North Dakota still kickin’ it with their new found oil wealth; Texas still a big draw…and the Mid-Atlantic states doing well.  Sitting right there in the middle is our good ol’ Tennessee!  Good governance, good tax policy, a great quality of life…these things add up.

Click HERE for the full interactive report.

Here are a couple of teasers:

I confess that I still miss the iconic Twin Towers.  I remember standing on the roof of WTC Two in 1984 and feeling the building sway.  This looks impressive though and will hopefully be a psychological success as well as a commercial success for New York City.

Let us never forget:

The perennially hapless Vanderbilt under the direction of new coach James Franklin is going to a bowl!  They thumped my other alma mater, Wake Forest, pretty badly.  I couldn’t get too upset though, Wake was already bowl eligible.  Then, in a karma like moment, Kentucky rose up and beat Vanderbilt’s arch (and recently unsportsmanlike) rival Tennessee.  Justice for the previous week’s bad call and incivility were redeemed.  Cap it all off with a Titans victory and all is well.

Back to the sitting – the second good thing to do while sitting is read.  Got caught up on a couple of books that had been in the “almost finished” pile for awhile:

Chet Raymo’s “Honey from Stone: A Naturalist’s Search for God” is a wonderful exploration of Ireland’s Dingle Peninsula.  I got hooked on Raymo’s columns through my dabbling in backyard astronomy.  One of my favorite collections of his is still “The Soul of the Night: An Astronomical Pilgrimage,” but “Honey” does not disappoint.

Beehive huts on Skellig Michael

Raymo’s description of the breathtaking Skellig Rocks off the coast of Ireland brought back fond memories of trudging up those sheer walls to the beehive huts of the Irish monks who arguably saved Western Civilization.

Say, speaking of Western Civilization and declinism – the notion that the United States is doomed and the best we can do is “manage” the decline – here’s a great short piece from Victor Davis Hanson that might make you think that one over again: “What America Does Best?”  And if you were in the grasp of declinism , it’s Siamese twin (no pun intended) is that China will bury us…um, think again: “The Fraying of China’s Gilded Age.” But back to my books…

One of the big concerns I have is a nation that chooses its leaders blissfully unaware of how the economy works.  I majored in the “dismal science,” thus have an affinity for graphs and odd equations.  But I have been looking for an easily readable book that explains how the economy works…I found two:

Naked Economics: Undressing the Dismal Science by Charles Wheelan covers everything from the basic structure of the financial markets to the Fed and trade globalization.  Wheelan leans a little left, so to balance that, pull Henry Hazlitt’s “Economics in One Lesson, The Shortest and Surest Way to Understand Basic Economics” off the shelf.  You won’t be disappointed in either one…read both and you will have a well rounded understanding of what the heck is happening to us!

One of the other activities over the tryptophan induced lull that I engaged in, was cleaning up my list of “websites to visit.”  A couple of jewels emerged from there:

1. Business Model Generation: Got a great idea that you want to bring to market?  Take a spin through this site to help you craft a business plan that will make you the next Bill Gates.

2. Zamzar: Ever get an attachment that won’t open and then end up on the phone with the sender asking them to save it in some more common format?  Go to this site and they have a free online converter.  I had an old Publisher file I couldn’t open on my Mac – Zamzar converted it to a PDF and sent me an e-mail with the download link…very nice!

3. EconTracker: now that you know all about Economics from reading the books I recommended, click on the WSJ’s Econtracker and you will feel like you are behind the wheel of a fine tuned sports car with all the instruments in front of you.

4. The Oatmeal:  I got turned onto this site a couple of months ago – it’s not for the kids – but it has wickedly appropriate humor.  Two of my favorites are “I Drew Some Tweets,” and “I Love it When Wikipedia Asks for Donations.”

That ought to keep you busy for awhile.  If you have any recommendations, comment below or send them to me and I’ll give ‘em a look.

1. I teach MBA’s, I have an MBA…this is sound advice for MBA’s.

2.  Some good news … AIA is reporting Architect’s billing rates are up (well at least back to 1996 levels!)

3.  OK, enough good news…famed hedge funder, Mark Mobius says the end of the world is near.

Remain calm, folks, remain calm!

4. Always thoughtful, Joel Kotkin, has a great piece on what the world will look like after the financial apocalypse…the full report is linked in there and it is worth a browse.

