Transcript Document

Inland Empire &
San Bernardino County 2009 …
A Very Difficult Year!
John Husing, Ph.D.
Economics & Politics, Inc.
7/21/2015
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7/21/2015
2 0 0 9 b a s e d o n p e r c e n t a g e c h a n g e f ir s t f o u r m o n t h s 2 0 0 8 - 2 0 0 9
S o u r c e : C A E m p lo y m e n t D e v e lo p m e n t D e p a r t m e n t
(342,778)
(147,033)
(9,242)
(100,067)
(203,752)
(182,138)
35,342
170,783
151,858
122,033
30,933
95,775
217,667
222,192
246,983
217,617
125,767
123,967
37,692
120,875
195,379
243,229
242,148
227,473
236,506
265,894
So. Calif. Job Change, 1984-2009
Southern California Employment Growth
Annual Change, 1983-2009e
2
Inland Empire Job Change, 1984-2009
7/21/2015
2 0 0 9 y td =J an u ary to Ap ril
(79,750)
20
08
20
09
e
20
07
20
06
20
05
20
04
20
03
20
02
20
01
20
00
19
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98
19
97
19
96
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95
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94
19
93
19
92
19
91
19
90
19
89
19
88
19
87
19
86
19
85
19
84
(48,650)
2,375
44,700
61,533
59,275
35,467
33,292
40,567
49,850
56,467
40,692
38,325
23,083
28,925
16,917
4,575
9,758
6,342
46,008
41,483
36,775
36,533
37,642
41,025
30,050
Exhibit 1.-Job Change
Inland Empire, Ann ual Average, 1984-2009ytd
S o u r c e s : C A E m p lo y m e n t D e v e lo p m e n t D e p a r t m e n t , E c o n o m ic s & P o lit ic s , I n 3
c.
Worst National Unemployment Rates
U.S. Metro Areas, 1 M illion People or M ore
Highest 2 8 of 49 Unemployment Rates, M arch 2009
M ia mi
O r a ng e C o .
C le ve la nd
I nd ia na p o lis
N a s hville
S e a tt le
C inc inna t i
M ilw a uke e
M e mp his
A la nta
B uf fa lo
J a c ks o nville
S a n D ie g o
C hic a g o
S t. Lo uis
S a n Fr a nc is c o
O r la nd o
Lo uis ville
La s V e g a s
Ta mp a
S an J o s e
S a c ra me nt o
Lo s A ng e le s
Pr o vid e nc e
C ha r lo t te
Po rt la nd
I nla
nd
E mp ir e
7/21/2015
D e t ro it
8.5%
8.5%
S o ur c e : St a t e Emp lo yme nt O f fic e
8.7%
8.7%
8.8%
8.9%
9.0%
9.0%
9.1%
9.1%
9.2%
9.3%
9.3%
9.4%
9.4%
9.5%
9.9%
10.2%
10.4%
10.4%
11.0%
11.3%
11.3%
11.4%
11.4%
11.8%
12.9%
4
14.0%
Unemployment Can Get Stuck For Years
U.S. & Inland Empire Unemployment History, 1929-2009
26.0%
24.0%
U.S .
22.0%
I nland E mp ir e
L not U
20.0%
18.0%
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
7/21/2015
S o ur ce: U.S . B ureau o f Lab o r S tat is t ics & U.S . C ens us B ur eau
2007
2009
1997
1999
2001
2003
2005
1993
1995
1985
1987
1989
1991
1981
1983
1975
1977
1979
1971
1973
1963
1965
1967
1969
1959
1961
1953
1955
1957
1949
1951
1937
1939
1941
1943
1945
1947
1933
1935
1929
1931
0.0%
5
What Happened?
