On the Borders
Ruh roh…possibly bad news for the Towne Centre who is banking on Borders to be it’s newest anchor store? From the SF Chronicle:
Borders, the nation’s second-largest bookseller, said Thursday it may put itself up for sale and that it has lined up $42.5 million in financing to help the chain continue operations.
Shares tumbled more than 29 percent, or $2.07, to $5.03 in volatile trading at midday.
Borders has lost market share both to online retailers and to discounters like Wal-Mart Stores Inc. and its possible sale was given mixed prospects by industry analysts.
…
“We see little opportunity in the near term for Borders to be sold, with the number one candidate Barnes & Noble not likely to pursue a deal at this price,” Balter wrote in a note to investors.
Barnes & Noble Inc., the nation’s largest bookseller, on Thursday said fourth-quarter profits declined 9 percent.
…
Same-store domestic sales, or sales at stores open at least a year, were up 2.1 percent from the same quarter a year ago. Same-store sales are a key economic indicator.
The sales performance marked the third consecutive quarter of positive same-store sales at domestic Borders stores, and Jones said it shows Borders hasn’t been as hard hit as some other retailers…
It wouldn’t be very promising if the Borders ended up closing shop as quickly as it opened. But if you have been to ATC lately you will have noticed that the Borders location is now sporting a spanking new sign and it appears that there is some construction work being done inside. Personally, Borders should probably just get rid of their Music and Movies departments and just concentrate on the books, magazines, and coffee, because isn’t that the real reason why people go to Borders? I don’t think I’ve purchased a new CD in years.
And in other shopping center news, as much as people tend to dislike the Bridgside redevelopment effort — it is better than what was there though, right? — according to the Alameda Sun, it can now call itself “award-winning” along with other Alameda insitutions. The California Redevelopment Association will be presenting the City with an award for the work at Bridgeside:
…Alameda’s Bridgeside project took top honors in the category “Commercial/Industrial Development.”
…
The new Bridgeside Center was a $36 million project with the city contributing $2 million in redevelopment funds to be repaid from the tax increment generated by the project. More than 175 new jobs have been created as a result of the project and more than 30 new businesses have opened in the adjacent business district and nearby Alameda Towne Centre. In addition, sales tax revenues have increased by eight percent in the area, according to the CRA.
Yeah well Marina Village was also “award winning” so really, it seems like they’re throwing the term around loosely these days.
Comment by MarkD — March 21, 2008 @ 7:33 am
Cody’s second Berkeley store on 4th street is closing because the rent is too high and they’re moving to a smaller Shattuck location, while the Berkeley Barnes and Noble which drew tons of non-buying browsers has closed. Berkeley was book central. Live Oak Books in North Berkeley, closing or closed.
Meanwhile, is Books Inc. on Park doing o.k.? They appear to have the proper niche to survive. Borders won’t help them. Borders will presumably have more inventory, but otherwise I would choose Books Inc. over Borders.
People blame the BOE for a state problem and even at the state level the problem flows from the economy which has been systematically picked apart by W and his tax dodging cronies. Seems fitting that the decline of book stores accompanies the reign of the idiot president.
Comment by Mark I — March 21, 2008 @ 7:56 am
Books inc. is great but their selection is very limited. If you can’t wait to have stuff ordered in, Borders with its many specialized sections should do ok here.
I guess the new Cody’s will do fine in the long run,Downtown Berk is slowly shedding its run-down seedy vibe.That particular spot has lots of new housing going in.
Back to ATC, I know it’s new(revamped) and all, but the tenants are kind of all over the place. Discount stores, grocery stores, children’s clothes,books stores, check cashing place, dry cleaners, upscale restaurant, Applebee’s.
Of course it’s either BEGGING for tenants, or it really is trying to cover EVERYTHING. Neither seems too good. Idunno, I thought the idea behind lifestyle centers was that they catered to a particular lifestyle niche. As of now, it seems like a glorified strip mall.Very pretty though.
Comment by MarkD — March 21, 2008 @ 8:23 am
Retail is going to get KILLED over the next few years. Harsch will be lucky if they are half-full one year from now.
Comment by Jack B. — March 21, 2008 @ 8:44 am
Whoever made the decisions about commercial leasing at ATC should be elected Chief Head Director of the Department of Redundancy Department. Does Alameda really need a TJ Maxx and a Mervyn’s right next door to each other (with an Old Navy a few yards beyond)? Ditto Bed Bath & Beyond and Anna’s Linens. Taken together, the current and future tenants at ATC are maybe the equivalent of one medium-sized Target… but the pointless duplication of retails outlets, not to mention the blight that will descend upon ATC if Jack B.’s dire prophecy comes true, makes me wonder if we wouldn’t have been better off the Target after all.
Comment by Peter — March 21, 2008 @ 9:50 am
… better off with the Target after all. Argh!
Comment by Peter — March 21, 2008 @ 9:53 am
It seems I’m in the minority, but I like the new and improved ATC so far. My biggest issue was with the Target store, so I’m glad that’s not there. I have shopped at BB&D and it was for items that I would otherwise have gone off the island for.
I am looking forward to Borders opening, but probably just because it is very close to where I live (closer than Books, Inc.) and because it does have merchandise in addition to books.
As for Bridgeside, I am more than surprised that it won any kind of award; the bar for that type of thing must be on the floor. I do agree that it is better than what was there before, but come on; if that is the standard, etc.
Comment by Mike Rich — March 21, 2008 @ 12:00 pm
Mike, it doesn’t matter what you like… don’t like… or wish for. Retail sales are going to the toilet, IMHO. It’s gonna get harsh for Harsch as those giant chains continue shedding locations.
Hopefully, Books Inc. will survive thanks to their much smaller overhead.
Comment by Jack B. — March 21, 2008 @ 12:07 pm
Harsh has done a great job with the design of the center — but I think they lost a wonderful opportunity to become the Bay Area’s Premiere Upscale Beach Front Lifestyle Center. Continental Real Estate Companies named their first tenants for their new Brentwood Upscale Lifestyle Center in Brentwood called “The Streets of Brentwood” opening in the fall of 2008. Tenants such as: Banana Republic, Chico’s, REI, Talbots, Ann Taylor Loft, Victoria Secret and Coldwater Creek are just some of the upscale tenants that will be part of this development.
I wonder if by choosing discounters such as TJ Max, Old Navy and Bed Bath & Beyond did we miss out on the opportunity to attract some of the more upscale tenants that have signed on to the new Brentwood center? The Streets of Brentwood is anchored by a theater and major bookstore — which perhaps is one of the drawbacks for Alameda Towne Center which is not anchored by a theater.
But high end restaurants with beach front views would have set this developement apart from other lifestyle centers — beach front is the key word and should have been the theme of this development in my opinion. There are not many shopping centers in the Bay Area with beach front views.
I’d like to see Harsh remove the parking lot with the beach front view — and bring in some upscale restaurants that face the beach and then focus on bringing in more upscale tenants to the center. I would even consider a name change to mark a new direction that would embrace the waterfront!
Comment by Karen Bey — March 21, 2008 @ 12:18 pm
>>> Harsh has done a great job with the design of the center.
You are kidding, right? That’s the worse designed pedestrian death trap I’ve ever seen! They do it better in Kansas City!
>>> and bring in some upscale restaurants that face the beach and then focus on bringing in more upscale tenants to the center.
You are going to see a lot of restaurants going out of biz along w/ retail over the next few years. They are getting squeezed by agricultural commodity prices SKYROCKETING (despite little correction we just had) and the pullback of the American consumer.
You might consider what the truckers are going through right now and how so many of them will simply have to stop hauling. ATC’s best chance is to use the beach front as a port and load the crap from China straight into the stores!
Comment by Jack B. — March 21, 2008 @ 12:34 pm
#9 - I completely agree regarding the restaurants - get rid of the beach front post office -move them someplace else - let’s have a saloon on the beach - live’n up the place - also get rid of that stinky bird sanctuary.
Comment by ChrisO — March 21, 2008 @ 12:55 pm
Restaurants like the Cheesecake Factory, PF Changs, the Elephant Bar are all opening new stores in 2008. Harsh might even consider the Beach Chalet — a popular beach front brewery and restaurant in San Francisco or an Il Fornaio restaurant would also work well in Alameda.
