Cynthia Morgan is a well regarded hypnotherapist in Los Angeles. She was recently interviewed for an article in Westside Today for an article about how one’s state of mind can bring opportunity where some believe there is none. ( http://www.westsidetoday.com/m1-770/mind-over-matter.html ). She states in the article that one “…cannot have emotional health without healthy thoughts. Emotion follows thought. It’s not the other way around. First the thought, then the emotion. In order to change the emotion, you must go back to the thoughts you are thinking. And not just conscious thoughts, but rather thoughts in your subconscious mind”.   

This idea touched on an area that interests me. As an environmentalist and a designer I think it is important to attempt to understand the impact of environment on our formation as human beings. Environmentalism, to be real, must go beyond the surface of 'saving the planet' to an understanding of how we relate to the environment. Karl Menninger was a well known child psychologist who's family founded a foundation and clinic in Topeka and in Houston. The Foundation does a lot of work with emotionally disturbed children. In tracking this topic, during his career Karl performed many studies of the effect of environment on childhood development. Some of his most well known studies were of identical twins who were separated at birth. Although genetically different, when raised in differing environments, they developed very differently with differing interests and habits. Of course there are also the effects of violent environments, war zones, religious extremeism and so forth.  

Karl's thesis was that environment affects the development of personality which is, to a certain extent, a reflection of how we relate to our surroundings and situations. This also implies that we can shape humanity through the environment that we create for living, at all scales. The home environment affects the development of a person while the global environment affects the development of humanity. Quite simply, environment is another lens through which we see different things when looking at the same thing from different places.

A Bear Market Rally

My reading tells me that the recent optimism in the economy is wishful thinking. The technical indicators- based on trends – say “buy” but the business fundamentals do not back it up. Most traders pay more attention to trends than fundamentals, because it is easier. The current ralley is an artificial run up being headed by traders who are watching for the trend to peak before getting out. Or, they think that the market has bottomed and that it is safe to "get back in". In either case, I do not believe that the market fundamentals support a meaningful recovery based on the fundamentals, at least not yet.

Usually the private sector leads the public sector out of a recession as the increase in tax revenues lags behind growth by a year or more. This time it may be different as the fed floods the public sector with money to stimulate private growth. I don’t see much happening now except for bargain hunting. The stimulus package doesn’t seem to be hitting very hard so far, and municipal tax revenues are definitely not up enough to support municipal spending. I hope I am wrong but at this point I am not going to gamble on it.

I do think that the cities stand a good chance of getting substantial infrastructure and transportation money from the stimulus package, but even on a fast track, we are a year away from seeing real movement, or even the initial design work for new projects.

Another real danger lies down the road in the form of inflation. That is what happened in the late 70’s. There is no better way to pay for a lost war than to make your currency less valuable, assuming that the debt is payable in that currency.

Old Morrow

Good news: the rail line described in last week's article is dead. The Georgia DOT board ousted the head of the department and immediately thereafter dropped the lawsuit which had been filed at the last minute in order to allow for heavy rail to pass through Atlanta's Piedmont Park. 

On another front, the interactive water feature located in the town green of Old Morrow, in Morrow, Georgia, has been started and appears to be a great success. The latest phase of construction at Olde Morrow is now well underway with the completion of the town square fountain. This  interactive fountain features dancing jets of water surrounding a 20 foot tall central jet. Kids and adults alike can interact with the fountain which will provide a wonderful combination of sound and action all year round. The fountain is the centerpiece of the new town green. When the water is turned off, the cobblestone basin also serves as a central point for special events while the rest of the town green can do double duty as an amphitheatre or festival lawn. 

