# Top tier, world class city: how do US cities know they have "arrived"?



## brooklynprospect (Apr 27, 2005)

Rockford said:


> um dude, last time I checked virtually the entire Midwest is growing faster than the entire Northeast. New York and Boston are actually in the middle of the real declining region. And anyone who drops the "Ivy" league crap wouldn't be welcome in the Midwest anyhow.


Boston, NY and Washington are by far the single largest concentration of talent and power in the United States. The region is also, along with California, the largest immigrant destination. The decline you're talking about is happening in upstate NY, rural PA, and other places that no one in NYC, Boston or Washington gives a shit about. Not many people in NYC even think of Buffalo or Rochester as being in the same region. We draw talent from the whole country.


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## Rockford (Jan 12, 2005)

again, Massachusetts, the state, tiny that it is, lost population last year. St. Louis had some of the fastest growth in terms of jobs last year. The Midwest is drawing an increasing number of immigrants from both abroad and from the coasts themselves. Hindu temples are popping up in places like Omaha.

Your perceptions of the Midwest are obviously comtrolled by the same places you think are uber alles, the coasts.

Here's a prediction for 2010, the Coasts will be bleeding population as a housing crash in those regions send people inward. It's already happening in California.


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## Rockford (Jan 12, 2005)

there won't be a crash in Rockford 

from an NPR show

Coastal Housing Bubble May Be Set to Burst
http://www.npr.org/templates/story/story.php?storyId=4572672

and from the left coast
San Francisco Bay Area Housing Crash Continues

Charlie Munger of Berkshire Hathaway: "There are some very extreme housing price bubbles going on."

Foreclosure listings nationwide went up 50% from February to March 2005.

PMI mortgage insurance now refuses to insure more than $350,000 of risk in speculative markets like San Jose/San Francisco.

A large majority of Bay Area houses are now bought with interest-only adjustible rate mortgages, exposing owners to bankruptcy.

New house sales plummet 9.2% nationally in January nationwide, while median prices fall 13%.

Speculators now account for 25% of all purchases nationally, and an additional 13% are vacation houses, making a market free-fall possible when they all sell.

Sydney, London, and Las Vegas are already well into their crashes. Now it's our turn.

Why?

# Interest rates going back up. When rates go from 5% to 7%, that's a 40% increase in the amount of interest a buyer has to pay. House prices must drop proportionately to compensate.

82% of Bay Area loans are now adjustable, not fixed. This means a big hit to the finances of many owners every time interest rates go up, and this will only get worse as more adjustable rate mortgages (ARMs) get adjusted upward.

From CBS.MarketWatch.com on 13 Jan 2005: "There is a double whammy inherent in these ARMs," said Frank Nothaft, chief economist for Freddie Mac. "At the end of fixed-rate period you face a hike in interest rates and you have to start paying principal. There is more default risk in these interest-only ARMs than in a fully amortizing product."

# Massive job loss. More than 300,000 jobs are gone from Bay Area since the dot-com bubble popped. This is the worst percentage job loss in the last 60 years. It's worse than Detroit car problems or Houston's oil bust. People without jobs do not buy houses and owners without jobs may lose the house they are in. Even the threat of losing a job inhibits house purchases. Santa Clara County posted its third straight year of job losses in 2004, so it's not over yet.

# Salary declines. From http://www.mccallstaffing.com/need/needsal.html we hear that "salaries have in fact returned to 1997 and 1998 levels." Local incomes are nowhere near what they need to be to sustain current house prices.

# Mortgage fraud. Incidents of mortgage fraud tripled in 2004 compared to 2003, according to the FBI. A typical scenario is where the seller, buyer, both agents, and the appraiser all collude to inflate the price of a house to get a huge loan. They split the excess amount of the loan between them. The buyer then hides his share of the excess and defaults on the loan.

