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October 27, 2011

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Phoenix is screwed. THERE ARE NO JOBS. That is the central, inescapable fact. With no jobs, Phoenix is ruined.

Most of the rest of the country is the same way.

There will be lies and hype and claims of recovery, but the economic trend of the US is going to be an endless downward spiral. The US is finished. The US is going to become a totalitarian slave-labor dictatorship, much like China. The Republicans and the Corporate Owners have decided.

Mitt Romney will be Master of the Plantation soon, and us slaves are going to be really hungry.

Reading the Republic is a reminder that boosterism is the rule both in fair and foul weather. In a metroplex of 4 million, you will find some good news. There will be new restaurants downtown, new Chase Bank branches will pop up here and there, a development may be promised on an outer loop along with some real-estate transactions in the center city. Even the old McCain/Hensley mansion just sold in a short sale. I suspect the haircut the bank took was in the millions.

The boom-and-bust cycle was always a feature of life here. The difference for us today is that the current aftermath does not point to a recovery. Previous downturns were quick and the damage easily treated. Today's epic failure, unfortunately, does not get redressed with the same stuff that caused the crash in the first place. Phoenix may be marginally more sustainable than the dystopian Lagos, but Lagos has oil. Phoenix has empty cheap houses, vast desert tracts, and a branch-office economy.

The bust here is a bookend to the boom. There will be a few interruptions but the bumpy descent is the necessary complement to a breathtaking ascent. Nature does not countenance a huge city in such a harsh and unforgiving environment. If it seemed like it did 50 years ago, thank full reservoirs, a rich country, cheap oil, and a homogeneous nation bringing its social capital to this magical place. It's all changed now. The social friction and economic malaise are not bumps in the road. They're the end of the road.

From what I hear, the job market for health care professionals in Seattle SUCKS. True or false?

If you are over 40, neither Microsoft nor Google will hire you, no matter how good you are.

Boeing lays off massive numbers of people all the time. No future there.

The IT grapevine says that Amazon only hires Indian H-1bs for programming jobs and will not hire Americans, period.

Right. In a country of 300 million people, with a rigged economy, there will be so-called bright spots. Washington DC does well with tons of government jobs and government spending that props up the real estate market. New York is a financial and business hub. That doesn't mean that the US has a healthy economy or any hope. Over 45 million Americans on are Food Stamps. When Mitt Romney is done in 2016, that number will be at least 60 million (write it down), or that many people will be malnourished or dead because the Republicans abolished Food Stamps.

Economic news in 2011 is like watching the media interview the winner of a lottery. The fact that one person got a huge lottery payoff does not mean that everyone who plays will succeed, and it does not mean that playing the lottery is a substitute for a job. Lotteries are by their nature a losing proposition for the aggregate of lottery players. Likewise, the US economy is a huge loser for Americans as a whole. Most are going to lose big. Celebrating one lottery winner doesn't change that.

The west valley is not the only area exploding with new development.

Here in the east valley, a project has begun which will encompass 2,500 acres, 4,000,000 square feet in commercial space and employ 15,000 to 20,000 workers.

The immediate "deliverable" project will be a 100 square foot Tuff Shed, employing me and my brother in law.

The balance of the project will remain on the drawing board until we find out the results of Saturday's Powerball drawing.

It would be good if Americans would stick together and say "Don't tell us that the stock market went up."

"Don't feed us nonsense that the GDP went up." (The GDP number is so manipulated, massaged and contrived that it has no meaning).

"Don't shout about real estate projects."

SHOW US THE JOBS. Nothing else matters. We don't give a flip about anything else. Show us the creation of solid, good-paying jobs, or we will turn off your stupid news, and vote against everyone.

There is only one benchmark. Where are the jobs?

What, no jobs? You lost my vote.

The Republicans are the Party that Destroyed America. Never forget.

Just a brief note: two new replies (to koreyel and phxSUNSfan) in the "Here and Now and gone" thread preceding this.)

The Republic also ran a recent editorial, pimping for future development in the far West Valley. It cited a "real estate expert" who was actually a shill for the vested interests . . so what's new?! The knock against Steve Jobs was his propensity for magical thinking, but he actually built an enduring icon via those dreams. What we've got is Grady Gammage & Co. for whom hope (and delusion) spring eternal.