Moving forward, the walks and streets surrounding the town green connect a variety of uses including restaurants, shops, entertainment, small businesses and homes providing Morrow with a fun and safe entertainment district which is also close to home. The project is an effort to create a downtown in a suburban town which evolved largely during the middle of the last century in an auto centered suburb without a center. The town has been buying endangered old houses from all over the state and relocating them to Old Morrow and reconstructing and renovating them on site. Of note, the houses include the home of a former governor, a very pretty victorian house of about 3500 square feet, and two antebellum mansions of 6 to 7 thousand square feet. One of the mansions came from  downtown Macon and the other from a farm. The old houses will be primarily used for restaurants, retail and office space around the town square while residential uses will be concentrated in a ring of modern live-work spaces which surround the core area. 

Of special interest, no cars will be allowed into  the central area; it is to be totally pedestrian. Parking will be in  lots on the edges of the downtown core area. Morrow is growing by leaps and bounds. Clayton State college is located in town as is the new State Archive. The new town center is seen as an attraction which will allow residents and students to find a diverse shopping and night life experience without having to drive to Atlanta. Old Morrow has been located within sight of I-75 and next to a mall which is being converted to a broader mix of uses including a civic center and office space. Design and engineering for the project has been done by the Landscape Architecture and Civil Engineering studios at Pond & Company in Atlanta. 

Regional Chauvinism

I had the opportunity to spend last Friday morning with several thinkers and doers in the fields of urban design, landscape architecture and park design. The event was a walkabout on the site of one segment of the Atlanta Beltline and the participants were made up of a group of leading landscape architects from around the country – mostly people involved in urban issues of park planning, transportation planning, communications and education.

We in Atlanta tend to think of Atlanta’s urban issues as being universal. A few years ago Atlanta had several dubious distinctions. We were first in the Nation in pedestrian death and injury along our roadways. Likewise, we were at the top of the statistics on traffic related air pollution, time spent in traffic, miles driven to get to work, lack of sidewalks, lack of overall connectivity, fuel consumption per capita, and so on. The numbers, and experiences were, and remain, so bad that much of the great reputation Atlanta built as a livable city was becoming tarnished. Companies were choosing other cities over Atlanta for expansion and relocation.

Atlanta is perpetually at odds with the State of Georgia. In truth, Atlanta is a relatively small city. The population within the City of Atlanta is only 520,000. On the other hand Metropolitan Atlanta, is the 9th largest metropolitan area in the US with a population over 10 times that of the City at 5,200,000. Politically, the City and the close-in suburban areas tend to be liberal. Most of Metro Atlanta is conservative, as is the majority of the State of Georgia. For many years the City allowed itself to be walked on by the State. The State began to see the City, in its traditional role of a hub of transportation, to be subject to the State’s need to speed intrastate traffic through with as little hindrance as possible. The urban fabric was ripped with massive freeway projects which divided neighborhoods and destroyed property values. White flight was blamed for much of the City’s neighborhood decline but, in fact, it was largely due to the fact that long stable neighborhoods were being ripped apart by large scale transportation projects.

Mayor Andrew Young based much of his mayorship on an effort to assist the state with plowing an expressway through a string of stable inner city neighborhoods along a route which had been earlier killed by neighborhood groups in a twenty year long series of lawsuits against the Georgia Department of Transportation. Mayor Young’s predecessors were also big highway men. Much of this approach was brought to a halt as the City began to regain its sense of self in the early 1970’s. Law suits were filed against inner city expressway projects and those projects were ultimately halted. Neighborhoods banded together into political action groups and the City began to elect mayors, legislators and councilpersons who would stand up to the forces which put freeways ahead of neighborhoods. Local politicians began to see themselves more as advocates for city life rather than actors on a national stage.

Things have improved. The Atlanta Regional Commission has promoted a series of successful planning efforts called Livable Centers Initiatives wherein grants are made to communities to improve connectivity and a more urban sense of community, These studies often include planning for creating downtowns in the midst off sprawl, where none had existed before.

