Market Conditions: Will Secondary Cities Boom After Coronavirus?
There’s a lot of discussion about how COVID-19 will impact the housing markets both immediately and long term.
Closings are still getting done as buyers house hunt through virtual tours and remote appraisals and closings.
Chicago’s inventory remains low as new listings have plunged.
Each week the shutdown continues, the number of new listings seems to get more anemic.
But it’s unclear if there will be a huge surge once the economy re-opens.
And it’s unclear if buyers will rush to the suburbs or go even further, and leave the largest cities for smaller cities that are cheaper and less dense.
Is the pandemic the final straw that forces Millennials and GenZers to leave the Superstar Cities?
From the NYT:
Even before the coronavirus, Nina Brajovic wasn’t so sure about her life in New York. As a consultant for PricewaterhouseCoopers, she spent most weeks out of town traveling for work. She often wondered whether she could do her same job for cheaper — and more easily — while based in her hometown, Pittsburgh.
Over the past month, she has gotten a sneak peek of that life, moving back in with her parents to avoid the wall-to-wall density of New York and working out of her childhood bedroom. She is now savoring life’s slowness, eating her father’s soup and watching movies on an L-shaped couch with her mom.
“Part of it feels like, why am I even living in New York?” said Ms. Brajovic, 24, who pays $1,860 in rent each month for her share of an apartment with two roommates in Manhattan. “Why am I always paying all of this rent?”
With her lease up for renewal, she is contemplating whether to make the move more permanent.
“I have no idea what I am going to do,” said Ms. Brajovic. “But it is a thought in my mind: the potential of not going back.”
Meanwhile, on the other coast, Californa’s high prices continue to push out the middle class.
For those facing thousands of dollars a month in rent, what if you can work remotely somewhere where it’s just $825?
Brenna Pelletier, an artist, has been on a journey to downsize — and cut costs. She left Los Angeles in 2018, a year it lost about 35,000 people, and headed to Las Vegas, but even that was proving pricey.
As the coronavirus shut things down, business cratered on the website where she sells enamel pins. Instead of worrying about how she was going to pay $1,360 for rent in Las Vegas, she sped up plans to move to Tulsa, since she had been accepted to the city’s recruitment program.
By early April, she was behind the wheel of a 26-foot Penske truck, making the 1,200-mile drive with her two cats in a case seat-belted in next to her.
“This is the perfect time to move,” said Ms. Pelletier, 31, who works from home. “I have to do it now. Otherwise I’m going to be stuck or evicted.”
She is now settling into an apartment in downtown Tulsa, where she pays $825 a month. “I normally don’t like to just throw a dart and see what happens,” she said of her last-minute change of plans. “But in this case, I thought, these are extreme circumstances.”
Will more people make the move to an “easier” life in a secondary city, as Sonies has done?
America’s biggest cities were already losing their allure, what happens next? [New York Times, by Sarbrina Tavernise and Sarah MervoshApril 19, 2020]
Remember this article from the Redeye about everyone moving to Austin?
I had to go look up the date.
2014.
Population data from the U.S. Census Bureau show that more than 1,500 Cook County residents migrated to the three counties that make up the greater Austin area between 2007 and 2011. That may not seem huge until you compare it with big-name burgs like San Francisco (987) and Brooklyn (250). Each had smaller numbers of ex-Chicago-area residents relocating to those cities over the same period.
Why Austin? For some like Leo Resig, former West Loop resident and co-founder of pop-culture website The Chive, the siren call was of a financial nature.
“Austin is a pro-business town,” said Resig, 34, who moved to Austin last year. “The support they offered, in addition to there being no income tax, made it a no-brainer for us [when planning to relocate].”
http://www.chicagotribune.com/redeye/ct-redeye-xpm-2014-03-12-48162988-story.html
I’ve been saying this for years. I don’t like densely packed, expensive cities. Chicago is less bad than the other ones but still difficult to navigate. I’ve also made the unpopular argument that there is a dis-economy to dense packing – the infrastructure is hard to maintain. Just look at the cost to renovate the NYC subway, which is probably a major contributor to the spread of CV. Note how often streets in Chicago are narrowed due to construction or maintenance. How much time do people spend in traffic? How often do trucks block streets while they make deliveries? These are unseen costs.
I was in NYC back in the October timeframe and walking around at 7 AM I felt sorry for the people living there with kids. They have no cars and they have to get their kids, with all their supplies, to where they are going before going to work. PITA. Never understood why people live there.
One other thing…I have two daughters. One lives in NYC and the other in SF. We intercepted the one that lives in NYC on her way back home as things were blowing up there and she’s been staying with us since thank God. I don’t know how/ when she can go back, let alone get around the city without a car while this thing is festering. The one in SF wants to buy a car now and told us that 3 months ago she would have thought that was the most insane and unimaginable idea ever.
“Austin is a pro-business town,”
The irony is that people move to red states from blue states for reasons like this and then they want to change the red state to blue. Hey, I’m not gonna take sides here but I find it extremely humorous.
“The irony is that people move to red states from blue states for reasons like this and then they want to change the red state to blue. Hey, I’m not gonna take sides here but I find it extremely humorous.“
Sounds like you’re describing a virus
In regards to the snippets posted, a sizable portion of millennials have bought into the trope that you really haven’t made it unless you’re in NY/LA/SF and maybe Bos/Sea/Port/Chi.
Once they get a little older and have kids, smaller markets sound better, especially if they’re a transplant
“The irony is that people move to red states from blue states for reasons like this and then they want to change the red state to blue. Hey, I’m not gonna take sides here but I find it extremely humorous.“
IL is a reddish state, with a major blue city (Chicago) in it. TX is a red state, with at least one majorish blueish city (Houston) and one small blue city (Austin).
“In regards to the snippets posted, a sizable portion of millennials have bought into the trope that you really haven’t made it unless you’re in NY/LA/SF”
I don’t think it’s limited to millennials. In any event, there’s some merit to that trope.
“TX is a red state, with at least one majorish blueish city (Houston) and one small blue city (Austin).”
Dallas County (easy to find; didn’t look for city only) vote totals for POTUS in 2016:
Donald J. Trump (REP) . . . . . . 262,945 34.34
Hillary Clinton (DEM) . . . . . . 461,080 60.22
I’ve always liked some of the smaller cities. I think people mistakenly believe there are no amenities, culture, food, etc.
A big problem now though is that many of these cities are getting popular and can’t support all the new residents.
I’m from Atlanta and cannot believe how expensive housing has become and the amount of traffic there now. Granted, it has been 21 years since I live there, but it is like night and day. I can’t stand driving there now when I visit as it is exhausting.
I mean Tulsa is bribing people with 10 grand to move there
https://www.cnbc.com/2018/11/13/tulsa-oklahoma-will-pay-you-10000-to-move-there-and-work-from-home.html
can’t say thats a normal choice most would make without that
“Tulsa is bribing people with 10 grand”
From the article:
“the city hopes that newcomers will decide to remain in Tulsa long term and shape the community by … even running for political office”
I doubt that they really want that.
““In regards to the snippets posted, a sizable portion of millennials have bought into the trope that you really haven’t made it unless you’re in NY/LA/SF””
Yet, those cities will eat you up and spit you out. All of us are well familiar with the transient nature of the ‘yuppie’ areas these cities. We all have stories of people who’ve left. I’ve always said that to make it in a big city, you need a ‘good’ job, a family (spouse/kid) and home ownership. That’s how you measure success. Otherwise you’re just a transient in a foreign town with no connections, ready to leave at any moment, which is OK for some people, but not necessarily good for the human condition.
Most of my college roommates all moved home to another state, as have many of my former apartment neighorhors and co-workers under the age of 30. My spouse is not from Chicago and had she not met me, and everything fall into place, there’s a good chance she’d be back in Omaha, so to speak.
