We interrupt this Holiday Posting Hiatus to bring you word that the federal government is now apparently bailing out GMAC which--if you can really believe the sheer audacity, stupidity and recklessness of this--will allow GMAC to lower its lending standards to provide auto loans to those just a smidge about subprime.

It's as if George Bush is attempting to morph into history's most inept president ever (and this coming from someone who, up until the last four months, remained positive about President Bush).

Folks, this is cause for great alarm. The federal government is now providing federal funds to re-enable private companies to engage in the same type of loan practices which caused this problem in the first place.

2008 is ending in the bleakest of ways. 2009 is beginning even worse.

UPDATE: More here from the Market Ticker blog on the monumental ridiculousness of this GMAC bailout. We predict that this might be the act that really gets some major attention in the New Year.

Daily Sprawl in 2009...

...as the year winds down, we'd like to thank all of our readers. The numbers keep growing and that's rewarding to know.

Daily Sprawl will head into 2009 with a somewhat more structured format. For starters, every day, we will post the one article that we think is the daily "must read" for those who follow sprawl and related topics.

Then, twice per week, we'll recommend green and natural products (that's been a big hit with our readers based on feedback).

Finally, we'll feature at least one sprawl related book or movie each week for your reading/viewing pleasure.

We hope that this format will touch the bases with all of our interested readers.

Thanks again for a great 2009...See you on January 2nd, 2009...Chad.

Hiding the Ball...

...the always interesting Financial Sense website has a good article discussing the current litigation between Bloomberg and the Fed related to the Fed's refusal to disclose certain financial information related to the bailouts.

What might the Fed be hiding behind Door #1?

We probably don't want to know because of the chaos that learning it might mean.

Toy Safety This Christmas Season...

The excellent Seventh Generation website has a great new article on tips for buying toys that are safe for our kids:

* First, avoid toys made in China, where lax regulations often mean that anything goes as far as toy safety is concerned. While not all toys from China are unsafe, the country's track record of producing hazardous goods demands a precautionary stance.
* Choose toys made in Western Europe, where countries have strong consumer protection policies. Toys made in America are a good second choice, but consumers should be cautious because lack of domestic regulation means certain hazards like phthalates (see below) may be present.
* Shop in small "boutique" toy stores and mail order catalogs. These merchants traditionally shy away from the mass-market offerings that are the most at-risk for problems and instead offer higher quality toys from more discerning manufacturers and imports from safer countries.
* Unless they're clearly labeled as "phthalate-free," avoid soft plastic toys, which often use these toxic chemicals to maintain pliability. Playthings that commonly contain phthalates include vinyl and other flexible plastic toys as well as polymer play clays. Toys made in Europe are generally safe as the E.U. has largely banned phthalates from children's products. New U.S. regulations will ban phthalates from toys starting in February 2009, but a recent regulatory ruling allows manufacturers to sell out their remaining stock of existing phthalate-contaminated items first.
* Watch out for lead, which in recent years has shown up in the paints and parts of all kinds of toys, including big name brands and vinyl items. Lead test kits are the only way to tell if lead is present in any toy you've bought. If it is, return that toy for a refund.

Grocery Store Contigency Plans

This article discusses how English grocers are game-planning for potential supply line problems. No doubt that U.S. stores are doing the same as the growing problems are apparently not bound by any border.

The Shallowness of Humans...

...can be especially disturbing in tough economic times like these:

"I try to have Alba come once a week," says Mrs. Sirof. She says she feels "horrible" about laying off Ms. Monterrosa. But there are some perks she isn't willing to give up. "Nothing deters me from my Botox treatments."

Read the entire WSJ article here.

Listen to these Experts...

...and you'll get a real sense of the potential problems and their scope.

Click here for the CNN article.

Well, Here's a Real Shocker...

...not really, but some are seeming to pitch it that way.

CNBC headline: "Many Borrowers Re-Default After Mortgage Is Modified"

The problem here is that many of the decision-makers continue to ignore the fact that the current crisis is one of excess credit rather than insufficient credit. That is to say, there is too much credit in the system when compared to the assets that back the credit and the ability to repay that credit.

Simply rejiggering these loans to make them somewhat less onerous doesn't address that underlying problem. At best, it delays it. To truly reach a solution, we have to understand the reality that many of these loans should not have been written in the first place.

Tweaking, er, I mean "modifying", them in increments will not ultimately stabilize them. Instead, they have to go away (aka default) in order to bring the amount of credit back into line with the assets backing it.

Until this is understood, the crisis will continue to linger on...

When the Dust Clears...

...expect to see the rating agencies, like Moody's, among those most profusely sued and investigated.

Why?

Well, as this NYT article points out, their lack of institutional integrity is startling.

The Domestic Automaker Bankruptcy...

...watch continues. This LA Times story explains what we've been reporting for awhile now: GM could go under soon with Chrysler close behind.

As someone who grew up in the Detroit area, I'm a nostalgic fan of the domestic auto industry. However, what reason have these companies given taxpayers to believe that these billions in bailout dollars is not simply a PAUSE button on the road toward a final crash?

Very little from everything that I've read. Stay tuned.

UPDATE: More insightful analysis from the Econobrowser blog on the domestic automakers ongoing death dance.

UPDATE #2: "Forgive me for not believing a damn thing Ford says." So says Mish Shedlock. Click here for his explanation of why.

I've been told in the past that one strong indicator of prolonged economic trouble is the number of utility shutoffs. The idea is that some of the last bills to go unpaid are the gas, water, and electricity ones.

If that's the case, then this WSJ article is very concerning.

The Market Ticker Blog...

...continues to speak the truth:

The bottom line is that there is no fix for this mess nor will the economy recover until and unless the bad debt is removed from the system.

An Important Cautionary Tale...

...click here for the Washington Post story that discusses two very human sides of the current crisis.

This Is What I am Thankful For...

Even though times are tough these days, I wish all Daily Sprawl readers a wonderful Thanksgiving Day...May the Lord Bless You and Your Family on this most favored of holidays.

Chad.

The Viability of the Entire U.S. Banking System...

...is now in doubt as a result of the Citigroup bailout. So says, Mish's Global Economic blog.

I'm afraid that he may be correct. Indeed, Daily Sprawl suspects that there is not a Defcon high enough for the pending situation.

If you still have money in the stock market, we highly, highly recommend that our readers consider removing it during this brief bull rally amidst a disruptive bear outlook. The reason is that the myth of all things financial being "cyclical" will continue to be proven false. And, we assure you that this is not a hollow recommendation on our part.

Daily Sprawl moved every penny it had from the stock market in January 2008 (including from all 401k accounts). As a result, we have not lost a single dime in the current stock market downward spirals.

Ultimately, the reason we did this was that we are confident there will not be a return to 2005 during our lifetimes.

This doesn't mean that we'll all be living on farms barely getting by. But, it does mean that there will be fundamental changes like we've discussed in the past here at Daily Sprawl.

Don't believe us? Just check our archives and the archives of those sites and blogs we link to. The proof is right there as most of those predictions continue to bear out.

Please--don't sit still in this all. The results could be financially debilitating to you and your family.

Ugh!

Just back from a trip to a couple of conferences. Upon returning, I found this article which argues that President-Elect Obama is poised to appoint another economic trouble-maker as his Treasury Secretary.

Please, please, please. Purge this from the system. Move on to someone who has not had a major role in the current crisis like this nominee.

Change? No. Apparently, we can't.

As Predicted...

...the commercial real estate market is tanking because of oversupply and lousy car-centric designs. Here's the Calculated Risk blog's take on it all.

The New York Times...

...reports on the stark reality that the automobile business is completely oversaturated with excess supply.

Time Magazine Headline: "Why the Energy Crisis Will Outlast the Credit Crisis"

The Paris-based organization's annual World Energy Outlook, released on Wednesday, predicts that oil prices will start a steep climb soon, and by 2030 will settle around $120 a barrel — more than double this week's price — as producers face rocketing costs of equipment such as drills and rigs, and are forced into the increasingly expensive business of extracting oil from less accessible fields, many of them far out at sea.

