn't roll her eyes at me, it only made it that much better. Thanks, Norman Wright. I, too, am glad we met.

Chuck is one of those people who confound me because he can express something I’ve been thinking about before I even realize I’ve thought about it. He and I only met once, many years ago, but we’ve kept in touch for some time. Over the past few years, Chuck has introduced me to books, blogs, and other resources that have impacted me more than anything I ever learned in graduate school. I do not exaggerate.

  • Another cool way to start off the year is to have Sarah Goodyear from Atlantic Cities call you up and ask you how you came up with the term "stroad". I thought it was funny that she quoted me as laughing a lot....because I was, and still am. I'm really glad the term is getting out there, though, and am hopeful that it will stigmatize bad engineering at least to a point where other options have a chance.

Marohn says he coined the term in 2011 to wake up the people who design America's roads. "I really was writing it as a way to push back at the engineering profession and get my fellow engineers to think about the bizarre things they're building," says Marohn. That was why he initially wrote the word in that annoying all-cap style, which he eventually dropped. "I figured engineers would read it and wonder, what was it an acronym for?" he says, laughing.

  • If you are interested in learning more about Economic Gardening -- and you really should be -- there's a great web seminar (I think that means a webinar, dude) coming up later this month that will feature Chris Gibbons and others in the Economic Gardening movement. Highly recommended.
  • Another thing that is highly recommended is David Collum's 2013 Year in Review over at PeakProsperity.com. You'll want to read Part 1 and Part 2 -- they are both incredible. If you are not interested in investing, you can skip the first few sections and do directly to the "Debt and Retirement" section. There is a lot of good Krugman bashing that is done brilliantly using only his own contradictory and ridiculous words, but my favorite part -- one of many that had me laughing hysterically -- was this:

The high point of the year was when JPMorgan decided to communicate with the public via Twitter by encouraging questions using hashtag #askJPM. They got thousands—literally thousands—of the most truly raucus rhetorical questions you could imagine:

"I have Mortgage Fraud, Market Manipulation, Credit Card Abuse, Libor Rigging and Predatory Lending. AM I DIVERSIFIED? #AskJPM"

~ Representative tweet to #askJPM

  • The International Monetary Fund is not known as a hotbed of Tea Party thinking, radical gold standard idealogues or general purveyor of doom and gloom. I say that because you are going to be shocked that they are saying the world's debt problem is so bad that we are going to need Cyprus-style bail-ins (the taking of depositor's money) to solve the problem. I've been wanting for a while to have my Mexican friend from graduate school, Eduardo Millet, on to tell the story about how he had his a significant portion of his meager savings stolen from his bank account by the government. It is an astounding story, one we're a little tone deaf to in the USA (but, according to the IMF, won't be for long).

The IMF working paper said debt burdens in developed nations have become extreme by any historical measure and will require a wave of haircuts, either negotiated 1930s-style write-offs or the standard mix of measures used by the IMF in its “toolkit” for emerging market blow-ups.

The paper said policy elites in the West are still clinging to the illusion that rich countries are different from poorer regions and can therefore chip away at their debts with a blend of austerity cuts, growth, and tinkering (“forbearance”).

 “The size of the problem suggests that restructurings will be needed, for example, in the periphery of Europe, far beyond anything discussed in public to this point,” said the paper, by Harvard professors Carmen Reinhart and Kenneth Rogoff.

  • If the fact that we're being overwhelmed with debt payments is throwing you off your game, just follow the lead of Louisville, whose debt on their stadium was just downgraded to junk status. Don't worry. Be happy.

[Louisville Mayor Greg Fischer]  acknowledged the financial concerns that continue to plague the nationally recognized arena, which has played host to some of the world’s top entertainers, including Lady Gaga, Justin Bieber and Taylor Swift. Rolling Stone magazine named the arena one of the country’s Top 10 concert venues.

But the financial projections expected to pay for the arena’s construction debt have failed to meet expectations, Fischer conceded, “and the bonding authorities see that.”

  • One of the best books I read last year was Nicco Mele's The End of Big, which reinforced for me the difficulty in deciding which I think is the greatest threat to mankind: big government, big corporations or big labor. For the rest of the U.S. population, for the moment, big government appears to be winning. Hopefully Mele is right and the coming years will see the end of big.

  • And if there are any big government Keynesians still with us here (if there are -- shout out, I love you guys and the fact that you stay engaged here), I came across this video of Peter Schiff on the Daily Show. I personally found the entire thing fascinating.

 

 

  • I'm not really sure what the source is on this, but I love it. Even if this specific instance isn't true, this is definitely how it was done all those years ago when we were alledgedly poor, backward and had much less economic growth. In retrospect, where is the greater genius found, then or now?

  • In Australia, their program of "shovel ready" road projects -- they actually call them "ready to proceed," which lacks a certain blue collar appeal -- is being questioned by a heretic who does not believe in fairy dust or that road building automatically equates to growth.