# Stock option expensing. The Financial Accounting Standards Board issued final guidelines that will force companies to deduct billions of dollars of employee stock options from profits starting in mid-2005. This will reduce the amount of money that local technology employees will get, and that in turn will depress housing prices even more.

# Population loss. San Francisco continues to lose population at the fastest rate of any city in the US and most of those are professional jobs. The problem is not only the dot-com crash, but also the outsourcing technical jobs to India, which continues at a frantic pace as corporations realize they can pay an Indian only 20% of what they must pay a similarly qualified employee in the Bay Area. Fewer people in the Bay Area means less demand for housing.

# Stock market crash. The NASDAQ at about 2000 is still only 40% of the 5000 it was at the peak of the recent stock market bubble. The crash in the NASDAQ probably hit the Bay Area harder than anywhere else because of all the stock held by employees of tech companies. That money would have been spent on housing, but is now gone.

# Extreme use of leverage. Leverage means using debt to amplify gain. Most people forget that losses get amplified as well. If a buyer puts 10% down and the house goes down 10%, he has lost 100% of his money on paper. If he has to sell due to job loss, he's bankrupt in the real world. Even a small price decline will bankrupt buyers with small equity. Buyers foolish enough to buy with no money down are already bankrupt, but still unaware of the fact.

# Inflation warp. The rest of the economy shows little inflation, but housing inflation has been very high. This disconnect makes houses more expensive in terms of real work. There is no increasing salary to pay off the ever higher interest, so the only way to do it is more work. Many recent buyers will have to postpone retirement because they overpaid for their house.

# Surge in foreclosures. We are already reaping the consequences of bad lending. Foreclosures are at the highest rate they've been in 40 years, about 1,500 per quarter in Santa Clara county. There are only about 4,500 sales in the quarter, so on average, about one third of house sales are ending in foreclosure.

# Shortage of first-time buyers. According to the California Association of Realtors, the percentage of Bay Area buyers who could afford a median-price house in the region plunged from 20 percent in July 2003 to 14 percent in July 2004.

# Lightbulbs going on in many brains in the Bay Area: "Hey, I can just go to New Mexico or Oregon, buy a gorgeous house outright, and comfortably retire on the rest of the price difference. My neighbors just did it, so I'll have friends there too."

# Surplus of speculators. Nationally, 25% of houses bought in 2004 were pure speculation, not houses to live in. It is now possible to buy a house with 103% financing. The extra 3% is to cover closing costs, and the buyer needs no money down. All this is on the unwise assumption that housing will rise ever higher, covering interest payments through appreciation. Even the National Association of House Builders admits that "Investor-driven price appreciation looms over some housing markets."

# Trouble at Fannie Mae and Freddie Mac. They are now being forced to tighten up sloppy lending. This means they are not going to keep buying very low-quality loans from banks, and the total money available for buying houses is falling. Fannie Mae recently announced a $9 billion loss and its mortgage portfolio shrank at an annualized 16.8 percent rate in January 2005, on top of a 10.1 percent decline in December 2004.

# The best summary explanation, from Business Week: "Today's housing prices are predicated on an impossible combination: the strong growth in income and asset values of a strong economy, plus the ultra-low rates of a weak economy. Either the economy's long-term prospects will get worse or rates will rise. In either scenario, housing will weaken. Caveat emptor."


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## crawford (Dec 9, 2003)

Rockford said:


> Are you sure you are in Cambridge?
> 
> More people speak Portuguese than French, does that make Lisbon more important than Delhi???
> 
> Globalize people, gloooobalize. Outside of Europe and the northeast of America, such opinions are downright embarassing.


You do of course know European Portuguese is virtually unintelligable to a Brazilian? I'm not sure what Delhi has to do with Portuguese or French (or with Chicago for that matter).

French is one the top 10 languages on the planet and its capital is Paris. The Arab world, though isn't primarily French-speaking, looks first to Paris. Places like Cario and Beirut have much closer ties to Paris than to London or New York. Most people in the Arab world probably haven't even heard of Chicago.