Daily Sprawl concurs. Sure, oil prices are down these days but at what cost? Easy answer: a massive demand destruction via a deep recession that very few anticipated would be even this bad.

So, enjoy the $1.99 per gallon gas. Take a picture of the pump. And then pine for it again later in 2009 as it will be but a fleeting memory.

Healthy Sippy Cup Option...

...for your kids. That's what the Safe Sippy cup represents. We've tried it and recommend this chemical free and BPA free sippy cup choice.

Senator Inhofe is right. Stop the "blank check" madness.

The Answer is a Resounding Yes!

Click here to see the question asked by Newsweek in this week's issue.

Another Healthier Option...

...recently Daily Sprawl reviewed products from Camelbak and the Planet Bottle. Both offer excellent BPA-Free options for adult and child water bottles.

They save on wasteful plastic from disposable water bottles, are free of nasty chemicals, and embrace sustainable practices.

That's why Daily Sprawl recommends Camelbak and the Planet Bottle.

Clay, Alabama Considers...

...adopting a SmartCode. This is a strong strategic move by the City of Clay and hopefully will work out. I've been informally advising on this effort and there seems to be careful and prudent thought being put into the overall strategy.

Two More Startling Articles...

...over at the Market Ticker blog, Karl Denninger is making some bold predictions. While they might sound somewhat over the top, the reality is that he has often been correct on these things. His disturbing analogy related to the economy and a drunk with a bad liver is especially apt.

Here's why: the Paulsons and Bernankes and Congresses of the world seem intent on flooding the markets with more and more money (liquidity) in the hope that doing so will restart the credit spending that has propped up the economy for the last 20 years. The problem though is that the markets are NOT starved for credit but rather engorged with it. They simply can't digest anymore and that's why they are hemorrhaging it. Forcing a drunk to drink more will only kill them. That's what is happening here.

Meanwhile, over at Portfolio.com, Michael Lewis is revisiting the origins of the current economic woes and such. An incredibly compelling read.

Two Very Troubling Articles...

...that the always informative Global Economic Trend Analysis blog is covering today.

First, this one about GM retiree health care benefits going away and then this one about parents pulling kids out of daycare because of the continuing financial problems.

Readers, this is getting even more serious. Due preparations (starting with debt reduction/elimination) remains crucial in light of the continued uncertainty. Do not assume that a recovery is near.

Another Healthier Option...

GMO Free. No Trans Fat. No Hydrogenated Oils. No Refined Sugars.

Sound too good to be true for a great tasting cookie?

Fortunately, its not if you're eating Organica Foods line of all natural ingredient cookies.

Daily Sprawl highly recommends Organica cookies to our readers.

Anecdotal Stuff...

...this evening, Mrs. Daily Sprawl and I went shopping without the kids for the evening. While browsing around Montgomery's newest "lifestyle center" mall, we were astonished to see 50% off sales all over the place. It was like the day after Christmas--1.5 months early!

Considering that this mall--EastChase--is considered the region's most desirable retail location it was strange to see Linens N Things and Harold's both holding "Going Out of Business Sales".

Worse still, while talking with a store manager at EastChase, I learned that at least three other tenants will be leaving by the end of the year.

Yeah, this is only anecdotal, but its still pretty compelling coming from a lifestyle center that is less than 6 years old.

AIG Back for More...

...folks, at some point even the U.S. government cannot continue to loan billions into trillions.

An important point when you considered that AIG alone is nearing the 100 billion mark in various bailout funds.

Naked Capitalism has some good info on this bad situation:

The Financial Times reports that AIG is up to its old tricks, back again to the trough for more money. Christmas The Iceland credit default swaps settlement is coming soon, you know.

The worst is that AIG is pretending to act as if this is a negotiation as opposed to extortion.

Read the entire article and you should quickly see that the current woes are worsening rather than improving.

Dow Headed Toward 4,000?

That's a scenario suggested by this MSN Money column:

once the current rally interlude is over, it's not hard to see the Dow Jones Industrial Average ($INDU) sinking to around 4,000 -- a level it last hit in 1995, before debt started to play such a large role in corporate and personal finance.

That would entail a decline of 70% from its 2007 peak, or about the same amount the Japanese stock market has fallen since 1990 in the wake of its own debt unwinding. Or the amount the Nasdaq Composite Index ($COMPX) dropped from 2000 to 2002. Or the amount the Russian market has plunged since June.

Meanwhile, one CNBC columnist is suggesting that, if the domestic automakers cannot make it as is, then they should be allowed to fail.

While it would be painful, Daily Sprawl agrees with that assessment. Ultimately, the system must be cleansed of bad debt and bad business models before it can reliably work again.

Seventh Generation's Blog...

...has posted new articles on children and chemicals as well as healthy eating.

Both are very informative and worth checking out.

More Healthy Alternatives...

When it comes to snacks and sweets, Daily Sprawl is always on the lookout for healthier options. Treats without high fructose corn syrup, preservatives, and other modified ingredients that sound like they belong more in a science class more than on a recipe label.

Well, more good news from Daily Sprawl. The taste tests are in and these two options fantastically exceeded even our highest expectations:

1. Liz Lovely cookies

2. Margaret's Artisan Bakery

Kudos to both for embracing natural ingredients while keeping great taste!

A Natural Alternative to Purell...

...it seems that all the rage these days are Purell hand sanitizers. You don't need water and they supposedly kill all the nasty germs that make us sick.

Unfortunately, Purell and those type sanitizers also contain some pretty nasty chemicals that don't work well for other purposes.

That's why Daily Sprawl was excited to discover Clean Well hand sanitizers. They kill germs without the unhealthy chemicals. Yep, it almost sounds too good to be true but, in this case at least, the early data seems to indicate that Clean Well is a natural and healthy alternative to chemical hand sanitizers.

Healthy Living Products...

...each week, Daily Sprawl will highlight three products that it recommends for healthy and safe living. Many will be food products, household cleaners, and body care products like soap, shampoo, and toothpaste.

Our goal is to identify those products that replace the use of synthetic chemicals (whose long-term effects remain unclear) with natural ingredients and sources.

In addition, for everyone one of these, Daily Sprawl can guarantee that it has used the product before recommending it. No second-hand info here.

So--drum roll, please--here are Daily Sprawl's first three Healthy Living recommendations:

1. Food Product--Tired of terrible hydrogenated oils and high fructure corn syrup but still looking for something to satisfy your sweet tooth? If so, there's good news. Laura's Wholesome Junk Food is a fantastic and highly recommended option.

2. Household Cleaner: Need something cleaned but don't want to toxify your house with impossible to pronounce chemicals when doing so? Try Dr. Bronner's Magic Soaps. Natural ingredients that aggressively wipe out stains, dirt, and other grime.

3. Body Care Product: Triclosan is a bad thing dressed up with good intentions. You see, it's a main ingredient in all the anti-bacterial suds and washes on the market today. Unfortunately, is also can have some pretty nasty side effects when used the wrong way. So, rather than risk it, try Triclosan-Free hand soaps from Method.

We the People...

...as U.S. taxpayers apparently now own even more bank stock: Please welcome Capital One and Sun Trust to the taxpayer portfolio.

At this rate, We the People as U.S. Taxpayers will own a major chunk of the financial services industry. Talk about the bizarre becoming real...

Upcoming Debate...

...I'll be moderating an upcoming debate between Sen. Obama's Alabama campaign head (Congressman Artur Davis) and Sen. McCain's state campaign chief (State Rep. Cam Ward).

The debate will be held next Wednesday at the Alabama State Archives. Click here for more details.

A Downturn That Lasts Until 2020?

That's what is suggested in this recent WSJ article that discusses how the Baby Boomer generation has been a major player in the present problems:

"This is like winter coming," adds Harry S. Dent, an author and consultant who says the U.S. is headed for a slump that will last until 2020. It will take that long for the financial wreckage from this boom-bust cycle to be cleared away, he says, and for the 79.4 million strong "Millennial Generation" -- most of whom are still in high school or college -- to enter adulthood and start buying homes, cars and gadgets of their own. "It happens once every 80 years," Mr. Dent says of this sort of demographics-driven economic cycle. "It's going to be difficult."