Smaller cities that are not Chicago, and not in IL, are certainly more attractive in this economic downtown. IL’s been floating, just barely, for years, and this economic downturn is going to be teh final nail in our coffin. We may be in federal receivership in 12-18 months, and ipass tolls will be $8 per axel to drive on the Kennedy as it turns into the I-90. The progressive tax will be 11% on all income over $20,000 by the time it is actually enacted, and it will take 3 days to get a driver’s license renewal.
Which is ironic, because in these uncertain times, that house, that job, and that family, are not root, but an anchor, that will ultimately bring you down financially and destroy you, eat you up and spit you out.
“IL’s been floating, just barely, for years, and this economic downturn is going to be teh final nail in our coffin.”
Nah. States and cities will be bailed out over the next few months. There’s no way any politician is going to allow for thousands of workers to get laid off, state parks to close and services to be dramatically cut, like libraries.
LA County just had to do a salary cut. Imagine living out there with those home prices and you work for the government? It’s awful.
Put it all on the bill. Along with the $1200 people just got.
“TX is a red state, with at least one majorish blueish city (Houston) and one small blue city (Austin).”
Sorry anonny. Totally wrong about Texas now. All 4 major cities have gone blue the last 2 elections. And 80% of the population lives in them and their suburbs.
That’s why Texas will likely go blue either this year in 2020 or certainly in 2024.
“Nah. States and cities will be bailed out over the next few months. There’s no way any politician is going to allow for thousands of workers to get laid off, state parks to close and services to be dramatically cut, like libraries.”
As opposed to the private sector? Yeah that’s going to play well
Nice that Porky Pig wants the Feds to pay for Illinois Pension malfeasance and give the state a blank check
LOFL
No love for Omaha?
Chicago’s no fun right now, but nowhere else is either. When the city wakes up from its slumber, the Cubs are back at Wrigley and Lake Front is open in all its glory, people will remember why they love living in Chicago. Not to mention, for those needing high paying jobs, big cities will always be the best place to have a career with successive high paying jobs, where you’re not tied to whatever shop lured you to town.
…all that said, I bugged out to a lake house in Michigan for the time being.
“…all that said, I bugged out to a lake house in Michigan for the time being.”
MI is such a great state, too bad for that whack job in the governor’s office. She’s about to be recalled. You can’t boat, or buy gardening seeds, but the dope stores are open!
“All 4 major cities have gone blue the last 2 elections.”
True. Including the in-county burbs, too.
“And 80% of the population lives in them and their suburbs.”
FALSE! Top 4 metros = 18,211,286 (’18 est) Total pop = 28,995,881. 63% in the Top 4 metros. And that’s with the DFW metro including Fort Worth’s MSA, which did *not* go blue. Take out the ~2.5m on the FW side of the Metroplex, and its about 54% of the pop in the other 4 big metros (FW is 3d, ahead of SA).
And the *sole* suburban county of all of those metros that voted blue in 16 was Fort Bend, SW of Houston.
“When the city wakes up from its slumber”
Perhaps later this year
“the Cubs are back at Wrigley”
Hopefully 2021, but unlikely with 40,000 available seats. More likely 2022.
“Lake Front is open in all its glory”
TBD.
Not sure how it all shakes out over time. Those that travel 50%+ for work will still struggle with the added commute times of flying in/out of a smaller market. If you can work from home and only travel 20% it will be much more enticing. I’d say cool college towns in settings with great natural amenities Boulder, Madison, Tempe, do well. Places like Austin, Nashville, Vegas, Portland, and Bozeman are already on an upswing. They will continue to grow or make a comeback in the years ahead.
We have been spending several days per week at our WI place. And let me tell you there has never been a greater appreciation for that slower pace of life and small town amenities. The proximity to chicago burbs is amazing. Made it from the lake to my Goose Island office in 1:15. If traffic was always that easy I think that we would seriously consider moving there full time!
“When the city wakes up from its slumber”
Perhaps later this year”
Or perhaps never in some of the more authoritarian areas. Absolute Power is hard to give up, and it’s so much easier to determine the outcome of an election when your people first inspect the ballots as they are mailed in. JB made the mistake of holding the election – and people died as a result. They’ll never do that again. You’ll be able to mail in your ballot and they’ll examine it closely for ‘errors’ before it’s tallied. Watching even ruby red mchenry county turn ocean blue as JB’s handpicked men ‘inspect’ mailed in ballots of accuracy. They’ve showed their autocratic tendencies these last three months. You’d have to be an insane person to let them stay in office after getting a taste of that power, and they may outright steal it.
Dude, you should get that fever checked–I fear you might have the covid.
Can you still taste the bitterness?
“The one in SF wants to buy a car now and told us that 3 months ago she would have thought that was the most insane and unimaginable idea ever.”
What’s the point of being a transplant living in CA without a car to go see the Western US and the rural/coastal parts of CA and the Sierras? Get the car.
I guess you could call the GZ a “big city” but ultimately we’re trapped here, in a small area. With the Kennedy, Eisenhower, and Dan Ryan expressways in gridlock both ways, most days, most times of day…there is no ability to leave. We’re trapped on a flat grid, with nothing else to do but eat & drink. That’s why Chicago is a great food & partying & sports-0watching city, we’re trapped with nothing else to do, nowhere else to go. Lake Michigan is only good for 2 months of the year.
MI is such a great state, too bad for that whack job in the governor’s office. She’s about to be recalled.
https://thehill.com/homenews/state-watch/490825-governors-win-high-marks-for-coronavirus-response-outpacing-trump
Michigan Gov. Gretchen Whitmer (D) has seen her job approval rating jump to 60 percent, according to a Marketing Resource Group poll, and just 22 percent disapprove. Whitmer’s approval rating is 15 points higher than Trump’s in the battleground state; Trump dismissively referred to “that woman from Michigan” after Whitmer complained about the lack of support from the federal government.
“That’s why Chicago is a great food & partying & sports-0watching city, we’re trapped with nothing else to do, nowhere else to go. Lake Michigan is only good for 2 months of the year”
Well there used to be some really kick ass people around here too but now? It’s filled with the kind of people who would elect a fat f*ck billionaire authoritarian jerk off beholden to public sector union rule who bought the governorship. Pigster is a Palm Beach party boy who bought this state to asset strip for his family’s empire, nothing more. Illinois is fucking done. You had a chance with Rauner and ran him out on a rail. You will get what you all deserve, anyone with half a brain is getting the fuck out.
https://www.zerohedge.com/economics/illinois-senate-democrats-seek-massive-federal-bailout-state-going-far-beyond-coronavirus
“The requested bailout is galling in scope and shameless in purpose – a clear attempt to use the pandemic as cover to get federal money to pay for Illinois’ pre-pandemic fiscal mismanagement, particularly of its pensions.”
I think of the southbounds of the world when it comes to this kind of shameless activity. These know-it-all arrogant narcissists, Trump-hating misfits, the “hate has no home here” hate-filled hypocrites, etc. etc.
They try and tell us how rich Pritzker is compared to Trump, etc.
Now look, the fat spoiled brat has to go hat-in-hand to Trump begging on behalf of our hate-filled blue state residents. It’s Chicago/Cook Cty. that bankrupted IL not the downstate folks.
I think the Pritzkers should donate some of their wealth to help the less fortunate in IL. Let’s see them walk the walk, instead of blaming Trump who shouldn’t bailout a state that hates him so terribly.
“Let’s see them walk the walk, instead of blaming Trump who shouldn’t bailout a state that hates him so terribly.”
—————————–
uhh, who put the gun to Trump’s head and forced him to run for president. Last I heard there were 50 states, and the federal government didn’t get to dole out aid on the basis of whim and caprice.
And while we’re on the subject, how much of his own money has Trump donated to corona virus relief?