Business also jumped on the new urbanism bandwagon in an effort to find ways to improve connectivity and create environments which would be attractive to the forces of growth. There are 6 universities in the City limits and another two in nearby Decatur. The Universities, led by Georgia State University president Carl Patton, began to promote urban activities to bring life to the City at night and to improve safety for pedestrians. The City got on the band wagon and began to promote itself as a college town – this really worked – there are a number of new dormitories and classroom buildings in downtown and midtown. Neighborhoods began to heal; a healthy street life has taken hold in many areas of downtown and midtown. There are a number of quite nice urbanist projects at or near completion in the city, including a dense transit oriented development located around the Lindbergh MARTA subway station in the north midtown area and another in an area reclaimed from a large steel mill.

The result of these efforts has been a shift in perceptions. Atlanta is now the number one most desirable location for recent college graduates and for young adults in general. A good and improving intown lifestyle combined with a good job market and a sense of ‘cool’ has brought the City back to life. Employers are taking notice and are beginning to come back as well.

Nevertheless, the state transportation authority continues to express its regional chauvinism in unpredictable ways. Recently, on the eve of the passage of an element critical to the expansion of Atlanta’s intown park and light rail system (Google ‘Atlanta Beltline and GADOT’) the state filed to block the transaction so that they could force a heavy rail line through the middle of the City’s finest park and several of its most desirable inner ring neighborhoods. You would think that they had learned a lesson from their last effort to do something like this. Or at least that they had enough common sense not to attempt to tackle the professional and intellectual (and financial) heart of the City with some half cocked scheme to introduce heavy rail into a series of popular and stable parks and neighborhoods. The City was so completely surprised by this effort, which could only be classified as an ambush, that the Mayor put a half page op-ed into the local newspaper vowing to fight back by taking the state’s attack all the way to Congress and the White House. The State’s move not only surprised the City, but it hurt the City’s efforts to bond some of its park and transit efforts as well. This State scheme is not likely to go anywhere unless the State can find a way to put the rail lines in a tunnel, but the whole affair is indicative of the low level of regard and communication between the City and the State.

As someone who is involved in urban design and planning, I think that I tend to see the urban experience in general as being similar to that in Atlanta, as do many people in Atlanta.

Shenzhen, City of the Future 5

Not much new to post this week, but I did find a great web page for anyone interested in modern and contemporary design of all types. It is MoCo Loco - at mocoloco.com.

This led me to check up on the web site of my favorite design magazine, "Abitare". Upon looking, I found that it has received a significant upgrade since the last time I visited the site, when it was basically a review of a few articles in the current edition. Much better now - abitare.it.

And, speaking of Cities of the Future, check out the article on the new housing projects in Shenzen, China on the Abitare site. Here is an excerpt and a link:

"The rapid development of Shenzhen and otherareas has led to massive influxes of workers from other regions,bringing about the formation of “urban villages” - low-costhousing. Here, inside the city, lie densely-clustered areas with plotratios of more than 3, formed by homes extended by formerpeasants. These are home to millions of laborers and employeesin the service industry; the high mobility of residents and lack ofurban administration in many of these urban villages have led tosevere social problems and security concerns." More...

The City of the Future 4: Dubai

The biggest speculative real estate boom ever. (Market Study?We don't need a market study!) Environmentally, socially and economically unsustainable. Now, if you read the media reports, becoming a ghost town. Thousands of cars abandoned in parking garages and at the airport as those able to leave get out. The spector of debtors prison for some who can't get out. 90 per cent of population are foreigners. Lots of really bad architecture. Some good, but not much - but that is typical everywhere.

How does this become a real city, with all the diversity and life that define a city of this scale?

The City of the Future 3

Venice and Mars

The last two times that I visited Italy were in the Spring. There is no better time, especially for a trip to Venice. In fact, I think that Venice at Easter must be like being on another planet - it is just so  different from Atlanta that it is hard to believe that it is really on the same planet. If you can make the trip to Venice during holy week you should. Like most of the popular Italian tourist cities, Venice is very crowded the week before Easter and the prices are at peak, but the energy level has to be experienced to be believed - especially if the weather is nice. Venice when crowded is much nicer than Florence or Sienna - I think that the lack of cars and motorcycles makes the difference. The Venetian crowds have promenade pace, whereas crowds in Firenze and Sienna are just crowded. 