Meanwhile, remember the predictions that Daily Sprawl has made about the auto industry? Well, they are looking more and more likely everyday.

A Startling Report...

...that recently aired on PBS discussing what the commentators are suggesting may end up "worse than the Great Depression".

Click here to read the transcript or listen to the story itself.

Looking for a Good...

...article discussing the origins of the current economic woes?

If so, try this Financial Meltdown 101 article. It discusses the background and reasons in very plain, but accurate, terms.

Daily Sprawl recommends it.

What are the Signals to Watch for that Predict a Worst Case Scenario situation?

That's what this blog entry outlines. Frankly, several seem quite accurate.

The Economic Crisis and Birmingham, Alabama

Here's an interesting article from CNN's business page discussing how Jefferson County--home to the City of Birmingham--is on the brink of financial collapse.

Indictments are certain. Economic devastation are is possible.

Hampstead Community Farm Festival...

...on Saturday, October 25th Hampstead--a DPZ designed community here in Montgomery--will host its first ever Community Farm Festival.

As part of the event, we'll be having a series of free Green Living Talks on topics such as green products, green home design, and green landscaping.

I'll be presenting the Green Living Talk on the best household and body care products available to detox your house and improve your family's health--without busting your budget. We'll also have a drawing for some free product giveaways.

Hope to see you there...

Predictions...

A good many readers have asked Daily Sprawl to predict where all things peak energy and peak credit are headed. Well, we love parlor games as much as the next blog, but we're also informed enough to know that nobody can reasonably predict results in the midst of chaos.

That said, since we spent hours every day researching these issues, we've been able to glean certain potential trends by compiling info from a variety of sources.

Along those lines, here are some general Daily Sprawl predictions:

1. Until mid-November or so, expect generally positive news out of the financial markets. Some downs but also some big ups.

2. As the holiday season kicks in and it becomes apparent (not long after Thanksgiving) that consumers are buying less than usual, expect the financial markets to begin contracting.

3. After the first of the year, a variety of well-known retailers will go ahead. The Christmas season was just that bad.

4. By February, we'll know whether the various bailout/rescue efforts will hold. If so, spring may bring some glimmers of hope. Otherwise, we'll quickly devolve into a winter of massive problems. Note: there will be no in between. Things will either dramatically improve or dramatically worsen.

Are these very general? Sure, but they do offer some guidance. Daily Sprawl's plan is to continue investing in tangible assets and avoid the financial markets at almost any cost.

Stay tuned..

Patty Salkin's well-read Law of the Land Blog has a good review of the land planning and development book to which I recently contributed a chapter.

This is bad--grain piling up in ports because the needed credit cannot be freed up to ship it.

Daily Sprawl is trying to get a better feel for what's transpiring. We'll hopefully post a couple of good summary articles this afternoon. Stay tuned.

According to JD Powers...

More on the auto market:

The global auto market may experience an "outright collapse" in 2009 amid growing concerns around credit availability of credit and general economic stress, an influential industry tracking firm said on Thursday.

Today's Important Article to Read...

Sound overly dramatic? Well, just think how what is happening right now would have sounded only one year ago...

Shopping Malls are...

...looking at major financial problems.

Plus, the auto industry just gets bleaker at the dealerships. And the actual car manufacturers.

Odd how these two pillars of sprawl are simultaneously suffering serious fissures...

UPDATE: Oh yeah, airports are cratering, too.

The Washington Post has this good rundown of how the financial meltdown is going international. We're beginning to wonder if things are close to a serious loss of control. Stay tuned.

To our readers, Daily Sprawl now considers the economy to be in crash state. The question is no longer "if" but "to what extent". We'll post the most information articles here at Daily Sprawl to keep our readers informed.

Needless to say, if you are in the stock market--whether through your mutual funds, 401k, or other investment routes--you need to move that money into more conservative investments immediately. It is losing large amounts of value on a daily basis.

Here's a good article to get started with:

The movements in the FX market are incredible. One friend just read me something which he has received from an fx trader which said that the only things that anyone desires to own are the US dollar,the Japanese Yen, gold, bottled water and bullets”

This article from MacLeans on the current financial challenges is a very important one. Daily Sprawl puts this in the category of "Must Read" for our readers.

Gov. Palin and Boone Pickens recently met to discuss the Pickens Plan. Sounds like it went well and Palin really does understand the important details of energy issues.

Startling if accurate:

This from a friend in Atlanta with strong banking connections: "Reliable word that Bank of America branch managers just received a letter or memo from the USFed instructing them to perhaps be ready for a one-week universal shut-down of the banking system, including access to checking accounts, savings accounts and credit cards. Reliable word has it that BofA bank branches received a shipment of signs last week, reading "WE'RE SORRY, BUT DUE TO CIRCUMSTANCES BEYOND OUR CONTROL, WE CANNOT BE OPEN AT THIS TIME."

So the banks are in need of a respite, a break, a holiday. They need to shore up their positions. Economists and bankers avoid revealing the consequences of extended absence of short-term credit supply. Imagine all the supply chain DELIVERY routes being interrupted for lack of short-term credit, certain to interrupt the supply of food, gasoline, building materials, basic household wares, simple hardware, and more. The short-term credit would certainly also disrupt payroll streams for companies, inventory supply for retail chains, durable goods purchases by consumers (like washing machines & refrigerators), the maintenance of basic machinery (like cars, trucks, computer, communications), even cash dispensed at ATMachines.

The Town of Hampstead...

...Montgomery, Alabama's only DPZ-designed sustainable community has announced its first restaurant (a farm to table model) and several exciting October events.

Click here to learn more.

And, coming in November and January, two of the country's brightest minds will be visiting Hampstead as part of The Hampstead Institute Speaker Series. Exciting details to follow soon...

Another blog that Daily Sprawl recommends: Naked Capitalism (and, yes, its a perfectly clean, family-friendly site).

They've been doing a nice job following the financial crisis.

"This is a Disaster on a Grand Scale".

Daily Sprawl highly recommends watching this recent news video chronicling the wreckage created by the sprawl growth housing market.

Powerfully sad but still a good measure of the current reality.

More Sprawl-Busting...

...from the credit crisis:

After enduring a brutal sales slump caused by high gas prices and a faltering economy, the last thing the American auto industry needed was a credit crisis.

Larry Kelly, general manager at the Ritchey dealership in Daytona Beach, Fla., said car buyers — even those with good credit — were paying higher rates for loans. But with banks tightening up their lending, any hope for a recovery in vehicle sales this year has been dashed.

The virtual lockdown on credit is hurting Detroit’s Big Three and other automakers at every level. More consumers cannot get auto loans. Dealers are hard-pressed to secure financing for new inventories. The auto companies themselves are running short of cash and can hardly afford to borrow more at interest rates as high as 20 percent.

This NYT article discusses how more and more municipalities are finding that the bond market is increasingly uneconomical.

While some important projects like hospital expansions get caught in this problem, it also means that new road-building and other sprawl-supporting projects won't have funding.

A silver-lining in dark fiscal cloud.

What in the World...

...is going on if this is accurate:

Larry you have to read the bill. It's very clear. The Bank of Shanghai can transfer all of its toxic assets to the Bank of Shanghai of Los Angeles which can then sell them the next day to the Treasury. I had a provision to say if it wasn't owned by an American entity even a subsidiary, but at least an entity in the US, the Treasury can't buy it. It was rejected.

The bill is very clear. Assets now held in China and London can be sold to US entities on Monday and then sold to the Treasury on Tuesday. Paulson has made it clear he will recommend a veto of any bill that contained a clear provision that said if Americans did not own the asset on September 20th that it can't be sold to the Treasury.

Hundreds of billions of dollars are going to bail out foreign investors. They know it, they demanded it and the bill has been carefully written to make sure that can happen.

