Des Moines and San Francisco: factual differences

Bernie Madoff in Des Moines dollars

By his own admission Bernie Madoff engaged in criminal acts using $65 billion of other people’s money. He lost it.

How much is $65 billion in Des Moines dollars?

The median annual household income in Polk County is under $55,000.

If the average Polk County family worked 1 million years, they would still be $10 billion short.

You say you don’t have a million years? Enlist your friends. There are about 150,000 households. If every man, woman, and child in Polk County pooled their income for about 8 years, we could match the $65 billion. 

That’s one perspective on the crime: Bernie Madoff took the equivalent of 8 years of labor of every man, woman, child in Polk County, Iowa.

I wonder where his thinking went wrong. 

photo by flickr by Steve Rhodes of a painting by Yan Pei Ming

Des Moines economy receives high rating

While the economy in the Des Moines metro (like the rest of the country) is less than perfect, the Washington-based think tank Brookings Institution reports: Des Moines is doing relatively well.

The Brookings’ MetroMonitor report was released today (6/17/2009), and based on “overall performance” Des Moines is ranked in the top 20 of the 100 largest metropolitan economies in the U. S. where overall performance was based on recent changes in 4 indicators:

• employment
• unemployment
• gross metropolitan product
• housing price index

The full rankings are available.

In employment were are in the top 20% along with Omaha-Council Bluffs and Kansas City. The middle quintile included Denver, Minneapolis, St. Louis, and Chicago.

In the rate of increase in unemployment, the report showed that Des Moines was best in the country. We have lost jobs more slowly than any other metropolitan area. This was attributed in part to the relative insulation of the insurance industry to rapid change during a recession. Omaha-Council Bluffs was also in the most favorable 20%.

The question of wages which typically do not drop during a recession, Des Moines did not compare as favorably where we were in the second to the lowest quintile.

In recent changes in the gross metropolitan product, Des Moines was in the middle quintile.

The strength of the real estate markets is reflected by our position in the 2nd most favorable quintile. If you want to sell a house, it is most favorable to live in Houston, Buffalo, or Dallas, but you are in a lot of pain if you are trying to sell in Modesto, CA, Las Vegas, NV, or Stockton, CA. New slogan opportunity for Las Vegas: “If you bought a house in Vegas, your money will stay in Vegas.”

A final category considered in the Brookings report is real estate owned by lending institutions. These are properties that have been foreclosed, that the lender has tried and failed to sell at auction, and that remain in the hands of the lending institution. The Des Moines metro is in the middle. The fewest such properties are in Syracuse and Albany, NY and greatest number in Stockton, CA and Las Vegas, NV.

During the worst economic downturn since the Great Depression, while we are suffering individually and collectively as institutions, a city and state, the Des Moines metro is doing relatively well. We couldn’t ask for a lot more.

photos by flickr by recentexposurephotography

The changing face of Iowa: wind turbines

It’s windy in Iowa. (I didn’t have to tell you, did I?)

It’s hard to miss Iowa’s new wind turbines. They continue to spring up in Western Iowa along Interstate 80 in areas including one called Windy Hills. The turbines are on both sides of I-80 in Adair , Cass , and Pottawattamie Counties. 

Today we find that Mid-American Energy has over 100 turbines in Pottawatamie County alone where many of the pictures above were taken at the Walnut Wind Project.

Money is blowing in the wind.

According to the Union of Concerned Scientists each turbine will net the landowner $2,000 -5,000/year in royalties. That’s great news in counties where the average farm is near 440 acres and the crop value per harvested acre has been running between $205 – 225/acre.

How are we doing in terms of absolute capacity compared to the rest of the country? We’re doing well; currently we are even with California in absolute capacity. DOE puts us 3rd in the nation; citing Dirk Lammers Yahoo says 2nd, where Texas is first. 

•  Iowa has 2862 MW of capacity (with our population of 3 million that’s about 1 kW/person)
• California has 2868 MW with their population of 36 million
• In Iowa we’re producing 10% of the nation’s wind power. I’m impressed!