“Well there used to be some really kick ass people around here too but now? It’s filled with the kind of people who would elect a fat f*ck billionaire authoritarian jerk off beholden to public sector union rule who bought the governorship. Pigster is a Palm Beach party boy who bought this state to asset strip for his family’s empire, nothing more. Illinois is fucking done. You had a chance with Rauner and ran him out on a rail. You will get what you all deserve, anyone with half a brain is getting the fuck out.”
1000x Thumbs Up! Truth!
“And while we’re on the subject, how much of his own money has Trump donated to corona virus relief?”
Last time I checked, Trump donated last quarter’s salary.
JB donated $2,000,000 of his stash stored in the cayman’s and his family’s foundation reached into their cayman’s stash and matched it.
Donating inherited money that grew tax free is really no achievement at all.
https://www.bettergov.org/news/pritzker-s-storied-charity-costs-him-little-but-taxpayers-a-lot/
Pritzker’s Storied Charity Costs Him Little But Taxpayers A Lot
The wealthy governor candidate campaigns on his philanthropy, but records show most of his donated proceeds have first been filtered through offshore tax havens and a tax-exempt foundation.
BUT HE’S LOOKING OUT FOR THE UNIONS AND THE LITTLE GUY!
“Records show Pritzker has funded his charitable giving almost exclusively with inherited proceeds, much of it filtered through offshore tax havens and then deposited in a tax-exempt nonprofit he controls, the Pritzker Family Foundation.
The result is that Pritzker’s philanthropy, and any accolades that go with it, have been bankrolled with what is essentially found money. He did little to earn the proceeds and paid no taxes on the bulk of it before giving it away.”
https://www.bettergov.org/news/pritzker-s-storied-charity-costs-him-little-but-taxpayers-a-lot/
So, the answer is Trump donated $100K and JB donated $2 Million?
“So, the answer is Trump donated $100K and JB donated $2 Million?”
Yes.
And even better, the Pritzker Foundation matched it.
Lol.
$4 million donated.
Meanwhile, Trump stole from his own foundation, which wasn’t his money either, gets shutdown and has to pay a fine.
“You will get what you all deserve,”
Yep. Georgia or Florida awaits everyone else.
Zerohedge is shit and produced by the Russians.
It is literally propaganda.
And, yes, every state will want bailouts. Cities too. And Illinois will get a lot of money. Let’s hope it helps us.
Oh, and by the way, this is when it pays to have a powerful, senior Senator representing your state.
His name is Dick Durbin. And he’ll make sure we get money.
“Lake Michigan is only good for 2 months of the year”
It’s down to 2 months now?
Pulease.
You guys are hilarious.
We’ve actually debated on this blog how “long” Chicago has good weather with some saying 3 to 4 months. And that you can only be outside for that long.
Yawn.
If you don’t like it, plenty of places to move to in the country. It’s big and beautiful. There’s a tropical zone, there’s subtropical zones, there’s prairie, mountains and desert.
Go. Find your joy.
Meanwhile, Chicago still remains one of the largest cities in the country and the only one building skyscraper after skyscraper.
Someone is moving here. Someone is staying here. Many love it here. Some will move away.
It’s up to you.
Quit whining.
“What’s the point of being a transplant living in CA without a car to go see the Western US and the rural/coastal parts of CA and the Sierras? Get the car.”
Again, HH doesn’t live in Chicago and has never lived in California and is so old he doesn’t know what is available today.
There is a thing called: rental cars. You can rent one if you want to drive to the “Sierras.” And San Francisco is actually ON the coast so you can just take the Muni right to the ocean. No car necessary.
Even better, just get a Zipcar in your neighborhood. You can drive up to 190 miles. Plenty of places to explore that are under 190 miles.
There’s really no point in getting a car in San Francisco. Buses, subway are good. Unless you’re doing the commute down to the peninsula every day.
And, yet another indication that HH doesn’t live in Chicago if he says Chicago is trapped in a “small area.”
I mean, my god, what jibberish is he even saying?
“You’ll be able to mail in your ballot”
Homedelete lives somewhere where he, gasp, can’t mail in his ballot. Where’s that?
In Ohio, you can mail it in a whole month before the election.
And over 2 million people every presidential election mail in their ballots and have for decades. They’re called…the US military.
The ENTIRE election this fall should be by mail in ballot so that people are safe. That is all.
Anyone who argues against that is a moron and idiot. There are 6 people infected in Wisconsin now too from that dumb election day that the Republicans lost anyway.
The madness must stop.
Oh- and Chicago had a record number of mail in ballots. If JB’s “handpicked men” inspected them, gotta love them as there were over 70,000 mailed in ballots just in Cook County.
Every time I didn’t feel like going to a polling place I just got an absentee ballot. No bigee.
“There is a thing called: rental cars.”
That’s what they’ve historically done.
“There’s really no point in getting a car in San Francisco. Buses, subway are good.”
Well, right now they’re good for catching the orange death. Same for Uber, which they heavily relied upon up until now. Hence, the desire for getting a car.
“Well, right now they’re good for catching the orange death. Same for Uber, which they heavily relied upon up until now. Hence, the desire for getting a car.”
That makes sense Gary. I’ve wondered what the long term impact might be on Uber/Lyft.
How long will people be leery to get into a car with a stranger driving?
It’s good news for the auto industry that your daughter is considering getting a car.
“I’m from Atlanta and cannot believe how expensive housing has become and the amount of traffic there now. Granted, it has been 21 years since I live there, but it is like night and day. I can’t stand driving there now when I visit as it is exhausting.”
People in the midwest, even Chicago, have a hard time imaging how many people live in the Boston-Washington, DC corridor. It’s a lot: over 52 million people. And it’s all blue and it’s very packed in and the traffic sucks and the taxes are high, etc.
So those that can flee it. But they can’t just flock anywhere these people know they won’t fit in in many places. Atlanta does seem to be drawing a lot but the most recent boom town is Nashville.
Nashville has rush hour traffic jams in ours well outside rush hour. People are flocking to it en masse & the infrastructure can nowhere near keep up with it. It’s the next city to be ruined if you’re looking for the traditional American dream.
“the next city to be ruined if you’re looking for the traditional American dream”
Thought that was a homestead farm? Where one works with one’s hands, for oneself, and succeeds or fails by the grace of god/the weather. How does one have that in the city?
Or are you talking about a “traditional” American dream sold to your parents by the admen on Madison Avenue, and then passed down to you by Hollywood?
https://www.dailymail.co.uk/news/article-8242679/Droves-New-Yorkers-looking-flee-city-permanently.html
‘Droves’ of people are fleeing New York City permanently to live in the suburbs or smaller cities – sparking questions of how the city will bounce back once coronavirus lockdown is lifted
Waves of people are trying to leave New York for the suburbs and smaller cities amid growing fears that the city may never return to its former glory or that it will take years to get there.
Among those fleeing are parents with young children who had already been eyeing moves to suburbs and were give a push when the pandemic hit, and frustrated singletons who no longer see the point in paying exorbitant rent prices for small apartments when there is no city beyond their homes for them to enjoy.
It has sparked questions of whether New York will bounce back – like it did in the 1920s after the Spanish Flu, when there was a spike in creativity and population growth – but also fears that the Big Apple, beloved for its chaotic density and busyness, may never be the same again.
You’re citing to the raggiest rag of the British “press” now?
What’s next? DailyKos?
The source for the “droves” in the hed:
[Realtor, talking her book]: “The existing clients who were on the fence before are also all coming back in their droves.”
So, since NO ONE talks like that, I have to question the accuracy.
Anon(tfo), the DM article is a recap of a pay walled WSJ article.
“the DM article is a recap of a pay walled WSJ article”
Rupert doesn’t send C&D letters to a competitor who is plagiarizing his papers? Really?
“Nashville has rush hour traffic jams in ours well outside rush hour. People are flocking to it en masse & the infrastructure can nowhere near keep up with it. It’s the next city to be ruined if you’re looking for the traditional American dream.”
