Wednesday, March 25, 2009

Bad News

We're having some spotty good news on the economic front these days. That happened at the start of the Great Depression as well. One thing I think we can be sure of is that there are rough times ahead - and it annoys me no end that there isn't enough discussion of what's coming and how we're going to deal with it. In particular:

- There will be a series of more shocks to the system. The most likely causes are the collapse of a number of countries' economies - Estonia, Latvia, Lithuania, Hungary, and several others that are teetering at the moment. Each would cause a big negative shock around Europe, resulting in more loan defaults and more collapses in the financial system. This thing is like a wildfire that isn't completely extinguished, and keeps flaring up. If bad enough, who knows what countries will go down - major European economies may be at risk. There will be other sorts of shock as well: more US mortgage defaults, more large corporate collapses, who knows what else.
- Obama's attempt to bail out the US financial system is not going to work. He's spending a ton of money, but his plan is bad. At some point he's going to have to adopt a new approach, but by then hundreds of billions will be squandered, limiting future options. It will take a long time for the US financial sector to rebuild.
- Obama's attempt to stimulate the US economy is not going to be very effective. There is simply too much delay until the stimulus hits the street, and in the meantime the economy will plummet; unemployment will soar; companies will fail. The US congress, lacking good leadership or strong resolve, will continue to react to citizen anger with populist pandering rather than create good economic plans.
- The repercussions from the problems to date will play out throughout the system. Stimulus programs and bailouts have greatly increased debt, and paying that off will dampen economic activity for years to come. Municipal, provincial and federal tax revenue will fall; grants will plummet; arts and charitable organizations will fold up... there will be all sorts of cutbacks that will drag down economic recovery.
- As we emerge from the recession, we will likely be hit by inflation and high interest rates.

I like Obama, and I think he's making a really good effort. But why would anyone think that a young academic with two years experience at the federal level could handle the biggest economic crisis in 80 years? Sure he's doing a better job than the Texas playboy did or that the old man could have done, but that will be cold comfort in the dark days ahead.

In the meantime, you'd think the media, public and government would have learned from our failure to see the developing crisis last year. After railing that we should have seen it coming, everyone has apparently put back on their blindfolds.


Tuesday, March 24, 2009

Building Walls

I'm not a hockey fan but I'm fascinated by Jim Balsillie's attempts to buy an NHL hockey team for Waterloo - he may really be aiming for a team for southern Ontario, but I like to think his goal is Waterloo - so when news broke today that his favorite team, the Habs, is up for sale, I fired up Google News to see what the rumor mill had going.

One of the articles that caught my eye was from the Nashville Post. Balsillie's last attempt to buy a team was the Predators, so you can imagine that city is interested in the topic. But when I clicked on the link I got a message that unless I'm a subscriber, I have to pay $7.50 to read the article. It's difficult to imagine that anyone would pay that much (even a hockey fan). Just for fun I clicked the link to buy the article, and it opened an email: the only way to purchase an article is to write an email or call their subscription department. That inconvenience makes it even less likely that anyone has ever actually paid the $7.50, or that the paper even expects anyone to.

Their goal is probably to get people to subscribe: they may hope that faced with such a high price for an article, the reader will opt for a subscription. However, a little more clicking tells me that a subscription to online material is $99/year. Now, even's premium subscription is $39/year (and I refuse to pay that). A hundred bucks is steep. There's no way an individual would pay that unless they're super interested in Nashville news - and are probably a local. The Nashville Post might prefer that; after all, newspaper revenue is all about ads, not subscriptions, and they may aim their ads at local businesses that don't care about readers outside the city limits.

That seems like a failed marketing strategy - especially since, when I check out their home page, I see that their ads are customized to the visitor (so I see ads for Toronto). It's not clear what articles they're putting behind the subscription wall, but it's not based on freshness; I clicked on several inaccessible articles that were posted today.

We hear a lot about the financial difficulties of print media, and this is just an exaggerated example of what newspapers are doing wrong. Profitability is linked to eyeballs, and eyeballs are not attracted to over-the-top fees (either $7.50 per article or $99 per year). In fact, now that I know that the Nashville Post puts their articles behind the subscriber wall, I won't click on links to them anymore - just as I stopped reading the LA Times a number of years ago. (The LA Times may have changed their policy, but I read hundreds of online newspapers, and I can't keep up with their marketing flipflops.)

Samuel Chi over at RealClearPolitics thinks that subscriber walls are inevitable due to declining ad revenue. He suggests that all print subscribers of Newspaper Association of America (NAA) papers should be offered a deal to get online access to all 2,000 NAA papers for one fee of $50/year. There are a number of problems with this, one being that internet traffic is international (trust an American to forget that); a bigger problem being that it will drive people to other media sources that are free, and further hurt the finances of newspapers. Ad revenue is down because it's a recession: when demand falls, raising the price rarely solves the problem.