The key is to target a more upscale demographics as well. The real estate market in communities like Rockridge, Piedmont, and Albany are all doing well inspite of the slow down in real estate — and I believe it’s important to consider this market as we build out retail in Alameda.
And yes, I think they did a great job of the design. I would have preferred a different species of palm tree in the entrance and a fountain in the plaza —- but overall I think it’s great!
Comment by Karen Bey — March 21, 2008 @ 1:11 pm
Regarding high-end shops: I think I heard or read recently that Emeryville’s high-end Bay Street shopping area isn’t doing that well. I say “think” because I can’t find anything via Google. That would be interesting, tho, considering that Bay Street’s location is about as heavily trafficked as possible. By those standards, Alameda has some serious limitations as a retail draw of any sort, and especially in a location that would bring thru traffic (on Park Street, worse yet). I agree that the Bridgeside location would’ve been great for a really nice, somewhat upscale development, because it’s a relatively accessible site, and with a potential for businesses overlooking the water. I can see how many people would be disappointed with run of the mill design that emerged — it’s pretty dreadful considering the potential.
Comment by Darcy Morrison — March 21, 2008 @ 1:14 pm
Cheesecake Factory was going to open 21 stores in 2008…. it’s been cut to 7-9. Their stock is sinking even though they’ve borrowed 100 million dollars to… guess what? buy back their own shares! Good luck w/ that, CAKE.
I don’t see how Alameda could support any of those. I see the appeal.. P.F. Chang’s is really good. And the folks who designed the interior at the Bay Street location live here in Alameda.
But you think folks w/ the views from the Oakland hills are going to come down to the flatlands for our view of the bay?
I think Darcy is more on target here… there is appeal in the estuary because there is some action there. They sure blew it w/ Bridgeside. I don’t know the criteria for that award, but it sounds like a joke.
Comment by Jack B. — March 21, 2008 @ 1:57 pm
As for unloading the crap from China — are some of those port cranes still available near Alameda Point (the ones I see in the distance from Santa Clara Ave)? If so, we have a great multi-use project in the works here…
I used to live quite near the 4th St. shops in Berkeley, and I was always amazed at the hordes of people over there. It was a big draw for young families, which is interesting — many people w/ strollers, many couples generally. People came just to browse around and hang out, and even tho the shops were often cutesy and marginal, the sheer mass of them apparently kept the place afloat. I think there’s a market for a nice, safe, comfortable place that’s good for kids, has upscale takeout food (Bette’s pizza, fancy sandwiches, eg).
Plus that location was very convenient to the freeway. Nothing will work here w/out very extensive signage — in fact I sometimes think of the folks in Bolinas hiding the road signs –Alameda has effectively achieved something similar. You can leave pretty easily, but you can’t get back.
Comment by Darcy Morrison — March 21, 2008 @ 2:18 pm
I believe that we are going to see a lot of business failures in the next 18 months. Retail is being hit by rising expenses, the sharp decline of the dollar and lower consumer demand. Combine that with Internet sales and the picture is grim. The cost of energy and transportation is rising and the cost of foreign goods is going up due to the plummeting dollar. All of those goods from China are no longer so cheap and we are competing against China and other emerging economies for raw materials.
Businesses do not care what Alamedans want; they care about what will make them a profit. That’s business folks. If it so happens that what we like also makes business a profit, that’s great. Sorry, no Bloomies in Alameda. At this point, we’ll be lucky to hold on to the 99 cent stores. The City needs to prepare for an even further drop in sales tax revenue. Hippie grocery stores do not generate nearly as much sales tax as SUV dealerships.
Comment by AlamedaNayTiff — March 21, 2008 @ 2:24 pm
Hehe, Darcy,,,, I always thought Alameda Pt. has the potential to be truly “Factory-Direct”! Imagine the marketing… you could shop right out of the containers.
I see what you’re saying about the upscale family friendly development… but what I think people need to wake up to is this: our entire financial system is de-leveraging. What does this mean? A huge pullback in spending and investment. It’s barely begun, but it’s happening. Bay Area hasn’t even begun to feel it yet. Socal is feeling it… search “tent cities” on youtube.
If you want to see proof of where money/investment is headed,,,, look at the yields on short-term treasuries (IRX). There is a HUGE FLIGHT to treasuries… driving yields down. That’s where the smart money is going, and the yield is down to ALMOST ZERO. It touched .2 of a percent, and the money was piling in. This is back to early 1930’s levels. Great Depression levels!! The smart money (ie bond market) is seeking return OF capital, not return ON capital. No one is buying corporate bonds. No one! So my point in this thread … building upon what Lauren noticed today… is many of these stores are just going to go away.
Comment by Jack B. — March 21, 2008 @ 2:30 pm
Now you folks should really be scared… Tiff and I are on the same page!
Comment by Jack B. — March 21, 2008 @ 2:31 pm
Yes, LOL ;D — that’s really funny! We bring you the discounts direct from China — just be sure and wear your steel-toe shoes.
This oncoming recession is very frightening — I think I’m literally headed for Euros, I don’t know what to do. In any event, I’ve been entertained by the various “imagine the very most wonderful Alameda Point” surveys and commentary, like, oh sure, this is definitely going to happen. One thing anyway, the collapse of the housing market will put a lid on suburban sprawl for awhile. See, a market collapse does have some helpful outcomes.
Comment by Darcy Morrison — March 21, 2008 @ 2:37 pm
And #16: That’s a good analysis in brief, it sums up the sorry state of affairs quite well. People talk about the need for regulations, how about regulating the Fed?
Comment by Darcy Morrison — March 21, 2008 @ 2:46 pm
The re-appearance of the depression was prophesized. Try reading “The Fourth Turning” and get yourself ready. Just don’t be a big baby. Your country needs you.
Comment by EJK — March 21, 2008 @ 2:50 pm
Seems to me the regulators are the problem. The SEC isn’t doing their job and the FED keeps interfering. If they’d just let the market do it’s thing… we could get it over with. Instead they are making everything worse and trying to make sure it falls into President Obama’s lap. I’d sure hate to be him!
Comment by Jack B. — March 21, 2008 @ 3:08 pm
Jack B,
You may be right about where the economy is heading; I am concerned about that too. But, at least if it happens as you’ve predicted we’ll have a nicer looking half-empty shopping center.
Comment by Mike Rich — March 21, 2008 @ 4:25 pm
“The real estate market in communities like Rockridge, Piedmont, and Albany are all doing well inspite of the slow down in real estate —”
Actually, the latest numbers from Dataquick shows that Albany sales are down more than 60%, and the Piedmont by 50%, with a respective -3.4 decline. So basically much as the same story of the bay, with declines now hitting even the upper more wealthy markets.
In regards to a recession, well I don’t really find them that frightening. In fact, we probably needed one. Stocks and Real Estate were way over-inflated and in most expert’s guesses, we’re looking at a 2012 turnaround at the earliest for Real estate. This means areas like Alameda will ultimately become more affordable. More affordable communities actually encourages economic growth. As it is now, most people simply have too much of their incomes tied to their mortgages.
What concerns me more than anything is the way in which the Fed and government is handling the crisis so far, which appears to be making attempts at shoring up and bailing out investors, banks, and even homeowners- many of them investors themselves- by lowering interest rates, cranking the printing presses, and selling junk to foreign banks who already own an enormous amount of our debt. China owns a huge amount of US mortgage related debt. This only causes inflation to increase and the recession to drag on for years. The same happened in Japan under similar circumstances.
Lastly, the big nasty monster on the horizon is fuel prices. I returned from TN to near $4.00 a gallon gas. I drive a small car that gets 30MPG. But filling even this car is starting to get expensive. People making 30-50k a year are going to feel this pinch badly. Since most people in the country-including the Bay Area- fit under this salary range, the future damage to the economy is most certain unless the prices start coming down.
So we have decelerating housing of which many people depended on for their future wealth, rising commodities, and a government taking a totally wrong approach to solving the issues.
My best advice is to save, live frugally, and don’t buy things that you can’t afford. If you rent, then you need to wait until there’s a clear sign that housing prices have been going up for a minimum of one quarter, or six months preferably before considering buying a home. Otherwise you’re just catching a knife.
As for books- I get mine for free. We have a great public library.
Comment by edvard — March 21, 2008 @ 4:38 pm
Auto dealerships are very vulnerable to recession as people put off expensive purchases.