7/21/2015
6
Shrinking Our Economy
E x h ib it i 2 0 . - T o t a l B u ild in g P e rm it V a lu a t io n
I n la n d E m p ire , 1 9 9 0 - 2 0 0 9 e ( b illio n s )
$10.6 Billion Hole
$12.1 $12.5
$10.6
In IE Economic Base
$9.1
$7.2
$4.5
$2.9
90
19
91
9
1
7/21/2015
$5.1
$8.3 Billion From
$4.2
$3.3
$2.5Residential
$2.5
Decline
$2.3
$2.3
$2.2
$5.4
92
19
00
20
93
19
94
19
95
19
96
19
97
19
98
19
99
19
$7.0
$6.1
$3.9
$1.9
01
0
2
02
03
04
20
20
20
2009 based upon 1st quarter 2008-2009 p ercentage change
C onstruction Industry Research B oard
05
20
06
20
07
20
08
20
e
09
0
2
7
MineLoss
Theory
-$21.2Gold
Billion
To The
Secondary Tier
Economy
Another
-$10.6 Billion
Primary Tier
-$10.6 Billion
7/21/2015
8
Taxable Sales Decline
Graph A.-Taxable Sales Growth Rates
Quarterly, California & Riverside County, 1992-2008
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
-12%
-14%
-16%
-18%
-20%
C alifornia
19 9 2
19 9 3
7/21/2015
R ivers ide
19 9 4
19 9 5
19 9 6
19 9 7
19 9 8
19 9 9
2 00 0
2 00 1 2 00 2 2 00 3 2 00 4 2 00 5 2 00 6
S o u r c e : C A B o a r d o f E q u a liz a t io n , R C TC f o r 2 0 0 8
2 00 7 2 00 8 2 00 9
9
Housing Demand Rose With Population
CA Home Restrictions
Slow Growth
NIMBYs
Endangered Species
Water
Keep “Them” Out of Our City
Just Under
LA & OC
Production In
2006 or 2007
1997 18.3 million people/3.9 million SFR homes =
4.66
1997-2007 Add 3.2 million people: Need 709,600 homes = 4.66
1997-2007 Actual New homes
552,900
1997-2007 Shortfall
156,700
Annual Production Too Low:
15,670 a year
7/21/2015
10
Prices Had To Take-Off To Eliminate Buyers
Exhibit 8.-Price Trends, New & Existing Homes
Inland Empire, 1988-2008, Quarterly
420,000
400,000
380,000
360,000
340,000
320,000
300,000
280,000
260,000
240,000
220,000
200,000
180,000
160,000
140,000
120,000
100,000
80,000
$404,611
1997-2003
12.9% per year
2003-2006
19.7% per year
Source: Dataquick
7/21/2015
11
Sales Soars Until Late 2005 … Back to 2002
Price Peak
32,000
32,000
30,000
30,000
28,000
28,000
26,000
26,000
24,000
24,000
22,000
22,000
20,000
20,000
18,000
18,000
16,000
16,000
14,000
14,000
12,000
12,000
10,000
10,0008,000
8,0006,000
6,0004,000
4,0002,000
2,000 0
0
7/21/2015
Exhibit 11.-Existing & New Homes Sales, Inland Empire
Seasonally Adjusted, by quarter, 1988-2008
31,545
29,670
19,664
11,398
Source: Dataquick
Source: Dataquick
83.5%
12
Prices Back to Early 2002 Levels
-56.8%Traded 2004-2007
359,044 SFR Homes
More Owed
They Are Worth!
$404,611
Exhibit 8.-Price Trends, All Homes
Inland Empire, 1988-2009, Quarterly
33.2% Of IE’s
1,080,328 SFR Homes
$420,000
$390,000
$360,000
$330,000
$300,000
$270,000
$240,000
$210,000
$180,000
$150,000
$120,000
$177,363
$90,000
$60,000
7/21/2015
Source: Dataquick & Economics & Politics, Inc.
13
Supply: Foreclosures
Sales In Jan. 2009
71.2% of Riv. Co.
67.3% of SB Co.
7/21/2015
14
Housing Affordability
Exhibit 16.-Share Able To Buy Median Price Home
San Bernardino County, 2000-2009
66%
53%
45%
18%
2000
7/21/2015
2002
2005
1Q_2009 SB County
Source: CA Association of Realtors, 2000-2005; Economics & Politics, Inc., 2009
15
Demand & Supply
Demand Rising
From Lower Prices
7/21/2015
vs.
Supply High From
Foreclosures
16
And The Winner So Far ….