It's not clear to me why newspapers are finding it so difficult to figure out the internet economy. Everyone else is trying to create sites that attract readers so they can make revenue from ads; newspapers are one of the biggest draws for readers that there is, and they're squandering their opportunity. Or at least some of them, like the Nashville Post, are. Since different articles attract different types of reader, newspaper articles could even provide advertisers with nice neat demographic targets. The internet business model is not even that different from the print business model: newspapers have always received the majority of their revenue from advertising.

A more interesting approach would be to reduce costs by producing a much smaller print edition, and make the bulk of the paper online-only - or just drop the print edition altogether. I don't read print editions ever, anymore, so this makes sense to me - but I can't be sure it would actually work. I have heard that printing represents 50% of a newspaper's costs.

By the way, I don't believe Balsillie would try to move the Canadiens. If he loves the team then surely he knows it has to stay in Montreal. Also, it's exciting to think that it might go back to Quebec francophone ownership, and gain back some francophone staff.


Wednesday, March 18, 2009

Is It Like Evenly Matched Mad Dogs Tearing Themselves to Bits... Or Am I Being Unkind?

Bernie Madoff only allowed the rich and powerful to invest their money with him. In a Ponzi scheme, the people who get out early do very well - leaving the rest holding the bag. Some of the losers (about 13,000 people who have lost about $65B - or $5M each, on average) are now trying to get back, in court, the winnings of Madoff investors who cashed in before the crash. It's an interesting battle of Rich & Powerful v. Rich & Powerful. You'd think the losers didn't have a chance, but some of those losers have a lot of clout.

That the losers are powerful has been playing out in other ways. The losers have already got the IRS and congress to grant them extended tax breaks over and above the usual tax breaks for investments that lose money - even over and above the tax breaks normally given to victims of fraud. Your run of the mill citizen doesn't get that kind of response from government.

The Madoff losers are also being compensated by the Securities Investor Protection Corporation (SIPC), which will reimburse them up to $500K each. Little old SIPC only charges a $150/year flat fee to brokerage firms, so that's going to put it in a mess of debt. The outcome may be positive, though: SIPC may be raising their fees to as high as$100K per year. We need to get serious about collecting money in good times to finance bailouts and reimbursals in bad times - just as unemployment insurance has always been financed.

No doubt Losers v. Winners will play out in court for some time to come. According to New York bankruptcy law, the losers may be entitled to winnings up to six years in the past.


Tuesday, March 17, 2009

Smoke and Punishment

Conversation I overheard today: A man says he hates the smell of cigarette smoke. The woman he's talking to (I couldn't see either of them) launches into a series of complaints. First she says she can't stand the smell of "dead meat" to such an extent that when she walks by the deli counter downstairs she faints at the smell. Then she complains that when she lights a cigarette at the bus stop in the morning people move away from her "even when they're upwind" - and says she finds that terribly rude.

My first reaction was along the lines of "What an idiot", but then I started to think that the woman has a point. (Other than claiming that she faints when she passes a deli counter.)

For example, I have heard two people in two separate conversations complain about driving past a bus stop and being bothered by smoke from people standing at the stop. When told that their car is spewing a lot more harmful fumes than come from a cigarette they're like, Everyone drives - what's the problem with that?

Or this one: Residents in my condo building complain about smelling smoke from people standing outside - even when the smokers are far enough away that no smoke gets in their units, just a faint smell - and so we've enacted a property by-law to keep people from smoking anywhere near the building. But residents can still control what they do in their own units, so they've just started smoking indoors - and the whole building shares air so we're brething in more smoke now.

The by-law is shooting ourselves in the foot, but the anti-smoking contingent doesn't care because, let's face it, the anti-smoking movement is partly about punishing people for doing something we don't like.

I don't like smoking either, and I hate the smell. I even dislike being on an elevator after a stinky smoker has been on. But there has to be a limit on how much we clamp down on smokers. Make it illegal to smoke in cars with kids, sure, but can't we let people smoke on the street?


Monday, March 16, 2009

Watchmen (Review)

...Not a review, though. Strangely enough I don't have anything much to say except: it's fabulous! All around great entertainment: great music, great characters, great plot. I plan to go back and see it on an IMAX screen as soon as I can.

I had heard that the plot was hard to follow and that you need to have read the graphic novel, but I hadn't read the graphic novel and I had no trouble following it. Also, don'tbe put off by the length: I found it engrossing all the way through.