All shall be well.  Funny, I say that a lot these days – it’s from Eliot’s “Little Gidding.”  Did you know that recordings of him reading his poetry is available on line?  Just found this:

Have a good day!

I spent a lot of my time with the Vanderbilt team, where I serve as a faculty representative, but also had time to reconnect with several members of the Trammell Crow Residential fraternity and other professors and judges.  The weather was quite pleasant, the food and facilities elegant, but in private conversations a sense of ennui and foreboding inevitably crept in.  Now admittedly, practicing real estate these days feels a bit like being a rookie Sherpa on a climb up K2, but there was a clear sense among “my generation” as we watched and mingled with the bright and fresh faces of the soon to be graduated MBA’s, that they are inheriting a very tough spot.

America has lost it’s swagger.  Reasons for it abound, but solutions – solutions that are politically feasible – do not.  We all know the dismal numbers:

• Today, the national debt stands just above $15 Trillion a number that EQUALS the national GDP forecast of $15.2 Trillion.
• A key measure of personal net worth, home values, have continued to fall – from a peak in 2006 just north of $211,000 to somewhere around $166,000 today…and there is no sense that the drop will stop.
• Unemployment levels (officially) remain stuck around 9%.  In reality, when you add in those who have given up looking for jobs, the underemployed and the lack of business for self-employed and the number is closer to 17% .
• The entitlement programs are unsustainable - Medicare alone has an unfunded liability of $54 Trillion – about $200 billion less than the total net worth of every family in the United States.

We’ve sort of reached that point where you need to keep the sharp objects in a drawer for your own safety.  These somber statistics are compounded by the sense of outrage and frustration felt when our ruling class does nothing towards the obvious, but healthily enriches themselves and their buddies.  Two examples:

• We learned this morning that Robert Kennedy, Jr. received a bailout of $1.4 Billion from the Federal Government.  The shaky enterprise has created 1,400 jobs with the funding – $1 million per job – and is still struggling to make ends meet.
• This morning’s Tennessean point out the our Congressman, Jim Cooper, now has a net worth north of $20 million.  Explain to me how someone with an annual salary of $174,000 can amass that kind of wealth?  We all know.

The reality is we have been socializing risk in this country while the profit is privatized.  Don’t know where you stand on Newt Gingrich- he’s no doubt been the beneficiary of the system too – but he makes a great point in a speech I watched on YouTube the other day.  He asked the audience to complete the sentence: “If you can’t afford a house…”  We all know the answer, but we set up a system that does just that and it led to the housing crash in 2007 and  it’s still falling…and the very perpetrators of this crash are awarding themselves multi-million dollar bonuses!

Socialized the risk, privatized the profit.  We are doing the same thing with the “green energy” companies, GM, Chrysler, student loans…the list goes on.  If the guarantor on the loan is the Federal Government, any bank will lend to you.  This type of intervention has distorted the markets everywhere it has been practiced.  Did the median home price in 2006 deserve to be $220,000?  Probably not.  At $166,00 we are closer to a historic appreciation rate for the value of housing.  Should a four year public university cost an average of $8,244 per year…or a private school cost $28,500 on average?  Probably not, but the tuition and fees are met because loans are readily available.

John Mackey, the CEO of Whole Foods, has a terrific article in the Wall Street Journal this morning where he lays out some of the problems he sees.  He pins the tail on the problem: the central problem is the lack of economic freedom in this country.  Between the regulatory state that we have built – which has to keep on regulating to survive – and the growing entitlement culture, so glaringly illustrated by the Occupy Wall Street crowd,   we have lost our moxie.  John’s article offers up some sound solutions and I encourage you to click over and read them.  I don’t like to post articles that just document the problems – I like to offer a few solutions.  Herewith my wish list:

A. Fundamentally change the tax system at both the corporate and personal levels. The metrics would include the following:

1. The most competitive corporate rates in the world to encourage capital migration and job creation here.
2. A personal income tax system that has EVERYONE in the game.  Being a compassionate society, we must have allowances for the less fortunate, but we all know they don’t make up 47% of the population!
3. The elimination of all tax deductions with the exception of charity.  Let’s stop trying to steer economic behavior, but we must also encourage those enterprises that do take care of those less able to take care of themselves.