As long as the air is blowing in from any direction but north the Venetian air is clean and invigorating. The water in the canals is a pale opalescent green - a very beautiful color that I have not seen elsewhere. At this time of year the water is also clean and not infragrant. 

No where else can you visit a city like this. Dense and compact yet utterly clean, quiet and, even with great crowds, unhurried. 

Then stay for a few days after Easter. The crowds evaporate and you have the most beautiful city in the world almost to yourself. 

Venice shuts down not long after dark. It is as if everyone is exhausted from all the walking. It becomes very quiet. You may hear the occasional sounds of footsteps echoing off the stone and water. Murmured words. An acapella trio chanting a chant in a spot known for its acoustic reverberations. 

Every part of the city has a refined beauty. Most of it has been in place long enough to have been reconsidered and rebuilt if it was done wrong the first time. You know instinctively as you walk, or float, through that you are a part of a continuum of admirers, and you feel good about this.

I try to think of an analogy to cities of another time but I don't think there is one. Even before the industrial revolution most real cities were filled with carts, and the streets were filled with waste. In an utopian world, Venice could serve as a model for the City. Yet the Venetians are moving away. The City resident population drops annually. The locals are moving away in order to live in - what - more exciting places? Places with better internet? Places where you can get in your car and drive? 

And the boats. Never on earth have you seen such beautiful boats. 

The City of the Future 2

Big and Tall Buildings

Facts:

No part of a large multistory building which is more than 15 feet from an outside wall is affected by outside temperature. Everything in a large occupied building that is further than 15 feet from an outside wall generates heat which must be removed with air conditioning or ventilation. Most very larrge buildings are not well ventilated. Two thirds of all energy use in the United States takes place in buildings. An equivalent amount of greenhouse gasses is generated from building use. Worldwide, other countries have an even higher percentage of energy usage in buildings, largely because they drive less and have more efficient transportation systems. Transportation accounts for less than a third of energy use and greenhouse gasses in the US and globally. Unfortunately, however, most of what we hear about the energy situation has to do with the price of gasoline at the pump.

There is obviously a gap in the understanding of the problem. But, as we get further and further into the downhill part of the energy supply bell curve, we will begin to see changes that affect building patterns as significantly as transportation habits. At the same time, it is important to realize that transportation and building patterns are flip sides of the same coin. To understand this we must examine what the urban pattern really is. In some ways, the urban pattern is like a piece of fabric. The fabric of a city consists of buildings and the spaces between the buildings. The exterior spaces are connective tissues. They contain roads, sidwewalks, train lines, and open space in the form of parks and specialized use areas such as outdoor cafes, streetscapes, playgrounds and so forth. They are places for the movement of goods, services, utilities and people. The buildings form walls for the outdoor spaces and define the look and feel of the larger city. Most American cities are made up of a dense central core of larger buildings surrounded by concentric rings of successively lower density districts transitioning to a low density suburban landscape. The stock of existing buildings is mostly made up of buildings put in place in the last 30 to 40 years. These are the buildings which will cause the most problems because they are almost totally reliant on cheap energy to remain usable. They were designed to be built as cheaply as possible for the desired use and they are largely unresponsive to the environment.

Newer large buildings, especially in Europe and Asia, are being built to allow for ventilation to cool the building core in winter and into the more temperate parts of summer. Vertical wind tunnels in the core of some new large buildings draw cool air in from windows and vents on the outside and channel it up using convection to create air flow. Some new buildings even incorporate windmill generators into the air flow to generate electricity. Creating this type of air flow in an existing tall building would require a major structural rebuild of the central core of the building and an accompanying loss of usable space. Retrofitting existing large buildings to make them more environmentally responsive is difficult and very expensive. In many cases the work would cost more than the worth of the building. The difficulty and expense of energy renovations portends a loss of existing buildings unless they are seen as being valuable enough to make extensive rebuilding worthwhile. The resulting abandonment of existing building stock may well result in abandonment and disinvestment in large areas of existing cities. Always on the look out for new opportunities to build, the development community will push to replace existing stock with new buildings, but in new areas which have a brighter future and in areas where it is cheaper to build from scratch rather than having the additional cost of demolishing existing stock.