Nashville was never built to be a big metropolis but now thousands are moving there every week. Literally.
It was always a backwater. Has no real “industry” (except country music.) No Federal Reserve Bank. Amtrak used to go there but they shut that line down a long time ago. They only got non-stop flights to Europe a few years ago and are now building a new international terminal because demand has grown.
It has no big city amenities. No zoo. Few museums outside the country music hall of fame.
Cleveland and Detroit were meant to be big cities.
Nashville?
Nope.
There’s no subway or light rail. Just buses and those are few.
It’s urban design is horrible.
City is gentrifying as all the Millennials and GenZers flock there and want the urban life. So property values have doubled in the last few years. The recent tornado is going to set back one of the most popular Millennial neighborhoods, with cool bars and restaurants. But it will come back.
If you’re a house flipper/real estate investor, great place to be.
“Or are you talking about a “traditional” American dream sold to your parents by the admen on Madison Avenue, and then passed down to you by Hollywood?”
Stay at home wife, decent enough schools for the kid(s), low property taxes, own your own home with two car garage, not terrible traffic. Just had a friend who bought his first home in a Knoxville suburb.
Yes the dream still exists, but it’s not what’s being sold by Hollywood these days nor at any point in my lifetime, that’s for sure. Listening to the garbage being pumped out by the Hollywood types and establishment is why our society has a whole lot of very unhappy people now.
Now that people have figured out they’ve been sold a bag a goods by these institutions is precisely why populism is now dominant and not likely to recede any time soon. You build up a propaganda PC empire on a house of cards and lies you shouldn’t be surprised when it gets torn down. The flames of its demise are beautiful indeed.
Nashville was never built to be a big metropolis but now thousands are moving there every week. Literally.
It was always a backwater. Has no real “industry” (except country music.) No Federal Reserve Bank. Amtrak used to go there but they shut that line down a long time ago. They only got non-stop flights to Europe a few years ago and are now building a new international terminal because demand has grown.
It has no big city amenities. No zoo. Few museums outside the country music hall of fame.
Cleveland and Detroit were meant to be big cities.
Nashville?
Nope.
There’s no subway or light rail. Just buses and those are few.
It’s urban design is horrible.”
Fed Reserve banks & Amtrak might be the 2 dumbest metrics I’ve seen to determine big city status
What? You don’t regularly hang out at the Federal Reserve bank with your friends? That’s the first place I’m going once this stay at home order is lifted.
“Stay at home wife, decent enough schools for the kid(s), low property taxes, own your own home with two car garage, not terrible traffic.”
So, the Madison Avenue/Hollywood “American dream”.
Sold to you by people tehHof tells us constantly are what is wrong with America.
“sold by Hollywood these days nor at any point in my lifetime”
So, you’re what, 30? And you never saw a movie or tv show from before your birth?
It’s not about what they’re selling now, it’s about the faux-stolgia for the ‘better time’ when they were.
“Fed Reserve banks & Amtrak might be the 2 dumbest metrics I’ve seen to determine big city status”
Zoos, too.
But especially dumb since there is one:
https://www.nashvillezoo.org/
Yes, only about 20 years old, but it’s in the city limits and about the same radius from the center as the airport.
Since there’s not a whole lot going on right now..
Things that identify BIG TYME CITIES ™
– Amtrak Service
– Fed Reserve Bank
– Zoos
– International Flights (Need an over/under on flights)
– Subway/Light Rail (Need Over/under on ln-ft of track)
– Being able to get good P?czki
– Corrupt Local Government
– Overpriced Crapshacks in marginal neighborhoods
Please free to add to the identifiers
Top League professional sports team/tour stop
Publicly financed arenas for them
Magazine focused on local ‘society’
Exclusionary country clubs
Potholes
Traffic jams
Rats (I hear they are struggling with the restaurants closed but I haven’t heard anything about government aid)
High taxes
“No Federal Reserve Bank.”
Circling back to this one:
The state of Missouri has as many cities with Federal Reserve Banks as the entirety of the country west of Missouri–19 states, with 36% of the population, and 12 of the 20 largest cities, have as many “meant to be big metropolis” cities as Missouri, with the larger of those 2 cities being 38th largest.
Missouri is apparently the most “big metropolis” state in the country!
“There is a thing called: rental cars.”
LOL! Yeah right Sabrina. People move to CA to hit it big in life. They don’t move there to use a friggin’ zipcar.
Now, NorthernCA is known to have some of the ugliest women in America (“it’s cold and it’s damp, that’s why the lady is a tramp). So some poor tech guy out there is going to try and take out some date (a 4 or 5 who thinks she’s an 8) and show up in a zipcar? or tell her he has no car? Yeah that’s really on the path to golfing at the Olympic Club and owning a second house near Truckee. Girls move out west for similar reasons, to try and land something better and they ain’t going to be dating some “rental car” loser. Just like Chicago also. They like Audis and 5-series guys who can take them to Napa, Tahoe, down 280, or some stupid trailhead parking lot in Marin.
Things that identify BIG TYME CITIES:
I’d say luxury shopping boutiques. Prada/Ferragamo etc. don’t open up in secondary locales, for instance. Maybe Stuart Weitzman does.
“They like Audis and 5-series guys who can take them to Napa, Tahoe, down 280, or some stupid trailhead parking lot in Marin.”
So what your saying is all I need to drop $30k on a CPO 5 Series and a fake Rolex and I’m in?
Fake it till you make it
“The state of Missouri has as many cities with Federal Reserve Banks as the entirety of the country west of Missouri–19 states, with 36% of the population, and 12 of the 20 largest cities, have as many “meant to be big metropolis” cities as Missouri, with the larger of those 2 cities being 38th largest.
Missouri is apparently the most “big metropolis” state in the country!”
Provel & Imo’s knock STL off the list, even tho they have a Zoo and Fed Reserve Bank
We’ve got to have some standards
KC Gets bonus points for Jack Stack
“So what your saying is all I need to drop $30k on a CPO 5 Series and a fake Rolex and I’m in?”
Watches are out. You don’t need that. The car isn’t going to solve anything by itself. The golddigging whores in SF are looking for the whole package, so “rental car” loser is out, and so is some guy who just buys a car but doesn’t have other things, like the degree from the right school etc. You need the car and be dropping terms like Boalt Hall blah blah.
“Now, NorthernCA is known to have some of the ugliest women in America”
Really? I was not aware of that. I’d like to learn more. Can you please provide your source for this information?
“So some poor tech guy out there is going to try and take out some date (a 4 or 5 who thinks she’s an 8) and show up in a zipcar?”
Apparently so because there are zip cars every block or two all over the city. My daughter and husband and their friends use them for shorter trips. But if it was in the city they’d just use Uber black. And my daughter and her friends couldn’t care less what car a guy uses because they are all highly educated with really good jobs.
You know…is it possible that all your assumptions are wrong?
“Watches are out.”
Watches are in.
Remember, HH is OLD. He has no idea what’s going on culturally with Millennials or GenZers. Millennials are some of the biggest buyers of old-fashioned watches (not smart watches, although those are popular too.) Also, the type of watch you wear does matter in some segments of society. Depends on which city you are in though.
In SF, they never really cared about jewelry, cars or that crap. Steve Jobs never even wore shoes. Younger people don’t even HAVE cars anymore (wouldn’t HH know this? He lives in River West and hangs out at Au Cheval. Are you DRIVING to Au Cheval? No. You’re taking an uber there. Unless you’re old and really live in another state, of course.)
“Boalt Hall?”
WTF?
And the women in San Francisco make their own money. No one who lives out there can afford to unless they have a pretty good job.
“They don’t move there to use a friggin’ zipcar.”
Yes, they do. They don’t HAVE cars. They’re too busy training for the triathlon.