Oakland’s Broadway Ford runs out of gas
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/03/21/BA7IVNSOC.DTL&hw=ford+oakland&sn=001&sc=1000
Restaurants are also one of the most vulnerable types of businesses. During recession, families eat out less often. Also, rising energy and food costs really squeeze profits. Some restaurants may be able to negotiate lower rents. Look for a rash of local restaurant closures in the next few months. Grocery sales could increase if people eat at home more often.
Bars tend to do well as do liquor sales when times are tough. People can’t put off dying, so funeral homes are a safe bet.
Comment by AlamedaNayTiff — March 21, 2008 @ 5:13 pm
Mike, you can have the consolation prize if you really want it. When it comes to “design” I look at functionality and could care less about the superficial facades on the concrete boxes at Townay Centray. To me… it’d look much better bull-dozed into the baby.
My biggest gripes are probably older stuff… the banks right on Otis w/ the overgrown shrubs making it impossible for exiting drivers to see pedestrians on the sidewalk. I think the whole place is a cobbled together mess.
Comment by Jack B. — March 21, 2008 @ 5:32 pm
#15, am I confused by what you are saying about cranes?
Port facilities at the Point would require that a portion of the estuary directly adjacent to the jetty along the runway be suitable for large cargo ships and that portion of the navigable channel be available for large ships at anchorage, which it isn’t.
Also, since we are an ISLAND with ingress and regress limitations, off loading goods from ships to trucks makes no sense. Look at the environmental issues with trucks in West Oakland.
Comment by Mark I — March 21, 2008 @ 5:42 pm
Context, Mark I, context…
Comment by Jack B. — March 21, 2008 @ 5:44 pm
Jack B.,
Context? I don’t need no steenking context! Just kidding. The context I was referencing was “unloading crap from China”. Pardon me, I’m really, really exhausted from work and should just go shower and nap.
Comment by Mark I — March 21, 2008 @ 5:57 pm
Enjoy your nap, Mark, and then you’ll see we were joking about bypassing the trucks altogether.
Comment by Jack B. — March 21, 2008 @ 6:17 pm
#13 Darcy,
We went to Bay Street a few weeks ago and it was packed. We had to wait a hour to eat at the Elephant Bar to eat as it was so busy…??? I don’t see how they can be doing that bad.
As far as retail doing bad, a lot of it in my opinion has to do with gas prices and the $…people have only so much free cash to spend and it is going for gas.
My hope is Alameda Landing will truly have some more upscale stores…Towne Centre has all the discount stores.
I was at Towne Centre and I believe Walden’s is closing on April 4th…everything is on sale and Borders is suppose to open in May.
Hopefully not everyone in Alameda is broke.
Comment by Joel — March 21, 2008 @ 7:00 pm
Sounds like nobody is in a good mood today.
As for the Bridgeside Center I would agree that it does not deserve any awards, as it could have been built in Fresno just as easily as in Alameda. Believe it or not there are contitions of approval that require the buisnes owners on the water to not cover up the back of the stores that look out on to the water. They are not supposed to cover the glass with anything, however they have used the windows as the rear of thier stores. I have walked the waterfront side of this shopping area and seen garbage and cardboard contianers stacked along the rear of these stores.
The only buisnes I have found to actually use the waterfront is Round Table and I would like to thank them for the effort to actually use the waterfront for thier buisnes.
When this was going through the planning board I remember getting into an argument with the developer over this very issue, and he told me that we could write any conditions that we want but in the end “you can lead a horse to water but you can’t make him drink”
sad to say I guess he was right. Believe me we tried and tried to get eyes on the water but it just isn’t happening. It was the same way with Knob Hill they did not want to deal with the water. Thier Bakery backs up to the windows on the water.
This was a total failure to me as far as getting something really nice there,life goes on. John P.
Comment by john piziali — March 21, 2008 @ 7:16 pm
Alameda is facing a crisis. There is very little tax base here and we have the albatross of the old base that needs city services. Much of our city budget is tied up in providing the most basic of services. The only way to maintain those services, absent a growing economy, is to increase local taxes. The tax burden on individuals and businesses will continue to grow. If our economy does not expand, the options we have are all unpleasant.
I don’t think that our city fathers and mothers yet understand just how difficult the next few years are going to be.
Comment by AlamedaNayTiff — March 21, 2008 @ 7:46 pm
Tiff, you are so right… and getting righter.
It’s only going to get worse. I know we are all freaked how Arnold slashed education but I guarantee you… he’s seeing some very ugly #’s coming down the pipe and is trying to frontrun it.
Pay down your debts, folks, and save your $$.
John, I’m not in a bad mood. I’m just trying to be realistic and help educate fellow Alamedans. America is facing a challenge it hasn’t faced in generations, and the first step is to get past the denial stage. Some communities weather these storms better than others. I’d like to be optimistic that we’ll do ok.
Comment by Jack B. — March 21, 2008 @ 8:10 pm
S.F. deficit grows, budget experts announce
“(03-21) 17:29 PDT SAN FRANCISCO — San Francisco city officials have expected to be short hundreds of millions of dollars for next year’s budget, but they will have to cut even more, according to a report released today by three City Hall budgeting offices.”
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/03/21/BA9VVOGK0.DTL&tsp=1
Comment by AlamedaNayTiff — March 21, 2008 @ 8:22 pm
The other albatross on our island is “re-development”.
As John P. can confirm, much of our island is in what CC has determined or created as “redevelopment zones”. All the property tax increases known as “tax increment” in these zones has to go to pay down the redevelopment bonds. Even though the City only gets to keep about 17% of the property tax (and their increments) on non-redevelopment properties the city, ALL, repeat, “ALL” of the tax increments of every property in every redevelopment zone goes to service the bonds used to pay private developers.
Since approx 40 – 50 % of the island (including the Point) falls within the re-dev. borders CC created, and because CC has bartered away all increases of all properties in all re-dev zones, we are really going to see some sad changes here. We will see vast shortfalls of city services unless property taxes are increased to offset rising costs, compounded with the loss of so much tax increment.
For those who think Prop 13 has an effect on our city, how about Redevelopment Laws? Prop #13 places a limited annual increase on property tax between changes of ownership. Every change of ownership and the real property value is re-established.
Re-development says the city gets NO INCREASES for every property in a re-dev zone, no matter how much the property value increases, no matter how many times the property changes ownership, until the bonds are paid off. When will the bonds be paid off? Ha! Will the bonds be paid off?
Remember CC approved the conditions that will cost us dearly. We did get to vote to give away our community property and potential tax revenue so that our city could support services for more people with less money.
It will be a minimum of 30 – 40 years before any additional tax is added to city coffers for all the new developments the city financed with re-dev bonds. What about the service costs of these developments – where does that $ come from? What about the money to service the bonds? It is ‘we the citizens’ who will have to step up and pay for the services we are accustomed to. But it was not ‘we the citizens’ who voted to put us into such debt.
Comment by David Kirwin — March 21, 2008 @ 10:16 pm
Yikes of a ‘typo’
We did NOT get to vote to give away our community property and potential tax revenue so that our city could support services for more people with less money.
Comment by David Kirwin — March 21, 2008 @ 10:21 pm
Gad, what a bunch of gloom and doomskis. There’s an easy way out of this mess.
First, the cause of a good portion of the problem is energy costs. That problem could be solved in a month if off-shore and ANWAR were opened for drilling the cost of oil futures would immediately drop which would downward affect present oil prices. It’s a giant myth that the world is running out of fossil fuels and that the burning of fossil fuels is changing the climate. Coupled with renewed drilling allow oil refineries and Nuclear energy plants to be build throughout the country.
Second, do the exact opposite of what Jack B. in # 34 suggests. Go out and spend, spend, spend.
Third, vote against every tax and spending solution any level of government proposes. And, vote out of office any politician who proposes tax increases.
But, none of this will happen because commutarians love gloom, doom and more government.
Comment by Jack Richard — March 22, 2008 @ 9:25 am
Jack R,
I can’t believe that a guy as smart as you would say make ridiculous claims about energy. There is plenty of evidence of human effect on climate change, but if you want to argue that, how can you just say we haven’t reached peak oil? How about some proof for either. The amount of oil in ANWAR is insignificant in the long run anyway.
What really gets me is the supposed motives people claim environmentalists have for propagating the “climate change myth”. We hate capitalism and love bureaucracy.