The linked article also includes the relevant language backing this claim. This is simply outrageous if it bears out.

Watch C-SPAN's streaming coverage here for the House Floor Debate on the bailout bill on Monday morning. Fascinating to see democracy at work in the strangest of ways.

Meanwhile, this Financial Week story explains how companies are getting so desperate for credit that they are reaching into their revolving credit lines for some liquidity. This is like dipping into your emergency funds to pay the credit card bill--a bad idea in many ways.

With Wall Street inches from a plunge off the commercial paper cliff, I went looking for some completely and totally unrelated yet interesting information. My mind needed a break from the potential severity of what's happening.

This is what I came up with. Interesting, eh?

Maybe we should just let the Russians kill sprawl.

An Interesting Medical "Breakthrough"...

...related to the 1918 Flu that killed 50 million worldwide. Sounds potentially useful.

Major Cell Phone/Cancer Risk Update...

...yesterday Congress held hearings on the topic of cell phone usage and a potential link to cancer. Please read this article and carefully follow this issue.

Young children should especially not be using cell phones. And adult should be using earpieces. This has the potential to become a critical issue. Consider this a Daily Sprawl preemptive notice. Please fully research this matter.

More on Why the Bailout Plan...

...is inherently flawed:

This is part of a disturbing pattern in the mainstream media as far as the plan is concerned. Despite the considerable diversity of opinion and political orientation among economists, the criticism of the plan among economists has been widespread, verging on unanimity (with Alan Blinder a notable outlier). Yet the press has treated the plan with vastly more deference than it deserves.

Read the useful Naked Capitalism article here.

Permanent Damage at GM...

The news coming out of Detroit is getting worse, and unlike in past years, there will be no full recovery. Analysts are betting that General Motors will be forced to take emergency financial measures this year that could hamper its competitiveness for a long time to come.

Read the whole Fortune article here.

The Next Big Story...

...this Washington Post article discusses what, in this era of bailouts upon bailouts, could well be a major flash point among Americans:

"I've been financially responsible with my own money. Why should I now be responsible for the fact that you were not?" he said.

This may be a Main Street bailout backlash in the making. The details of the financial crisis are still hard for most people to follow -- what with talk of exotic "derivatives" known as "credit-default swaps" and so on -- but the central fact of the matter hasn't been lost on anyone in this Northern Virginia community: The taxpayers are on the hook for the bad judgment of others.

And they say they don't like it. They didn't break it, but now they've bought it. Political leaders and financial titans say the bailout is necessary to save the economy, but on the ground, in such places as Manassas Park, people think that the bailout will reward the wrong people. There's a sense that too many folks bought houses they couldn't really afford, banks urged them on, common sense went on vacation, and now the grown-ups have to clean up the mess.

A Oil Interruption Contingency Plan...

...or, better stated, lack thereof:

However, if one, two or all of three vital chokepoints are hit by terrorists flying hijacked 747s or Iranian military action - the Abqaiq processing plant, the Ras Tanura terminal in Saudi Arabia, or the two-mile per sea lane Strait of Hormuz - as much as 40% of all seaborne oil will be stopped, as much as 18% of all global supply will be interrupted, and from 12 to 20% of the US supply will be cut off. Estimates are the US shortfall could be even higher. Repeat attacks could prolong the crisis for many months, which is exactly what either al-Qaida or Iranian terrorists have promised. Yet there is no plan.

THE BEST experts predict that if we suffer as much as 10% for any period of time, let alone 20%, it will be a neighbor-against-neighbor "Mad Max" scenario as food shortages swell and a storm of economic collapse surges across the country. Indeed, experts have been warning about this looming calamity for years. But the government and presidential candidates refuse to even consider the possibility or develop a contingency plan.

Yet our allies have developed oil contingency legislation and other administrative plans that will permit their nations to survive a stoppage. These measures include severe vehicle traffic reductions, enabling fast alternative fuel production and mass vehicle retrofitting, as well as rush public transit enhancement, and mandated changes in driving habits. Unquestionably, for America to survive such a catastrophe will require a very painful, multilayered program of immediate-term, short-term, mid-term and long-term fixes that will change our society and transform it off oil. The nation has no real alternative fuel or retrofitting infrastructure. But every lawmaker, mayor, governor and every candidate must develop such a plan - and now.

Read the entire JPost op-ed here.

Good Advice from...

...Seventh Generation about steps toward making your house a healthier place for your children. A must read if you're looking to ditch the toxic lifestyle.

Time to Make a Stand...

...the current trillion dollar bailout plan proposed by the Treasury and Fed--while well-intended--will create a monumental burden on this country going forward.

Fortunately, Mish Shedlock has posted an efficient way to express your opposition.

Click here for details.

Floating Trains?

This article from MetropolisMag.com discusses just that:

While we have been dreaming about floating trains, Europe has been methodically threading its cities together with a sophisticated high-speed rail network. The French TGV, a conventional train with earthbound steel wheels, broke the land-speed record last year, hitting 357 miles an hour on a test track. Asia, too, has invested in high-speed rail: the famous Japanese bullet trains have been in operation since the 1960s, and Beijing’s new high-speed line, which debuted for the Olympics, can go as fast as 220 miles an hour. Even Argentina is about to build a 440-mile-long high-speed rail line. What do we have? Well, we’ve got the Northeast Corridor, where Amtrak’s Acela Express can, on a good day—and only on two short stretches in Rhode Island and Massachusetts—reach 150 miles an hour. And, apparently, we’re gearing up to spend an estimated $12 billion linking our two most significant tourist destinations.

This NY Post article, if accurate, is scary on what almost (and might still) happen in the financial markets.

$500 Per Barrel?

That's what this Fortune column is considering:

"I find it ironic that here we have the biggest industry on earth, and I'm one of the few people to figure out that we have a major problem," he says, in his confident if not quite brash way. "And I did it all in my spare time. How stupid and tragic is that? I shouldn't be one of the only folks that actually has a handful of ideas of how we can keep from blowing each other up and get through this."

Read the entire and see why this is definitely not a good sign for McCain supporters on this topic.

More on Gas Shortages...

...the situation has eased somewhat here in Montgomery but it appears that other places (such as the Nashville area) continue to see significant shortages:

With an estimated 20 percent of the nation’s refinery capacity on hold due to Hurricane Ike, retailers located in the Southeast and Mid-Atlantic regions not affiliated with major gas bands are experiencing gas shortages.

Here's the entire article.

Credit Default Swaps?

If you follow Daily Sprawl, you've probably seen the above term pop up in a variety of different articles. And, quite possibly, you've wondered what the heck it is and why is everyone talking about it?

Basically, a credit default swap is a form of insurance. The buyer of a financial debt instrument purchases the instrument to make money off of it as an investment (for instance, off the interest that the instrument pays or yields).

But, sometimes bonds or mortgages or other debt instruments go into default and lose their value. The result is that the investment is lost.

Except...

If the buyer of the debt instrument also purchased credit default insurance (that's a more accurate term than "swap"). If that happened, then the insurer against the default (e.g. the company that issued the credit default insurance) pays the buyer (e.g. the investor for whom the original debt investment became worthless).

The problem arises when the insurer sells more credit default insurance than it has the ability to pay. That's the problem these days.

This NYT column explains this important problem in more detail.

So Now The Taxpayers Own an Insurance Company...

Are you curious why the federal government reversed its earlier course and decided that it could not let insurance giant AIG fail?

If so, Time Magazine has the story (and, if not, then you should be because these are the most unique of times).

Welcome to the...

...Chevy Volt. Popular Mechanics has a good story on the unveiling of its production version--the one planned for public sales in 2010.

From the story, it is clear that the car is less sporty than the original concept version. But, it still looks good--a somewhat narcissistic yet important thing in the car-buying world.

Aside from that, Daily Sprawl is really curious about this vehicle. It will be a "plug-in" hybrid meaning that you will literally plug it into a normal electric outlet and charge it up. After 75 miles or so, the electric range gives out to a more conventional gas engine. But, that leads to a important question:

Who drives more than 75 miles per day?