Foreclosure Supply Still
Overwhelming Demand
BUT … Price Is Stabilizing Indicating The Supply and Demand
are Nearing Equality … The Price Bottom Is Near
7/21/2015
17
Current Status Of SB Co. Housing
150,927 San Bdno. County’s Traded in 2004-2007
515,492 Total Homes Existed in January 2009
29.3% Share of Homes In Potential Trouble
7/21/2015
18
Notices of Default
•76,180 of 150,927 Homes Sold 2004-2007: Notices of Default
•74,747 Upside Down but Not Yet in Visible Trouble (49.5%)
E x h ib it 1 2 . - M o n t h ly N o t ic e s o f D e f a u lt : 7 6 , 1 8 0
S a n B e rn a rd in o C o u n t y , M a r- 0 7 t o M a r- 0 9
4,820
3,210
2,126
2,180
2,435
M
3,978
2,275
1,827
ar
-0
7
Ap
r -0
7
M
ay
-0
7
Ju
n07
Ju
l-0
7
Au
g07
Se
p07
Oc
t- 0
7
No
v07
De
c-0
7
1,862
4,015 4,022
1,752
Ja
n09
Fe
b09
M
ar
-0
9
2,566
1,9181,918
4,150 4,106 4,280 4,094 4,211 4,211
Ja
n08
Fe
b08
M
ar
-0
8
Ap
r -0
8
M
ay
-0
8
Ju
n08
Ju
l-0
8
Au
g08
Se
p08
Oc
t- 0
8
No
v08
De
c-0
8
2,672
3,848 3,650 4,032
Source: ForeclosureRadar
7/21/2015
19
Defaulted Homes
•76,180 Notices of Default
•67,338 through 90-Day grace period
•52,323 (78%) foreclosed … 15,015 (22%) worked out
E x h ib it 1 4 . - N o t ic e s o f T ru s t e e S a le s : 5 2 , 3 2 3
S a n B e rn a rd in o C o u n t y , J u n - 0 7 t o M a r- 0 9
6,234
4,404
2,296
2,987 3,279
7,083
7,806 8,070
8,484 8,289 8,289
5,526
5,032 4,754
3,763
6,383 5,883
6,687
5,554
4,760
3,347
7/21/2015
Source: ForeclosureRadar
Ja
n09
Fe
b09
M
ar
-0
9
08
No
v08
De
c-0
8
Oc
t-
Ju
l-0
8
Au
g08
Se
p08
Ja
n08
Fe
b08
M
ar
-0
8
Ap
r -0
8
M
ay
-0
8
Ju
n08
No
v07
De
c-0
7
07
Oc
t-
Ju
l-0
7
Au
g07
Se
p07
Ju
n07
1,296
20
Upside Down Homes
•74,747 Upside Down … Not Yet Notices of Default
•12,820 NOD Grace Period
•87,567 Future Issue!
7/21/2015
21
Bank Foreclosure Sales
36,357 Re-Sold (69%) of 52,323 Foreclosed
E x h ib it 1 5 . - F o re c l o s u re B a n k S a l e s : 3 6 , 3 5 7
S a n B e rn a rd in o C o u n t y , J u n - 0 7 t o M a r- 0 9
2,931
1,485
ar
-0
9
1,450 1,489
1,804 1,674 1,875
M
1,275
Ja
n08
Fe
b08
M
ar
-0
8
Ap
r -0
8
M
ay
-0
8
Ju
n08
Ju
l-0
8
Au
g08
Se
p08
No
v07
De
c-0
7
863
07
918
Oc
t-
777
Ju
l-0
7
Au
g07
Se
p07
Ju
n07
609
1,160 1,072 1,313
1,568
2,502 2,502
Ja
n09
Fe
b09
1,919
2,346
08
No
v08
De
c-0
8
2,177
Oc
t-
2,648
Source: ForeclosureRadar
15,966
Inventory (31%) of Unsold Foreclosures22
7/21/2015
Pace of Future Problem
Sub-Prime
Over
7/21/2015
Alt-A
Option Adjustable
Unsecured ARMS
23
Months of Standing New Home Inventory
Southern California
1st Qtr 2009 Statistics
16
14
Orange County 12.3
LA County
11.8
Inland Empire
4.6
Riverside
3.8
San Bernardino 6.4
12
10
4Q92
2Q93
4Q93
2Q94
4Q94
2Q95
4Q95
2Q96
4Q96
2Q97
4Q97
2Q98
4Q98
2Q99
4Q99
2Q00
4Q00
2Q01
4Q01
2Q02
4Q02
2Q03
4Q03
2Q04
4Q04
2Q05
4Q05
2Q06
4Q06
2Q07
4Q07
2Q08
4Q08
8
6
4
2
0
Riverside
Inland Empire
San Bernardino
Source: Market Monitor, Metrostudy
7/21/2015
24
Standing New Home Inventory 1st-2009
Fontana Rialto
SB-Colton-Highland
Loma Linda Redlands Yucaipa
High Desert
Chino Chino Hills Ontario
R. Cucamonga Upland
7/21/2015
21
22
31
56
19
32
181
60
34
15
258
80
23
470
25
Inland Empire’s Long Term
Competitive Advantage Still Exists
Exhibit 118.-Home Price Advantage, So. California Markets
Median Priced New & Existing Home, 1st Quarter 2009
Median All Home Price
Inland Empire Advantage
$433,000
$331,000
$307,000
$256,000
$177,000
$154,000
$130,000
Inland Empire
7/21/2015
Have ToLos
Get
This CrisisSanBehind
Us … Orange
Angeles
Diego
$10.6 Billion Hole to Fill
Source: Dataquick
26
Worst Potential Financial Crisis
Since 1929
Fed Raised Rates
Cut Money Supply!
