April 7, 2011

7 Keys to Understanding Mass Transit Impact – and Value

Posted in role of government, taxes, U.S. Economy, Uncategorized tagged , , , , , , , , , , at 9:32 am by realitytax

DC Streetcar study1) It’s not just bus and light-rail

Streetcars play an increasing role, as the DC Streetcar Land-Use Study documents, and for good reason. The upfront costs are lower than light-rail, while businesses (and commercial real estate values) react much more vigorously than they do to bus rapid transit (BRT) proposals.

2) Return on Investment is Reliable, Investors React

In terms of taxpayers dollars, the Goody Clancy DC study found “streetcar offers a better ratio of benefits to costs compared to Bus Rapid Transit (BRT) or Light Transit. While BRT is less expensive to implement, it does not generate the real estate investments to the same degree that streetcars can.” In other words, with a lower implementation cost than light rail that stability and predictability is what businesses and property owners like. Long-term, they know the traffic patterns and support for use are reliable.

3) Urban Rail Transportation Stimulates Economic Development

With so many elected officials trying to create jobs and reverse shrinkage of tax revenues, studies on the light rail projects in Minneapolis, Portland, and Denver reveal more benefits than just the immediate job creation from the construction projects, there’s lots of other new real estate development, too, including especially housing when the lines are well-sited.

4) Transit Is Not an “either/or” Choice

Some state legislatures are leery of the investment as they look at funding for the repair and maintenance of existing roads, highways, and bridges. Yet a new (or better) Transit system reduces wear, freeing up more money and reducing infrastructure maintenance costs in transportation budgets.

5) If Highways Are the Answer We’d All Move to L.A.

I don’t want to decry development in Southern California, but the smog and traffic jams are legendary. Most developed areas don’t have the land to give up for more highways, toll-roads are far from a free solution even though they shift the maintenance costs, and most communities favor fewer big roads as the cost to our environment and impact on our quality of life becomes more evident.

3) It’s Efficient

Max busIt’s a simple fact, person-throughput is increased when a greater share of travelers in any given transportation corridor are riding rather than driving. Risks shrink, quality of life blossoms, and systems that mitigate commuter congestion coincidentally result in revitalized commercial and retail growth – again, because business investors recognize and gravitate to the predictable. While there are pitfalls to be avoided, there are numerous studies that show what’s working and what hasn’t; the data is real, so re-inventing the wheel isn’t the first step.

7) If You Build It, They Will Come

When you consider areas such as the Pearl district of Portland it’s obvious why that city is always high on lists of desirable places to live; urban development was phenomenal, and some estimates suggest streetcar ridership is 7 times higher than a bus alternative would be. Either way, it spurred billions of dollars in development projects, which translates into jobs and other tax revenues for the city – and isn’t that what every state or local government needs?

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July 20, 2009

Why is Fifth Third Bancorp in the ERRI?

Posted in economic indicator, economic recovery, ERRI, foreclosure crisis, U.S. Economy tagged , , , , , at 6:00 pm by realitytax

Fifth Third Bancorp (FITB) is a diversified financial services company in two U.S. regions affected differently by the economic crisis reverberating through the country on the heels of the credit/mortgage crisis of 2008. As of the end of 2008, 5/3 Bancorp operated 1,307 full-service banking centers, including 92 Bank Mart locations through 18 affiliates in the midwest and southeastern regions of the United States. The Bancorp operates through five business segments: Commercial Banking, Branch Banking, Consumer Lending, Fifth Third Processing Solutions (FTPS) and Investment Advisors. (On June 6, 2008, Fifth Third Bancorp completed the acquisition of First Charter Corporation.)

In indexing banking sector recovery on the heels of major intervention in the largest U.S. banks by the government it is difficult to ignore that Large-Cap institutions are influenced by TARP processes – it’s impossible to measure what’s happening without considering these large institutions. Considered against its peers, such as Regions Financial, Huntington, or Marshal & Ilsley, FITB seems solidly positioned.

FITB, which has traded as high as $21 within the last year, was in disfavor with traders before much of the market in early March, bottoming out near $1/share a couple weeks sooner. Stock price trends reflect “collective opinion” within the investment community. The 50 day Moving Average is rising; the 200 day Moving Average is falling which is Bearish. Other indicators are mixed – as is true for much of the sector.