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## crawford (Dec 9, 2003)

Rockford said:


> again, Massachusetts, the state, tiny that it is, lost population last year. St. Louis had some of the fastest growth in terms of jobs last year. The Midwest is drawing an increasing number of immigrants from both abroad and from the coasts themselves. Hindu temples are popping up in places like Omaha.
> 
> Your perceptions of the Midwest are obviously comtrolled by the same places you think are uber alles, the coasts.
> 
> Here's a prediction for 2010, the Coasts will be bleeding population as a housing crash in those regions send people inward. It's already happening in California.


Care to cite a reference to the "housing crash" or the "bleeding populatiion" in California? 

You do realize Chicago's population is decreasing, right?


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## brooklynprospect (Apr 27, 2005)

crawford said:


> The Arab world, though isn't primarily French-speaking, looks first to Paris..


For what? Moral support against Israel? How about education? Investment? Oil expertise? America is the dominant political player in the middle east, and America and the UK the dominant foreign economic players.

Again, the French speaking world consists of France, Quebec, Haiti, 1/5 of Switzerland, less than half of Belgium, a few tiny tropical islands, and some of the poorest and least developed countries in Africa, which is itself the poorest and least deveoped part of the world. How is that important?


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## Rockford (Jan 12, 2005)

Especially if they are staying at the Chicago Beach Hotel in Dubai


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## Rockford (Jan 12, 2005)

crawford said:


> Care to cite a reference to the "housing crash" or the "bleeding populatiion" in California?
> 
> You do realize Chicago's population is decreasing, right?


According to the Coastal folks at the Census, which has cionsistently underestimated Midwest populations for decades.


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## Rockford (Jan 12, 2005)

from a local blogger








Census Announces Population Figures, Probably Wrong Again

Chicagoist is one of those people who actually pours over census data in its spare time. As a result, we've come to view Chicago area population estimates with skepicism, such as those 2004 numbers announced yesterday. The big story is that once again, Cook County lost about 20,000 people, while the Collar Counties gained about 65,000 people.

We have no doubt that the Collars are growing that fast. Take a trip out to Elgin's new sub-divisions, and you'll believe 70,000 more people have moved to Kane County in the past five years. But a quick look at the graph we made of Census data from the past fourteen years shows a curious bump in Cook County numbers. That bump is the (surprise!) correction the Census made when they received hard counts from Chicago in 2000. While DC number crunchers had been expecting a steady drop of Chicagoans since 1990, when they got real numbers, they found an additional 96,000 people living in the city they hadn't been looking for. What the heck?

Anyone living in Chicago can tell you, lots of people are moving into the city, in lots of places. Not only is there tons of new residential construction downtown, but throughout the city -- and density is increasing. Vacated neighborhoods have turned a corner. Like Taylor Street near Western Ave. Or Kenwood.

Chicagoist will continue to bear the brunt of the Census' errors, and then in 2011, we will enjoy seeing the new correction, and yet another bump on the trend line. Population data geeks unite!


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## Rockford (Jan 12, 2005)

Must be the best and the brightest from the Ivies running the Census huh?


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## brooklynprospect (Apr 27, 2005)

Rockford said:


> Must be the best and the brightest from the Ivies running the Census huh?


come on man. It's attitudes like that which make people on the coasts think of Chicago as provincial. The ivies, whether you like them or not (yes the students can be arrogant dicks), process a large chunk of this country's most talented people.


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## Rockford (Jan 12, 2005)

And back at ya. It's attitudes like that make the East Coast seem provincial.


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## Rockford (Jan 12, 2005)

Anyhow, I'm with ya on the France thing.


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## brooklynprospect (Apr 27, 2005)

Rockford said:


> And back at ya. It's attitudes like that make the East Coast seem provincial.


no offense man, but no one in NY cares what people in the midwest think about us. And the definition of "provincial" is from or like the provinces. How can the business (NY) and political (DC) capitals of the most important country in the world be provincial?