Fed’s Ben Bernanke
President Hoover
7/21/2015
27
Issue: Mortgage Backed Securities
Loan
LoanOriginator
Servicer
Mortgage
Home Buyer
Low Risk Investors
Loan Servicer
Will Do
Nothing To Hurt
the Interest of the
Investors
Fannie, Freddie
Investment Bank
Mortgage
Group
High Risk Investors
7/21/2015
28
Reduce Principal
Purchase Price
$400,000
Owe
$350,000
Today’s Value
$250,000
90% of Today’s Value Paid To Investor $225,000
Loss to Investor
$125,000
30 Year FHA Mortgage, Less Principal & Interest, Lower Payment
If Sell Early For Over $225,000 Profit To Lender
Only For Existing Mortgages
7/21/2015
Obama Cramdown: Bankruptcy But Must Negotiate First
29
NO!
Hurts The Interest of the Investor
7/21/2015
30
Leave Principal Alone
Cut Interest Rate
Lengthen Term
Reduce Monthly Payment
7/21/2015
31
Stay In Home BUT Upside Down
Never Able To Sell!
Inland Empire Upside Down Too Much For
These
Strategies!
Obama: FNMA, Freddie Mac
If Owe
105% Refi To Lower Rate
7/21/2015
Obama: If 38% of Income, Share Cost of Lowering to 31% of Income
32
What About
Moral Hazard?
Unless We Cut Off The Flow of Foreclosures …
If Foreclosures Not Lowered …
No Recovery Until Past 2012
7/21/2015
33
225,000 Unemployed – 2½ times Normal
E x h ib it 5 . - N u m b e r o f U n e m p lo y e d
I n la n d E m p i re , J a n u a ry 2 0 0 0 - A p ri l 2 0 0 9
250,000
225,000
200,000
175,000
Aver age Unempl oyed
Jan-00 to Jun-07
89,786
150,000
125,000
100,000
75,000
50,000
25,000
0
J an-00
7/21/2015
J an-01
J an-02
J an-03
J an-04
J an-05
J an-06
J an-07
Source: C alifo rnia Employment Development Department
J an-08
J an-09
34
Can New Homes They Be Profitably Built?
2,500 Square Foot Homes on 7,200 Square Foot Lot, No Fee Reduction
$336,500 with 34% Affordability @$80,219 @ 4% return
2,000 Square Foot Homes on 6,000 Square Foot Lot, 40% Fee Reduction
$257,000 with 47% Affordability @$61,876 @ 4% return
Fees: 100% School; 60% Agency; -500 Sq. Ft.; 6,000 Sq. Ft. Lot
Total Revenue
Construction Cost
Land Cost
Fees
Total Cost
Profit
Return
7/21/2015on Sale Price
$257,000
$221,526
$2,857
$22,379
$246,752
$10,328
4.00%
35
Consumer Confidence In Future
Dec 2007 Level (pre-Recession)
nJa
07
Future Outlook
72.3
28.9
51.0
25.5
21.9
30.2
22.3
27.3
29.7
42.5
30.2
43.0
42.3
46.2
43.5
35.7
61.1
61.5
65.0
54.1
65.8
42.7
65.4
41.4
74.2
47.3
81.9
50.0
90.6
Source: C onference B oard
49.4
104.0
58.0
114.3
69.3
112.9
75.8
115.7
69.1
118.0
Present Outlook
80.0
121.2
85.0
130.1
89.2
138.3
94.4
129.9
88.8
136.1
90.1
133.5
88.2
138.5
87.9
93.8
94.4
133.9
137.1
E x h ib it 1 6 . - U . S . C o n s u m e r C o n f id e n c e
C u rre n t a n d F u t u re O u t lo o k , J a n u a ry 2 0 0 7 - P re s e n t
7
8
9
8
9
7
7
8
8
7
8
8
7
8
9
7
7
8
8
9
7
7
8
7
7
8
8
9
-0 ar -0 r- 0 y- 0 n-0 y-0 g-0 p-0 c t- 0 v-0 c-0 n- 0 b-0 ar -0 r- 0 y- 0 n-0 ul-0 g-0 p-0 c t- 0 v-0 c-0 n- 0 b-0 ar -0 r- 0 y- 0
b
l
p
e
J Au Se O No De
Ja Fe M Ap Ma Ju
Ja Fe M Ap Ma
Fe M A Ma Ju Ju Au Se O No D
7/21/2015
36
Office Market
Housing Slowdown
Hurts!