Resources for further information

• National Renewable Energy Laboratory (US DOE)
• energy matters (Australia)
• Wind Power A to Z
• You Tube videos on wind energy

photos by James G. Lindberg

Trouble at GM? It’s not the first time

The wheels have come off at GM, but it could be worse.

After all, you will wake up on Tuesday June 2, 2009, and there will still be a General Motors. (That’s good.) You will own the lion’s share of GM until (and if) it starts to make money, and then someone else will get to buy it back. (That’s mixed.) I would probably favor the idea that we (aka, the federal government/U. S. Treasury) would make some big bucks before we sell. Some question whether making money anytime soon is going to happen.

If you read 2008 Salisbury Automobile Classic on AroundDesMoines.com last September -especially the links to Billy Durant – you know that GM has had its share of trouble.

Billy Durant created GM in 1908 for a small sum of money, raised a large sum of money by selling stock, bought Buick, Oldsmobile, Cadillac, and Oakland (Pontiac), was pushed out in 1910, quickly joined forces with a race driver named Chevrolet and founded Chevrolet Motors, regained GM in 1916, was forced out again in 1920, and before he could rebuild his fortune, was ruined in the stock market crash of 1929. Durant was a dandy entrepreneur who lived too close to the edge once too often.

You can examine the way GM views its history. While the Web site has a corporate spin, the photos make it great fun for a car buff.

CNBC.com has a timeline history that was posted on May 27 2009. While it wanders a bit, it has a lot of facts.

The foreign press is sometimes a nice read since they mince fewer words. Try the Telegraph.co.uk from England.

So while the trouble at GM is not the first trouble, it is the biggest bankruptcy in U. S. history, and it does have our attention.

I sure hope we like the changes in GM ‘cuz looking for a Chevy is never going to be the same.

photos by flickr by bobster885 and James G. Lindberg

Thomas Friedman at Grinnell College

Good message!

Become the generation that will be called the Re-Generation.

Thomas Friedman, New York Times world affairs columnist and prolific author, gave the commencement address at Grinnell College on Monday May 19, 2009. You can hear the entire address (in 3 installments totaling just under 25 minutes) courtesy of YouTube.

In his initial remarks Friedman related several issues cited by fellow journalist Kurt Andersen in his recent Time magazine article, The End of Excess.

Continuing, Friedman then focused on a generational theme, first on the The Greatest Generation (that of his parents and grandparents – the generation that survived The Great Depression then fought in World War II). He cited the qualities that characterized the greatest generation:

• hard work
• delayed gratification
• achievement oriented
• focused attention

Those were my parents too and I would add to that list

• frugal
• humble
• accountable

Friedman contrasted the Greatest Generation with his own generation, the baby boomers (post-WWII babies) and named that generation the Grasshopper Generation – eating through the fabric of the nation like hungry locusts. He credited the grasshopper generation with such dubious qualities as

• excess (over-consuming, over-building, over-borrowing, over-lending, over-eating) and
• dumb as we wanna be (delaying the solutions to Social Security, health care, energy, environment, and immigration).

He cited the subprime meltdown in particular as illuminating a decline in basic values, risk management, accountability, and ethics.

Friedman then challenged the Grinnell graduates to become the Re-Generation

that could restore the basic values of

• hard work
• accountability

and added that the graduates should carry with them

• ethics
• uncompromising idealism
• unbending convictions
• principled behaviors

and that they should create value through

• invention
• innovation
• imagination

all in order to do real engineering of materials, of services, of societal movement that fulfill needs, both seen and unseen.

It was great advice to the Grinnell College Class of 2009.

Friedman also told an interesting story with several Iowa connections. While studying in London in 1975 and dating wife-to-be Ann Bucksbaum, daughter of Carolyn “Kay” (a Grinnell alum) and Matthew Bucksbaum (an Iowa alum), Friedman (not a journalist at the time) was so stirred by the politics of the day that he wrote an op-ed piece. Ann carried it back to Des Moines. The piece made its way to The Des Moines Register editorial page editor who published it. Friedman received $50, and he was hooked as a journalist. Thus, Friedman’s exceptional career has a strong Des Moines connection.