Comment by Mark I — March 22, 2008 @ 9:46 am
jack r, confidence needs to be restored in our financial system. Why do you think money is flying into treasuries with practically negative yields? We need to flush some fraud. As far as oil goes… I’m on the fence. Hopefully recession will lessen demand. But you are right about the taxes. Americans better get out their pitchforks because those banks are driving for socialization.
Comment by jack b — March 22, 2008 @ 10:30 am
ATC is considered a second tier shopping center. It does not or did not attract the major anchors.
Trader Joe’s is the best attraction to ATC. With two TJ’s opening in Oakland, I’m sure the customer base has slipped over the past 6 months.
I agree with Tiff (#33) - the tax burden will increase for individual tax payers. I just received a second letter from ASUD on the parcel tax (who’s paying the postage on this campaign?).
Comment by Basel — March 22, 2008 @ 11:44 am
#31, re Bay St — I found one article about stores there struggling, but was dated from 2006 — perhaps I’m recalling something from a ways back.
#32, re water view — that’s really a shame, I imagine that cookie cutter stores get designed in a cookie cutter manner that just does not take anything but parking lot access into consideration.
As for retail on Alameda generally: Alameda benefits very much from being something of an “insulated island” — all the negatives of a very crowded urban setting are kept at something of a remove. However, I’m guessing that shoppers are kept at a remove as well. Personally, I vastly prefer the peace and quiet to constant traffic and crowds, but when hen I see various proposals for this or that retail center, I’m always wondering who’ll come here to shop. Will they get to the tube and think, jeez, what is this? And what about the draw bridges? That could be a little challenging to off-islanders too (!) (I’d like to know why they bother opening the bridges and holding up dozens of people so some rich twit in a sailboat can float by — that draw bridge thing is a bit too quaint, even for me.)
Comment by Darcy Morrison — March 22, 2008 @ 1:36 pm
Another of my lagging thoughts: How much of Emeryville would we like to have in Alameda? I’m guessing the answer would be: absolutely none. Emeryville has the location and the traffic to support those mammoth shopping centers, but who’d want to live there?? Or, for that matter, any place near there?? (And if you haven’t seen it, Emeryville does have a little village of old houses, rather endearing in a sad way.) And as for Alameda Point: let’s have a casino! I bet they bring in money! ?
Comment by Darcy Morrison — March 22, 2008 @ 1:48 pm
Jack R.,
Bush’s own energy department released a study in 2004 that said that drilling in ANWR wouldn’t affect gas prices.
http://www.msnbc.msn.com/id/4542853/
Comment by John Knox White — March 22, 2008 @ 2:27 pm
If energy was a real concern we would be investing heavily in alt energy development.
Comment by Dave Kirwin — March 22, 2008 @ 3:11 pm
#45 Energy IS a real concern and we had damn well start investing in alternatives. It’s potentially as good for economics as for the environment, provided we make the right choices.
I don’t know how ethanol is being utilized at this point. But it is a bad option in terms of carbon because there is so much carbon produced to farm the corn through oil based fertilizers and fuel for machinery. This is pretty common knowledge but tell that to a heavily subsidized corn farmer in Indiana.
Anyhow, so many farmers have dropped wheat to plant corn for ethanol that wheat prices are sky rocketing, another reason ethanol is a bad equation.
Biodiesel is not something we could embrace in the mass market any more successfully until the algae and switch grass technologies are perfected, but in the interim, running vehicles off used fry grease is quite viable for the individual. We plan on getting a diesel VW instead of a Prius and to buy biodiesel in Berkeley once a week or eventually join a coop of home brewers.
Comment by Mark I — March 22, 2008 @ 4:17 pm
# 39
Anyone who seriously believes the globe is running out of oil needs to do a little research. Canadian oil sands is just the tip of the iceberg. Colorado’s Green River Basin contains the largest fossil deposits in the world. Off shore drilling and ANWR are an easy start. China and Cuba have signed an agreement to retrieve Caribbean oil while we sit and complain. And the list goes on and on. Why aren’t we building Nuke plants? Between oil and Nuclear Power we could be energy independent in a decade.
# 40
You bet we need to flush some fraud. Starting with the idea that you can tax this country into wealth.
# 44
Recovering oil in ANWR may not affect current gas prices but in concert with off-shore drilling and Nuclear power plants it couldn’t help but slow the upward spiral in oil futures. The market sees paralysis in this country when it comes to energy. No way can there be economic growth by limiting our technology to conservation methods and growing corn.
Comment by Jack Richard — March 22, 2008 @ 4:19 pm
I agree Jack R. that there is plenty of oil… but not easy-to-get cheap oil. There may be or not be global warming caused by our burnin’, but why anybody would presume to believe Al Gore about anything still amazes me. The funny thing is… his efforts probably will lead us torward nukes.
Solar and wind etc. simply don’t pack enough punch. Eth is a total scam, as Mark I notes. America will hurt w/out cheap energy.
We are in agreement about taxes. Just watch as the fed will nationalize the bands. Privatize the gains, socialize the losses. It’s disgusting and everybody should be pissed. Yet, this week’s Economist says that the taxpayers will be better off!! go figger. They don’t even know… they’re watching American Idol.
Comment by Jack B. — March 22, 2008 @ 6:23 pm
nationalize the banKs is what i meant, of course.
Comment by Jack B. — March 22, 2008 @ 6:53 pm
Re Doomsday predictions: Does anyone remember Y2K? Even Ed Yourdon, the seminal founder of structured systems design, got on board with his silly book, “Timebomb 2000″.
Meanwhile, the members of my tribe quietly and methodically went to work to make sure that we all woke up with nary a blip on 1/1/2000.
Comment by Susan — March 22, 2008 @ 7:04 pm
Susan, the volume of money flooding into treasuries w/ yields approaching zero is all the proof I need. If you think the biggest borrowing binge in the history of the planet is not going to have massive repercussions… well, I dunno what else to tell you. I am not one to underestimate the power of wishful thinking and argue with it.
Comment by Jack B. — March 22, 2008 @ 7:31 pm
Clearly, the Aztec calendar was right, we’ve only got a few more years left. Either way, I would encourage all of you to pump some money into the economy even if we only have “second tier” shopping centers. Bridgeside and ATC are HUGE disappointments indeed.
Comment by MarkD — March 22, 2008 @ 9:28 pm
The economic gloom and doom is nothing. Time to learn how to walk on water folks.
It’s not about Al Gore’s exaggerated claims of 20 foot rise in sea level (a theoretical possibility eventually), it’s about Greenland today and the changes which are occurring faster than the computer models have projected, clearly about what ice cores tell us, and the very, very high likelihood that we are looking at a minimum 2 foot rise in sea level by 2050, which is enough to make life on the planet real different, and not for the better. (Finally getting the Northwest Passage out of the deal is one of the lamer attempts at putting lipstick on a pig.)
I think for what is known, you guys are a little too smug. There is no last laugh for any of us on this one, but if their were, people like me would get it. Small consolation.
If people can be herded like sheep over fear of Al Qeda, I wonder what critical mass of natural phenomena it will take before they start running for the exits because of climate change. But there is only one way out for all of us and it’s terminal anyway. Personally, I’m not banking on resurrection, or even reincarnation but would prefer an attempt at course correction in this life, if there is any time left.
Comment by Mark I — March 23, 2008 @ 10:49 am
You meant “walk on ice” didn’t you Mark I? Most of the globe experienced (and it ain’t over yet) the coldest winter in several years. You must have had your ear muffs on.
Comment by Jack Richard — March 23, 2008 @ 1:13 pm
I too think that the energy issue is fairly serious. But I also think that a good bit of what we’re dealing with right now is a production problem mainly because the BRIC countries: Brazil, Russia, India, and China, are all growing rapidly and have an increasingly large middle class, which unsurprisingly have an interest in having the same middle class lifestyle American Television has spoon-fed them for years. With that aspiration, the supply and ability to produce energy is greatly reduced, hence raising the price.
What’s interesting to me is how fast new technology has ’suddenly become available. GM has a plug-in ultra-hybrid called the Volt coming out next year: It will run 40 miles on pure electric before a tiny 1.2 liter diesel/ethanol/gas engine kicks in to recharge. The result is a 150MPG avg fuel economy. VW has a new diesel electric hybrid coming out in Europe that gets 85MPG flat. And of course I’m sure Toyota has a trick up their sleeve yet their being ultra reserved as is in typical corporate Japanese style. In other words, fuel prices may have doubled, but the means to pay the same as a few years ago is already available, or will be available very soon.
