Monday, January 11, 2010

186 acres in Ramsey. A Strib poster child. It is serious for the nation with small community banks at risk. This IS Main Street. Not Wall Street.



You can read Chris Serres' story, this link.

It does not give numbers of failures, projected 2010 effects, but is more anecdotal.

The 186 acres in Ramsey? The owner who sold when the bubble was rising did okay. That is land speculation. The developer who borrowed took gas. The bank that lent the purchase funds took gas. Details of who believed what in the Ramsey dealings, well, all politics are local and politics mixes locally with local land deals. Sometimes the mix works. Sometimes not. Is it a healthy mix? I don't believe so, but when the fires of passionate love of the bubble burned as if it would be unending, nobody asked much except, "Do I get the loan?" Some suffer from timing, others don't but instead prosper, and those losing should look at the politics and whether promises were made or expectations fueled in ways that are actionable. Not knowing details of the 186 acre housing gamble, of the politics mixed into it, I cannot guess about what led, (or possibly misled), decision making.

The Strib article is headlined as if about commercial real estate failing, but this 186 acres in Ramsey is a housing thing. It was part of the housing bubble that went kaput some time ago.

It was a development loan, for housing, as opposed to a development loan for retail, strip malls, big box, whatever. Commercial tenants are leaving vacancies as the "credit crunch" and the mood of the times have effects. The commercial real estate "adjustment" will be on the heels of current bad times, making times worse.

Can you say "big time depression?"

Learn to.

"Business cycle" is a cliche term. The great capitalist free market, the Gipper's favorite speech fodder, is cyclical by nature so that without countercyclical government policy, it happens.

The Gipper never speechified down side. To the Gip, he went horseback riding and cut taxes by selling off government property and running deficits. That was Gip's view of good policy. Of how capitalism should work. And Wall Street made a bundle and with the mergers the surviving big capital there is more strongly positioned than ever.

The Strib article's reader comments were disheartening.

Community banks taking gas is not good for Main Street. Not good for jobs. Not good for those who've moved to the 'burbs. The "cry me a river" reaction of most of the comments overlooks what makes the world go around - orderly cycling of money and credit, without disruptive exuberance or pessimism. The roller coaster of capitalism is something the fat cats don't talk about, it's something they play, with power to manipulate timing, thereby gaining more wealth and power - which are after all the heads and tails of the same coin.

And the little guys voting GOP, the little guys voting DFL, they see the two party system as defining their two choices in a "lesser evil" offering, but they fail to see it defining their destitute realities. What else is to be expected, however, from two parties, each owing loyalty not to Main Street but to the same batch of lobbyists and the bigger players funding the lobbyists and pulling the strings there, two levels of puppet shows - it's playing in every theater in the nation these days, and nobody's seeing the show while all the small players are queasily watching and thinking it's apparent.

And who owns Strib to be giving hints about what's really happening? Hey, how about them Vikings? Now that's news. Let's buy Zygi a new place to charge more per seat. It's civic pride, after all. It is such good sense.