If you don't then, according to GM's plans, you will rarely use the gas engine--driving almost exclusively on electric power.

Which, in turn, leads to the second important question:

Does our existing electric grid possess the capacity for the large amounts of new electricity needed to power these type plug-ins?

Tough to say at this point. Issues such as whether power companies can diversify into renewable energy sources (tidal power and river current power being two of the best long-term prospects) remain unanswered.

One positive thing is that most of the plug-ins will likely be powered up during the nighttime hours--as their drivers sleep. This also happens to be one of the times of day with the least amount of stress on the grid.

So, the long and short is that the Volt has the potential to offer a powerful alternative if grid capacity can be expanded through advances in renewable power sources.

Stay tuned closely on this one...

Not Good

1,000 banks might fail by the time the dust settles?

It seems unbelievable but, then again, what in the last 9 months hasn't.

"What Happens if a Major Bank Fails?"

The column offers a good run down of the game plans for such a situation.

Gas Shortages for the Next Week...

...according to one Texas senator.

Stuck.

From the Times Online:

Like Zoom, XL cited the high price of oil as one of the main reasons for its collapse and Willie Walsh, chief executive of BA, said today that there are likely to be many more casualties of costly fuel and the economic slowdown this year.

Mr Walsh, who yesterday told staff that BA is cutting 1,400 senior management jobs to save £170 million, said today that there were a lot of “weak” airlines struggling to remain in business.

He said: “This is a difficult trading environment and some of the airlines that we have become used to will not survive.”

Still think that the recent dip in oil prices is the a panacea?

In reality, its a temporary correction on an otherwise upward course. Evidence of that will soon start coming in by October.

Heinberg has an interesting discussion up at the Post Carbon Institute website about this.

Good Night, Lehman...

...Fortune's online wing offers an interesting look at the scene near Lehman's HQ last night. Don't be surprised to see this scene--albeit at different scales and locations--become the symbolic coverage of this unwinding crisis...

Gas Shortage Implications...

...the Oil Drum has posted an interesting article discussing the effects of the growing gas shortages resulting from Hurricane Ike:

Where is our gasoline and diesel supply headed? Even before Ike hit, quite a few areas of the US were starting to see gasoline shortages. The impact of Ike can only make shortages worse. Most likely, it will take refineries at least a week or two to get production back to normal levels after a storm of this type, considering the impacts of electrical outages and flooding. In this article, I will examine some of the issues that seem to be involved. Based on my analysis, fuel supply shortages are likely to last well into October, and are likely to get considerably worse before they get better.

A Sunday to Remember...

...well, it's about 8pm central time and word is that Merrill Lynch no longer exists as an independent company--having been bought today by Bank of America.

Lehman Brothers is also apparently out of options and will be forced to declare bankruptcy unless a last minute suitor appears.

Readers, these are fundamental changes and represent the most stark examples yet of the unraveling of the American sprawl-funded finance system. A system that fed itself on artificially cheap money and gave that fake money to all kinds of strip malls, subdivisions, and other land development schemes that stressed our infrastructure while making almost every investment unsafe.

It is not an exaggeration to say that today marks a fundamental turning point in U.S. finance history.

Click here for a website that is aggregating many of the articles covering this amazing series of events...

UPDATE: Mish's take. Probably the best site for following these startling happenings...

Hurricane Ike...

...will miss many oil platforms in the Gulf of Mexico but appears on a direct track to nail a large swath of oil refinieries.

This Knoxville News Sentinel story is an early indicator of the potential effects of Ike:

Refinery outages along the Gulf Coast in the wake of Hurricane Gustav have created severe shortages, causing retailers like Weigel's to scramble to keep their pumps flowing. And Hurricane Ike is bearing down on Texas, drawing a bead on North America's petroleum manufacturing capital of Houston and portending a worst-case scenario for dealers and consumers.

"Knoxville has been out of gas since Monday. We've been buying gas from Atlanta, North Carolina, Kentucky, anywhere we can get it," said Bill Weigel, head of the Weigel's chain of convenience stores in Knox, Blount, Sevier, Loudon, Anderson and Monroe counties.

Same story in places here in Montgomery. I stopped this morning at a station that was out of gas. Troubling.

From the Faculty Lounge blog...

...gasoline pricing invades the retail world. Pretty clever if it works.

Automotive Leftovers...

...the WSJ has an interesting op-ed today that concisely explains why the federal government absolutely should not issue the Big Three automakers below market (and federally guaranteed) loans in this crisis time:

And what about the precedent the government would set? If we bail out Detroit, where do we stop? The newspaper industry is in financial trouble because more readers and advertisers are turning to the Internet. Newspapers are good for democracy -- Thomas Jefferson said he would choose newspapers over government, after all -- so shouldn't they get low-interest government loans to help them adjust to the Internet? Of course not, and ditto for Detroit.

If Detroit's auto makers would apply more than knee-jerk analysis to what's being proposed, they would reject it quickly. No matter what their spin, including the patently absurd claim that government-guaranteed, below-market loans aren't a bailout, loan subsidies will paint them in the public mind as corporate welfare recipients that can't compete on their own. That can't be good for sales.

More fundamentally, the last thing these companies need just now is more debt. They are leveraged to the hilt, and risk climbing into a financial hole from which they'll never recover. Better to raise money by selling more assets (e.g., Ford's recent sale of Jaguar and Land Rover) or raising more equity -- even if new investors would require management changes or other measures.

Oil Price Changes...

...several readers have noted that oil prices have been "down" and wondered how that affects the Daily Sprawl projections.

For starters, the fact that $100 per barrel oil is considered "down"--while technically accurate--demonstrates the ease at which we accept such fundamental market changes.

Remember, roughly three years ago, gas was below $50 per barrel. In other words, it has doubled in one-third of a decade. The idea that $100 per barrel will provide relief from our sprawl-ending predictions neglects the reality that prices remain historically high for fundamental supply and demand reasons (as opposed to artificial shortages such as the 1970s OPEC actions).

On point, this Barron's article presents an interesting oil price discussion.

You have to register to read it so if you don't want to do that, this blog discusses some of the major points.

Problems for the Auto Industry...

...continue to get worse according to this CNN Money article:

Thus, the automakers have deployed what one industry official describes as a "surge" of lobbyists and executives at both the Democratic and Republican Party's political conventions. The Big Three's hope is that if they can win speedy passage of the loan package, they can move more quickly to retool their plants to produce more smaller cars.

The $50 billion loan package, first proposed by the auto industry last month, has won the support of presidential candidates Barack Obama and John McCain as their campaigns eye key votes in Michigan and Ohio.

On Tuesday, White House Press Secretary Dana Perino signaled the outgoing Bush administration was open to approving the loans.

This is one of the worst examples of blowing good money on a very bad idea. The fact is that the U.S. government cannot keep bailing out corporations that a) have poorly management themselves into near failure and/or b) build a product or provide a service that is increasingly less viable in a post cheap energy era.

If the federal government ignores this fact, then mark Daily Sprawl's word--it will be the government itself that will require the bailout.

This could well be the beginning of the nastiest part of the current downward spiral.

Interesting Article on Commuting Costs...

...from the Orange County Register:

Before you rush out to an open house for a foreclosed house just off the 91 in the next county, please note the cost of commuting. It's been a factor – ignored by some house shoppers – that's critical in evaluating a value-priced house far from any employment centers.

I asked my trusty spreadsheet to transform gasoline prices and commuting distances into a number that a house shopper could love: how much real estate you could buy with borrowed money paid back with dollars otherwise spent at the pump. What I found was harsh, at least, to me.

To be fair, I used some broad assumptions that won't apply to many situations. But there's my rough guess of a commuter's profile: driver was commuting to the 5-55 intersection in Tustin; their car got 20 miles per gallon; and the math used assumed 6 percent, 30-year, fixed-rate financing. I was generous.