Meanwhile, Shaun McKinnon is about to unveil his research on the causes and effects of our abysmal air quality. To the Republic's credit, they continue to give him great exposure on environmental issues . . and to HIS credit, he knows enough to tiptoe when/where it may be appropriate. It is great that they support him because he provides such a valuable public service as he 'splains the facts surrounding our air and water woes.

Mick, that last comment of yours above ("show us the jobs") is uncharacteristically good. Right on target, quite realistic, and a compelling expression of popular values and concerns. Why don't you send a copy as a letter to the editor of the Arizona Republic? Don't change or add a word.

Interestingly enough, the Business section of the Arizona Republic carried a story two days later on "The Infill Boom".

The story concentrates on Seventh Avenue and McDowell, 16th Street and Bethany Home Road, and Metrocenter as prime examples of this "trend". Some excerpts:

"Unlike previous retail-building spurts, focused in new-growth areas, the current flurry is occurring at infill locations in established areas."

"Retailers who got burned on the fringes when the housing bubble burst are insisting on established customer traffic and sales volume when considering a new location.

"It's a redevelopment trend that has occurred in other metropolitan areas but has been slow to take hold in metro Phoenix. Now, as select intersections in older neighborhoods become development hot spots, many far-flung suburban retail properties continue to see high vacancy rates and little leasing activity."

http://www.azcentral.com/business/articles/2011/10/22/20111022rebound-retail1023.html

Of course, certain fringe areas continue to see high growth. I don't know enough about the project areas cited by Mr. Talton to address some of his questions (which are certainly acute, as are his compelling observations).

Emil,
one funny aside: the article about infill retail projects mentions "freeway access" as the first appealing quality of the four examples - medium-large boxes with little mixed use. Also, typical developer speak: "Metrocenter is a fantastic area with a lot of potential." Baby steps.

The fringe area with high growth are the wealthy pockets where there is enough money to offset the ponzi scheme nature of that kind of development. Until the wealthy caravan moves on to the next area of separate peace.
http://www.theatlanticcities.com/jobs-and-economy/2011/10/suburban-sprawl-ponzi-scheme/242/

Phoenix was the land of milk and honey for the real estate industry. The cows have been milked dry, the grass completely eaten, and the bees are dying. The leadership, as it is, does not have the motivation or foresight to change.

Phoenix, RIP

Read Good News by Abbey.

Stories that rarely make the Republic are record breaking ridership numbers for light rail in September. Phoenix's light rail use peaked at over 60,000 boarding in one day. Nearly 2.5 times the number of boardings on a "busy" Seattle workday. Average weekday ridership surpassed 47,818.

http://www.valleymetro.org/pressreleases/detail/metro_ridership_peaks_in_september/

The One Lexington condo building is completely sold out (including the six penthouses). West 6th in Tempe, a huge two tower apartment development, continues to fill up and has a waiting list for one bedrooms and studios. 44 Monroe is now over 90% full. Infill projects abound in the Central City as Awinter noted.

While Phoenix's old school developers continue to dream their sprawl, they are ignoring an area of Phoenix that no longer has inventory and could use some investment. It is urban and unrecognizable to them. Will they lose out as out-of-town developers continue cashing in on the urban inventory in Phoenix? The firm that handled One Lexington has roots in Seattle, Vancouver, and Minneapolis not Phoenix.

http://downtownphoenixjournal.com/2011/10/27/one-lexington-all-sold/

I for one hope Jon is right and all those sprawling developments remain in the graveyard.

"...the article about infill retail projects mentions "freeway access" as the first appealing quality of the four examples." - Awinter

Of course they would; this type of language in Phoenix developer campaign material is ingrained and must be unlearned. They fail to recognize that these developments will attract people from the neighborhoods surrounding them, much like the redeveloped SW corner.

Brief note: a new (and hopefully definitive) reply to phxSUNSfan regarding Arizona employment statistics has been posted to the previous thread ("Here and Now and gone").

"A Winter",

It doesn't sound like "developer speak" if you consider the quotation in context:

"Consumers also are seeing lots of activity in the area around Metrocenter. The area has been struggling for a decade, with a steady exodus of retailers and high vacancies. But it is beginning to re-emerge as a desirable infill location.

"The area lost appeal when Metrocenter, the principal draw, fell into decline. But it has good freeway access, adjoins high-density residential areas and is near major employment centers along the Interstate 17 corridor."