Just like Hancock, this film got poor reviews. (On Rotten Tomatoes, Hancock got 39%; Watchmen got 64%.) It's hard to understand how two such good movies could get so panned by the press. It may be that critics don't "get" superhero movies: they think they should be shlock, and can't handle complexity. Unless, of course, one of the stars ODs before release.

(If I had guts I'd have written about the social implications of Dr. Manhattan's genitals.)


One Year Ago Today: The Bear Stearns Bailout Started It All

The Wall Street Journal's editorial page is not what you would call critical of business. But today James Freeman, WSJ's assistant editorial page editor, has an explosive op-ed in which he argues that the bailout of Bear Stearns a year ago was a contributing factor in the size of the financial crash last fall - because it caused the rest of the finance industry to expect to be bailed out.

He writes, "If nature had been allowed to take its course, Bear's directors and executives would have faced the liability tsunami of bankruptcy, and creditors would likely have suffered as well. Watching this horror show, would the leadership at AIG and Lehman have spent more of the next six months seeking to avoid this fate?" Instead, after the Bears bailout every other financial institution expected to be bailed out. Freeman says that the Lehmans Brother CEO was "stunned" to find that his company was allowed to fail.

Here's what I wrote about Bear Stearns one year ago.


Buy American

It turns out that the "Buy American" provision in the US stimulus package will mean the government can't buy from American economic giants IBM, GE and Proctor & Gamble, all of which derive over half their revenue outside the US.

That's just one small indication of the problem with protectionism. We live in an integrated world, and it's simply no longer possible to "protect" jobs at home.

Some have argued that the Buy American provision will protect only 1,000 US jobs, but has the potential to lose many times that. The reasoning: the provision will mostly affect steel and iron, which are capital-intensive industries. It is estimated that banning government imports of steel will increase US output by 500,000 tonnes - or 1,000 jobs. On the other hand, retaliation could have huge effects. If other governments reduced US imports in their government procurements by just 10%, the US would lose 65,000 jobs.

Another writer reminds us that a "Buy American" provision in the building of a California bridge would have resulted in a $400M increase in the price of the bridge, just because of higher domestic steel prices.

I can't verify these numbers, and I don't know the specific effects on Canada from US protectionism. Recently I heard a steel union representative talking on CBC; he was very confident that US steel companies would not lay off workers here because they had recently invested a lot in the steel factories. A few days later a big US steel company laid off all 1,600 employees at one plant. My point: logical arguments about how "rational" economic agents will behave are not very reliable.

The Buy American provision has another bad consequence: it is leading Europeans like Angela Merkel to criticize growing US protectionism - including even recession-related expenditures like the auto industry bailout, which she calls "distortion and protectionism". Merkel could be laying the groundwork for a troubling new round of trade battles.


Sunday, March 15, 2009

The Rich Use Taxpayer Money to Further Enrich Themselves - As Usual

US President Obama's Chief Economic Advisor Larry Summers on This Morning with George Stephanopoulos today, commenting on AIG paying out $165M in employee bonuses this week ($450M total) after being given $170B in federal bailouts:

"We are a country of law. There are contracts. The government cannot just abrogate contracts."

Will the government adopt the same stance when demanding that auto workers accept cuts to remuneration? In that case, there seems to be a whole different attitude: accept reductions to pay and benefits or you can't expect to keep your job. There are even demands for cuts to payments to auto union pensioners.

If you're going to force auto workers to accept pay cuts for relatively minor bailouts you sure as hell better force financial institutions to accept pay cuts.

To put the bailout in perspective, US taxpayers are paying on average over $1,000 in 2008 - just to bail out AIG. And it's just one of dozens of financial institutions being bailed out. The bailout to the auto industry is going to be something like one 10th of just the AIG amount.

I see the justification in the auto industry negotiations: the auto industry is not profitable, and so costs have to be reduced to make it a sustainable industry. Has the financial industry somehow not been judged in the same way?

Most of the AIG bonuses go to the Financial Products Division, the group that ruined AIG. In the last three months of 2008, AIG lost $62B - the largest losss of any company ever. Some individual bonuses are as large as $6M. The company argues that the average bonus is only $19,000, but you can manipulate the average: the key thing is the top amounts. Plus, the company claims that if they aren't paid people will quit, but really: in today's economy, where will they go? You might argue that they'll sue: well pass a law.

The bonus issue is just part of the scandal at AIG. There are also troubling questions about counterparty payouts: while a company in distress might have forced counterparties to take a cut on payouts (especially since a lot of the transactions were highly speculative), AIG used federal bailout funds to voluntarily pay 100% - and is now resisting efforts to provide a list of who was paid. Again, it seems like the rich and powerful are using government bailouts to transfer money among themselves.