I’ve been holding off replacing our aged vehicles for something that gets real-world great fuel economy. That time may be soon.
In regards to the budget and other stuff, Well as I’ve said a few times, I feel that many In the US- especially those on the more expensive coasts- are seeking return to ‘happier’ times when the middle class was more stable and things like housing, education, retirement, and jobs were more assured. I fully feel that the latest housing bubble did more to destabilize the US and it’s large metros more than any event in recent history. What’s interesting to me is that it seems that larger metros are suffering a lot more than smaller ones. What I saw when I visited my folks on TN was 360 degrees opposite than here. While CA seems to be closing schools, my old high school was doubled in size as was my High school. I saw very little distress in the area, and in fact, it seemed like things were actually going well.
In order to return to a more stable community with people who can contribute to it’s success, housing prices are going to have to come down, and come down by a fair amount. Plain and simple, unless that level of domestic stability is restored, California is going to have massive budget shortfalls and a increasingly unhealthy base of citizens.
Comment by edvard — March 23, 2008 @ 5:28 pm
Yeah Jack, it’s complicated which is maybe why it’s not the joke you want to make it out to be.
NewScience: “The ocean current that gives western Europe its relatively balmy climate is stuttering, raising fears that it might fail entirely and plunge the continent into a mini ice age.
The dramatic finding comes from a study of ocean circulation in the North Atlantic, which found a 30% reduction in the warm currents that carry water north from the Gulf Stream.
The slow-down, which has long been predicted as a possible consequence of global warming…”, like from the Greenland ice shelf melting into the North Atlantic.
Comment by Mark I — March 23, 2008 @ 11:36 pm
Mark, I have often found that it is not a good use of my time debating the global warming naysayers like Jack Richard. I’m sure they will come around when the waters are lapping at their front door … but it will be just a tad late by then
Comment by alameda — March 24, 2008 @ 8:13 am
# 56
Got all bases covered, don’t you Mark I, even the new “mini ice age” is man made global warming, How about the Sun Mark I, did man cause this:
“Sun Blamed for Warming of Earth and Other Worlds”
By Ker Than, LiveScience Staff Writer
# 57
Right on yeasayer. Total waste of time…until the water laps. You can find me in the attic then.
Comment by Jack Richard — March 24, 2008 @ 8:27 am
Jack,
It’s not like I made this shit up. Science is science, and denial is denial.
In the snappy snarky come back department, I think you have me beat on covering all bases. Hell, you’re never wrong, even when your opinion is simply an opinion which you won’t/can’t substantiate.
Comment by Mark I — March 24, 2008 @ 12:25 pm
Because I too like to wallow in my own ignorance most of the time, I have to make myself read the business section of the paper once in a while. Yesterday I decided to try extra hard and took on the NYT. I hit the jack pot, or should I say a brick wall.
The first article was essentially an historic review of the Great Depression, what we think caused it, along with reassuring us that the regulations we have enacted since then assure this won’t become another depression. I could follow all that was said. Sounded good. Read here:
http://www.nytimes.com/2008/03/23/weekinreview/23duhigg.html
Then, I read an article on “collateralized debt obligations and credit default swaps”. I was lost in the first paragraph but persisted just to see if I could get the big picture despite the details being over my head.
It’s seems there are vast realms of unregulated banking on Wall Street.
A scary scenario which to me contradicts the first article.
http://www.nytimes.com/2008/03/23/business/23how.html?em&ex=1206504000&en=545585f39cd180f0&ei=5087%0A
Comment by Mark I — March 24, 2008 @ 1:07 pm
Mark,
You just hit on what I’ve been talking about with friends and family for years. Basically, the whole system is utterly rotten. Banks and lenders sold mortgage-backed securities- a huge percentage being of the subprime variety- back and forth to one another. It wasn’t just US banks, but many international banks as well.
So the Ponzi scheme worked as follows:
A: Fed lowers interest rates fueling a housing bubble.
B: Housing prices skyrocket. Lenders introduce toxic loans to fuel the bubble longer than it should have lasted.
C: The Banks, lenders, and investment firms sell, buy, and trade massive amounts of subprime loans back to each other, in many cases re-packaging the product with multiple investments at a time.
D: Foreclosures start to occur after the peak. The result is a massive selloff, which in turn causes these securities to become worthless.
E: Banks lose billions. The fed lowers interest rates, proposes and enacts bailout plans, and so on.
F: Wash… rinse… repeat?
Basically, the lending and mortgage industry is going to be more highly regulated in the future, which will hopefully mean more normalized, non-crazy, and non-fundamental rises in RE prices.
Comment by edvard — March 24, 2008 @ 3:51 pm
#61
But the question remains:
WHY SHOULD OUR TAXES BAIL OUT THE BANKS AND LENDERS?
I would rather let the market decide which institutions survive. That would force safe, sane and responsible businesses practices in the future. Forcing the taxpayers to fund a bailout will encourage these and other institutions to look for loopholes in regs that they can profit from, even when doing so puts their business and everything they ‘touch’ at risk again. Everyone who got “caught” in this ponzi scheme knew they were taking a financial risk. They were irresponsible – why should the overtaxed be forced with this burden too?
Comment by David Kirwin — March 24, 2008 @ 4:17 pm
Valid points about taxpayers funding a bailout, moral hazard etc, but taxpayers are not funding this one. The Fed is funding BSC until the JPM deal closes, but that funding is via repos and BSC does pay interest on these very highly collateralized loans.
There are a lot of reasons to dislike this action but tax dollars are not in play.
One can make a very good case that Bear deserved its financial karma, but the entire banking system would have been at risk had Bear failed. The primary reason would have been counterparty risk on swaps, et al. Countless contracts would have been cancelled, revalued or otherwise called in by one side or other. It would have been (and still may yet be) the 21st century equivalent of a bank run. The Fed decided a few yards of credit to the weaker counterparties (generally the inv. banks and merchant banks are measurably weaker counterparties than the commercials & euros) was worth it, even if it did come with a dash of moral hazard.
The analogy that comes to mind is a juvenile picked up for a minor offense. Parents may be tempted to let him spend a night in jail to teach him a lesson, but decide the risk of harm is too great & so bail him out, hoping that the short trip downtown was enough to alter future behavior.
Comment by dave — March 24, 2008 @ 5:07 pm
And in any case, JPM is aleady driving Bear. No trader at Bear can take a position w/o approval from JPM. The deal is defacto a JPM risk, greatly reducing whatever notional risk the Fed is taking.
Comment by dave — March 24, 2008 @ 5:10 pm
#61 I understand what a mortgage is to begin with, money lent for interest. But C. is where I get lost because there is no inherent logic in this “swapping” from my minimalist perspective. It reminds me of Enron.
Comment by Mark I — March 24, 2008 @ 5:26 pm
There’s more logic to it than you think, Mark (and in any case willy doesn’t understand t either).
The most basic swap is party A agreeing to pay a fixed rate to party B, and in turn receiving a floating rate from Party B. Each side has its own motivation, whether it’s an outright bet on rate movement or a hedge vs its own loan portfolio, or anything else. After that it’s just bells/whistles as to what you can create, swap wise.
Mortgages are excellent swap collateral because there’s so much room for creativity. A standard mortgage has 360 separate cash flows (30 yrs, 12 payments per year) and each cash flow can be stripped out and valued on its own. Again, after that it’s just creativity.
It’s easier than you think (and that NYT piece was a poor explanation). If I get some time later I’ll post a link or three w/ some description but really, it’s simpler than you think.
Comment by dave — March 24, 2008 @ 5:47 pm
One of the biggest problems with Alameda is that its residents are coerced into lockstep thinking by a self-appointed elite. Build mixed use at Alameda Point:
Lockstep:
Change Bureau of Electricity to APT:
Lockstep:
Build parking garage:
Lockstep:
Form Healthcare District:
Lockstep:
Pass school parcel taxes:
Lockstep:
Lockstep:
Lockstep:
No matter how often the Locksteppers are wrong, they stick their noses in the air and proclaim that they are right.
