Clean Coal

This is a famous oxymoron. Even if coal can be made to burn cleaner than it does, it still destroys the world when it is mined. China has just pumped 7.5 billion dollars into a small Australian town to bring the coal from under that town to a seaport so that it can be burned in Chinese power plants. The population of this town will triple with the new jobs produced.

The town itself will probably become unlivable in a few decades. Look at what has happened to a large part of the state of West Virginia. Once pristine mountain streams are now dead and killing the rivers into which they flow. Ash retaining ponds at power plants are collapsing and destroying the nearby environments.

The insatiable demand for energy today is driving us to destroy the world that our children will inherit. This feels like the beginning of a bad “B” movie. Picture yourself walking in a barren landscape, trying to avoid deadly violent mutations looking for something to eat that won’t poison you. Science fiction….I doubt it.



David Segrest, CCIM, CIPS, CEA, TRC, is a REALTOR in Charlotte NC. His web page is http://www.segrestrealty.com. His email address is david@segrestrealty.com.

Hollow Demographics

The Economist Magazine ran an article on the hollowing out of the USA job force. They indicated that the new jobs becoming available are at the top end or the bottom end of the pay scale. People at the upper end will save their money and invest it. It is possible that their investments will be made abroad. People at the lower end have to constantly trim their budgets and decrease their style of living.

This will cause regular drops in consumer spending. More and more people will join the underground economy to stay afloat. This will impair the government’s ability to provide basic services. Cuts in education are exacerbating the situation. Military spending puts some money into the economy, but it does not improve infrastructure or educational levels. In many cases the spending is for weapons systems that will never be used. In other instances the materials just get blown up.

A serious investment in education and infrastructure could be made with the money that is currently going for defense. This is not a new idea. The interstate highway system was build as the Nation Defense Transportation system. More spending on education would reduce the spending on prisons. The Republicans do not want an educated population, because they would not be quite as susceptible to Fox news and Rush Limbaugh.

David Segrest, CCIM, CIPS, CEA, TRC, is a REALTOR in Charlotte NC. His web page is http://www.segrestrealty.com. His email address is david@segrestrealty.com.

Jobs and Prosperity

It seems to be agreed that the economy will not truly heal until the jobs come back. Will this solve long-term problems? That depends on what kind of jobs come back. Building new weapons systems keeps people busy and gives them money to consume imported goods and local services. Does it really help things in the long run? It uses vast amounts of energy and natural resources and causes unbelievable pollution. What could be accomplished investing the same amount of money in infrastructure and education?

For one thing, the only way we can lower our Gini coefficient is to improve our educational system. There are plenty of people who are well qualified to get a “good job in a cotton mill”. The problem is there are no cotton mills. My dad’s first question when he was examining a new business opportunity was. “How will this make people’s lives better?” He knew that a business model based on providing benefits was saleable. What are the problems our world and our country are facing in the near and distant future? What are the skills and technologies needed to deal with these issues?

Directing our money and our energy into solving these problems will provide jobs and get the economy moving in a sustainable direction. New weapons systems will not.

David Segrest, CCIM, CIPS, CEA, TRC, is a REALTOR in Charlotte NC. His web page is http://www.segrestrealty.com. His email address is david@segrestrealty.com.

The Gini Coefficient and Income Disparity

The Gini coefficient measures the gap between the rich and the poor. The higher the number the greater the difference. The coefficient varies between 0 and 1, but is usually multiplied by 100. Canada and most of the western European countries have a ratio in the mid twenties. The USA was under 40 through the mid 1980’s at which time it began to rise. Now it is well over 40 and the USA has a similar position to many of the banana republics.

Anyone who has spent much time in Latin America knows that in this type of system, the poor people live in hell and the rich people live in jail. The middle class is almost non-existent. This has changed over the last several years. Latin America’s coefficients have been going steadily down, while the USA has gone steadily up.

Part of this can be explained by the erosion of our industrial base. Most of the problem comes from the governments theories of “trickle down” economics. The idea being that if the rich people get more money, the benefits will “trickle down”. Unfortunately the rich people use the money to invest abroad or by imported good. All the poor people get is a warm damp feeling on the back of their neck.

David Segrest, CCIM, CIPS, CEA, TRC, is a REALTOR in Charlotte NC. His web page is http://www.segrestrealty.com. His email address is david@segrestrealty.com.

Keeping the World Working

The motto of the world ever since Adam Smith has been “grow or die”. Prosperity and standards of living and education levels have increased in most countries dramatically. Growth has come to mean producing huge quantities of goods that no one needs and convincing them to buy them anyway. Perhaps this is like the disease organism that grows and grows until it kills its host and then dies itself.

Many of the Developed countries have taken worker security and benefits to the point where their economies have become uncompetitive. Now there is clamor for increasing working hours and push back retirement age as an incentive for companies to expand or hire more workers. The short term benefits of this are pretty obvious. Long term, the goal is to reduce the expected deficits in entitlement programs.

Most of the countries considering these things are experiencing high un-employment. Is squeezing more out of workers the answer to this problem? This will eliminate the need for more workers. More jobs are needed. The solution to this is more consumers not more workers. A retired person or a person on vacation is a professional consumer. Perhaps, the whole structure of production, consumption and employment needs to be re-examined in the light of and organism that may be growing itself to death.

David Segrest, CCIM, CIPS, CEA, TRC, is a REALTOR in Charlotte NC. His web page is http://www.segrestrealty.com. His email address is david@segrestrealty.com.

Linkages and Countries

In commercial real estate we talk about linkages rather than location. This used to mean proximity to airports, other transportation hubs, population centers and highways. Now the importance of linkages goes beyond the location and extends to the global community. An auto plant is more connected to the parts suppliers and raw materials producers and the dealerships that sell the cars, than to the community of its location.

Globalization has lead to greater productivity and lowered employment. While this seems to be a sudden phenomenon, it is not. The current economic crisis has merely accelerated the process. The jobs that are lost will not come back. The labor type of jobs that have been outsourced will continue moving for cheaper production. The new plants used to just move and take advantage of cheaper labor. Now they move and take advantage of new technologies as well.

This means that the 4000 jobs that moved to Mexico, were probably replaced with 3500 jobs when they went to China and 3000 jobs when they go to Viet Nam. Each time the factory moves, productivity and production increase. Employment decreases. A new strategy will be needed to keep the world working.

David Segrest, CCIM, CIPS, CEA, TRC, is a REALTOR in Charlotte NC. His web page is http://www.segrestrealty.com. His email address is david@segrestrealty.com.

Bubbles May not be all Bad

They certainly made Lawrence Welk famous. The economies of Central and Eastern Europe were the last to go into the tank. They had been buoyed some by membership in the European Union. Latvia’s real estate had been propped up by unrealistic lending criteria.

When the bubble did pop, it splattered hard. Most of these economies, except for a few little pockets, dropped like a rock. The thing to remember about emerging economies is that they move really fast. This has been the lesson learned in South America. The USA or western Europe may take years to recover. When these small economies take off, it will be rocket-ship style.

I’m not saying that it is time to buy. It is time to look for market landmarks. There will be some awesome opportunities and some terrific profits will be made. If it is not time to buy it is at least time for close observation of these markets. The examination must be of the general market; but pay close attention to micro markets. There will be pockets of greater opportunity. A rising tide supposedly raises all the boats. Some of these boats may have already sunk.

David Segrest is a REALTOR® in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com He is also a contributor on Argentina to: http://realestatebloginternational.com/