Also, men outnumber women by far in Silicon Valley. It used to be 3 to 1 but I don’t know what it is now. Only Alaska was worse. So, it’s fairly easy for women to find men to date.
“International Flights (Need an over/under on flights)”
This is vital. This is what brings jobs. Without an international airport, or even a decent domestic one, you are doomed as a city. It’s why Columbus Ohio is growing so quickly, as they have been adding a lot of flights to that airport. Same with Charleston which now has non-stop service to London. Same for New Orleans which has London and Germany (seasonal).
St Louis used to be the headquarters for TWA. It used to fly to every corner of the globe. That’s when it had like 20 or 25 corporate headquarters. Huge economic driver.
Now it has less than 10 headquarters and the airport is pathetic. It actually has NO international flights anymore. The airport is really holding it back.
Ah, how little any of you know about the history of the Federal Reserve and what the bank branches represent.
It’s HUGE in terms of what that city was supposed to be. Remember, they give out the forecast for the entire region. And they were originally put in the cities that mattered.
Nashville never mattered. Still doesn’t.
And yes, without Amtrak Chicago would be shit as well. Train stations were airports 100 years ago. They were economic engines and drivers. They were wealth creators. Still are- if only they would build high speed rail and get into this century but America is really BEHIND every other country. Blah. Just pathetic.
So, yeah, Nashville was a backwater. Flooded all the time. Mosquitos. Has a few decent universities though. Without that, forget it.
“What? You don’t regularly hang out at the Federal Reserve bank with your friends? That’s the first place I’m going once this stay at home order is lifted.”
Federal Reserve banks bring highly educated economists and PhDs to cities. Hundreds of them. They collect tons of data. Data is a big deal.
Cities without Federal Reserve banks just don’t have the same prestige. Never did. Never will.
And, by the way, the next time you’re in St. Louis I really recommend their museum.
“Stay at home wife, decent enough schools for the kid(s), low property taxes, own your own home with two car garage, not terrible traffic.”
No. This is the BABY BOOMER or SILENT GENERATION “dream.”
It’s now a stay-at-home husband. No car. Take uber or public transport everywhere. No kids or a just a dog.
“Millennials are some of the biggest buyers of old-fashioned watches (not smart watches, although those are popular too.) Also, the type of watch you wear does matter in some segments of society. Depends on which city you are in though.”
Almost correct. Millennials are driving up the prices on the secondary market for certain Rolex, Pan, Seiko (not GS) and LE Omegas watches
On the flipside its amazing how much they’ll drop to get a LE of a 2nd tier brand or Microbrand and then sell a year later and lose 40% of the purchase price
They’ve also driven up the market for fakes and clone brands
“This is vital. This is what brings jobs. Without an international airport, or even a decent domestic one, you are doomed as a city. It’s why Columbus Ohio is growing so quickly, as they have been adding a lot of flights to that airport. Same with Charleston which now has non-stop service to London. Same for New Orleans which has London and Germany (seasonal).
St Louis used to be the headquarters for TWA. It used to fly to every corner of the globe. That’s when it had like 20 or 25 corporate headquarters. Huge economic driver.
Now it has less than 10 headquarters and the airport is pathetic. It actually has NO international flights anymore. The airport is really holding it back.”
More BS
You’re acting like there’s multiple non stop service to every city in Europe from every BIG TYME CITY in the US. If you’re not in London, Paris, AMS, and a couple of others you are generally hopping a flight to a hub and then going to a US Hub (DTW, ATL, ORD or the 3 NY Airports).
You recently extolled the virtues of STL HAWT(tm) market. How could having a shitty airport (and it is shitty) stop the roll STL is on (according to you)?
Helmethofer,
You know…I used to wonder how Sabrina could be so sure you don’t live in Chicago. Personally, I thought your comments indicated enough knowledge of Chicago for you to be a credible resident. But then it finally dawned on me that she can see your IP address – unless you are clever enough to hide it.
“a US Hub (DTW, ATL, ORD or the 3 NY Airports)”
Is LGA getting trans-atlantic flights when the construction is done?
As to TWA, when it was a major trans-atlantic carrier, almost all those flights were out of JFK.
Yes, from ’85 until AA shut it down in ’03, there were dailies to Gatwick, and periods of time with flights to Paris and Frankfurt, plus the usual North American international destinations. But it ain’t the case that STL had robust international service ever.
“No. This is the BABY BOOMER or SILENT GENERATION “dream.”
It’s now a stay-at-home husband. No car. Take uber or public transport everywhere. No kids or a just a dog.”
This perfectly describes my elderly parents. And it ain’t pretty. My father retired and gets his $1,500 a month in social security. Not enough money for a car so they uber or take PACE. No kids at home in the 1 bedroom apartment and the dog destroys everything. I occasionally give them money but with my own family and the early stages of major depression, I can’t put my own household at risk to fund two households.
Living like this isn’t a lifestyle choice, it’s a symptom of a disease, where the top 10% has taken the vast majority of the gains in the last 40 years leaving those in the middle or bottom with nothing. There’s no need at this point to get into reasons why – everyone has a partisan reason why the other side is at fault – and we’re both probably right.
I’m not saying people need to have children, or live in the suburbs, people can live anyway they want. But unless you’re a bohemian college grad in your 20’s living in a city apartment, this lifestyle ceases to be glamorous after a couple of yeas, and the only people who continue to live this way are the ones who can’t afford otherwise.
“the top 10% has taken the vast majority of the gains in the last 40 years leaving those in the middle or bottom with nothing. ”
This makes it sound like “gains” just materialize and are then divided up unfairly. That’s not how it works. The top 10% actually produced the vast majority of the gains in the last 40 years and that’s why they have them.
I know this is not a popular view.
“This makes it sound like “gains” just materialize and are then divided up unfairly. That’s not how it works. The top 10% actually produced the vast majority of the gains in the last 40 years and that’s why they have them.”
—————————-
You are correct, Gary, but what you fail to take into account is that while the gains are illusory piffle created by financial and accounting chicanery, the income accruing to the top 1 percent is hard money.
After 2008 businesses loaded up on debt and used real money for stock buy backs rather than pay down debt and build financial cushions. Now you find businesses stiffing landlords for rent (Cheesecake Factory, et al) after blowing money on outlandish salaries for C suite executives and stock buy backs.
But those companies never raised salaries.
Bottom line: American workers are something like 4X as productive than their peers 40 years ago. Those productivity gains never went to labor, though, not even close.
“This makes it sound like “gains” just materialize and are then divided up unfairly. That’s not how it works. The top 10% actually produced the vast majority of the gains in the last 40 years and that’s why they have them. I know this is not a popular view.”
It is true, they have produced the gains, but how they went about producing them is the problem. The toxic combination of low wage labor imported into the US while offshoring formerly well paying middle class jobs has lead to stagnating wages for the bottom 80% or so. Sure, some of the formerly middle class have jumped into the upper middle class, and some have fallen into the lower classes. We all have partisan views with vitriolic responses how to solve this problem, but it’s very real. The only working class people with a secure financial future are government workers with lavish pensions. And those are now seriously in doubt given the financial calamity about to hit the city, county and state budgets. It’s going to be bad, really, really bad. The missing billions to pay the pensions isn’t suddenly going to materialize out of nowhere.
“Bottom line: American workers are something like 4X as productive than their peers 40 years ago. Those productivity gains never went to labor, though, not even close.”
This is true, a toxic combination of low skilled low wage immigrant labor and offshoring of manufacturing/back office type work forced even more workers back back the low skilled low wage pool. Truly toxic for the worker. there’s been no shortage of workers in the previous 40 years and every time unemployment got lower, and wages went up even the tiniest bit, certain classes of people, on both ends of the political spectrum, started screaming to open the borders!!! Just imagine a world where mcdonalds had to pay workers $15 an hour, not because the goverhment mandated it, but because there were so few low wage immigrant laborers that market forces alone increased wages. What a world that would be.