At $4 a gallon, with my commuting formula, gasoline costs alone (forgetting wear and tear, tolls, etc.) equal $23,818 in today's homebuying dollars driving 17 miles one-way from Corona; $53,240 with Riverside's 38 mile drive and $86,865 from Temecula (62 miles.) Compare those gas tabs to a Tustin-to-Lake Forest commute of 10 miles costing, in my homebuying dollars, just $14,010.

While the article was calculating commute distances in the Los Angeles area, those same numbers can be roughly used in many other areas with long commutes and high gas prices.

In other words, the numbers present a compelling case for short commutes whenever possible.

Watering Lawns in the Desert...

...Mish has this one right:

Why anyone thinks that watering the desert is a good idea in areas where water is in short supply is beyond me. But here it is: "Can you imagine what this will do to the value of our home?” [resident Brandon Knudsen] said. “One of my neighbors said, ‘I just put $20,000 into my backyard.’ And I just spent my summer, and $8,000, in my backyard. And for what?”

However, this goes far beyond a water problem for the 60 home owners in Liberty Ranch. The issue at hand is why anyone would want to buy a home from Centex or any other national builder that treats its customers this way.

Smart Growth webcast

I was recently interviewed by this webcast related to New Urbanism issues. Flagstaff city planner Roger Eastman joined me.

Have a listen...

Trains of the (Near) Future...

...as airline travel becomes more costly and less viable for many, the possibility of a return to more passenger rail travel increases.

This article does a nice job laying out some of the possibilities.

Last Desperate Gasps at CitiGroup?

That's what appears to be going when reading this Bloomberg report:

Citigroup Inc., the biggest U.S. bank by assets, banned off-site meetings among employees and cut back on color photocopying to reduce expenses as investment- banking revenue declines.

Now, don't get us wrong. Daily Sprawl is a huge supporter of these type of more sustainable corporate practices.

But, at this point, they beg the question: Why did Citi wait until it was a crisis time to take such logical steps?

Unfortunately, there's no good answer and that's much of the reason why Citi and other similar companies are unlikely to survive this crisis as they are currently situated.

Sprawling Jefferson County, Alabama...

...inches closer to a bankruptcy filing. That's right, the large county that includes Birmingham, Alabama's largest city, appears to be on a course to file bankruptcy.

The dominoes continue to fall across the board...

NPR Has a New Report...

...on how Wal-Mart is increasing its use of locally-sourced foods:

Two years ago, retail giant Wal-Mart created a stir when it announced it was moving into the organic foods market.

Today, the nation's top grocery seller is highlighting its purchases of "locally grown" produce. While the company is touting the community benefits, buying local produce is also a way to cut the company's growing fuel costs.

Wal-Mart says partnerships with local farmers have grown 50 percent over the past two years — not just in California, but in Wal-Mart stores across the country. This year, it plans to buy about $400 million worth of locally grown produce.

Someone asked "so, do you think this is a good thing?"

My answer was "of course it is!"

Granted, Wal-Mart remains on the negative side of the sustainability balance sheet, but efforts to change that--even incremental--are important, especially when they are done on a Wal-Mart scale.

After all, the Wal-Mart produce aisles remain much more visited than even the most popular of farmer markets. Meaning that, the more that Wal-Mart sources locally, then the more that people will be exposed to the benefits of local food production.

Game Over?

That's what Warren Buffet is saying about Freddie Mac and Fannie Mae:

And the billionaire investor Warren E. Buffett, the chairman of Berkshire Hathaway, said in an interview on CNBC that “the game is over” for the firms to continue operating as independent companies.

Read the entire NYT story here.

Now, this does not mean that Fannie and Freddie are going away. The federal government has guaranteed to somehow back them. However, the reality is that the home mortgage market is about to become even tighter, even sooner.

We may be looking at a huge decrease in mortgages and huge increase in rental agreements. Which, contrary to the myth of an "ownership society" is not an inherently bad thing.

Oil Price Update...

...the Naked Capitalism blog has an interesting update on the current state of all things Oil-Priced:

The bad thing about the volatility in oil prices is that it is an impediment to moving to new sources. The Financial Times, in an editorial last year, stressed the importance of having a stable price for carbon to facilitate the transition to cleaner sources. But as much as the runup of oil to nearly $150 a barrel led to conservation in advanced economies (which is far and away the biggest opportunity over the short to intermediate term), the sudden drop to almost $110 leaves open the possibility that it might retreat further (which this article contends will happen later in the year), which would call the viability of alternative energy into question and may also lead to more consumer use (at a minimum, airlines may be able to lower prices and add flights although their nickel and diming is no doubt here to stay).

Another Movie That Seems to Matter...

...this time, Daily Sprawl offers for your viewing knowledge: I.O.U.S.A.

Here's a WSJ interview with one of the movie's lead participants.

And, here's the trailer.

The Marketing of "Second Mortgages" into...

...a "home equity loan" disaster. The NYT has the backstory how this banking scheme has contributed to the current housing crisis in big ways:

Marketing executives knew that “second mortgage” had an unappealing ring. So they seized the idea of “home equity,” with its connotations of ownership and fairness. The phrase was also used for lines of credit, which are sometimes taken out by people who have already paid off their first mortgage.

But in the early 1980s, Americans were not very familiar with the concept of dipping into home equity. Charles Humm, the senior vice president for marketing and sales at Merrill Lynch Credit Corporation, had to go on a road show explaining the idea to potential customers.

He had to change the notion that only people in financial trouble took out a second mortgage, he recalls. Merrill wanted to sell second mortgages to consumers who did not need to borrow money urgently.

Going Natural...

...now and then, a book comes along that really changes your outlook on something. Oftentimes, its a large, substantive book.

In Daily Sprawl's case, it was a more simple tome: Squeaky Green.

Quite simply, this book has led the Daily Sprawl family to consider the health and environmental effects of many everyday products. Indeed, little did we know that things like parabens and petroleum by-products make simple products like shampoo and detergent more toxic than most people should be comfortable with.

Below is a list of several products that we are trying. Yes, sometimes they are more expensive (though with stores like Target and Wal-Mart stocking many of them, the difference is mitigated some):

Top natural product manufacturers: Tom's of Maine, Jason's Natural, Seventh Generation, Method, Ecolever, Ecos.

Toothpaste: Tom's of Maine, Jason's Natural
Shampoo: Jason's Natural, 365 (Whole Foods store brand)
Household Cleaners: Seventh Generation, Method
Detergent: Ecos, Ecolever, Seventh Generation
Shave Cream: Tom's of Maine, Jason's Natural
Deodorant: Tom's of Maine

Just of sampling of the products we're trying out. Daily Sprawl highly recommends checking out Drugstore.com for great deals on many of these products.

Remember the Pickens Plan...

...and the Daily Pickens update here.

While we don't agree with everything the Plan promotes, we do find the vast majority--and the effort in general--to be exactly what we need to begin to address the Major Changes coming our way very soon.

Frugality and Saving Start...

..to become cool and admired:

And this new frugality might actually be OK with many of us. Consumers were "so glutted on everything that they had acquired and all the time that was robbed from them...that they almost saw this [downturn] as a great opportunity to stop," says Faith Popcorn, chief executive of her eponymous consultancy. In a recent survey, she found that 90 percent of respondents said they were considering options for "the simpler life," and 84 percent said they were inclined to buy "less stuff."

Another survey found that people rank being in control of their finances and living a green lifestyle higher as signs of success than having money or a luxury car, and view having a paid-off mortgage as more of a status symbol than having a beautiful home. "We have to convince ourselves that the lifestyle we can afford right now is a desirable one," says Holly Heline Jarrell, a global director at the communications firm Manning Selvage & Lee, which sponsored the survey.

The California Story...

...in all of its depressing detail:

But this was no ordinary gold rush; it was alchemy, with the developers turning piles of concrete, glass and steel into gold as if by magic.

This boom was great for state finances as taxes levied on the new buildings and on the tens of thousands of construction workers arriving in the state flooded in. But Stockton's newfound prosperity was just a flash in the pan. All too quickly the city became vastly overdeveloped, with so many empty houses and blocks of flats that the place started to feel like a ghost town.