With $4.1 billion in market capitalization, FITB, a Mid-Cap stock, is initially weighted as 3.37% of the whole (the financial sector comprises just slightly over 10% of the ERRI fund, arguably the key component in the index itself) the rest of the sector is represented in the equity compenent of the ERRI by Allied Irish Banks (AIB) and Comerica (CMA).


Disclaimer: Readers are advised that the ideas, materials, and opinions contained herein should be used solely for informational purposes. The author does not purport to tell or suggest investment securities that should be bought or sold. Investors should always conduct their own research and due diligence and obtain professional advice before making any investment decision.Neither the author nor realitytax shall be be liable for any loss or damage caused by a reader’s reliance on information obtained in any posts, newsletters, special reports, email correspondence, or comments on the web site. The author is not a registered investment advisor or broker/dealer.

The information contained herein does not constitute a representation by the publisher or a solicitation for the purchase (or sale) of securities. Opinions and analyses are based on sources believed to be reliable and are written in good faith, but no representation or warranty is made as to their accuracy or completeness, and we are not liable for errors or omissions. All such information should be independently verified with the companies mentioned.

The author(s) receives no compensation of any kind from any companies that may be mentioned on this web site. Any opinions expressed are subject to change without notice. Owners, employees and writers may hold positions in the securities that are discussed; the intent is neither to suggest investment choices/strategies nor to influence market conditions, but rather to divulge methodology for inclusion of equities and sectors in the Economic Recovery Reality Index [ERRI]

Why is Comerica Incorporated in the ERRI?

Posted in economic indicator, economic recovery, ERRI, U.S. Economy tagged , , at 5:31 pm by realitytax

Comerica Incorporated (Comerica ~ CMA) is a financial services company operating a Finance Division as well as segments outside retail banking: Business Bank, and Wealth & Institutional Management. In other words, not just a retail regional bank concentrating solely on consumer lending, consumer deposit gathering, mortgage loan origination, etc. The Business Bank focuses on middle market, commercial real estate, national dealer services, and international finance, as well as leasing, and technology and life sciences. The Wealth & Institutional Management segment offers investment and fiduciary services, private banking, retirement services, and discount securities brokerage services.

In indexing banking sector recovery on the heels of major intervention in the largest U.S. banks by the government it is difficult to ignore that Large-Cap institutions are influenced by TARP processes – it’s impossible to measure what’s happening without considering these large institutions (although the government hasn’t opted to the help of CIT as it did BAC, for instance.) CMA seemed a good middle-of-the-road choice.

CMA, which has traded as high as $54 within the last year, was in disfavor with traders when it bottomed out in early March under $12/share. Stock price trends reflect “collective opinion” within the investment community. Both the 50 day and the 200 day Moving Average are falling. Other indicators are mixed – as is true for much of the sector.

The financial sector represents just under 10% of the ERRI equity component. With $3.4 billion in market capitalization, CMA, a Mid-Cap stock, is initially weighted as 3.32% of the whole (the financial sector comprises just slightly over 10%;) the rest of the financial sector is represented by AIB and Fifth Third Bank.


Disclaimer: Readers are advised that the ideas, materials, and opinions contained herein should be used solely for informational purposes. The author does not purport to tell or suggest investment securities that should be bought or sold. Investors should always conduct their own research and due diligence and obtain professional advice before making any investment decision.Neither the author nor realitytax shall be be liable for any loss or damage caused by a reader’s reliance on information obtained in any posts, newsletters, special reports, email correspondence, or comments on the web site. The author is not a registered investment advisor or broker/dealer.

The information contained herein does not constitute a representation by the publisher or a solicitation for the purchase (or sale) of securities. Opinions and analyses are based on sources believed to be reliable and are written in good faith, but no representation or warranty is made as to their accuracy or completeness, and we are not liable for errors or omissions. All such information should be independently verified with the companies mentioned.