Following this pattern, cities may continue to become a patchwork of viable new and abandoned older areas. while the much older areas with environmentally responsive building stock (i.e. buildings having windows that open) will renovate and areas of underutilized and abandoned low density uses (such as industrial zones) will be redeveloped with new, more energy efficient building stock. Already most American cities are seeing a land rush to buy and redevelop older inner ring industrial and warehouse districts which have lain unused for much of the last 50 years. The new uses being proposed in these areas are largely mixed use with densities and forms reminiscent of the period of time from the beginning of the industrial revolution to the dawn of the international movement in architecture which began to flower in the late 1920’s.

The City of the Future - 1

World oil discovery has peaked. The major oil fields are being drawn down faster than they are being replaced with new discoveries. We skate a razor's edge between growth of demand and the ability to pump enough fuel to meet that demand. "The market's obsession with plummeting oil demand has been so pervasive in the past six months it even fostered a new theory -- peak demand." this from an article in the Financial Post that also concludes that peak demand is being out gunned by peak production.

Like it or not, things are changing. But what will be the result? What will be the impact on city life, on the way that most people live? That depends a lot on where you live. If you live in Manhattan, or downtown Chicago, or San Francisco, things will not change much. These "livable centers" have never lost their vitality. However, many newer cities and the growth areas around the old livable centers, are not sustainable and will face massive change in the next two decades.

I have often thought that the city of the future will be much like the city of the 1920's. Those turn of the (last) century cities had livable centers surrounded by well connected inner ring suburbs. There were several forms of transit making the connections work well and there was also a very dense network of other means of  transportation which provided short efficient connections. The suburbs themselves were compact with right sized houses on small lots. Lots were frequently served by allys from the back and cars were scarce. The inner ring suburbs also had nearby, walkable, commercial districts with a wide range of services and goods easily available to meet day to day needs. This included grocery stores, hardware stores, specialty shops, laundries, drug stores, cafes, candy stores and the like. The shopping districts were intersperced with churches and schools, also in walking distance. This model worked on the way up the energy curve and it will work also on the way down, although it will jell in different ways. To emphasize consider that real estate in the livable centers and in the old inner ring suburbs is the hottest market nationwide and that it has been for more than ten years.

We will start this series of posts with a look at how cities will fare, beginning with the center of the city and working out to the outer suburbs. More to come...

Passive Energy

The NY Times published an article recently about 'passive' energy in Germany. They made it sound like something new. The book on passive energy was written in the mid 1970's by Edward Mazria ("The Passive Solar Energy Book"). "Passive energy" is created through the use of environment and smart construction to offset the need for energy input from outside sources. Passive energy is especially suitable for temperate climates where the difference between inside and outside temperatures is relatively small, and for high arid climates where cold temperatures can be offset by abundant sunshine. It can also supply a substantial amount of needed winter time heat in cold climates, thus ofsetting the need for more and  more greenhouse gas generating fuel inputs. 

The problem with passive energy is that it requires thought in planning, design, operations and maintenence. It is not idiot proof, it is not consumerist and it is not glamourous. One can not just throw up a stick-built house from a standard plan and expect it to  provide passive energy. There are some new technologies, such as the heat exchangers mentioned in the Times article, but the best source of information remains Edward's Mazria's book (which is linked above). While it is true that Mr. Mazria wrote the best book on passive energy more than 25 years ago, he continues to be on the cutting edge and also has a new initiative which he calls "Architecture 2030". Here is a blurb from and a link to his web page:

2030 Challenge Stimulus Plan Hits Capitol Hill 

President-elect Obama has committed to economic recovery, energy independence, carbon-neutral buildings by 2030 and an 80% reduction in US greenhouse gas emissions by 2050. Architecture 2030 has developed a groundbreaking economic stimulus plan that, with a single investment, simultaneously addresses all of these issues. Edward Mazria and Kristina Kershner presented the 2030 Challenge Stimulus Plan last week to policymakers and industry leaders in the Nation’s Capitol where the Plan is now gathering steam. http://www.architecture2030.org/

780 Million Dollars vs.15 Billion Dollars

Why Nuclear Electricity is Not the Answer

All the talk about building new nuclear plants may be nothing more than hot air. The current cost estimate for a major new coal fired plant in  is about 780 million dollars. Construction of a new nuclear plant of about the same output is estimated to be in the range of 15 billion dollars. In terms of the initial capital cost it is very difficult for nuclear power to compete with coal for electrical generation.  Any subsidies required to make nuclear power competitive would be in excess of the cost of offsetting their power generating capacity with wind, solar, and conservation technologies. 

The last nuclear power plants which were under construction in the United States, in Washington State, were decommissioned and sold for scrap after construction had begun. Not because of environmental problems but because escalating construction costs made it clear that the Washington utilities could earn a higher profit by promoting conservation than by selling nuclear generated electricity. In other words they discovered that they could make more money by giving away energy saving devices and construction subsidies than they could make by selling electricity generated in the new power plants. 

While we can expect subsidies for new technologies which will offset greenhouse gas producing coal plants, we should not expect the subsidies, and corresponding investment,  to go to nuclear until and unless it becomes clear that the other, less expensive technologies, including conservation, will meet our electricity needs. The math does not work.

I think that further proof of the direction this will take lies in Barack Obama's announcement that one of the first elements of the stimulus package will be a program to reduce energy usage in Federal buildings. 

Why Electricity Has Problems as a Car Fuel

The electric car has great potential, both in hybrid form and in the form of purely electric. However, remote generation is very wasteful. There are several reasons for this. First, very little of the energy released by burning, or fisioning, fuels in the power plant actually make it to the wheels of the car. In terms of raw energy, or btu's, for every 100 btu's of heat released from burning fuels in the power plant, only about 3 actually make it to the car in the way of usable energy. The rest is lost as waste heat and in transmission losses. Once in the car,  electricity is stored in batteries where it loses an additional 5% of its power for every day that it is stored. 

The original power source, if it is coal, is very cheap, but in addition to the lack of efficiency in the process of putting the power to the road, coal is a greenhouse gas producing fuel. The by-production of these gasses is much greater with coal based electricity, or even natural gas or oil generated electricity than with the direct burning of liquid fuels simply because so much more coal must be burned to generate the same amount of energy. 

Here is a comparison of the embedded energy from various fuels used in cars:

-Alcohol fuel: Approx. 0.7 btu's of fossil fuel energy required to create enough fuel to deliver 1 btu of energy to the fuel tank of a car.

-Gasoline: Approx 1.25 btu's of fossil fuel energy required to create enough fuel to deliver 1 btu of energy to the fuel tank of a car. Yes, it takes more energy to make alcohol and deliver it to a car than it does gasoline! 

-Electricity: Approx. 33 btu's of fossil fuel energy required to create enough fuel to deliver 1 btu of energy to the battery of a car. Nuclear generated electricity requires even more energy input because of the immense amount of waste heat that must be dissipated. 

The numbers above are fairly realistic. And some in the corn - alcohol fuel industry will tell you that alcohol fuel is bottled solar energy because of  the fact that corn and other vegetable fuel stocks are grown in the sun. If you would like to look at the numbers in more detail there is a good explanation available at the following link:  http://www.extension.iastate.edu/AGDM/articles/hof/HofJuly07.html  

Electric cars are the wave of the future, but we are not there yet. Coal generated electricity is dirty and inefficient. Nuclear is a better alternative in regards to green house gasses but it is much more expensive and there are still unresolved safety issues. Alternative technologies such as wind, tide, and fuel cell technologies are on the horizon but will not offset coal for some time to come. Hydro Power is maxed out in the United States. 