A Startling Statistic...

...from this CBS News report:

Sixty years ago, cheap gas and new highways helped fuel suburbia's rapid rise, creating a new American utopia. But as CBS News correspondent Ben Tracy reports, the triple threat of falling home values, empty nesters returning to the city and sky-high gas prices is driving suburbia to the brink.

Some developments are left half built while other homes look abandoned. Demand for suburban housing is dropping so fast that a recent study predicts that by 2025 there will be a surplus of 22 million large-lot homes in suburban areas.

Interesting Washington Post Article...

The New Economy of the 1990s fostered delirious spending with easy credit. Americans were encouraged to borrow far beyond their means. A pervasive taste for extravagance equated size and opulence with luxury. The McMansion, gargantuan in size, appeared, often entailing the demolition of several historical houses. The facades of these homes are adorned with a showy pastiche of super-size motifs. How about some classical columns, two stories high, to stir memories of Southern plantations, alongside huge displays of half-timbering to evoke a Tudor castle? Interiors focus on a majestic stairway and a portentous spectacle called the "Great Room."

A McMansion is rife with contradictions. It's an exhibitionistic house, yet it's set far back from the street, with tall gates and security systems. These Hummer houses appeal to people who want a truly conspicuous display of wealth. They've given freedom of expression a new and rather disturbing meaning: the right to do whatever you want, to be totally self-absorbed. Which is where we are, for the most part, today.

Read the whole story here.

You Can't Make This Stuff Up...

Have you ever heard about the incoherent strategy of giving an alcoholic cigarettes in order to take the focus off of their alcohol addiction.

Apparently, the U.S. money masters have decided to try it out with their failed addicts.

Goodbye Airline Seats?

At least 60 million will be grounded according to this article:

Airlines are set to make the reduction, the equivalent of one in every 14 seats, in response to high oil prices and the global credit crisis, according to the Official Airline Guide (OAG). Reduced availability is almost certain to force up ticket prices.

In all there will be 59.7m fewer tickets available compared to October-December last year. Routes will be scrapped at 275 airports around the world and 3,500 fewer planes will be needed, according to the OAG. While Europe will suffer the loss of 5.5m seats, America will be worst hit, with a reduction of about 20m.

The effects of Peak Oil continue to wreak havoc on both the airline and auto industries. The biggest difference is that the auto industry can adapt to a greater degree with electric-powered cars.

For the airline industry, that is practically not an option. So, as we've said before, use those SkyMiles and WorldPerks while you can...

Automakers Drive Toward the Cliff...

Awhile back, we posted a Daily Sprawl update on the likelihood of a major U.S. car maker hitting the skids [see "Is GM Going Bankrupt?"].

Well, it looks like that prognostication is gaining credibility:

Some experts fear that GM, Ford and Chrysler - their sales plunging as fewer consumers buy gas-guzzling pickups and SUVs - could be forced to head for bankruptcy.

Last week, General Motors (GM, Fortune 500) reported a $15.5 billion second quarter net loss. While its operating loss was only $6.3 billion, that's still more than the market value of the company.

GM's loss followed an $8.7 billion loss at Ford Motor (F, Fortune 500) and came on the same day that the industry reported a 13% drop in sales, its worst month in 16 years.

The States in Worst Shape...

...the whole sprawl-induced, housing crisis is pretty widespread across the country. Indeed, this list of the states in the most financial trouble (ugh! it includes Daily Sprawl's home state of Alabama) represents every region of the country:

The list of states in trouble is 29 on the way to 50. The Center on Budget and Policy Priorities is reporting 29 States Faced Total Budget Shortfall Of At Least $48 Billion In 2009.

Washington, California, and New York have all recently acted. Every other state will eventually follow to varying degrees.

The worst states as a percentage of budget gaps vs. general funds are in order: California (21.3%), Arizona (17.8%), Nevada (13.5%), Rhode Island (12.6%), Florida (11.0%), New York (9.1%), New Jersey (7.6-10.6%), and Alabama (9.2%).

Those eight states are already in deep trouble. Another 21 are in less trouble.

Click here for the entire report.

Trapped in Suburbia?

Yep, it's happening more and more often:

Falling real estate prices, a shrinking job market, and huge segments of the population underwater on the value of their home in comparison to their mortgages are making it very difficult for people to move. Add in rising gas prices and inability or unwillingness for people to commute long distances and it's no wonder many suburbs have become ghost towns.

Some trapped in suburbia, with no one to sell to and no willing or able buyers, have become their own neighborhood islands.

The Ongoing Fiscal Nightmare...

...for SUVs appears set to get worse:

If you thought $4 per gallon was a hit to the wallet, wait until hundreds of thousands of off-lease sport/utility vehicles are returned to dealerships. That's when the whammy of inflated residual values of off-lease sport/utes will hammer the market.

According to Oregon-based CNW Research, with some 800,000 truck-based sport/utility vehicles coming off lease this year, residual values projected three and four years ago will be missed by as much as $6,000 per unit.

Whom will this hurt? Those who lend the money--banks, credit unions, car companies' captive finance arms and others who write leases--will face a tab of nearly $5 billion just in 2008. That number rises to $5.24 billion in '09 and $4.74 billion at the end of the decade.

Sport utility vehicles are about to become virtually worthless to anyone other than the current owner (whether that is an individual or a bank that holds a loan). No resale, the return value in a lease is tanking, and gas prices plus insurance costs are going higher (which is strange for insurance at least since you'd think that decreased value would mean decreased premiums).

All in all, unless you can afford an SUV outright, you likely won't be getting one soon. Which, ultimately, is probably a good thing for the environment and the economy in the long term.

Special Beach Edition...

...we're here wrapping up a great Daily Sprawl get-away.

No Internet use all week until today and, ya know, life goes on without it (and, quite possibly improves).

Nevertheless, while checking emails at the end of the vacation, Daily Sprawl discovered that Mish Shedlock is getting more and more accurate in his prognosticating.

On a much more exciting note, today is the day that the Hampstead Sales Gallery opens to the public. Go check it out--it's one of the most amazing New Urban projects we've ever worked with.

One Quick Article for the Road...

We've discussed how the Las Vegas business model (air-centric travel with millions of feet for conventions and thousands more rooms) is pretty much doomed in the new era of expensive energy.

Well, to a lesser but still troublesome degree, Orlando is facing similar problems.

Granted, unlike Las Vegas, at least Orlando does have rail access to much of the population-heavy Northeast corridor. However, even that access is limited and, of all things, comes in the form of a car train (what a strange creation that will one day be looked back on as).

This recent Orlando Sentinel column discusses how one major portion of Orlando's tourism empire--International Drive--is facing major viability problems:

The north stretch of International Drive is crumbling into blight.

Empty storefronts spread in the strip shopping centers. The Festival Bay Mall was supposed to lead a revitalization but also has succumbed to a growing cancer of vacant spaces.

As a Category 4 recession approaches, you have to wonder how far the contagion will spread along one of the nation's top tourism strips.

Daily Sprawl on Vacation...

...that's right readers, Daily Sprawl is taking a vacation trip until August 2nd.

Depending on Internet access at this super-secret location (no, it's not the NSA HQ in MD, but close...), I'm not sure how frequent updates will be.

Of course, if something big breaks (which is entirely possible in these times), Daily Sprawl will blog it. Short of that, if you don't see any updates between now and August 2nd, you can rest assured that we're safe from the depression-inducing affects of sprawl for at least one more week in the Summer of '08.

See you soon,

Your Daily Sprawlster.

A "Worldwide Hard Landing"...

...ouch!!

Mish's Global Economic Trend Analysis is predicting just that in the most straightforward terms yet:

A worldwide recession is coming. China, India, Brazil, and third world economies simply cannot pick up the slack for the US, UK, EU, and now New Zealand. For more on the situation in the US and UK please see Deflationary Hurricanes to Hit U.S. and U.K.