If you’d like to read two recent Friedman books try

• The World Is Flat
• Hot, Flat and Crowded.

photos by James G. Lindberg

Chocolate? Not always

Will it melt in your mouth or stick to the roof of your mouth?

Maybe they hoped you wouldn’t notice, but The Hershey’s Company changed the formulation for some but not all of their candy. The news broke in September, 2008. Now Hershey’s has changed the names of some of their products because they can’t call them milk chocolate. What’s that slogan again? Is it, “If it’s Hershey’s, you’d better read the label?” I am not sure I have it quite right, but it’s something like that. I’m afraid, we’ll just have to read the label carefully. With an American icon like Hershey’s, I shouldn’t have to do that. Some of it’s milk chocolate; some of it ain’t.

Chemists use the term formula to describe the mixture of particular materials (ingredients) and amounts that go into various products, especially those that are sold to the public. It might be food, paint, steel, medicine, paper, ink, glue, or plastic. The term formulation describes the process of putting it together. Every commercial product has its own formula.

By law you can’t call a product milk chocolate unless it contains cocoa butter. In 2007, according to the New York Times (and elsewhere) in spite of lobbying by U. S. manufacturers to cheapen the ingredients, the FDA held their ground on chocolate.

On Friday when I told a friend of mine about the recent changes in some chocolate-like candy, she talked about her perception of the difference between real chocolate and the chocolate-like candy that looks like chocolate but now lacks the name. She talked about the oily film that formed on the roof of her mouth with some products. We talked about some of the better chocolates including European chocolate. She asked me what brands. When I suggested Lindt’s as one, she happily showed me the Lindt chocolate her husband had given her for Valentine’s Day. Lately I have found European chocolates Lindt, Toblerone, and Ritter Sport and American chocolate Ghirardelli in a lot of local grocery stores.

Of course you can always find great chocolates at Chocolaterie Stam right here in Des Moines too.

If you see a little chocolate on the Purple Wren’s beak this week, it came from Chocolaterie Stam on Ingersoll.

Real chocolate costs a little more, but after all it’s not my lunch, it’s dessert!

photo by flickr by fensterbme and eszter

Under water mortgages

If you owe more on a property than it is worth, your mortgage is said to be under water. You have negative equity. According to an article in Reuters published on October 31, 2008, across the U. S. about 18% of mortgages are under water, but the problem is very regional. (Note that since some houses are fully owned, the percentages cited below are not of total homes but of total mortgaged homes.

According to a CNN report as far as under water mortgages are concerned in Iowa we are

• not in the10 worst (NV, MI, AZ, FL, CA, GA, OH, CO, NH, TX which range from 48% to 16%) and we are
• not in the 10 best (NJ, NM, WA, OR, AL, CT, MT, PA, HI, or NY which range from 9% to NY’s 4%).

We’re in the middle. But remember any homes that are paid up are not reflected in these numbers, and many older Iowans own their homes.

The negative equity problem is caused by a continuing drop in housing prices in some markets. The expectation is that the decline will continue before it improves. The fraction of mortgages under water is highest in the Southwest which reflect the sharp decline in house prices over the past year through August. Equity evaporates.

• Las Vegas -30.6%
• SanFrancisco -27.2%
• LosAngeles -26.7%
• SanDiego -25.8%

This is in contrast to housing price declines in the Midwest.

• Minneapolis -13.8%
• Chicago -9.8%
• Cleveland -6.6%

A few markets including Des Moines have shown minimal declines in housing prices.

• Charlotte -2.8%
• Dallas -2.7%

While the time frame is not exactly comparable, Des Moines housing prices are said to be similar to Charlotte and Dallas according to WHO-TV.

• Des Moines -3%

Some sources say Des Moines and West Des Moines housing prices are rising (Zillow.com).

• DesMoines +5.1% (November 2007 – November 2008)
• West Des Moines +2.7%

And they are rising even more according to R. Michael Knapp of Iowa Realty who reported in The Des Moines Register an increase of 6% in median Des Moines housing prices for the second quarter (4/1 – 7/1/2008) while the rest of the nation averaged a -7.6% (decline).

Whatever the exact numbers, we are doing relatively well. Lucky us!

