Air Quality: April 2010 Archives

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Did runaway exurban sprawl--particularly in hypergrowth Sunbelt communities--help create the conditions for gaming in the financial industry? In other words, Goldman Sachs and other financial firms gave us what we wanted as a nation and then bet against us when they saw too many suckers entering the game. 

These issues loom large as the Securities and Exchange Commission (SEC) accused Goldman Sachs of fraud last week tied to collateralized mortgage debt obligations that contributed to the worst financial crisis since the Great Depression.

Goldman made large profits on the housing boom through 2006
, then essentially bet on the market to fail so it could profit on the national housing bust, which raged in 2007-2009.

The first domino of that financial panic was the 2006 spike of foreclosures in the most sprawled, car-dependent communities such as Phoenix, Las Vegas, San Bernardino-Riverside, California and Tampa, Florida.

Goldman started betting against the mortgage market in 2007, which thereafter began its well-publicized death spiral, particularly in newly developed suburbs located far from city centers of public transportation and jobs. 

The Post Carbon Institute will soon be publishing my report examining the sustainability impacts of such "easy credit terms" and subsequent speculation. The study also provides planning solutions for greater metro area resilience, which The Natural Resources Defense Council recently highlighted: "NRDC has chosen sustainable communities as a strategic objective for the next five years. Karlenzig's advice seems right on target as we further refine that agenda." 

Here's an exerpt from, "The Death of Sprawl: Designing urban resilience for the 21st century climate and resource crises." (The study profiles a fast-growing exurban city in Southern California, Victorville. Victorville, now wracked by foreclosures, grew in population from 60,000 in 2000 to 107,000 by 2007, largely due to zero downpayment home loans for newly built subdivision homes):

Relatively cheap real estate, flat land, and single-purpose zoning meant big profits for real estate developers and construction companies. Builders could easily and quickly build vast residential neighborhoods without thinking about where residents would work or how they would get there. Relaxed federal regulations on the financial industry meant first-time homebuyers could "own" their home without a downpayment, and sit back while home prices climbed. 

And for a few years, climb they did. When home prices were rising in the region in the early 2000s, Victorville seemed like a sound investment. But by 2006 the price of gasoline began its steady ascent above $2 a gallon and a bubble burst in Victorville and other exurban market housing prices creating the first wave of foreclosures that helped set off a national economic crisis.
A complex and devastating chain of events began with people losing confidence in the seemingly ever-upward growth of exurban economies. Across the country, home foreclosures began to appear overnight in exurban hyper-growth markets, most notably inland Central and Southern California, Las Vegas, Phoenix and much of Florida.
The nationwide exurban decline that ensued may prove to be the last gasp of the Sunbelt's decades-long development frenzy. We will be absorbing or trying to erase the unwanted surplus of this end-of the-twentieth century building spree for years, if not decades.
Whether Goldman was guilty or not, we are all paying a high price for unfettered housing growth and financial speculation. The impacts of the financial and housing sector "gone wild" includes a much greater carbon footprint, wasted resources, significant traffic and air quality impacts, not to mention now-blighted communities.

We can learn much from such lessons, but who will take responsibility so that it won't happen again? Local, regional and state government that allowed the crazy-quilt growth surely are to share the blame with national financial oversight agencies.

But to a certain degree, this chapter in our nation's history was a reflection of ourselves.

We sacrificed our domestic jobs so people could instead live off their housing deal or "property flipping" income and home equity loans. We built over our best farmland, forests and watersheds, greedy for tax revenues from endless housing subdivisions and strip malls. And we sacrificed our historic communities and walkable neighborhoods for mass-produced completely car-dependent chimeras.

Make no mistake about it, we are Goldman Sachs.

Warren Karlenzig is president of Common Current, an internationally active urban sustainability strategy consultancy. He is author of How Green is Your City? The SustainLane US City Rankings and a Fellow at the Post Carbon Institute.

 




 
 

About the Author

    Warren Karlenzig
Warren
Warren Karlenzig, Common Current founder and president, has worked with the United Nations Department of Economic and Social Affairs (lead co-author United Nations Shanghai Manual: A Guide to Sustainable Urban Development in the 21st Century, 2011); United Nations Center for Regional Development (training of mayors from 13 Asian nations on city sustainable economic development and technology); provinces of Guizhou and Guangdong, China (urban sustainability master planning and green city standards); the United States White House and Environmental Protection Agency (Eco-Industrial Park planning and Industrial Ecology primer); the nation of South Korea ("New Cities Green Metrics"); The European Union ("Green and Connected Cities Initiative"); the State of California ("Comprehensive Recycling Communities" and "Sustainable Community Plans"); major cities; and the world's largest corporations developing policy, strategy, financing and critical operational capacities for 20 years.

Present and recent clients include the Guangzhou Planning Agency; the Global Forum on Human Settlements; the Shanghai 2010 World Expo Bureau; the US Department of State; the Asian Institute for Energy, Environment and Sustainability; the David and Lucile Packard Foundation; the non-governmental organization Ecocity Builders; a major mixed-use real estate development corporation; an educational sustainability non-profit; and global corporations. Read more here.

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About this Archive

This page is a archive of entries in the Air Quality category from April 2010.

Air Quality: December 2009 is the previous archive.

Air Quality: December 2010 is the next archive.

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