Admittedly New Zealand is just a tiny cog in the global economy. Nonetheless it offers confirmation of things seen elsewhere.

Australia and Canada will follow in a mind boggling drop once the air is let out of the China commodities balloon. Brace for a worldwide hard landing. One is coming.

A good summary of the Fannie Mae mess from Bloomberg News.

Plus, one commentators view of "everything you need to know" when it comes to Peak Energy:

A student in my class asked me for a list of skills we need to get ready for peak oil, prioritized. I admit, it took me about a day after she asked to stop thinking “Holy Crap, how do I figure that all out!” But it is an interesting question. And while it isn’t all just about food preservation, I thought I’d take a shot at it. I will, of course, be relying on my fearless readership to point out gaps in my thinking.

The Demise of the Domestic...

...commercial airline carriers continues:

The decrease in overseas flights is a potentially troubling sign for the major airlines, which traditionally make more money on tickets for trips outside the United States.

But with the price of jet fuel nearly double what the airlines paid in 2007, “the economics of many routes just don’t make sense,” Mr. Tague said during a conference call.

Daily Sprawl is not the type of blog to brag too much. But, so far, almost all of our predictions have proved accurate.

So, we'll now predict that, by 2010, at least 50% of the U.S. commercial airline carriers will be defunct--either by merger or just going out of business. And, add to that prediction the extreme likelihood that UPS and FedEx will have to merge to make any economic sense.

Just repeat after us: "I like the train. The train is good. The train works for me...I like the train. The train is good. The train works for me...I like the train..."

Got An Extra...

...Heavy Duty Sleeping Bag? One Merrill Lynch economist (is that an oxymoron?) thinks heating bills might burn a hole in your pocket this winter:

“The federal government is going to have to step in and heavily subsidize this winter,” Mark Wolfe, executive director of the National Energy Assistance Directors’ Association, told EnergyTechStocks.com last month. NAEDA represents the state directors of the federal government’s Low Income Home Energy Assistance Program (LIHEAP). President Bush cut LIHEAP funding and, despite experts’ dire warnings, the U.S. may enter the winter heating season with less money available to help people than last year.

Peak Water Hits California...

...bad news for the Sunny Cal-a-forn-eye-eh:

Gov. Arnold Schwarzenegger's recent executive order certifying that California is in a drought and directing state agencies to start thinking about what to do about it is only the latest sign that a way of life built on cheap and readily available water is coming to a close. For much of the state, June was the driest month on record, according to the National Climatic Data Center. The continuing water crisis raises the question of whether we are approaching the limits of growth in California.

For the last century, it seemed there was no limit. More than any other state, California's economy and population exploded, a growth spurt fueled in large part by abundant water supplies. Now we may be at a turning point, especially in Southern California.

Headline: "Is America too big to fail?"

It is almost beyond belief that the mainstream media has reached the point where it is asking this question. Not because this result was unexpected, only that it happened so swiftly.

Clearly, 2008 will mark the historical date where the sprawl-centric ponzi scheme finally caved in.

The Death of the Strip Mall...

...continues to accelerate:

The vast majority of these failed companies are among the nation's 23 million small businesses, with fewer than 100 employees. Their fortunes have tumbled as the national economic downturn has deepened.

"The climate is turning desperate for small businesses," said George Cloutier, founder of American Management Services, a consulting firm that helps small companies increase profits. "They are in crisis, and, as these numbers show, it's getting worse and worse."

Daily Sprawl keeps hearing more and more reports about a pending boom in the desertion of strip malls. Expect to see many stores in your typical sprawl strip flashing "For Lease" and "Vacancy" signs soon. A big question is whether strip mall landlords will actually evict tenants or seek compromises. After all, an empty store is often worse than a filled one that isn't paying full rent.

If only we would have developed like this from the outset...

The Airlines are Actually Recommending Reason...

...but the Las Vegas elected officials don't seem interested in listening:

Airlines serving McCarran International Airport have issued the bleakest economic forecast yet for Las Vegas, recommending that officials reconsider the need for a terminal that is under construction because there may not be sufficient tourism traffic to justify it.

The airlines also have asked the airport to cancel its $114 million Heliport project and to reevaluate all other capital projects in McCarran’s five-year plan.

The airlines’ message to Las Vegas: The industry will not quickly recover from the tourism decline wrought by a combination of higher fuel prices and a sputtering economy.

County officials scoffed at the airlines’ pessimism, saying the region’s economy depends on an airport built to support more tourism traffic. The Clark County Commission on Tuesday voted to stay the course with construction of the terminal.

On the Cusp of Worldwide...

...energy shortages:

Of the 266 distinct nations or entities on the world today, nearly 100 are now reporting continuing energy shortages, mostly in the form of inadequate electricity supply, but in a growing number of cases, shortages of liquid fuels and natural gas. The actual number of countries affected is probably well over 100 but there are dozens of isolated island-states scattered around the world that are rarely heard from and are almost certainly suffering in silence while waiting for the next oil tanker to come in.

The majority of these energy-short states are small, poor and play only a minor role in world trade. While we should feel sorry for the plight of their inhabitants who are, or shortly will be, enduring severe hardships from greatly reduced supplies of electricity, water, food and use of motor transport, the impact of their problems on the better-off OECD world is likely to be minimal for a while.

Shortages, however, are not confined to small, poor states, but, in an increasing number of cases, are appearing in large, relatively well-off and active states on which the OECD world of North America, Europe and parts of Asia are very dependent. Several of the countries having energy problems are actually oil exporting states that, for one reason or another, are not able to turn their increasing oil wealth into smoothly functioning shortage-free economies. Unfortunately, several major countries appear to be on the path to an energy shortage-induced economic and perhaps political collapse within the foreseeable future which obviously will have serious consequences for us all.

According to my brother who currently serves as a missionary in Togo, West Africa, oil prices are about to jump nearly 25% there.

These are very serious concerns. People should be prepared for the possibility of greatly reduced international travel soon.

Daily Sprawl Loves Coffee...

....and has been increasingly researching more sustainable coffee options.

This website has an article ranking some of the better "fair trade" and organic coffee options.

Gas Shortages This Fall?

This article concisely and carefully explains whey gas lines and fuel prices in excess of $5 per gallon should be expected this fall:

The purpose of this essay is to highlight petroleum inventory issues likely to cause shortages this fall. Several events can create instant, grave shortages. Following is an incomplete list of known risks. There are still more unknown risks of unknown magnitude. As explained below, gas lines will be accompanied by a price jump of about $1.50 per gallon, even if crude oil does not increase in price.

Drive slower=save gas money.

A no-brainer that, if my daily commute is any indication, some people are starting to join the 60 mph, right-lane caucus:

Even with gas prices cresting above $4 a gallon, large SUVs, pickup trucks and even Toyota Priuses barrel down freeways here in suburban Detroit at more than 75 miles per hour -- well beyond the 55 mph that was the national speed limit during the '70s and '80s.

If the U.S. Energy Department's calculations are right, all these lead foots could save the equivalent of 29 cents to 94 cents a gallon if they slowed down just to 60 mph -- and reduce the fuel they burn by about 7% to 23%. But most of my neighbors and I still choose to hit the gas rather than add 10 or 15 minutes to our commute times.

The Next Shoe to Fall?

More than $1 trillion (£500 billion) is held on credit cards in America. In the UK, debts of more than £50 billion have been run up on the plastic. Across the world, somewhere between $2 trillion and $3 trillion is owed on credit cards.

Up to now, the credit crisis has passed by without plastic going into meltdown. Statistics have shown steady levels of arrears, and suggested that many consumers have been successfully paying off part of their balances.

Now there are increasing signs that this last breakwater, shoring up the economies of the western world, is about to crack under ever-increasing strains.

Read the entire story here. The hard truth is that credit card defaults could not just be the next but, quite possibly, the final shoe to fall. As the story discusses, credit cards have been the last line of payment defense for many consumers--including such basic expenses as food, shelter, and power.

When the credit card market contracts later this year/early next year, the chaos will be unique among recent generations.