The author(s) receives no compensation of any kind from any companies that may be mentioned on this web site. Any opinions expressed are subject to change without notice. Owners, employees and writers may hold positions in the securities that are discussed; the intent is neither to suggest investment choices/strategies nor to influence market conditions, but rather to divulge methodology for inclusion of equities and sectors in the Economic Recovery Reality Index [ERRI]

March 24, 2009

Information in the open changes the way business was done in DC.

Posted in foreclosure crisis, Obama administration, President Barack H. Obama, taxes, U.S. Economy tagged , , , , , , , , , , , , at 4:09 am by realitytax

President Obama told the National Conference of State Legislatures last week that, “Decisions about how Recovery Act dollars are spent will be based on the merit…” and stressed that maximizing job creation, making health care affordable, rebuilding crumbling infrastructure, and other projects that manifest “enduring benefits” to taxpayers must take priority.

President Barack H. ObamaUnder the recently issued guidance from the Obama administration (which some were hoping wouldn’t appear) lobbyists seeking an administration member’s time to discuss a “Recovery Act” project must submit their requests in writing so that correspondence can be posted online, just as with the topics of meetings between administration officials and lobbyists on stimulus efforts. This is not business as usual for DC lobbyists; this is a refreshing degree of openness at a time when voters are very curious about how their money is parceled out, and echoes his warnings to mayors last month that the President would “will call them out” on wasteful uses of stimulus dollars.

As history shows us, when we let Wall Street and lobbyists handle their own affairs in smoke-filled back rooms and over martinis at the country club, jobs and sustainable wealth fall by the wayside while cash flows to the wealthiest investors. Curiously enough, income disparities shrink while job creation and government revenues increase if, and when, the wealthy are taxed – it causes them to invest rather than hoard their capital.

Economic viability will come only through repudiating the unfounded faith many Republicans have exhibited in trickle-down voodoo and unregulated capitalism, paired with self-serving definitions of sound-bite terms such as educational choice. We need a return to an ethic of service, work, and strong family values such as the first family demonstrates.

We need to restore confidence – both here and abroad – that the United States is a leading force on economic and moral issues, not a duplicitous, arrogant bully guilty of not practicing what we preach. Obama’s walking the walk.

Obama doesn't just talk

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March 4, 2009

We need to invest in our country

Posted in foreclosure crisis, health care, mortgage reform, Obama administration, President Barack H. Obama, taxes, U.S. Economy tagged , , , , , , , , , , at 5:18 am by realitytax

USA flagAs an entrepreneur who has run several small businesses, I think it’s time to return to fundamentals on the economy, starting with investing in America again. It’s small businesses that will put people back to work; that’s how we’re going to get this country back on its feet. It’s entrepreneurs and small business owners who respond with enthusiasm instead of being bound in their decision-making by CFOs and slow-moving Boards of Directors focused on short-term bottom line numbers, (the kind of decision-making that led to the foreclosure and credit crisis, and ultimately the big business bailout using taxpayer dollars.)

To be sure, we need public education, technical schools, and affordable college tuition so young Americans are ready for these new jobs. It’s a global economy, but most of us work in the same city we live in. When we see bulldozersCaterpillar tractor and excavators moving dirt, and trucks hauling instead of sitting idle at auction sites, then we’ll know things are turning around.

The President is intent on stimulating the private sector, but big businesses with names we all know have abused deregulation and the public trust. Credit card companies raise their rates willy-nilly, and hide extra fees in the small print. How much of his economic stimulus can be paid for simply by ending wasteful government spending, and eliminating tax cuts for the super-rich?

Is it a coincidence that the size of the bailout Bush proposed roughly equals the cost of the war in Iraq?

That war has been a burden on our military, and paying the debt is a drag on our economy that will linger for years. The new President is winding that down, but we’ll be paying for it for years and spending is only half of the equation. The money to do these things has to come from somewhere. Government is here to stay: In some way we need to fund the things that make government work for the people. Our elected leaders, in turn, must stop letting our hard-earned tax dollars simply line the pockets of special interests.

The American Dream isn’t about letting lobbyists control who pays taxes and who gets rich, it’s that any child in this country should have a chance at becoming a productive adult who can support and raise a family comfortably.  Working full-time and pulling your weight should mean you don’t have to worry about grocery bills, the price of commuting, or paying to see a good doctor when you or your family needs medical care.