Is LGA getting trans-atlantic flights when the construction is done?
I though Delta was running T-A flights our of LGA last year. They had T-A our of JFK & EWR
And yes, without Amtrak Chicago would be shit as well. Train stations were airports 100 years ago. They were economic engines and drivers. They were wealth creators. Still are- if only they would build high speed rail and get into this century but America is really BEHIND every other country. Blah. Just pathetic.
So, yeah, Nashville was a backwater. Flooded all the time. Mosquitos. Has a few decent universities though. Without that, forget it.
Yeah cant figure out why HSR would be a much better option in Europe Vs the US, maybe I should look at a freaking map.
Nice history lesson, now explain in todays world why Amtrak is critical. I’m sure there some Hoop Skirt and Buggy Whip manufacturing hubs that trotted out the same lines
So Nashville is STL with a world class University minus a Fed Res Bank with the added bonus of being a lot more fun
“….The missing billions to pay the pensions isn’t suddenly going to materialize out of nowhere”
8 weeks ago I would have agreed. Apparently it just might. And no way public sector feels a thing.
I believe the whole wage discussion is a bit more involved. First productivity has not gone up 4 x in that time period. Maybe 100%. See link below. Looks like a really good discussion but I don’t have time to study it. Let’s face it there are 4 places where productivity gains can go:
Wages
Investment returns
Taxes
Lower prices to consumers
In theory if all productivity went to lower consumer prices wages would not go up but nobody would care. I believe this article addresses that in a much more sophisticated way.
I have 0 expectations of how the world “should” operate. We should not have a pandemic but the universe doesn’t give a shit about what humans believe should be. The same with how the profits are divided up. I don’t care about the result but I do care about the rules and having a level playing field.
Some buybacks were stupid but not all buybacks. If you are running a company in a declining industry it’s best for everyone if you buy your stock back. A classic example might be the oil industry as it’s threatened by electric vehicles.
As for offshoring…I look at the best outcome for the planet, not the US. Yeah, offshoring lowers US wages but it also lowers consumer prices and has dramatically lowered global poverty. Who won’t give a lower priced provider a shot at their business?
https://www.epi.org/publication/understanding-the-historic-divergence-between-productivity-and-a-typical-workers-pay-why-it-matters-and-why-its-real/
“Some buybacks were stupid but not all buybacks. If you are running a company in a declining industry it’s best for everyone if you buy your stock back. A classic example might be the oil industry as it’s threatened by electric vehicles.”
——————————-
Stock buy backs reward people for quitting the company, and reward executives manipulating prices to make sure their options and performance bonuses (which are not indexed to outstanding shares) are in the money.
Proper thing to do with excess cash is either invest it, pay down debt, or give it to shareholders in the form of dividends (and don’t give me that BS about dividends being taxed twice — the company is a separate entity from the shareholder, so that doesn’t wash). Buybacks are never — maybe rarely — justified.
Executive salaries are wages — funny how all the wage growth went to the top, not the rank and file. Investment returns are where the chicanery took/takes place (debt gooses investment return, for example). As for lower prices: you can’t eat a computer.
Gary,
In your last Lucid Realty post, you referred to the iBuyers Zillow, Opendoor, etc.
Have the ibuyers ever been a factor in Chicago’s re market? Have they traded many — or any — houses in the Chicago MSA?
Zillow’s long a half billion of inventory. Do you know if any of it is located in Chicago?
https://www.marketscreener.com/ZILLOW-GROUP-INC-20814107/news/Zillow-Coronavirus-Tests-Viability-of-Home-Flipping-iBuyers-30390467/
“I though Delta was running T-A flights our of LGA last year.”
Maybe they had a once weekly on Saturday? Otherwise banned:
“The Port Authority’s perimeter rule for La Guardia was originally set at 2,000 miles in the 1950s and was reduced to 1,500 miles in 1984. The rule does not apply to flights on Saturday and flights to and from Denver, which is about 1,600 miles away. ”
https://www.nytimes.com/2015/08/14/opinion/why-you-cant-get-there-from-la-guardia.html
Also: Is there a commercial jet that can profitably (payload wise) fly 3000+ miles taking off from a 7,000 ft runway? I truly dunno, and can’t find an answer after gthooi, but do find that LGA-LHR is outside the range for the 737-Max, which I would think would have been the likely candidate.
“Have the ibuyers ever been a factor in Chicago’s re market? Have they traded many — or any — houses in the Chicago MSA?”
I don’t think so. I’ve been keeping an eye out for them too because I wanted to have them bid on my house to see what their scam is. I find it odd that none of them came here – or at least not in a big way.
“Remember, HH is OLD. He has no idea what’s going on culturally with Millennials or GenZers. Millennials are some of the biggest buyers of old-fashioned watches”
LOL, you are the OLD and the SCOLD. Millenials can tell the time from looking at their cellphones, but you wouldn’t know anything being an out of touch boomer cat lady. Oh, yeah they don’t care about cars in NorthernCA? Do you know how many Teslas are out there? That zipcar is going to really impress people!
Training for triathlons? I have friends who live there. I know more about the area than you do. No, more like driving to trailheads to go “hiking” like lemmings (all NoCA people have to pretend to like hiking), all the while talking about their jobs and careers on the path while walking past the so-called wildlife (overrated) in Marin or the foothills down the peninsula.
“Proper thing to do with excess cash is either invest it, pay down debt, or give it to shareholders in the form of dividends”
The cash leaves the company either way. What difference does it make? Are you saying you can only sell stock and not take it back? Why not? All a buyback is is the reverse of an offering.
And dividends are absolutely double taxed. Taxed once at the corporate level and again at the personal level. If I own 100% of a C corp and make 100K let’s say I pay 30K in taxes. If I then get 70K in dividends and I’m in the 24% bracket I will only net 53.2K. However, if I buy back some stock I will net 70K and still own 100% of the company.
“And dividends are absolutely double taxed. Taxed once at the corporate level and again at the personal level. If I own 100% of a C corp and make 100K let’s say I pay 30K in taxes. If I then get 70K in dividends and I’m in the 24% bracket I will only net 53.2K. However, if I buy back some stock I will net 70K and still own 100% of the company.”
————————————–
Nice try, Gary, but you are a separate entity, as you would loudly protest when somebody slips and falls at “your” store (or real estate office) and goes after your “personal” assets. The government taxes entities in order to obtain revenue. The government is not under any obligation to preserve your “net” wealth in the process. You and the company are two separate entities. The double taxation argument is a scam.
Consider this: My income is your outgo. You obtain a dollar in income. It is taxed. You then spend it at “my” store. Do I pay taxes on it? Do I whine that if I paid taxes on it, then that would double taxation?
“The cash leaves the company either way. What difference does it make? Are you saying you can only sell stock and not take it back? Why not? All a buyback is is the reverse of an offering. ”
————————-
Yes, the cash leaves the company either way, but buy backs encourage transient ownership, not long term ownership, rewards those quitting the company at the expense of those staying with it, and is a vehicle for manipulation and chicanery.
Invest it, pay down debt, or pay out dividends.
Stock buybacks in the MBA theory book are what Gary says. But stock buybacks in reality are a financial shenanigan designed to temporarily prop up the price of a stock so the executives and major stock holders can cash out before the inevitable decline in prices. That’s why investors view stock buybacks as the kiss of death in the corporate world, just like other financial games like selling assets only to lease them back, and other absurd payment in kind bonds. Investors know when the C level is playing financial shenanigans and punishes them accordingly.