You might argue that it's all about power. AIG is too big to fail so the government's hands are tied. Baloney. The government now owns 80% of AIG. The government has all sorts of options up to and including taking control of the company, sending people to jail, and levying massive fines.

I'm not blaming Obama for this; he has a whole lot better take on this than his opposition. This is just the way the system works. It's a mindset: a paradigm that needs to be broken and replaced with something more equitable. It's doubtful it will ever change. Everyone's mad about this but nobody's mad enough.

Update: Counterparty payments released


Saturday, March 14, 2009

Rapid Transit Part 4: How Uptown Waterloo Could Fail

Imagine the following scenarios.

The Region of Waterloo decides to run rapid transit alongside the existing rail line from King to Caroline, cutting across the Waterloo Square parking lot. This creates a new two-lane road beside the railway tracks. The last convenient parking for the Waterloo Square grocery store is thus destroyed; the remaining spaces are across a wide divide from the mall, with only one pedestrian crossing. People stop using the grocery store and it goes bankrupt. The grocery store anchors the mall so other shops in the mall fail, including the drug store that houses the Uptown postal outlet. Residents in Uptown can no longer walk to get their groceries so now drive to grocery stores on the outskirts of town. They drive to the Westmount Place postal outlet to get their packages. Increasingly, Uptown residents drive to retail outlets rather than walk and shop close by. (Note: While there is currently parking on the south side of Waterloo Square, the land nearest Willis Way is owned by First Gulf and is the planned location of development, possibly a Westin Hotel, leaving the north lot the only parking. That's why it would be so devastating if rapid transit cut a wide swath through it.)

Greatly reduced parking on King Street spells the death knell for Waterloo's two Uptown cinemas, the Princess and Princess II. Restaurants that rely on cinema traffic are shuttered. The north end of Uptown (between Erb and Central) starts to spiral downward. Cheque-cashing stores and pawn shops pop up.

The retail jewel of Uptown, the Ontario Seed store which has been in business for decades, is the only business on its block with parking (because of its parking lot in the rear). Increasingly, drivers going to other stores fill up the Ontario Seed lot, blocking its customers, who need close parking to carry out the heavy hardware and garden supplies sold there. Ontario Seed closes shop and opens a big box store on the outskirts of town.

Traffic in Waterloo is constantly backed up because the lanes are reduced from four to two, with gates and signals where the rapid transit turns left from King to head towards Waterloo Park. Increasingly, local drivers learn to avoid the area.

Isolated in an increasingly non-viable block, and with no parking within a 10 minute walk, Words Worth bookstore goes under, just as the resplendent Provident Bookstore gave up the ghost in downtown Kitchener when that downtown core failed.

Rapid transit on King Street makes it impossible to close King for Uptown festivals like the Busker and Icedog festivals. This means that people from the suburbs have no reason to ever go to Uptown; increasingly, they rely the big box stores and the mall in north Waterloo for all their shopping. The downward spiral increases.

As local residents increase their shopping in the north end of town, more and more shop at the new Wal-Mart. While there they increasingly buy groceries, and Zehrs stores all over the area start to close down.

King Street becomes a sad strip of newspaper-lined empty storefront windows. Commercial rents drop, making it profitable to open bars and discos aimed at university and college students. Drunken revellers make the Uptown increasingly unsafe, and garbage blows through the streets.

As the empty trains rattle past without stopping, the residents of Waterloo are incresingly burdened by ever-rising property taxes to pay for the expensive transit system. There are fewer and fewer regular buses to help them live without cars because rapid transit is draining the Grand River Transit budget. As Uptown becomes a shell, residents with money move to the subdivisions surrounding the town, causing Uptown's remaining schools to close.


Rapid Transit Part 3: Whether the Concept Makes Sense in Waterloo Region

The defining characteristics of rapid transit compared with regular transit are:

* Few, widely-spaced stops.
* Transit doesn't merge with regular traffic. It is either on rail lines, or if buses, in dedicated lanes built only for the buses.

Rapid transit works when you want to move a large group of people to a small selection of places. Toronto's GO Train system is a successful example. GO picks people up at a few stops in the suburbs, and drops them all off in downtown Toronto. Great idea.

The only part of Waterloo Region that remotely suits the rapid transit paradigm of concentrations of workers is downtown Kitchener, and even in its most optimistic projections it does not have the concentration necessary to support a rapid transit system. We are simply too small.