What this means in terms of overall efficiency and the production of greenhouse gasses is that for now, a highly efficient, non-plug-in hybrid vehicle is a better choice than a plug-in hybrid or an all electric vehicle. When and if electricity for cars can be generated by renewable, non fossil or fissionable fuels, then this formula may change. But for now, the environment and the economy are on the side of gasoline, diesel, natural gas and alcohol fuels.

Prognostication 09 (updated January 5)

Jim Kunstler's forecasts are very pessimistic (www.kunstler.com). Unfortunately they tend to be accurate. Of all the major bloggers who prognosticate on energy, economy and environment Jim has the best track record for elucidating the basics and for drawing conclusions about what they mean. I have been reading Jim's material for several years. At first I found it mostly entertaining, but I was not a believer. Jim writes with outrageous bluster and hypebole. While it makes for an interesting read, his style tends to undercut his credibility. His forecasts have been so outrageous that they make it difficult to believe him when he predicts  that the status quo will move so far, so quickly. 

I read a lot about energy, environment and economics - this is a natural result of practicing landscape architecture and environmental planning for the last 35 years. Landscape architecture and architecture are perennial bellwethers of the economy. They are the first to take a dive when the economy goes south and the first to recover when the economy comes back. So, being flexible and being able to forecast and move from one market to another, as markets rise and fall, becomes a survival tactic. 

The design professions for the built environment are driven by market conditions and react swiftly to upturns and down ticks in the economy. If you want to know when the economy will truly come back, you would do well to monitor the employment ads for these professions. When you notice a trend in increased hiring you can safely start to move back into the market because the money is starting to flow again and the landscape architects, architects and engineers are the first ones to begin the work of ramping up for new capital projects. 

So, Jim Kunstler has been on my radar for the reason than that he understands the issues, has good information, he can synthesize, and he writes well. At the beginning of each of the last few years he has made a forecast for the coming year. At the beginning of last year, he predicted pretty much what happened, as it happened, but so outrageously that it was hard to believe. By mid year, as things unrolled as he said they would, I started to pay serious attention to  his weekly blog. 

Jim has just published his forecast for 2009 and it does not include much hope for recovery, or even leveling out the broader economy. If his forecasts remain as accurate as they have been in the past, we are in for a rough ride. There will be a quick uptick from the influx of public money for public works but the underlying forces which have shaped the current downturn have not abated, nor will they abate in the near and intermediate term. 

Things will  be better in the design and construction sectors in the near term as the public money kicks in but the broader economy is in for a great deal of volatility as demand for commodities continues to skate along its convergence with peaking supply capacity. Many crucial natural resources such as free flowing oil, steel, copper, et.al. have fallen in price because of  over supply, but the capacity for supply to exceed demand is not far away and as the economy begins to recover, scarcities will return and drive prices back up, thereby once again weakening the fundamentals. Acknowledging that there are sectors and places where the economy is contra cyclical to conditions in most of the rest of the world, I will leave it to you to read his material yourself and draw your own conclusions. 

Mikes Forecast for the Design Professions

Except for federal, and some institutional work, everything in the development world pretty much shuts down early in a major recession. If real money has been dedicated to construction and the construction is underway, the work will probably be finished. However, the first sector to go down is the private development sector. This is followed a year or so later by the state and municipal sectors as their coffers dry up due to declining tax revenue. In a mild recession the private sector comes back first as money starts to come back into the system and then the municipal and state sectors come back as the tax money from the new employment and properties comes on line. The story is different in major recessions and in a depression because the money does not come back into the system quickly, or on its own. 

Within the design fields, the first to feel the pinch are those firms and individuals who work primarily for private developers. When these firms start to suffer they switch their marketing to focus more on municipal, state and federal work. It is difficult and time consuming to break into federal work so, unless they already have diversified into that market, or unless they can team with firms established in federal work, inexperienced firms probably will not succeed in the near term. 