You'll note that good freeway access is merely one criterion: high-density residential areas (read: lots of consumers) and near major employment centers (read: lots of consumers with disposable income) are the other criteria.

The idea that Metrocenter would be an "infill" project shows the magnitude of the city of Phoenix's mismatch between economic assets/good jobs and available space. Yesterday's Mall of the Future is today's slum. Similar tragedies are on display all over the city.

One result is the inability to focus policy on building a dense, vibrant downtown and Central Corridor worthy of a city this size. Thus, because a critical mass can never be achieved anywhere, especially in the core, the problems continue to metastasize.

The linear slums will never be fixed as long as the (real) core remains too empty, blighted and lacking economic power. Neither GPEC nor the leasing boyz have the core's interests on their agendas.

I tend to agree on Metrocenter; however, when light rail is extended to the area could it not become a part of a vibrant Central City? Metrocenter is after all at the epicenter of some of Phoenix's densest neighborhoods.

Jon, what do you make of the news that downtown business groups are interested in creating a "holding company" with the Downtown Phoenix Partnership? An article in the Republic states that it would mirror the effort in Denver.

http://www.azcentral.com/business/articles/2011/10/26/20111026venture-floated-by-downtown-phoenix-groups.html

pSf: My only hesitation about the "holding company" is that neither the Phoenix Community Alliance nor Downtown Partnership have fulfilled their role as a true economic-development agency. Will they finally do it now? Or will it just be more staff-dancing and studies? What's needed is to have an agency that leads building out the biosciences campus, retaining existing employers, luring new ones, and using the whole toolbox of economic development focused ONLY on downtown and the Central Corridor.

LRT to Metrocenter is fine. But the pedestrian environment is lacking as are the bones for New Urbanism. This was built as suburbia to see going by at 50 in a car. Also, the economic climate is so weak, a project at Metrocenter (I can see the new highrise plan already, maybe by Steve Ellman) will take away from the core. What's needed is real, demonstrable, walkable success in a dense setting downtown and on North Central. Hell, even Matt's Big Breakfast is too separated from other things. Just one example to build from is needed. The closest we have is the nearly filled-in blocks from McDowell to Thomas, but even there it lacks the whimsical shop or practical retailer. Then there's the horrid empty lot on the NW corner of McDowell and Central and the dying strip at Thomas.

Beyond that, central Phoenix needs to attract more developers like the Vancouver group that took over One Lexington and made it a success. They "get" urban and know how to finance and market it. But again, real estate shouldn't be in the lead. There must be a real economy.

The distortions are so immense that downtown and the core are apparently highly leased, but nobody is building. Thus, tenants are leaking to 24th and Camelback.

This doesn't really change the bombed-out landscape at Central & McDowell but it at least fits in with the "arts district" conceit.

http://phoenix.gov/news/070511azopera.html

The problem with OneLex-type projects is that they only work in a bottom-feeding market where foreclosed properties sell for a fraction of their original cost. Obviously, the same is true for even higher-end projects like Chateaux-on-Central, where the ongoing price reductions are starting from an unrealistic high point so they still have a long way to go in order to find their real market value.

Willo, Story, Palmcroft, and Alvarado have maintained their values better than most Phoenix real estate. This makes Jon's point that walkability is still a crucial value even in this, the most autocentric of all cities.

morecleanair:

"The knock against Steve Jobs was his propensity for magical thinking, but he actually built an enduring icon via those dreams."

There are of course other knocks against Jobs. But given the efficacy of the placebo effect, and the proven fact that a sugar pill works even when you tell a person it is just a sugar pill(!), means that Steve Jobs at worse committed a sin of omission against medical science. Yes he may have been a pure fool to think cancer can be "placeboed" in the same way as an unruly bowel. But I suspect deeper to the bone: He may have had a hidden death wish.

Your other point about "building an enduring icon" is an elephant in the crosshairs. In "The Class Warfare Has Begun," Frank Rich writes as to why Steve Jobs's death has pealed so many bells. This paragraph is particularly telling:

"That bipartisan grief was arguably as much for the passing of a capitalist culture as for the man himself. Finance long ago supplanted visionary entrepreneurial careers like Jobs’s as the most desired calling among America’s top-tier university students, just as hedge-fund tycoons like John Paulson and Steve Cohen passed Jobs on the Forbes 400 list. Americans sense that something incalculable has been lost in this transformation that cannot be measured in dollars and cents."