So what?, you might ask. Who cares if we're too small? It's all about economics. The total cost of just the first phase is estimated to be $500M. Waterloo Region, including Waterloo, Kitchener and Cambridge, has 500,000 people (and already Cambridge has been dropped off the rapid transit route for the foreseeable future due to cost considerations). Some of the money to build rapid transit would come from the federal and provincial governments, but it would still put a big burden of debt on our residents. And that's before the operating costs kick in. It is going to be very expensive to run. If it doesn't attract high levels of ridership then it will drain resources from existing bus routes and we will end up with less transit than we have now. And it simply doesn't look like the proposed rapid transit will attract the ridership it needs - simply because it has so few stops.

Even in some bigger cities, rapid transit has become a white elephant. But I don't think it has even been attempted anyplace with population as low as here. The city of Waterloo has roughly 100,000 residents.

Think of the other things we could do to improve transit in our area: free or 25 cent buses running in a loop in highly trafficked areas; more frequent buses on many routes; more shelters at bus stops; the list is endless.

The best argument for rapid transit is that development will occur around the widely-spaced stations, resulting in densification that will make our cities less car-dependent. I like that idea, and it's the reason I initially supported the concept of rapid transit in Waterloo Region. But look at the proposed stops in Waterloo: Uptown; University of Waterloo; University of Waterloo R&T Park; Conestogo Mall; Waterloo Farmer's Market.

Uptown needs no help in being further densified. Nor does planned growth point towards sufficient office space to support rapid transit; growth is mostly in living space.

Planned growth in Uptown is very aggressive, and it is on track. While condo developments in the rest of the country are stalling, they are booming in Uptown, and selling out before the shovels hit the dirt. Right now we are looking at:

* The 15-storey Bauer Lofts on King at Allen almost completed (includes 157 residences, 43,000 SF retail, 70,000 SF office space).
* the42 condo on Bridgeport at Peppler, currently being built (54 residences).
* The BarrelYards complex at Erb and Father David Bauer Drive (1,000 residential units, two hotels, and 230,000 SF of retail/office space).
* A 19-storey tower and townhouse development on the site of the Ontario Table and Chairs building on Allen at William.
* Another skyscraper condo on Alexandra at Caroline.
* The new Balsillie School of the University of Waterloo, taking up all the vacant land around the CIGI building at Erb and Caroline (11 storeys).
* A doubling of the size of the Perimeter Institute building in Waterloo Park.
* Possibly a Westin Hotel on Willis Way at Caroline.

University of Waterloo
Current plans have UW blessed with two stops: one on the main campus and one in the north campus, now called the Research & Technology Park. University students in Waterloo get virtually free transit passes (I believe they are charged $35/term for them, as part of school fees), and so they take transit more than other residents. There are currently several bus lines serving UW, including the iXpress, which also stops at the R&T Park. I worked at the R&T Park and took the iXpress occasionally. I never saw any other non-students on it (the R&T Park hires a lot of UW coop students). The reason full-time R&T employees don't take transit are: they mostly live in subdivisions surrounding the park; there is no place to shop or eat lunch in the park, so they need their cars; they make very high salaries and mostly drive expensive cars; many have children who they drop off at day care or school.

I'm not arguing by any means that we should cancel the iXpress, but adding a rapid transit route through the R&T Park seems nutty. Added to the other reasons why workers there don't take transit, the new buildings in the R&T Park are increasingly far from the stop, and will result in a long walk for almost everyone. That doesn't sound so onerous unless you're walking during the six months of the year that temperatures are frigid and snow is everywhere.

Northfield and Parkside
Someone pointed out recently in a comment that there's another stop planned here. I have confirmed that on the proposed route map I got from the Region, but I don't know the development implications.

Conestogo Mall
Conestogo Mall is a big, very successful mall on the outskirts of Waterloo. It is well-served by current bus lines. It has abundant parking, and is surrounded by subdivisions and by big box stores. I'm not clear why we would spend the big dollars to run a rapid transit route all the way out there. I'm not opposed; I just don't see the point.


Friday, March 13, 2009

Rapid Transit Part 2: First, Do No Harm

Currently, Uptown Waterloo works. While many downtown cores in Ontario are struggling, Waterloo’s uptown is a success. Rapid transit, as it is currently planned, could erode the success of Uptown Waterloo.

If the purpose of rapid transit is to move as many people as possible as quickly as possible, then its very purpose flies in the face of the way people use Uptown Waterloo. For example, jaywalking is not a sin in Uptown: it is part of the pedestrian-friendly, small town ambience that is a big part of what makes Uptown work. Turning Uptown Waterloo into a high speed corridor for rapid transit would be disastrous.