We need to pass another tax!!! Where are your lawn signs??? Show us your lawn signs!!! Why don’t you have a lawn sign??? Why do you hate our children? Why do you hate our senior citizens? Why are you against local cable? Where are your lawn signs? Show us your lawn signs!
Comment by AlamedaNayTiff — March 24, 2008 @ 8:32 pm
dave,
>>> The analogy that comes to mind is a juvenile picked up for a minor offense. Parents may be tempted to let him spend a night in jail to teach him a lesson, but decide the risk of harm is too great & so bail him out, hoping that the short trip downtown was enough to alter future behavior.
Another way to look at this… there is never just one cockroach.
Regards,,,
Comment by Jack B. — March 24, 2008 @ 10:54 pm
67. Here is your sign: Protect Measure A.
Comment by Observer — March 25, 2008 @ 5:58 am
Dave re:
“And in any case, JPM is aleady driving Bear. No trader at Bear can take a position w/o approval from JPM. The deal is defacto a JPM risk, greatly reducing whatever notional risk the Fed is taking.”
Not sure why you say this isn’t a Fed bailout. Every article I read seems to say otherwise (incl the recent quintupling of the $2 offer).
http://blogs.wsj.com/economics/2008/03/14/fed-invokes-depression-era-law-for-bear-loan/
“fed bailout bear stearns” gives me 2.3m results on google!
Comment by Jason C — March 25, 2008 @ 7:33 am
I encourage you to re-read post 63 in which I didn’t say it wasn’t a bailout. In fact I refer to it as such in the first line. What I said is that it isn’t a taxpayer bailout.
The Fed extending credit to Bear is a bailout but it does not spend tax dollars.
Comment by dave — March 25, 2008 @ 7:49 am
#69
“Here is your sign: Protect Measure A.”
I’m sorry, my posting was for left-footed locksteppers. For right-footed lockstoppers it is “Where is your Measure A lawn sign? If you don’t have one you must be for destroying Alameda.”
My apologies to the right-footers for leaving them out.
Comment by AlamedaNayTiff — March 25, 2008 @ 8:40 am
Dave;
Fed Bailout - tax payer bailout
Isn’t this semantics? Where do you claim the Fed gets its funds?
Comment by D.Kirwin — March 25, 2008 @ 10:40 am
The Federal Reserve is separately capitalized and does not receive taxpayer funds, though a chunk of its net profit is contributed to the govt each year. In addition to its own balance sheet, the Fed enjoys the privelege of seignorage, which obviates the need for any taxpayer support.
It is not a taxpayer funded bailout.
Comment by dave — March 25, 2008 @ 10:56 am
From Wikipedia (ok, maybe not the definitive authority, but a good explanation regardless):
Seignorage can be seen as a form of tax levied on the holders of a currency and as such a redistribution of real resources to the issuer. The expansion of the money supply causes inflation. This means that the real wealth of people who hold cash or deposits decreases and the wealth of the issuer of the money increases. This is a redistribution of wealth from the people to the issuers of newly-created money (mostly banks) very similar to a tax.
Comment by notadave — March 25, 2008 @ 1:00 pm
#74 Oh - do the Fed Reserve get the backing for their funds directly from the US Mint? …and how is the Fed Reserve not the property of the taxpayers? Isn’t it OUR government? Don’t we pay for all of it, or, aren’t we the source for all of it?
Funny - John McCain’s speech this morning was about the Fed “bail out”, and how we should not bail out irresponsible risk-takers.
Comment by David Kirwin — March 25, 2008 @ 1:16 pm
Kirwin:
Please educate yourself on the Fed, its operations, its capital, etc and then come back & we’ll have an intelligent conversation.
Please also work on your reading comprehension. After brushing up, you might notice on a second reading that I say the moral hazrd point is a valid one.
notadave:
That is pointless wordsmithing, though Milton Friedman would be proud of you.
Comment by dave — March 25, 2008 @ 1:26 pm
DK, we’re actually agreeing here. I too do not support the notion of any sort of proposed ” bailout” plan. That said, if there had not been any intervention, the damage probably would’ve been far greater. The fact was that the credit markets were completely locked up. That would spell disaster for the US because frankly- our country runs on asset debt. Don’t get me wrong though. I feel that the Fed and government have stepped out of line in regards to how this situation is being handled.
While I’m not nuts about Mcain because he seems like yet another guy hell-bent on keeping us eternally in Iraq, today he said about the only thing I’ve heard from any of the candidates that makes any sense out of the whole credit situation. Here’s an excerpt:
“I have always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers. Government assistance to the banking system should be based solely on preventing systemic risk that would endanger the entire financial system and the economy.
In our effort to help deserving homeowners, no assistance should be given to speculators. Any assistance for borrowers should be focused solely on homeowners, not people who bought houses for speculative purposes, to rent or as second homes. Any assistance must be temporary and must not reward people who were irresponsible at the expense of those who weren’t. I will consider any and all proposals based on their cost and benefits. In this crisis, as in all I may face in the future, I will not allow dogma to override common sense.
When we commit taxpayer dollars as assistance, it should be accompanied by reforms that ensure that we never face this problem again. Central to those reforms should be transparency and accountability.
Policies should move toward ensuring that homeowners provide a responsible down payment of equity at the initial purchase of a home. I therefore oppose reducing the down payment requirement for FHA mortgages and believe that, as conditions allow, the down payment requirement should be raised. So many homeowners have found themselves owing more than their home is worth, because many never had much equity in the house to begin with. When conditions return to normal, GSEs (Government Sponsored Enterprises) should never insure loans when the homeowner clearly does not have skin in the game.But don’t get me wrong-I have always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers. Government assistance to the banking system should be based solely on preventing systemic risk that would endanger the entire financial system and the economy.
In our effort to help deserving homeowners, no assistance should be given to speculators. Any assistance for borrowers should be focused solely on homeowners, not people who bought houses for speculative purposes, to rent or as second homes. Any assistance must be temporary and must not reward people who were irresponsible at the expense of those who weren’t. I will consider any and all proposals based on their cost and benefits. In this crisis, as in all I may face in the future, I will not allow dogma to override common sense.
When we commit taxpayer dollars as assistance, it should be accompanied by reforms that ensure that we never face this problem again. Central to those reforms should be transparency and accountability.
Policies should move toward ensuring that homeowners provide a responsible down payment of equity at the initial purchase of a home. I therefore oppose reducing the down payment requirement for FHA mortgages and believe that, as conditions allow, the down payment requirement should be raised. So many homeowners have found themselves owing more than their home is worth, because many never had much equity in the house to begin with. When conditions return to normal, GSEs (Government Sponsored Enterprises) should never insure loans when the homeowner clearly does not have skin in the game.”
I couldn’t have said that better myself. Thank god SOMEONE gets it.
Comment by edvard — March 25, 2008 @ 2:38 pm
whoops. for some reason, his speech got copied twice. sorry about that.
Comment by edvard — March 25, 2008 @ 2:40 pm
“Pass school parcel taxes:
Lockstep:
Lockstep:
Lockstep:”
Seriously.I got off the plane last week, took a taxi, got out, and holy crap- the “don’t trash Alameda schools” signs were EVERYWHERE. I’m not saying I disagree with the idea of trying to shore up the schools, but the signs are almost obnoxious, especially if you’re a couple like me and my wife with no kids. I can’t help but wonder if all the money spent on those signs and billboards could’ve been put to better use since it is already very clear that practically everyone in Alameda knew about it anyway and don’t need signs to convince themselves what they already agree with.
Comment by edvard — March 25, 2008 @ 2:51 pm
…Not to mention the lawn signs were obviously designed by someone who knows nothing about graphic design, common sense dictates that the signs should primarily be easily readable. The boxes of color represent wasted potential at increased cost. Is that part of the message? My guess is that the same group who planted the ballot wording frame work did the design on the signs.
Of course to assist the district educate my children, and the children of other families I know, and to protect my local environment and my property values, I will of course vote for this little tax, but I still wonder how AUSD plans on submitting a 3yr budget in 2010 when this and the other parcel taxes will sunset in 2012.
Did the District and BOE not consider the upcoming realities, or is there not full disclosure of their plans?
Comment by Dave Kirwin — March 25, 2008 @ 3:30 pm
I agree. I can’t read the signs at all. The no.1 rule of advertising is to have the minimum amount of words that deliver the maximum amount of message. That’s why the KEEP MEASURE A signs work well.That and they’re bloody red.