The developers that Mr. Talton takes to task lie far closer to the worthless tycoon Steve Cohen than the visionary Steve Jobs.

Yes the Phoenix developers are actually building something. But it is premised on short term profits with no further upgrades in the pipeline of time. The sprawl they hope to put down is like having to use a 80s Dell computer running Bill Gates software forever. Or as Soleri put it, they are building "a branch office economy". To which I can only add: "a branch office economy seasoned with a few gas stations".

Steve Jobs famously said of Microsoft: "They have no culture". The same thing can be said of John F. Long Properties and the Alter Group. They've got money but no values. The greater question is: Who put philistines in charge of designing our enduring architecture? The only answer is "Boss Capitalism".

Infrequently "The Boss" gives us a Steve Jobs as designer (where even the color of the google app icon does not escape refinement). But that's incredibly rare. Far more often "The Boss" gives us cheap houses in Phoenix designed without regard to the sun's daily path and checked-off as "fine" by someone with too much money and too little brains.


As mammals living in a desert, shouldn't we be living underground?

Other than the fevered fan base for Apple products, I don't get Jobs on Microsoft not having a "culture". Sounds like doublespeak to me.

Forgot to mention Taibbi's takedown of Perry in Rolling Stone is excellent. The New York Magazine article on Romney is interesting and not what I was expecting. Romney might be trapped/constrained by the shat of the party he hopes to lead (haven't finished it yet).

Cal - can I borrow your copy of Good News?

Phat Phools Phrom Phabulous Phoenix Phlip Phor Phantasy Phootball Phor Phorgetting Phailed Phortunes.

Phunny !

Electric dog u coming to coffee? I'll bring a copy.

http://www.nytimes.com/2011/10/28/us/americans-migration-patterns-shifting.html?hp

You can make an argument that Phoenix's woes are not entirely of its own making. That said, the cities that are weathering the Great Recession best are also those that have the most diversified economies and, equally important, the least political craziness.

Brief note: would you believe that Arizona lost 404,000 nonfarm payroll jobs at the height of the layoffs, from Nov 07 just before the recession, to the low point in Jul 10, according to the state's own jobs stats?

See my update in the previous thread, "Here and Now and gone" (continue to the second comments page).

Eclectic: it could be argued that Microsoft's "culture" was not one of innovation but rather one of selling sequential upgrades to their installed base. Pretty tame. They basically frittered away their salient advantages with a long-term holding action.

How does that apply to Phoenix developers? Probably, that they haven't figured out that they're in a new ballgame where less is more and "carbon footprint" is not just the parlance of the tree-huggers.

The Talton fan club adjorned at 12:44PM

"A Winter",

I finally got around to looking at that link comparing urban development (of the sprawl variety) to a Ponzi scheme.

The Atlantic article itself was okay but what really rang my bell was the imbedded link to another article (itself with links to a still more detailed article series):

http://switchboard.nrdc.org/blogs/kbenfield/how_sprawl_is_like_bernie_mado.html

Thanks!

The basic building block of a Ponzi scheme is GREED.

At the present time, savings accounts and CD's can be found which pay .01 %.
Wrap your mind around that percentage for a moment. .01%.

There was a time when 3, 4 and 5 percent were considered insulting. Who among us wouldn't give their left walnut for 5% right now?

Ponzi works because, when people get 3,4 or 5 percent legitimately, someone comes along and offers them 8 or 10 percent, even though it is not a real possibility.

So who do we blame, the Ponzi-ee or the Ponzi-or??

I know who I blame. I'll leave the rest of you to your own opinions.

azrebel, the .01% CD nominal rate after inflation is a yearly loss unless one believes the Fed that inflation is minimal.

The Ponzi-ee is motivated by greed but many times also lacks financial sophistication. The true Ponzi-or possesses a criminal psychological profile in many ways similar to a child molester although the ultimate material goal is of course different.

Don't worry, Resolution is on the way to save the day! People will be trying to commute from the valley to Superior to work dangerous, non-union jobs for an Australian mining giant that cares nothing about this country. Conveniently, Congress will also gut all of our EPA clean air standards by the time the project gets rolling. Anyone remember what the air looked like in the valley in the 1970's? Get ready for deja-vu.

Wheres the Monkey Wrench Gang when U need them.
Even Tonto is dead!

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