Uptown is ringed by seniors’ facilities, such as Terrace on the Square, Waterpark, Luther Village, the Lutheran Church residences on Willow, the George Street senior residence, and the Adult Recreation Center at King and Allen. There is a concentration of seniors in Uptown Waterloo, many of whom use walking aids. There are also many young people with baby strollers; people in wheelchairs; and many bicyclists.

Rapid transit stops are planned to be large, long barricaded stations that could block sidewalk access. Tracks on King could hinder wheels crossing the street. These problems are preventable: rails must be flush with the road; there must be no barricades around stations.

While in Uptown, the speed of rapid transit vehicles must suit the slow pace of Uptown. We must continue to be able to shut off traffic in our uptown to have street festivals, and have a flat street that is suitable for festivals.

We need abundant parking on King Street and in the Waterloo Town Square parking lot. Street parking is vital for the economic viability of shops on King Street. Parking close to Waterloo Town Square is vital to the viability of the grocery store, which anchors the mall and means that local residents are not car-dependent. Parking is also an accessibility issue; for example, many seniors can drive but not walk distances.

Parking on King Street between William and Erb could be completely wiped out by the plan to have train tracks (for LRT) or dedicated bus lanes (for BRT) down the middle of King Street. If the rapid transit route follows the option to turn west off of King Street towards Waterloo Park, parking in Waterloo Square will be greatly lessened, or at the least separated from Waterloo Square by a two-lane road and railway track. Rapid transit must not be allowed to displace street parking, and rapid transit can't bisect the Waterloo Square north parking lot.

Uptown Waterloo currently has trees and planters that are very attractive. Our current streetscape also allows outdoor cafes. A couple of times a year we shut down King Street to hold outdoor festivals.

The need for wider streets to accommodate the rapid transit lanes may lead to the loss of planters and trees on King Street. An LRT may have overhead wires. The platforms/stations for rapid transit stops are planned to be long and may have barriers around them. Care must be taken to retain all the aesthetic appeal of Uptown.

Whether a loop or two-way King Street route, there are grave issues with rapid transit turning left from King to head west to Waterloo Park: in particular, issues with safety and traffic flow. The current plan is for rapid transit to travel north on King and turn left either at the existing tracks in Waterloo Square or at Erb Street. Both plans will be disasters. If rapid transit needs to run from Waterloo Park to King, then it must run in the opposite direction, so that rapid transit makes a right turn on to King.

The proposed routes from King to the park is also a problem. If rapid transit runs alongside the existing rail line, it will reduce the size of the Waterloo Square parking lot and reduce accessibility of cars to the mall. This will threaten the economic viability of the grocery store and the mall it anchors. This route will probably also require destroying part of the public square the city of Waterloo is currently building. That’s just not acceptable. The other option, directing the rapid transit down Erb Street from King to Caroline, is almost worse, as that is a busy three-lane, one-way street that thousands of residents use daily to get to the expressway and other locations to the east. Running rapid transit down it would reduce flow and make it difficult or impossible for cars to access Albert Street from Erb.

Another turning issue is the Caroline-Allen and Allen-King turns specified in the loop option. Given that regional staff told us that rapid transit needs a wide turning radius, these turns do not seem possible unless the Adult Recreation Center (ARC) is torn down, or at the least if the ARC parking lot is greatly reduced. The ARC parking is already stretched to the limit. If the Region decides to tear down the ARC, they must replace it with a similar facility in the Waterloo Uptown core.

The Caroline-Erb intersection is the connecting route between Uptown Waterloo and Waterloo Park. Running rapid transit across it, especially in the loop plan where rapid transit will run off from the north-west corner in two directions (one route south and one route east) will create a barrier between Uptown and the jewel of Uptown, Waterloo Park. There may be a way to run rapid transit through this intersection without turning it into a nightmare, but we should accept the concept of rapid transit in Uptown Waterloo only on the condition that this issue, and the others I've outlined, will be fully addressed by rapid transit planners.

Just a couple of miles along King Street from Uptown Waterloo is downtown Kitchener. When I was a kid Kitchener had a great downtown. I remember going Christmas shopping there every year. It was full of all kinds of shops, the best bookstores in the area, department stores (like Goudy's, with its pneumatic tubes for sending cash receipts from all the separate departments), restaurants, coffee shops, bakeries, a big army surplus store, and six or seven movie theaters. It was a bustling, successful place, much bigger and better than Uptown Waterloo is now, and it was full of local businesses that had been there for many decades. There are lots of theories for why downtown Kitchener failed: the surrounding neighborhoods were gutted; the anchoring stores became too far apart; the movie theaters were turned into discos; too many social service organizations moved into a small area; and a host of other theories. The things we know for sure are: it failed very fast; and despite decades of smart people spending a lot of money to try to revive it, it has resisted being revived.