It would be interesting to see how many people are going to vote for this as you mentioned in part to preserve your property value. I’ve been endlessly fascinated with how Californians treat their homes more like investments. That’s not to say that I blame them, being the highly priced little houses they are.
Here’s something to think about: Let’s say Joe millionaire comes driving through Alameda in his BMW. He thinks to himself:” my my, what a cute little sorta’ upper class looking town in which to raise my future children.” But then he sees the millions of “save our schools!” signs. Perhaps he would have second thoughts. Are they actually helping the situation or just making the city look like a giant yard sale?
In any regard, a drop in the quality of the schools in Alameda would have an immediate impact on property values. People in the Bay Area pay a premium for living near functioning public schools. If Alameda becomes less desirable in that aspect, then they’ll probably go elsewhere. So I’m sure that even homeowners here without children probably have a fairly significant interest in at least putting some sort of bandaid on the problem.
The school situation in the area has been bad for years. My wife taught in it, so we know firsthand. The latest cuts has be fairly concerned about the remote possibility of if I were to have kids and decided to stay here.
Comment by edvard — March 25, 2008 @ 3:50 pm
Kirwin, this might help:
http://en.wikipedia.org/wiki/Federal_reserve_bank
Comment by alameda — March 25, 2008 @ 4:18 pm
I know this is way off target for this blog, but do let us know if McCain has figured out the difference between Shia and Sunni!
Comment by alameda — March 25, 2008 @ 4:22 pm
Does Alameda have the needed economy to support the services that its residents want? Do the new businesses at Southshore offset the loss of the auto dealerships? Or, are we supposed to be a bedroom community like Piedmont in which we all make the daily commute into SF or Silicon Valley to support our local lifestyle? Target would have generated sales tax revenue, but was rejected because it would bring so much traffic — but it is the traffic that brings the shoppers. The dilemma is that we want the tax revenue, but don’t want people traveling on our roads or parking on our streets.
The parcel taxes do not solve the problem of school funding. All they do is delay the hour of reckoning (and create jobs in the printing industry). Maybe it is time that we consider a reduced role for public schools. We expect far too much of our teachers, counselors, coaches, etc.
As for all those lawn signs, I can’t stand any of them. I’m not a fan of bumper sticker politics. Living on an E-W street, I get asked to put up lawn signs. I’m tired of giving the long answer about why I don’t like lawn signs. From now on I’m telling people that it is against my religion. Hopefully that will end the conversation.
Comment by AlamedaNayTiff — March 25, 2008 @ 4:24 pm
I think that I’ve solved our city’s budget woes and found a great use for Alameda Point:
Welcome to Alameda
Home of the largest lawn sign production facility in the World!
Comment by AlamedaNayTiff — March 25, 2008 @ 4:49 pm
Kirwin and edvard could be the designers-in-chief.
Comment by Jack Richard — March 25, 2008 @ 4:58 pm
[...] the end of last week, Border’s books and music announced (also here) that it is financial trouble and may be looking to sell itself to Barnes and Noble. [...]
Pingback by Stop, Drop and Roll » Make a run for the…. — March 26, 2008 @ 7:22 am
“Or, are we supposed to be a bedroom community like Piedmont in which we all make the daily commute into SF or Silicon Valley to support our local lifestyle?”
I think the answer to that question is yes. Not because we’re supposed to, but because a family these days pretty much has to make at least 150-200k a year in order to simply buy a starter home here. That and homes on the Peninsula are usually a million bucks.Even rent is way more there. I know because I’m one of those Silicon Valley guys making the dreadful commute. I’ve had 5 jobs in the last 5 years, which is getting to be pretty normal in this biz, and every single time I go looking for a new one, I always look in Alameda first. But there are zero jobs that pay anything close to what I would need to make in order to buy a home here someday.
This is perhaps one of the biggest reasons I’m so hell-bent on seeing home prices come down to levels in which people like me don’t have to drive 35,000 miles a year to another city. I could care less about BMW’s, Stainless steel appliances, and so on. I’m just looking for a lifestyle that enables me to live modestly without breaking the bank… which sounds almost like an oxymoron.The fact is that even now, only the top 10% of the earning public can afford a home in this area, so we still have quite a ways to go downward. The news today is that homes sales fell again and the supply is at the highest since 1981. Perhaps we’ll get our wish eventually.
Anyhow, While I don’t necessarily like him, I think McCain summed up the problem that was created from the speculative nature of home buying over the last few years. The best fix for this will be a return to stricter standards. This will automatically eradicate unqualified buyers, of which a large percentage in the Bay Area fit under. This in turn will adjust the prices back to a level that only real jobs and real money can actually afford. This in turn will actually be better for everybody. I agree with him. We must ensure that this type of thing doesn’t happen to this country again for the preservation of our communities and for the enjoyment and livability of it’s future citizens.
While this might mean that those who bought more recently could see a significant drop in their home’s current value, it shouldn’t mean anything for those who bought with the intention of living in their home long term.After all, a home is a long term… ‘investment’.
Comment by edvard — March 26, 2008 @ 8:16 am
“I’ve had 5 jobs in the last 5 years, which is getting to be pretty normal in this biz …”
No edvard, it isn’t … just confirms what we’ve known about you all along!
Comment by Bob Wilson — March 26, 2008 @ 11:11 am
uh-oh… Somebody here knows how to do basic WHOIS query background checks. How clever.
Comment by edvard — March 26, 2008 @ 12:39 pm
Edvard - I don’t want to make things sound more difficult than they already are, but I’ve wondered for some time: does it make sense to focus solely on the buying power of first time buyers? I’d like to see prices come down too, but I suspect that the more desirable areas such as Alameda may be attracting buyers who already have substantial equity in their current home. In other words, there’ll always be plenty of people around who have the equity to buy, even in expensive areas. And with that said, I certainly note all the young families here, with young kids — who are likely to first time buyers — and I have been wondering all along, “Who are these people?” Very well paid tech workers? I recall an article in the Journal awhile back, about a “thrilled” young couple who’d just paid over $900K for a house in the East End — the article focused on them and their lovely children and I kept wondering, What about their lovely income? How do prices stay so high in places like Marin? It seems that whenever there’s something good to be had, there’s no end of people w/ bucks who will pay whatever it takes. That’s partly why we wound up w/ such ridiculous home prices in the first place.
Comment by Darcy Morrison — March 26, 2008 @ 1:19 pm
Darcy,
It is sort of difficult to gauge exactly how much of the buying in the Bay Area has been supported by sustainable economics. I recall reading an article about the percentage of buyers in the area who used creative financing, which in 2006 was something like 70%. That to me suggests that the majority of home buyers used ARM and IO loans in conjunction with jumbo loans. What you have to consider is that almost all of those options have been taken off the bargaining table, which is why some areas of the Bay Area are now totally locked up in terms in sales because not many can actually afford the prices regardless of income, which again points to a systematic attachment to the lax lending standards that ratcheted the prices upwards. I’ve maintained that prices were only supported by the wide availability of easy financing. So logically, it makes sense the entertain the idea of prices heading back towards 2003 prices with with the addition of added inflation.
As you mentioned, many who buy here (or did buy here) probably did so through a previous home sales transaction. I know a few on here did just that. But since home sales have slowed considerably, that leverage isn’t as accessible anymore to those seeking to move up.
The reason I place importance on first time home buyers is that they are essential to keeping the market active. Without them, those seeking an upgrade can’t sell, thus removing them from the buying equation also.
Secondly, in regards to all those well-paid tech workers, I think many just naturally assume that once you’re in the wonderful word of tech that you will automatically be able to buy BMW’s, fancy homes, and 7 course dinners. I can tell you firsthand that as a “tech worker” myself, this is not really all that true. In fact, many in the tech field make about the same as those in the rest of the workforce. Even when you mention some of those who worked at Google when it gained IPO status, as well as some of those old Apple employees, we’re still only talking about the upper 1% of the public, which alone isn’t enough to justify the current high prices. I’m willing to bet that many of those young professional couples are paying in excess of 50% of their take-home pay on their mortgages, which isn’t exactly a healthy thing to do.