The response of JPMorgan Chase & Company to owners faced with negative equity was to offer to modify an estimated $70 billion in mortgages to keep 400,000 customers out of foreclosure. Good idea.

photo by flickr by Jay Galvin

The Age of Conversation 2

There is a new book out, and it better be good. Why? Because 237 authors from around the globe have each written one page limited to 400 words. They darned well better be the best 400 words each of the authors had. (Since I had only 200 good words available at the time, I collaborated with the Purple Wren. and we wrote a page with 385 words and one picture and we titled it, If you can’t stand the heat… .)

The book, a second edition is called

• Age of Conversation 2
• the authors have given their best insights into the nature of conversation and communication in a digital world as it affects business, community, and individual
• Several of the authors are local men and women
• You can buy (hardcover or paperback) or download a copy
• All profits (after expenses) go to Variety, the international children’s charity, and the 1st edition raised $15,000

Pricing for The Age of Conversation 2 is:

• e-book: US$12.50 ($10.00 going to charity)
• paperback book: US$19.95 ($8.02 to charity)
• hardback book: US$29.95 ($4.60 to charity)

The venture was overseen by local marketer Drew McLellan and Australian Gavin Heaton. Check the list of authors if you like.

Tinu Abayomi-Paul, Reginald Adkins, Vandana Ahuja, Ozgur Alaz, Armando Alves, Francis Anderson, Todd Andrlik, G. Kofi Annan, Mike Arauz, David Armano, William Azaroff, Steve Bannister, Ryan Barrett, Cam Beck, Jordan Behan, Connie Bensen, Rohit Bhargava, Susan Bird, Toby Bloomberg, Jon Burg, David Berkowitz, Mark Blair, Ed Brenegar, Chris Brown, Deborah Brown, Duane Brown, Tim Brunelle, Wayne Buckhanan,

Pet Campbell, Becky Carroll, Paul Chaney, C.C. Chapman, Katie Chatfield, Thomas Clifford, Gary Cohen, Stephen Collins, Tim Connor, Peter Corbett, Hillel Cooperman, Ed Cotton, Chris Cree, Dave Davison, Luc Debaisieux, Jeff De Cagna, Dino Demopoulos, Geert Desager, Rishi Desai, Pete Deutschman, Matt Dickman, Vanessa DiMauro, Jeanne Dininni, Brent Dixon, Mark Earls, Sue Edworthy, Jay Ehret, Gianandrea Facchini, Anna Farmery, Julie Fleischer, Justin Foster, Jeremy Fuksa, Seth Gaffney, Bill Gammell, Deanna Gernert, Cedric Giorgi, Gretel Going & Kathryn Fleming, Phil Gerbyshak, Scott Goodson, Mark Goren, James Gordon-Macintosh, Kristin Gorski, Lewis Green, Susan Gunelius, Jeff Gwynne & Todd Cabral,

Jessica Hagy, Mark Hancock, Ann Handley, Douglas Hanna, Steve Hardy, Nettie Hartsock, Doug Haslam, Gavin Heaton, Paul Hebert, Jeremy Heilpern, Alex Henault, Darren Herman, John Herrington, Susan Heywood, Adrian Ho, G.L. Hoffman, Daniel Honigman, Uwe Hook, Sean Howard, Cathryn Hrudicka, Robert Hruzek, Sam Huleatt, Richard Huntington, Shama Hyder, Paul Isakson, Tim Jackson, Dustin Jacobsen, George Jenkins, Kevin Jessop, Mitch Joel, Stanley Johnson, Timothy Johnson, Spike Jones, Amy Jussel, Michael Karnjanaprakorn, Ryan Karpeles, Douglas Karr, Gareth Kay, Lois Kelly, Christina Kerley (CK), Chris Kieff, Thomas Knoll, Katie Konrath, David Koopmans, Derrick Kwa, Michelle Lamar, Stephen Landau, Kenny Lauer, Bob LeDrew, Tammy Lenski, Mark Lewis, Phil Lewis, James G. Lindberg,