The design firms which have already established themselves in the municipal and state arena now begin to feel the pinch as they find their competition has increased exponentially. For example, it is not uncommon to see thirty firms bidding on municipal projects that might have attracted fewer than ten bidders during good times. Not only that, but the firms inexperienced in municipal work drive fees down in that they tend to under bid the work because they do not understand the full ramifications of working within the world of the bureaucracy. And then the supply of work begins to dry up as tax revenues fall. So, unless a firm is ensconced in federal work or is somehow immune to economic fluctuations, they will have a tough row to hoe. The same, of course, goes for the individual landscape architects and allied professionals who are laid off or who hang in with their jobs under reduced circumstances. 

Where We Are and Where We are Headed

In terms of the design professions, and development in general, we are near the bottom of this cycle regardless off  what happens in the commodities markets. The feds are going to pour massive amounts of money into infrastructure projects and the first (or second) group to begin to reap the rewards of this influx of money will be the engineers, architects, planners and landscape architects who work in the arena of infrastructure and public works. As the work is designed, and it will be fast tracked, the design firms will ramp up quickly and begin to hire. As the designs move into construction the construction industries will also ramp up and begin to absorb the excess capacity within the commodities supply markets. All this work will generate income taxes. People will buy new houses and start to pay property taxes. The new tax money will help to repay the investment in kick starting the economy. The design professions should see an early upturn within three to six months. 

Update  1-5-09 >>>I did note above that the design  and engineering professions might be the second group to see the uptick. My sources tell me that the immediate kick start will likely go directly to construction, bypassing design. There is a backlog of designed and permitted, but unbuilt, projects virtually everywhere. Many see the quickest way to  get the most out of  the re-employment efforts is to  go directly to construction on those projects, as the lag time for design and permitting in the public arena can be very long. However, at the same time I believe that stimulus will be added at the research, development and design levels for new types of infrastructure projects to offset dependence on over demanded and under supplied commodities.

The danger lies in the possibility of inflation and volatility. As mentioned in my earlier post titled "How Do You Pay for a War?", inflation is good for debtor nations. Inflation results from a  loss of value of currency. As debts are tied to currency, the declining value of the currency effectively wipes out a corresponding amount of debt. Once heavy spending overcomes the deflationary pressures of economic decline, as it will, the spending becomes excessive and forces the currency being spent to decline in real value relative to commodities, products and real estate. Prices rise, salaries rise and a cycle is created. 

In order to avoid inflation, the stimulus will have to be reigned in, perhaps sharply and quickly. I am hearing that the stimulus package will be monitored to  avoid over inflating the money supply and that it may last no longer than 18 months. If true, this means that the duration of direct stimulus projects will be quite short. R&D projects for larger new technology projects will have to make a shift from stimulus to long term sustainability projects meant to keep things running. This process is very difficult to manage and it can easily result in economic volatility. 

At the same time, the world's supply lines reached peak yield in 2008 - this resulted in the surges in prices of commodities which helped spark the downturn. Because of the economic collapse, those supply lines are not being expanded and ceilings are not being raised. Very little new capacity is being added to the supply infrastructure because the profit has evaporated due to falling prices and few can obtain the money to make it happen. Despite the recent fall in commodity prices, supply has not increased. Only demand has gone down and it really has not gone down much, just enough to leave surpluses in the system's 'just in time' supply line, which has no room for storage. As the economy comes back on line we will quickly take up the slack and prices will begin to go up as demand quickly exceeds supply.  All of the major global economies are on the same track as we are, and the result will be volatility of supply and demand. 

The effect is that there are two separate forces acting to create volatility; the supply of currency and the supply of commodities. The design professions will be busy for the near term but the ability of the larger economy to ride out the volatility remains in question. If you believe Jim Kunstler, we will see much change in our world before stability returns.