Tax credits for continuing education make it tempting to better yourself.  The tax cuts for the middle and lower class earners proposed by the Obama administration make a start at offsetting the skyrocketing costs of groceries, health care, and college, but we need to go further. One great idea is to give tax incentives to companies that cover increases in health care costs while the President tries to reform that out-of-control system.

Public pressure and increased scrutiny are starting to make companies think twice about  huge salaries and bigger bonuses for wealthy executives while pleading for bailout funds and cutting paychecks and benefits and pensions of the people who do the real work. Let’s take it a step further and tax those who make money by exploiting cheap labor overseas. Our government needs money to operate, Job Growth Aheadno matter if it’s to build roads, insure products made overseas are safe,  or to keep our military strong, and if a company doesn’t want to pay American workers they still have an obligation to contribute and support the system that has made their success possible. We need to reverse the trend of layoffs and plant closures; we need to rebuild the foundation of our economy – and the American Dream – by putting Americans back to work.

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February 22, 2009

Economic Recovery: Facts for D.C. to factor in

Posted in foreclosure crisis, health care, mortgage reform, taxes, U.S. Economy tagged , , , , , , , , , , , , , , at 5:24 pm by realitytax

MinnesotaWhen Congress and the President are working on the budget, they have a perfect case study for the “no new taxes” approach right here in Minnesota: we elected a rising star of the Republican party to be our Governor in 2002 on that pledge, Timothy J. “Tim” Pawlenty. Tim PawlentyNow in his second term, Governor Pawlenty won the office promising to balance the state budget at a time when Minnesotans were tired of the way politics had played out in the state capitol while Jesse”The Body” Ventura as Governor, and according to Wikipedia, Pawlenty attacked a deficit of  roughly “$4.3 billion without raising taxes, primarily by reducing the rate of funding increases for state services, including funding for transportation, social services, and welfare.

“New fees aren’t taxes”

If not for the fact that the tourism industry in the state took a big hit in 2005 due to a government shutdown and closure of highway rest areas, state parks and so on, we might have been ok with the winking at that pledge and calling some things new “fees” instead of taxes (heck, it was only $300 million or so,)double digit tuition increases at MN colleges as Governor slashes education spending and major increases in tuition at the state colleges and universities, or cuts in areas such as school spending — until we realized there was no longer a band playing at the high school events.  And in places where they value music, such as Fergus Falls, the communities and booster clubs can find local funding to keep band directors such as Scott Kummrow employed, right?

We needed the revenue, clearly, and the Governor didn’t raise taxes – although local jurisdictions had to fill the gaps as the money from the state dried up, but that’s another story. By the way, adding toll lanes to busy commuter routes isn’t a new tax, either. I have some question about how to label the bond bill the governor signed last year, but he vetoed some line items so maybe we can say he somewhat limited tax increases in the future?

But lets not quibble about fees and bonding, let’s talk about the Minnesota economy and budget – that’s the point.  Sure, we might have put thousands of Minnesotans to work if the bond bill had included funding for light rail connections between Minneapolis and St. Paul, and that probably would have stimulated business and tourism in those areas, but it would have made the bonding bill even larger and somebody would have had to pay and the delay only adds maybe $40 million to the cost – later, when he’s no longer the Governor. And now our budget deficit in probably only $7-$8 billion.

No New Taxes

In Minnesota trying to generalize that taxes were problematic by definition glossed over that the government runs on money: funding for nursing homes, teachers, and education was slashed, for example, and the costs passed on to local communities to “balance the budget.” The state budget deficit is now conservatively projected at double what it was when Pawlenty took office, while sales tax revenues fall and companies slash payrolls driving people onto unemployment rolls (placing their health care coverage at risk and further reducing consumer spending.) At least LA Governor JindalPawlenty isn’t posturing for the pundits as Louisiana Governor Piyush “Bobby” Jindal and a few others are by suggesting we won’t take “stimulus” money from the federal government –  He’s saying Minnesota government needs cash.