Brett Macfarlane, Lori Magno, Angela Maiers, Valeria Maltoni, Louise Manning, Tim Mannveille, Mike McAllen, Becky McCray, Matt J. McDonald, Paul McEnany, Mark McGuinness, Drew McLellan, Robyn McMaster, Doug Meacham, Jenny Meade, Terrell Meek, Efrain Mendicuti, Sreeraj Menon, Gaurav Mishra, Doug Mitchell, Corentin Monot, Scott Monty, John Moore, Matt Moore, Ernie Mosteller, Brandon Murphy, Eric Nehrlich, Jeff Noble, Andy Nulman, Andrew Odom, Jason Oke, Simon Payn, Branislav Peric, Neil Perkin, Eric Peterson, David Petherick, Steve Portigal, J. Erik Potter, Dennis Price, Joe Pulizzi,

Veronique Rabuteau, Arun Rajagopal, Daria Radota Rasmussen, Ryan Rasmussen, Connie Reece, Brian Reich, Cathleen Rittereiser, David Reich, Sandy Renshaw, Nick Rice, Steve Roesler, Fernanda Romano, John Rosen, Roberta Rosenberg, Troy Rutter, Mike Sansone, Sheila Scarborough, Dan Schawbel, David Meerman Scott, Sean Scott, Andy Sernovitz, Bernie Scheffler, Asi Sharabi, Ron Shevlin, Jamey Shiels, Brad Shorr, Sonia Simone, Charles Sipe, Dan Sitter, Jon Swanson, Oleksandr Skorokhod, Stephen Smith, Phil Soden, Aki Spicer, Sheryl Steadman, Rachel Steiner,

Paul Tedesco, Seni Thomas, John Todor, Scott Townsend, PJasmin Tragas, Jonathan Trenn, Kate Trgovac, Karl Turley, Tim Tyler, Yves Van Landeghem, Mario Vellandi, Steven Verbruggen, Greg Verdino, Jeroen Verkroost, Dylan Viner, Roger von Oech, Jeff Wallace, Jennifer Warwick, Ellen Weber, Hugh Weber, David Weinfeld, Scott White, Gordon Whitehead, Andy Whitlock, Keri Willenborg, Casper Willer, Paul Williams, Chris Wilson, Craig Wilson, C.B. Whittemore, Steve Woodruff, Troy Worman, Piet Wulleman, Faris Yakob, Joanna Young, David Zinger,

photo from Age of Conversation 2

Acceptance comes with age

I’ve been traveling a bit lately, and I was talking by phone to a North Dakota boy Tuesday. Here are the three sentences that this good Republican named Stan had to say about the prospect of the election of Barack Obama:

First,

• “It looks like the young guy is going to win.”

He followed that with,

• “Well, that’s all right.”

And ended by saying,

• “We’ll just give him a chance and see what he can do.”

Acceptance comes with age.

Stan is in his late 80s and he has lived a lot of American history, gained a lot from living in America, and given a lot back. He has known

• hard work on a Great Plains farm
• the Great Depression
• service in WWII as a technical trainer at Chanute Air Base
• marriage
• a long career as a government accountant and his wife as a teacher
• a modest income and sound judgment in how it was spent
• homes (one at a time, not multiple homes)
• retirement in Arizona and
• declining health

Now in his sunset years he and his wife were having difficulty keeping up with the physical demands of their home, so they moved into an assisted living facility, and they put their house in Arizona on the market. You guessed it. A full year later their house is still on the market with little hope for a sale. There is no bailout in sight for these loyal Americans – veterans of the Great Depression and World War II. Why haven’t we heard these Americans mentioned by John McCain in the same sentence as Joe the Plumber? Why we haven’t heard them mentioned by Sarah Palin in the same sentence as the parts of the country she calls pro-America? Couldn’t those “maverick” Republicans at least refer in passing to the aging Americans who have started with nothing and are seeing 60 years of hard work and careful living disappear either slowly or quickly? To add insult to neglect, if McCain were elected these uncomplaining, aging, loyal Americans would be saddled with McCain’s proposed cuts to Medicare.

Celebrate, Stan. It looks like the young guy is going to win.

photo by flickr by rileyroxx

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