7/21/2015
37
Office Absorption
O f f ic e N e t S p a c e A b s o rp t io n
M o v in g 4 - q u a rt e rs , I n la n d E m p ire , 1 9 9 1 - 2 0 0 8
Absorption Falls With
Housing Slowdown
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
2,000,000
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
(200,000)
(400,000)
(600,000)
7/21/2015
Source: Grubb & Ellis & Econo mics & Politics , Inc.
38
Office Vacancy Rate Has
Jumped Dramatically
O f f ic e V a c a n c y R a t e
I n la n d E m p ire , 1 9 9 1 - 2 0 0 8
28%
26%
24%
22%
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
23.3%
Source: Grubb & Ellis
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
7/21/2015
1992
1991
7.0%
39
Blue Collar Industrial Jobs
7/21/2015
40
Why Blue Collar Jobs Important
S h a re o f A d u lt s , N o C o lle g e C la s s & B A o r A b o v e
S o u t h e r n C a lif o rn ia C o u n t ie s , P e o p le 2 5 & O v e r, 2 0 0 7
63.8%
50.9%
48.9%
47.9%
44.7%
39.3%
Imperial
7/21/2015
San Bdno.
R iverside
Los Angeles Southern California
Ventura
S o u r c e : 2 0 0 7 A m e r ic a n C o m m u n it y S u r v e y
37.2%
Orange
35.9%
San Diego
41
1. International Containers Thru So. Calif.
E x h ib it 6 . - P o rt C o n t a in e r T ra f f i c
P o rt s o f L o s A n g e le s & L o n g B e a c h , 1 9 9 0 - 2 0 0 8 & 2 0 2 5 e ( m i ll i o
2007
43.2% U.S. Imported Containers
25.3% U.S. Exported Containers
15.8 15.7 14.5
7/21/2015
TEU=20 foot equivalent cont ainer units
Source: Ports of Los Angeles & Long Beach; forecast: Mo ffatt & Nichol Engineers
20
25
e
13.1 14.2
10.6 11.8
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
e
19
90
8.2 9.5 9.6
7.5
6.5
5.8
3.7 3.8 4.1 4.4 5.1 5.4
42.5
42
2. Ports On West Coast Nearest Asia
Los Angeles
7/21/2015
Long Beach
43
3. Deep Water Ports As Ships Draw
Over 50 feet of Water
8,000-Container Post-Panamax Ships
7/21/2015
44
U.S. Economy Has Crashed
J o b C re a t io n o r D e s t ru c t io n
U . S . , 1 9 9 8 - 2 0 0 9 , S e a s o n a l ly A d ju s t e d ( 0 0 0 )
750
500
250
0
(250)
(500)
-6,001,000 Jobs
(750)
(1,000)
1998
7/21/2015
1999
2000
2001
2002
2003
2004
2005
Source: U.S. B ureau of Labor Statis tics
2006
2007
2008
2009
45
Ports Increasingly Regarded As
Unreliable







UP Buys SP, Trains Can’t Move
ILWU-PMSA Lockout/Strike
93 Ships Can’t Be Unloaded: Not Enough Labor
Rains Wash-Out Rail Track
Clean Truck Fees
Employee Truck Mandate & Law Suits
Riverside Suing Ports
7/21/2015
46
BCOs
4-Corners Strategy
Beneficial Cargo
Owners
7/21/2015
47
Port Imports Have Crashed
G ro w t h o f I m p o rt e d C o n t a in e rs
P o rt s o f L o s A n g e le s - L o n g B e a c h , 1 9 9 8 - 2 0 0 9 e ( 0 0 0 o f t e u
551
454
654
443
349
160
934
788
670
(59)
(787)
(1,583)
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009e
S o u r c e : Po r t Im p o r t E x p o r t R e p o rt in g S e r v ic e (P IE RS ), c o lle c t e d f ro m V e s s e l
2 0 0 9 B a s e d o n a v e ra g e o f f irs t fo r m o n t h s c h a n g e
7/21/2015
48
Logistics Gained 76,500
But Now Lost -6,900
L o g is t i c s S e c t o r J o b G ro w t h
I n la n d E m p i re , 1 9 9 1 - 2 0 0 9 y t d
7,500
2,600
3,500
1,700
2,600
4,300 3,700
4,900 4,600 4,800
3,300
8,700
7,500
8,300
4,900
2,300
1,300
(1,000)
7/21/2015
Source: C A Employment Development Department
2009=J an.-Apr. Average.