“LOL, you are the OLD and the SCOLD. Millenials can tell the time from looking at their cellphones, but you wouldn’t know anything being an out of touch boomer cat lady”
HH – you are wrong on the watches (Possibly correct on the other) Not saying its 100% of Millennials, but they are the ones dropping >$4k on a new Seiko (Granted its a spiffed up Seiko) to pretend that they’re Capt Willard, dropping $1500 for a beat up version of the original or paying over cost for a Rolex
They’re an interesting group, supposedly they value authenticity but since they have no real culture other than participation trophies and glomming on to other generations output and attempting to claim it as their own.
So Apple buying back its stock is the kiss of death? I don’t think so.
Stock ownership is transient no matter how you look at it. If you think buybacks are bad for the company then sell and don’t look back. I’m a long term investor and I love when a company buys back its stock. No shenanigans there. Just the reverse of a capital raise.
If you really believe that buybacks temporarily raise the price of a stock then you’ve discovered a money machine. Simply short the stock of any company buying back their shares and then cover it when it goes down.
Doesn’t matter that owners are a separate entity than the company. The shareholders in the aggregate end up with more money in their pocket with a buyback than with dividends. That’s why it’s good.
“His name is Dick Durbin. And he’ll make sure we get money.”
I’m laughing my ass off someone could actually write and believe that. Durbin is a worthless turd, only thing he can do is grandstand for social justice cause of the week. Guys hasnt done shit for this state, this state’s business climate or competitiveness.
“The golddigging whores in SF are looking for the whole package, so “rental car” loser is out”
For what it’s worth I took my wife on our first date in a zip car and she’s from CA!
“I believe the whole wage discussion is a bit more involved. First productivity has not gone up 4 x in that time period. Maybe 100%”
———————–
You are right, Gary. From 1979 to 2018 productivity went up 66 percent.
Real wages went up 12 percent.
https://www.epi.org/productivity-pay-gap/
So rather than a 4X productivity gain, there was a 5X capture of productivity gains by capital. I am sure though, that capital deployed per worker did not go up 500 percent over that time period.
RE: stock buybacks and people cashing out, here’s some info:
https://www.cnbc.com/2020/02/12/rapid-ceo-turnover-continues-with-a-record-number-of-top-executives-departing-in-january.html
“Millennials are driving up the prices on the secondary market for certain Rolex, Pan, Seiko (not GS) and LE Omegas watches”
That’s a bugman minority.
“So rather than a 4X productivity gain, there was a 5X capture of productivity gains by capital. I am sure though, that capital deployed per worker did not go up 500 percent over that time period.”
The page you linked to is an update to the page I linked to. The page I linked to goes into much more detail and breaks down where all the profits went. If anything, over that time period, with falling interest rates, the expected return on capital has declined.
“If anything, over that time period, with falling interest rates, the expected return on capital has declined.”
—————————-
And wages didn’t go up. The cash still disappeared into the pockets of the C-suite execs.
BTW — very good article on page one of the business section of today’s (4/25) New York Times about how national restaurant chains are trying to get federal money to avoid layoffs after spending all their profits on stock buy backs and excessive dividends. Interesting fact — the S & P 500 spent $2 TRILLION in the past 3 years on stock buy backs.
Now they want to muscle out mom and pop stores for federal loan money.
And what use are stock buybacks when the market crashes months later.
There’s nothing wrong with executives making money. The problem is how they make it – – because there is a steady and infinite supply of low wage and low skilled labor flooding the market, keeping kitchen and staff labor low. Even Bernie for many years was against mass immigration because it lowered Americans wages, and made Labor weaker against the owner class. He changed his tune recently when the open borders crowds infiltrated his party and he, as a skilled politician, changed his views to survive.
“The cash still disappeared into the pockets of the C-suite execs.”
What does this even mean? If we’re still talking about stock buybacks it went into the pockets of shareholders.
“The problem is how they make it – – because there is a steady and infinite supply of low wage and low skilled labor flooding the market, keeping kitchen and staff labor low.”
If low cost labor is available they should avail themselves of it. If you have an issue with it then focus on the availability rather than them acting in the best interest of shareholders.
“What does this even mean? If we’re still talking about stock buybacks it went into the pockets of shareholders.”
——————————
You were talking about returns on capital. Some of it went to shareholders. a chunk of it went to management. Labor got zip
OK. You’re talking about management salaries and bonuses. But that is independent of stock buybacks. Buybacks don’t cause that.
“If low cost labor is available they should avail themselves of it. If you have an issue with it then focus on the availability rather than them acting in the best interest of shareholders.”
That’s disingenuous Gary to say “well they should use the cheap labor that’s available” while at the same time the chamber of commerce actively encourages massive immigration of low wage cheap labor. They’re just taking advantage of…the very situation they encouraged!
https://www.uschamber.com/immigration
Well, as long as people enter legally why not let them? Just because you want wages to go up? Why not give opportunity to people that want to join our country and work hard and improve their condition? I’ll take those people all day long.
“OK. You’re talking about management salaries and bonuses. But that is independent of stock buybacks. Buybacks don’t cause that.”
——————————
That’s bull, Gary. Stock options and performance bonuses are almost never indexed to outstanding shares, so as every schoolboy knows, buybacks are a highway of account fiddling and chicanery. Google the relationship between buybacks and price manipulation and options/performance bonuses for the C – suite.
There’s a reason why buy backs totaled $2 trillion in the past 3-5 years (per my earlier NYT article reference), and dividends only totaled $1.5 trillion. Guess what? It’s not because buy backs were best for the company, or even for the majority of the shareholders.
Please be specific as to what you exactly claiming. If you are saying that stock buybacks boost share prices (hopefully they do) then, as a shareholder of these companies I’m delighted that they do them. As a shareholder I don’t care what you, as a non-shareholder, think about them. And if management benefits from a higher stock price then their incentives are perfectly aligned with mine.
Are you claiming that dividends are better for shareholders? That is demonstrably false.
” if management benefits from a higher stock price then their incentives are perfectly aligned with mine”
What’s your time horizon, Gary? Does it match the execs? Do you have RSUs or Options that are in the money only if certain targets are hit “soon” rather than consistent with your horizon?
Saying that stock based incentive comp aligns execs interest with investors interests is the most MBA=planning-to-get-stock-based-comp self-serving BS out there. Al Dunlop did *great* with incentive comp; all his shareholders got zeroed out at the end of the day.
“There’s a reason why buy backs totaled $2 trillion in the past 3-5 years (per my earlier NYT article reference), and dividends only totaled $1.5 trillion.”
Dividends have to be paid out of cash flow. Buybacks do not. Companies can actually borrow and do the buybacks. And some do.
Also, buybacks are easy to suspend. All the 70-year old shareholders don’t care. But try cutting or suspending the dividend if you’re Exxon or Chevron and you’ve paid it out every year for 50 years? Or longer?
There’s a lot more risk involved in dividends.
“Durbin is a worthless turd, only thing he can do is grandstand for social justice cause of the week.”
He’s the second most senior Democrat in the Senate and sits on powerful committees. When the Dems re-take the Senate in November, he will be head of those same committees.
“HH – you are wrong on the watches”
Yep. He’s wrong, wrong, wrong…but especially on the watches. But this is what happens when you’re in your 70s.
This was the argument, oh, 10 YEARS AGO, that the smart phone (and later the smart watch) would mean that Millennials would never buy an old fashioned, classic watch again.
That argument was WRONG.
Millennials are among the bigger groups of watch buyers. GenZers like them too. They are considered a fashion accessory and a status symbol.
Just a reminder, the oldest Millennials are now 39-40. And the youngest are about 23.
“Training for triathlons? I have friends who live there. I know more about the area than you do.”
Nope. You clearly don’t.
Go back to your cave, HH.
“Nice history lesson, now explain in todays world why Amtrak is critical.”
It’s St Louis to Chicago routes are sold out every weekend.
But I guess that’s not “critical”?
Oh, and 3 Republican Congressmen and several Republican Senators just blocked Amtrak from ending the cross country service that goes from Chicago through New Mexico over to LA. It’s one of the least used routes and Amtrak is losing money on it.