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## eklips (Mar 29, 2005)

"Again, the French speaking world consists of France, Quebec, Haiti, 1/5 of Switzerland, less than half of Belgium, a few tiny tropical islands, and some of the poorest and least developed countries in Africa, which is itself the poorest and least deveoped part of the world. How is that important?"

THE FRANCOPHONIE


The Francophone world is made up of people throughout the world who use French as a normal language of communication. It can also be defined as the sum total of territories where French is frequently used.

A country can be a member of the Francophone world if French is its first or second official language. It may also be a member if a significant proportion of its population is French-speaking. Today the Francophone world comprises fifty-two member countries and states. More than 500 million people live in these territories.

Living in a Francophone region does not of course mean that one necessarily speaks French. Nor does being a Francophone imply that one speaks French on a daily basis. At the present time, some 70 million people throughout the world use French as their mother tongue. For another 50 million, French is just a second language.

French enjoys the status of being a world language. This makes it a major language, but among the twelve languages most spoken around the world, it ranks only tenth. French is spoken on all five continents and taught in most countries throughout the world. It is also a standard option at large international gatherings.

The number of Francophones has been on the rise over the years, most notably in Africa, which contains the largest number of French-speaking countries. In this area of the world, many people still do not speak French fluently, even if it is the official language of their country. Since more and more people are going to school, the number of Francophones is expected to double by the year 2015. 

Source:http://www.virtualmuseum.ca/Exhibitions/Instruments/Anglais/musees_en.html

Now you might say the source is unreliable, maybe it is, but I heard this many times over. Now Paris has a least, influence for 500 Million people, wether we are against it or not, not bad is it, and yes Paris has a important influence in the arab-speaking world, should I say that Yasser harafat, wether we agreed with him or not, frenquently went to Paris, his wife was french, and he died in a parisian suburb.


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## brooklynprospect (Apr 27, 2005)

Rockford said:


> Anyhow, I'm with ya on the France thing.


Yeah, sorry for the below the belt comments. Chicago is actually a great city. I just think they need to work a little on the international fame department. If you pay attention to the European posters, most of them are saying stuff like "we don't know about anything related to Chicago here..."


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## Third of a kind (Jun 20, 2004)

all of the major cities in the world had to start as something at one point.

many of the cities here in the us have a long way to arrive, although many are starting to create the foundations for elements. Some cities in the country have had those elements but they were never realized

in my opinion, when a city can offer jobs that attract people from other regions of the country, and internationally...extensive public transportation system (a combination of commuter rail, Heavy or LRT rail, and an extensive road system connecting the reigon)..cultural institutions....international commerce, regional commerce

grand ass boulevards, shit man it goes on and one but thats just my personal opinion...

I think one reason this has happened with our world class cities now is because they have had periods where they were treated as works of art (even in declining periods)

and now it just seems like that feeling of art has disappeared (sometimes  )


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## Justadude (Jul 15, 2004)

brooklynprospect said:


> no offense man, but no one in NY cares what people in the midwest think about us.


Do you think anyone else in the country particularly cares about the opinion of a New Yorker?



> How can the business (NY) and political (DC) capitals of the most important country in the world be provincial?


Funny you should say that, just the other day a native New Yorker mentioned to me that Brooklyn residents (I kid you not) were the most provincial people he'd ever met. Can't see out of their own back yard. I had to chuckle when I came across this thread.


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## brooklynprospect (Apr 27, 2005)

Justadude said:


> Do you think anyone else in the country particularly cares about the opinion of a New Yorker?.


THey don't care about 1 NYer, or 1 Londoner, but taken as a whole, NYers exert far more influence with their opinions about art, literature, fashion, pop culture or just about anything else than do people from any other city in America. btw, your cheap insult is off the mark, since I'm actually not from brooklyn. Just use it as my screen name.


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## rocky (Apr 20, 2005)

The american dream is new york, or even LA.. not chicago


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