When you add together all of the different factors, says [Dr. Alan] March, investing purely in roads is not a sensible approach. He points to factors such as peak oil, with continually increasing petrol prices, Australia’s large carbon footprint, and problems with our changing demographics.

Australia’s aging population will mean that fewer people will be able to drive in the future, not to mention health issues associated with increased commutes, such as obesity and diabetes, March says.

  • We're having none of that kind of talk here in Minnesota. Our state's top transportation officials are presenting us with two options, which is, as they say, one more than you would get under totalitarian rule. In reality, pay-now-or-pay-later is not much of a choice either. Are these seriously our only options?

In recent weeks, MnDOT Transportation Commissioner Charlie Zelle and Met Council Chairwoman Susan Haigh have been touring the state together to make their case for more funding to and ask residents and business owners what they want to see in a transportation network.

In town hall meetings,..., their message in a nutshell is pay now or pay later.

The Energy Information Agency said in a report Tuesday that it also predicts a big rise in the fuel economy of the nation’s cars and trucks. It predicts the fuel efficiency of the nation’s cars and trucks will rise from 21.5 mpg in 2012 to 37.2 mpg by 2040. Overall energy consumption by the nation’s transportation sector is expected to fall by about 4 percent.

The agency predicts that in 2040, 78 percent of all cars and trucks will run on gasoline, down from 82 percent last year. It predicts a big upswing in micro-hybrids and other advanced fuel technologies to 42 percent of all vehicles by 2040. EIA predicts full hybrids will account for 5 percent of vehicles in 2040 — up from 3 percent today. Diesel vehicles will double to 4 percent from the current 2 percent.

It predicts just 1 percent of total sales will be plug-in hybrids and 1 percent full electric vehicles in 2040.

  • I want to get Ian Rasmussen back on the podcast to debate speed limits, red light cameras and now I'll add right-turn-on-red cameras. I know most of you disagree with me and love this as a revenue stream (those nasty cars), but this is just insane.

Several motorist groups and camera opponents are skeptical of these types of tickets, arguing that the rolling right turn on red does not pose a significant traffic safety impact.

"Slowing moving right turns on red are extremely unlikely to cause accidents," Ron Ely of the Maryland Drivers Alliance wrote in September 2012. "One study showed that an average motorist could drive a billion miles, the distance from Earth to Jupiter and back, before being involved in a deadly accident that resulted from a motorist making a rolling stop on a right-hand turn."

Out of 6.3 million crashes nationwide in 1998, less than 0.04 percent of them involved a driver making a right turn at a red light, according to a 2001 National Highway Traffic Safety Administration study. The report also found no fatalities occurred that year from an accident resulting from a right hand turn on red when the driver yielded to oncoming traffic.

  • The Design Office of the Florida Department of Transportation -- or at least their marketing consultant -- is a case study in silo mentality. How many of you out there are urging FDOT to be more "consistent, predictable and repeatable"? Isn't that the problem? I recommend putting together a DNR in case FDOT ever does find themselves truly in need of CPR.

  • I make no qualms about being pro-Amazon. I remember the days when we had a great Main Street and the Montgomery Wards catalog. I hope Amazon drives the big boxes out of business and, until they do, I'm glad that all the fools out there continue to purchase AMZN stock. (And for the record: I have never owned, shorted or even dabbled with AMZN stock.) 

It’s become a quarterly ritual: Amazon reports that it’s losing money, and its investors cheer and hand over more. Pundits shake their heads in wonder. And Amazon’s competitors tremble in existential terror.

My colleague Matt Yglesias once half-joked that the company amounts to “a charitable organization being run by elements of the investment community for the benefit of consumers.” Bezos denied this, insisting that the interests of Amazon customers and shareholders will align in the long run. One thing nearly everyone agrees on, though: Amazon’s ridiculously low margins cannot be good for its rivals in the retail sector, who aren’t blessed with the same license from investors to lose money quarter after quarter.

  • My friend Tommy Pacello from Memphis posted this on Facebook. The picture seemed crazy but the narrative was awesome. My favorite was #19, which I won't excerpt here because we generally like to pretend we avoid profanity.
  • Yes, my hometown had a sonic boom from a meteor. I was so relaxed and chill the past couple of weeks I didn't even hear it even though lots of my neighbors apparently did. High on gingerbread and fudge, I guess.
  • And finally, in kind of a serious and personal note (I know, kind of late for that now), there were a couple of those latent family issues everyone deals with from time to time that made this Christmas season a little less than ideal. I'm not complaining -- we're very blessed and I would take our minor problems over anyone's -- but a friend sent me these Mister Rogers quotes at a very good time. It meant a lot to me so I wanted to share them with you in case someone out there is having a tough day.
Take care, everyone, and have a great weekend. I'll see you back here on Monday where I intend to write a little bit about the city of Huntington, WV, a truly spectacular place that doesn't seem to quite know it.
Charles Marohn