The success of Uptown Waterloo is fragile. It's great that we have been able to take it for granted, but now there is a serious threat to the ongoing sustainability of our downtown core, and we must stand up and protect it.


Tuesday, March 10, 2009

Rapid Transit Is Poised to Destroy Uptown Waterloo

Few residents seem to realize that a policy foisted on the City of Waterloo by the Region will radically change uptown Waterloo as we know it. If you don't know the details, rapid transit sounds like a great idea: a fast futuristic system that will help the environment by taking cars off the road. However, the rapid transit plan being prepared by Waterloo Region will likely have the opposite effect: it will be a giant white elephant that will suck money away from more highly-used regular bus routes. And it will change uptown Waterloo from a pedestrian-friendly small downtown core to a place with congested sidewalks, traffic jams, no street parking, pedestrian barriers, no street festivals... read on for details.

The Region's rapid transit plans were designed for Kitchener. Kitchener has problems. A fancy new transit line with only a few, widely spaced stops could direct development around those stops, potentially leading to revitalization of an ailing core.

Waterloo doesn't need to be revitalized. All the locations being considered for stops in Waterloo are places that already have plenty of density (present and planned). Worse, the Region plans to run the new transit line right down King Street in Waterloo, turning left at Erb and running against traffic down to the Clay & Glass Gallery at Caroline, where it turns and cuts a wide swath right across Waterloo Park.

It hasn't been decided yet whether rapid transit will be buses or trains. If trains, there will be dedicated and immovable rail lines down the center of main streets. Buses will not be much more flexible, because the region plans to build dedicated bus lanes with curbs down the middle of the street.

The route is also still up for grabs, but for uptown Waterloo it has been narrowed down to two options:

1. A loop that enters Waterloo from Kitchener on King, has one north-bound lane up King, turns left at Erb, runs on the north side of Erb to Caroline, crosses Caroline, and then runs beside the existing rail line through Waterloo Park.
Coming back south the transit would come through Waterloo Park, cross Erb-Caroline and run south on Caroline to Allen, where it jogs left and then right onto King to proceed back to Kitchener. The stops would probably be at King & Willis Way and at Willis Way & Caroline.

2. A two-way line down King Street from Kitchener, turning left either at the existing rail line near Waterloo Square or at Erb, and then proceeding across Erb-Caroline to run beside the existing rail line through Waterloo Park, returning the same way. There would be one stop, probably at King & Willis Way.

The stops are going to be larger than a regular bus stop (60 meters long and 3 meters wide), and may have some sort of barricade around them. There may also be an easement for transfer buses.

There are significant problems with each route.

Any route on King would change the entire ambience of Uptown. A raised rail line or curbed dedicated lane, each possibly with barricades, would have the following effects:
* It would hinder pedestrians from crossing the street. (The Region's response to this is that people shouldn't be jay walking.)
* It will make bike riding in uptown a nightmare.
* It will probably remove all street parking on King Street from William to Erb, meaning stores on King will have no immediate parking - and probably no places to drop off people from cars or taxis, either.
* The city will no longer be able to block King Street for the busker festival and other festivals. Even parades are in jeopardy.
* The many elderly people in Uptown who push their walkers or ride their scooters will have significantly more trouble crossing the street (even at lights).
* Long blockaded platforms will interfere with sidewalks and further hinder crossing the street.

Car traffic will also be significantly affected:
* King Street currently has four lanes of traffic; that will be reduced to two.
* Rapid transit will have priority turning left off of King, so may require gates to be put up where it turns. Gates will go down when a rapid transit vehicle approaches the intersection, just like a train crossing. This means gates on all four sides of the King-Erb intersection, or gates on King at the current railway tracks. Either would cause a traffic nightmare.
* If rapid transit runs along the north side of Erb, it will block one lane of that busy three-lane street. It will block cars that currently turn onto Albert Street.
* The Erb-Caroline intersection, already a mess, will get worse, and may also have to have railway gates.