But they blocked it because hundreds of jobs in each of the stations along the line would be lost and some areas would lose key access to transportation as there are no airports nearby.
Is that “critical”?
Ask the locals.
Do we need high speed rail instead of the slow train service we currently have?
Hell yes. High speed rail on many of these shorter routes like Chicago-Detroit would be HUGE economic drivers and transformational for the region.
Think beyond your little world JohnnyU. Dream big.
“Do we need high speed rail instead of the slow train service we currently have?
Hell yes. High speed rail on many of these shorter routes like Chicago-Detroit would be HUGE economic drivers and transformational for the region.”
We have high speed transit between Chicago and Detroit. It’s called Southwest Airlines and it’s $100 round trip.
Publicly funded rail makes me crazy. It’s supposed to have all this value yet, apparently, the consumer doesn’t see enough value to foot the entire bill because the taxpayer has to subsidize it.
“It’s St Louis to Chicago routes are sold out every weekend.
But I guess that’s not “critical”?”
Nope – rent a car, take the bus, fly. Not critical
So pork barrel politics is now the defining case for critical? Like I mentioned earlier, I’m sure there were folks in Congress looking to prop up buggy whip Mfg when the Auto became popular.
Chi to Det HSR isnt going to be fast as you’ll wind up stopping in Gary, Kalamazoo and Ann Arbor before hitting Detroit. Therefore the only ones taking it would be the same ones using Amtrak
Something like BOS-NY-DC would work
Also, explain how it’s going to “transform” the region.
“What’s your time horizon, Gary? Does it match the execs? Do you have RSUs or Options that are in the money only if certain targets are hit “soon” rather than consistent with your horizon?”
My horizon is as long as necessary to realize the difference between the current value and what I really think a company is worth OR as long as a company is providing a good return on the current value. Now, if I or you believe that management has gamed the system and is somehow able to temporarily raise the price of the stock then we can implement all sorts of trading strategies around that. But I doubt that it’s really possible for management to do that because, again, it would create a money machine.
“But I doubt that it’s really possible for management to do that because, again, it would create a money machine.”
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Given the friction in the system (discovery of the manipulation, time to discover the manipulation), cost to trade, etc., management manipulation techniques are pretty much tried and true.
“Dividends have to be paid out of cash flow. Buybacks do not. Companies can actually borrow and do the buybacks. And some do. ”
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Wrong. Companies frequently borrowed to pay out dividends, particularly buy-outs where the buyers were trying to recoup their investment, or big investors — if the company was still public – trying to do the same.
Read Franco Modigliani’s paper (from 1961) for the intellectual underpinnings for substituting debt for equity. The new cash can be used as a dividend.
“Given the friction in the system (discovery of the manipulation, time to discover the manipulation), cost to trade, etc., management manipulation techniques are pretty much tried and true.”
I thought we were talking about stock buybacks. That’s all publicly available information. And the cost to trade is now 0.
“Saying that stock based incentive comp aligns execs interest with investors interests is the most MBA=planning-to-get-stock-based-comp self-serving BS out there. Al Dunlop did *great* with incentive comp; all his shareholders got zeroed out at the end of the day.“
It should be. However it seems to me that it’s more tilted towards the short Vs long term. I’d place more blame on the BOD Vs CEO as they’re the ones that set executive comp and approve the business plan
Sunbeam and smart investors knew what they were getting w/Chainsaw Al. Anyone holding long term got what they deserved (I would exclude any line employees that were stuck holding the stock). The fault again lands on the BOD
“management has gamed the system and is somehow able to temporarily raise the price of the stock then we can implement all sorts of trading strategies around that”
Management can stay irrational (using corporate funds) longer than we can stay solvent.
“The fault again lands on the BOD”
Who are (in the context of probable dividend paying companies) usually C-Suite folks who use the saem justification for their own comp. It’s not a rock-the-boat role, unless it’s on behalf of an investor–who rarely if ever cares about exec comp.
“Wrong. Companies frequently borrowed to pay out dividends”
It’s actually not as simple as that.
They must have retained earnings to pay it out. If they have it in previous periods, they’re allowed to borrow to pay it out.
With buybacks, they don’t have to have retained earnings. Tesla can borrow right now and do buybacks if it wanted to. It cannot pay a dividend.
https://www.nasdaq.com/articles/can-dividends-be-paid-excess-retained-earnings-2016-02-13
“So pork barrel politics is now the defining case for critical?”
Critical means they can’t get service any other way.
Amtrak is the only way some people have to get to work in many parts of the country.
You have no idea what you’re talking about. For real.
HIGH SPEED RAIL JohnnyU. Ever been out of the country and in a place that has real transportation? Dream big. Build high speed rail Chicago to Detroit. Build it Chicago to St Louis. Build it Austin-Dallas-San Antonio.
Huge economic drivers.
Flying those routes is stupid.
Let’s get into the 21st century. We are so far behind in everything that has to do with infrastructure. It’s embarrassing at this point.
“Publicly funded rail makes me crazy.”
Did the publicly funded highways make you crazy too Gary?
Or the publicly funded El?
Or the metra?
Why not just let the consumer foot the bill for all of these things? Why should the taxpayer subsidize anything having to do with transportation?
Supply and demand.
That means we’re still driving Route 66.
Good times.
Actually I don’t want the taxpayer subsidizing any form of transportation. I’m a big proponent of raising the gasoline tax to fully fund all auto/ truck investments and maintenance. But politicians don’t have the balls to do it and haven’t for decades.
When politicians decide what the value of a service is to users they get it wrong. Only the users can determine that.
“Ever been out of the country and in a place that has real transportation? Dream big. Build high speed rail”
Until there is a real HSR line from DC to NYC (*maybe* LA to SJ+SF), there isn’t much realistic hope for it happening elsewhere. And NYC to Chicago makes about 100x more sense than Chicago to Detroit.
“from DC to NYC”
^^^^^^
Rationality
“Critical means they can’t get service any other way.
Amtrak is the only way some people have to get to work in many parts of the country. ”
Please give examples where Amtrak is the only way people can get to work
“HIGH SPEED RAIL JohnnyU. Ever been out of the country and in a place that has real transportation? Dream big. Build high speed rail Chicago to Detroit. Build it Chicago to St Louis. Build it Austin-Dallas-San Antonio
Yes cost was a little more than a flight of the same distance in the US. Train took longer. My time has value, maybe we’re different in that regard?
There are about 20 flights a day from Chi to STL. They’re not flying wide bodies so being generous say 20 X 150 = 3,000 people
That’s a ton of Cap-Ex to spend to move maybe 3,000/day I guess all the Fed Bankers, ADM and idiot Cub fans would potentially benefit. So explain to the unwashed masses all the benefits Chi to Stl HSR would confer. In detail please
“That’s a ton of Cap-Ex to spend to move maybe 3,000/day”
AND some consequential percentage of that traffic is just transiting thru Chicago either to or from STL.
There is no use case for high-speed rail. It’s basically a project for politicians to reward their construction donors much like the Illiana Expressway and Peotone Airport (I don’t know what it is with that rural area there they continually get these massive different public works projects with each Democrat governor).
They’ve already been trying this in California for decades and now there are small rural towns with ghost train stations that have never been used because the demand never materialized as projected.
“Actually I don’t want the taxpayer subsidizing any form of transportation. I’m a big proponent of raising the gasoline tax to fully fund all auto/ truck investments and maintenance.”
This in reality never happens and you know it. Even after our state constitutional amendment they are already finding loopholes to allow other things to be funded like the emissions facilities. Already our state has a constitutional clause saying expenditures must match receipts every year which is ignored so why on God’s green Earth would you be in favor of raising any taxes to give more revenue they will misuse?
Chicagoland has enough problems fixing it’s current rail bottlenecks as it is it’s the joke of the country getting freight through it they should focus on that first.