B. A review of ALL Federal Programs, Agencies, grants et alia to see if they meet the following criteria:

1. Is this a program sanctioned by the Constitution of the United States?  If not, eliminate the program or agency outright unless it meets tests 2 and 3.
2. If not, do a majority of Americans support the existence of the program?
3. If they do, can we afford it in light of existing obligations?

The savings and economic freedom that would be generated by this is immeasurable.  Yes, in the near term it would put a lot of folks out of work.  Washington DC would no longer be the nexus of our economy…but if the work that was being done was in fact productive, putting it into the open market would generate a superior product at a lower overall cost and greater benefit.  Again, we would truly be privatizing profits, but no longer socializing the risk.

C. A thorough review of our foreign policy and defense apparati. George Washington warned us over 200 years ago to steer clear of “entangling alliances,” it is time we put everything on the table.

1. Foreign Aid makes up a small piece of the budget, but is there any need to continue to fund countries like China?  How about we at least eliminate those that can make it on their own now and those that are overtly hostile to us?
2. There must be a way to make our military smaller but more lethal.  It must be able to react to any aggression, keep the sea lanes open anywhere in the world and protect American interests.  But do we really need to continue to keep thousands of troops in Europe?

I know these are three extremely complicated tasks and each step will open a thousand doors.  But this is a journey we need to take as a nation – honestly, our alternative could well be economic collapse.  Besides – in the infamous words of Bill Murray in “Stripes,” “We’re Americans!”

Stripes Scene

As of today, this is close to a 20% loss in value.  The implications for property tax revenues are serious and will require a sober evaluation of all metropolitan systems and functions.  The loss in value also represents a large crimp in the consumer’s ability to spend.  That coupled with tighter credit regulations and, what I perceive as an attitudinal shift towards spending and debt, will also hamper those municipalities that rely on sales tax revenue.  Already, there are discussions of shutting down non-profitable mass transit lines and in cities like San Diego that are in profligate states, the situation will only get worse.  There, they suffered an 80% cut in state funds for downtown redevelopment as scarce resources are directed towards more dire needs…in this case, education.

My only experience of service in the public sector was my time in the United States Navy, so I am not intimately familiar with the workings of government.  But if I were in municipal or state government, the simple math of these statistics would have me “bracing for heavy rolls,” as we said in the destroyer navy.  Since we have fantasy football, how about if we have fantasy government?  Here’s my five step fantasy action plan:

1. Educate – educate the public of the problem and explain that we are temporarily entering a period of scarcity.  I do believe the American public is prepared for straight talk – the model of Chris Christie in New Jersey or Scott Walker in Wisconsin bode well for directness and honesty.

2. Prioritize – with the public alerted, I would engage them in an open book prioritization of all functions of government.  Should we shut down transit lines that are only lightly used? Do we need to build the downtown art park right now?

3. Privatize – what functions of the government can be sold off and be turned into private businesses?  Trash collection? Transit? Utilities? Roads? Public housing?  I would examine all the real estate assets held by the city and explore sale/lease-back opportunities along with the shedding of unneeded land.

4. Zero Based Budgeting - most governments use baseline budgeting wherein last year’s numbers are used as the starting point and some random inflation number is plugged.  This is where the famous “cuts” language comes from in Washington – a “cut” is a reduction in the rate of increase, not an actual reduction in revenue for a given department.  Zero based budgeting forces everyone to look at their organizations and determine their actual needs.

5. Shift the culture – we need to fundamentally change the culture of government. As a young Ensign in the Navy, the Division Officer for the Auxiliaries and Electrical Division, I managed the finances of our division like it was my own check book.  With a week to go in the fiscal year, I reported to my boss, the Chief  Engineer that I would finish the year with a $4,000 surplus.  He was horrified and ordered me to spend the money as quickly as possible.  I ended up at the nearby Sears on a shopping spree for Craftsman tools.  This is the mentality that most of our bureaucracies operate under and it needs to be reformed immediately.  How about we motivate our leaders with an incentive system that rewards meeting budgets or even gives a bonus for coming in under budget?

One final economic note – the way out of this is with growth.  If we expand the tax-paying base by attracting (or home-growing) solid businesses, we will grow the tax base…simple math.  Municipalities and states should be doing every thing they can to earn the label of “most friendly for business.”

Folks, the earthquake that caused the tsunami has already happened, and the tremors are still being felt.  The tsunami is on its way, it’s time to prepare for it.