I sat down and did the math. I’m a fairly careful, conservative spender. In order to buy a home here and have the level of security I would feel comfortable with, I would need to be making 300k a year. That was for a home costing 650k. The reason I say this is that in order to retire, the average Bay Area citizen will need to save up close to 2 million dollars by the time they’re 65. If I buy a house and pour ‘x’ amount of dollars into the mortgage, then unless I sell high and head for the hills, I’m not going to meet that number. It’s all pretty simple mathematics.
But I’m not going to be unrealistic either. Of course areas like Alameda, Marin, SF, the Peninsula, and Palo Alto are always going to cost a lot more than say- Stockton or Hayward. California will probably always cost more than the rest of the country. So I’m not expecting prices ever to be cheap. Buying here will probably always require a degree of financial pain. But I feel strongly that even after a year of slowing, the prices are still way too high. So I have no problem waiting longer, even if that means another 2-4 years. If the prices start to magically start going up again and the prices are still beyond my comfort zone, then I won’t buy. There is no shame in renting.
So… where will prices eventually land? Who knows. Prices are all dependent on what your value system is. Mine I think just might be a hair on the “frugal” side.
Comment by edvard — March 26, 2008 @ 2:14 pm
edvard, do you have anything new to say other than regurgitating the same stuff over and over? Man, you are sounding like a broken record.
Comment by Bob Wilson — March 26, 2008 @ 5:09 pm
Edvard - I think your analysis is correct, and I know it’s not possible to cover everything in this space. With the market, it’s a vicious circle, and the hordes of essentially unqualified buyers drove the prices up. Now those buyers are gone, and demand has fallen tremendously — no surprise. I always wonder what “recovery” means in this context, because I don’t think we’ll be seeing this again anytime soon. However, it’s much easier to generalize about a given market across the board, and on the whole, Bay Area prices could fall, but within the most desirable areas perhaps not. Oh well, it’s probably better to live where you want, renting or owning, than to shell out bucks for a place you don’t really like. And as for the $2 million: that’s scary, I guess I’ll be retiring elsewhere.
Comment by Darcy Morrison — March 27, 2008 @ 11:16 am
Does anyone know what percentage of children from Bayport attend private schools?
Comment by AlamedaNayTiff — March 27, 2008 @ 11:28 am
Well,
As mentioned, nobody really knows when the “recovery” will end. The stalemate for buying remains to be tight credit lending, which in effect will cause prices to implode if credit isn’t freed up. The Fed is trying it’s best to reverse this trend. But even if some sort of bailout gets passed, this will have little effect here because lenders will not be offering the loan products they so easily lent to non-qualified buyers since they got burned pretty badly by their experiment doing so.
It usually helps to look at historical trends. In the Bay Area, the last boom was from around 1985 to 1989. The bust lasted from 1990-1997, or even early 1998. The result was a 10-15% decline overall, with certain areas dipping as much as 40%. The affordability index in 1989 was similar to the end of the 97-2007 boom, which was around 15%. In 1997, the index was pushing 95%- a drastic improvement.
This boom was extended much further. So While some comparisons can be made to the previous bust, I think the down cycle now might be more severe. As it is now, the Bay Area is down 13% YOY ( 2007), or almost at the same decline as the last bust created in 7 years. So the rate of depreciation is much faster than the last. Again- I attribute this to prices having been artificially raised by the wide availability of lax credit.
The boom was nation-wide and international. So while the US might have a recession, so too might Canada, Great Britan, Spain, Australia, and Ireland, where similar booms occurred.
The question many ask is why did this happen? The reason is that many developed countries no longer actually produce much of anything other than services. You can’t sustain an economy like that.So for the last 20 years, the US and other countries have been fueling their economies through asset debt. Something like 75% of all bank income is from housing debt. It was so lucrative, that as mentioned, many of these banks packaged and sold this debt to other investment firms and even other international banks, which is why banks from Japan, China, the UK, and even India are reporting major losses tied to US suprime and RE debt.
Anyhow, if you’re interested in more of the same, I’d check out Ben’s Bubble Blog- or
http://thehousingbubbleblog.com/index.html
Despite the silly name, it is one of the most popular blogs on the internet with thousands of subscribers all over the world. The writer has been interviewed both on TV and radio and was the first whistle blower on the whole mess. The format is simple: Post stories tied to RE from all over the globe. All in all- a highly educational blog.
Comment by edvard — March 27, 2008 @ 11:51 am
Ancedotally I only know of two kids who go to private school, but they just moved into the neighborhood so they are simply finishing out their school year. According to some numbers produced by our neighborhood survey, there are currently 29 kids from Bayport who go to Ruby Bridges. I know of several kids who don’t go to Ruby Bridges, but go to other public elementary schools in Alameda. From the survey results alone there are 112 kids of school going age (5.5 to 1
so would account for some middle and high school kids too. The largest majority of kids in the neighborhood are kids aging from 0-5, in fact 46 babies were born in Bayport last year for 2012 enrollment into Kindergarten.
Basically that was a long way of saying, no, I don’t know what percentage of children in Bayport attend private schools.
Comment by Lauren Do — March 27, 2008 @ 1:02 pm
Thank you, Lauren. Sorry that I posted this on the wrong thread. I meant to post it on closing and consolidating.
Comment by AlamedaNayTiff — March 27, 2008 @ 1:08 pm
#66 Professor Michael Greenberger on NPR “Fresh Air” just now quoted an economist referring to credit default swaps as “economic WMDs” and Greenberger referred to them as “toxic investments”. He went on to say that our economy is based on people sitting at computers all day betting on whether things like the sub-prime loan market will succeed or fail, instead of countries like China and India who invest in producing real commodities.
He said that the Fed HAD to bail Bear Stearns now that it was going down just to prevent a domino effect leading to a 1929 scenario, the proverbial house of cards. But had the Fed begun to act as far back as 2001 the economy might well be healthy. He referred to Senator Phil Graham floating a bill for deregulation of these debt swapping markets back in the 90s which slipped by without any vetting by the senate.
On the one hand your description of “creative” opportunities for investment made a certain amount of sense, but being somebody who actually builds things with my hands I am suspicious of such abstractions. I don’t mean to squander anybody’s creativity, but I can’t relate to creating wealth out of thin air.
This morning on KQED Forum, Atlantic Monthly Lewis Lapham was making similar grim references to these markets.
Comment by Mark I — April 3, 2008 @ 2:15 pm
Funny, I was listening listening to Lapham while poring over some broker swap rates. His description of them was really innaccurate and he conflated them with auction rate deals, which to my ears is a bit like confusing baseball with chess.
You make a fair point about the increasingly rentier nature of the US economy, but it should be noted that the US remains the world’s largest manufacturing economy.
As far as regulation goes, something is definitely needed for swaps. Perhaps a central clearing corporation to remove counterparty risk, as is done with options. At the very least a margin requirement or some other method to ensure there is enough capital support behind them. But simply labeling them toxic is just plain ignorance, something I was very surprised to hear come out of Lapham’s mouth.
Comment by dave — April 3, 2008 @ 2:55 pm
Did Lapham say toxic? I thought it was Greenberger on the later program. I caught Lapham’s use of the word auction and even though I have little real comprehension of the details it didn’t fit what I had read.
Lapham’s other comments about the function of money and pursuit of wealth as he claims it was perceived by the founding fathers, was interesting. He didn’t mention Locke who came up with the original rights of “life, liberty and property”.
Even this evening on another program Robert Reich was saying that if the gov’t bails out these outfits they better have SOME real assets to show because we the people can’t take all the risk.
Comment by Mark I — April 3, 2008 @ 6:39 pm
I think you’re right, LL didn’t say “toxic” but he did strongly condemn their existence, while not actually knowing what he’s talking about.
Reich, whom I like alot, has a very good point also, but there’s a lot more complexity to the situation. The govt, as well as the Fed, need to be extremely careful about who & when to bail out, but incentivizing the regulators to make a profit on such actions might cause them to bail out opportunistically instead of as a last resort.
We live in complex times.
Comment by dave — April 3, 2008 @ 7:05 pm
It’s amazing… Ben Bernanke is on The Hill testifying that we were on the verge of a total financial meltdown so we had to rescue Bear Stearns, AND it was so sudden they didn’t even see it coming. But now, everything is fine. Move along… nothing to see here… FEAR HAS LEFT THE BUILDING!!
Comment by Jack B — April 3, 2008 @ 7:34 pm