d
20
09
yt
20
08
20
07
20
06
20
05
20
04
20
03
20
02
20
01
20
00
19
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
(6,900)
49
Industrial Absorption Has Stopped
I n d u s t ria l S p a c e G ro s s A b s o rp t io n
I n la n d E m p ire , 1 9 9 1 - 2 0 0 9
( m o v in g 4 - q u a rt e r t o t a
7/21/2015
Source: Grubb & Ellis & Economics & Politics, Inc.
09
20
08
20
07
20
06
20
05
20
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
19
91
50,000,000
45,000,000
40,000,000
35,000,000
30,000,000
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
0
50
Industrial Vacancy Rate Soaring
I n d u s t ria l S p a c e V a c a n c y R a t e
I n la n d E m p ire , 1 9 9 1 - 2 0 0 9
SB-Redlands 21.4%
Moreno Valley-Perris 18.8%
11.8%
Ontario-Mira Loma 8.0%
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
26%
24%
22%
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
7/21/2015
S o u r c e : G r u b b & E llis
51
Issue: Financial Freeze
Savers
Account
Bank, S & L, CU
Mortgage
Business
Personal
Student
Auto
TALF: Term Asset
Backed Security Loan Facility Creates
Secondary
Market
Borrower
Secondary
Market
Mortgages
Auto Loans
Student Loans
Personal Loans
More Loans
7/21/2015
52
Short Term Business Loans
Restoring Demand
•Consumer (Scared)
•Business Investment (Can’t Borrow)
•Export Growth (Dollar Value Has Risen Again)
•Government Borrow & Spend (World War II Experience)
Borrow $787 Billion & Spend It
7/21/2015
53
Collect $787 Billion In Taxes … Cuts $787 Billion In Private Spending
Spend $787 Billion Collect … Effect is NEUTRAL on Demand
Collect Taxes … Spend That Amount
Borrow $787 Billion … Spent That Too … Adds $787 To Demand
7/21/2015
54
Has This Been Tried?
7/21/2015
55
World War II As A Giant Stimulus Effort
U.S. Unemployment Rates
Entering World War II
14.5%
9.7%
4.7%
1.9%
1940
7/21/2015
1941
1942
1943
56
Why Do This?
E x h ib it i 2 0 . - T o t a l B u ild in g P e rm it V a lu a t io n
I n la n d E m p ire , 1 9 9 0 - 2 0 0 9 e ( b illio n s )
$10.6 Billion Hole
$12.1 $12.5
$10.6
In IE Economic Base
$9.1
$7.2
$4.5
$2.9
90
19
91
9
1
7/21/2015
$5.1
$8.3 Billion From
$4.2
$3.3
$2.5Residential
$2.5
Decline
$2.3
$2.3
$2.2
$5.4
92
19
00
20
93
19
94
19
95
19
96
19
97
19
98
19
99
19
$7.0
$6.1
$3.9
$1.9
01
0
2
02
03
04
20
20
20
2009 based upon 1st quarter 2008-2009 p ercentage change
C onstruction Industry Research B oard
05
20
06
20
07
20
08
20
e
09
0
2
57
When Will “Normal” Start To Return?
2010,
x 2011
x
2012
If Policies
Work!
7/21/2015
58
While Waiting For Recovery….
7/21/2015
59
www.johnhusing.com
7/21/2015
60