We borrow to buy homes, cars, and even smaller items that fit on our credit cards. We continually pay interest to some of the same companies that needed bailing out on Wall Street, while one group of people benefits: the rich. They don’t worry about the price of cheese, cars, or college.

History doesn’t support trickle-down theory.

our economy has only grown when taxes are high - corporations always find ways to hide their revenue from the tax man.For the common good it’s time we admit that when you cut taxes for the rich they mostly they stash more money into their nest egg(s) so they can retire early, live comfortably, eat cake, and travel the world. Meanwhile the rest of us watch our food budget, some see the investment in their homes plummet, and if we have put money aside we watch what remains of it shrinking in our privatized retirement accounts.

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February 8, 2009

600,000 additional jobs lost in January.

Posted in foreclosure crisis, mortgage reform, taxes, U.S. Economy tagged , at 12:46 am by realitytax

U.S. Capitol buildingThe U.S. economy continues to reverberate from the policies (or perhaps lack of policies) that the Bush-Cheney administration championed since taking office 8 years ago, and by most accounts we’ve now lost over 3.5 million jobs during the recession that they bestowed upon the tax-payers and future tax-payers.  The layoffs are building momentum, the unemployment rate is soaring, yet certain members of the U.S. Senate and House of Representatives continue to support the trickle-down theories that brought us to this economic precipice. But it’s not their fault.

I don’t mean the state of the economy – that’s the fault of everybody who ever championed, or simply ignoredderegulation of the banking and financial industries.  No, it’s not their fault that they’re engaged in partisan theatrics at a time when the country has demonstrated a broad mandate for new approaches, because Nancy Pelosi tricked them.  The Speaker of the House got the minority to close ranks, to vote as a bloc to block the first version of the new Stimulus bill even though they had been altogether supportive of Bush’s unfettered spending as the previous administration was winding down, and now the Republican Senators are largely following suit.

Some strategists might suggest that at such a juncture the wise thing would be to give the newly elected President what he asks for, hoping that by the time the mid-term election rolls around they’d have something to point their fingers at if it fails while saying, “we did what he asked.”  But these savvy politicos couldn’t pass up the opportunity to close ranks when Pelosi ran a bill through quickly for a vote, and now they’re posturing desperately while the tax payers and voters watch more closely than the D.C. insiders are accustomed to – they’re being downright obstructionist, and that leaves the Democrats in a stronger position.

All the voters are seeing offered as alternatives by the Republicans is “cut taxes.”  Cutting taxes sounds pretty good to the people at the top end of the earning scales, but when you’re worried about losing your job and keeping food on the table your concern is not for the Capital Gains tax which is already considerably lower than the Income Tax, your concern is over staunching the flow of jobs before unemployment spirals to the levels of the Great Depression.  President Obama’s right to insist on timely action, the same sort of need the prior administration finally woke up to in the waning lame-duck days of their power.

 

Theatrics are alive and well in the Senate.

Theatrics are alive and well in the Senate.

What are the Republicans opposed to?  Not so much, it turns out: something under 1% of the spending, yet rather than come with proposals for the voters to contemplate their doing what worked in the past, made-for-Fox drama and histrionics, name calling.  While the President is visibly reaching out to find common ground, some of the most influential Republicans in the capitol are hoping for sound-bites of their outrage and opposition “you have to start from scratch” – they failed to realize that Nancy Pelosi invited them back into their old, discredited “we-they” postures for the national audience, and failed to understand the urgency and pain of their constituents as the layoffs and foreclosures continue.

I might counsel the Speaker to be less successful, but I know there’s no taking the politics out of the process.  I just hope the damage she’s done to the opposition doesn’t delay the repair the President’s crafting for the people.

The reality is the situation is urgent; we can’t allow the economy of the nation to falter and stall, we can’t afford it.  The decisions have to be made and plans launched by people who can’t remotely follow the calculus that economists such as Paul Krugman or Mark Anson employ.  Americans want to get back to work – and we want our elected leaders to do their work swiftly so we can stop laying off teachers and assembly line workers and losing their productive participation in our economy.

Maybe if we enforced layoffs in Congress in proportion to the rest of the country, or the budget, they’d get off their rhetoric and get the bill passed.