The proposed routes will have other negative effects:
* The loop that includes a transit line on Caroline will be a nightmare in the narrow part of Caroline between William and Allen, and on the short Allen portion. The only way it will be able to turn at the Caroline-Allen corner and Allen-King corner is to use the parking lot at the Adult Recreation Center (ARC). In fact, it seems impossible that the corner of Allen-King can be negotiated without tearing down the ARC. (Regional employees have said that they can't run rapid transit down the middle of King Street, but must run it along the east curb, because otherwise the turn would be too sharp at Erb. If that is the case, rapid transit can't turn at the King-Allen intersection while the ARC stands.)
* The route down King that doesn't entail turning at Erb means that rapid transit will turn at the existing rail tracks that cross King near Erb. (Rapid transit will not run on the existing tracks, but will be a double-lane road or two rail lines beside them.) This will mean that we have to tear up part of the public square we are in the middle of spending millions to create. It will also put a wide, barricaded divide in the middle of the Waterloo Square parking lot.
* In every route plan proposed so far, rapid transit runs alongside the rail line that crosses through Waterloo Park. This is equivalent to putting a two-lane road alongside the rail line, and it will probably be barricaded. This will be an eyesore and essentially cut the park in two, as trains or buses whip through the park at high speeds.
* The loop proposal will mean that people will have to walk a significant distance to transfer to buses, which will further reduce ridership.

In every route currently on the table, rapid transit enters Waterloo from Kitchener along King. It exits Uptown Waterloo through Waterloo Park, stops at UW, stops at the UW R&T Park (north campus), stops at Conestogo Mall, and has a spur to the Waterloo Farmer's Market. These are the only stops. People who don't live near those stops could take the bus to them, but will likely drive and park. This route is very convenient for students (who get virtually free transit passes and who have strong legs) but are not at all convenient for most other Waterloo residents - many of whom have children or are elderly. But LRT is enormously expensive to run, and will almost certainly drain transit money away from traditional bus routes that go close to people's houses.

If Waterloo must be involved in the Region's rapid transit plans, there are alternatives, but they are not being considered. For example:

* Create bus rapid transit, and abandon the dedicated lanes when you enter Waterloo from Kitchener. Run the buses on existing streets without modification from Union north (to some street to be decided). Use regular bus stops. Within uptown Waterloo, run rapid transit like a regular bus. Have more frequent stops in Waterloo.
* Do not run rapid transit through Waterloo Park. Run it right up King Street to Conestogo Mall. Create a density node at King and Columbia.
* Do not run rapid transit to the Farmer's Market as that is a guaranteed money-losing route. The market is only open two days a week. Plus, transit is not the ideal way to carry home a bushel of eggplants. There is abundant good transit to the Kitchener Farmer's Market. In addition, the Waterloo Farmer's Market is not even within the Region of Waterloo.
* Alternatively, run rapid transit down Weber Street or Westmount Road, and bypass uptown Waterloo altogether.

There has been a highly questionnable public consultation process around rapid transit. Over the last year we had many public forums, but in each one we were told that rapid transit was a done deal and the only parameters to be discussed were route location. Also we were told that "details" like location of stops would be dealt with "later". (For Waterloo, they showed the stop location as a big circle on a map that spanned all of uptown.) Videos were shown of rapid transit systems in other cities - never mentioning that Waterloo Region is a fraction of the size of those cities, and transportation professionals consider that we have much too low density of workers (even in the foreseeable future) to sustain a rapid transit system. None of the side-effects, such as draining resources from the traditional bus system, were mentioned.

Rapid transit is not a project for the far future. The Region is fast-tracking it, and while we still don't know the details of the route through uptown Waterloo or the location of stops in uptown, we are told that the shovels will hit the ground soon. Apparently there is someone very powerful in the Region who sees this as his legacy project (Ken Seiling?) and refuses to accept any opposition. As soon as 2010, the successful small uptown core of Waterloo may be destroyed forever.

Do we need to find ways to make Waterloo less of a car city? Absolutely! Planning in Waterloo has been atrocious: we have far-flung subdivisions and industrial parks, box stores like our latest atrocity, Wal-Mart, at the north end of town, a general urban sprawl that makes a car almost mandatory. But the rapid transit proposal does not do one thing to address that problem. It will probably make car dependence worse as it siphons resources from existing bus routes.

Added to all its disadvantages, rapid transit doesn't provide a lot of advantages. It turns out that it's not that much faster than regular buses, because while it doesn't stop as often, it still has to maintain city speed limits. It provides potential for higher capacity of riders, but it strips away a lot of the flexibility of buses: if transit patterns change, we'll be stuck with the expensive route that is built initially. The only real solid advantage of rapid transit comes if it is rail transit, and that is that the trains will look really cool. That's simply not enough.

What can we as citizens do? Raise bloody hell. The city is going to decide how to respond soon, and while there is a lot of unease in City Hall about the plans, most residents don't seem to understand the changes that are about to come and so they aren't worried. It is not clear whether the city can stop the Region, but we must at least try.


Tying Nominations to Fund Raising

I've been trying to decide whether to write about Michael Ignatieff's new plan to encourage MPs to get new members and donors by giving them a bye on nominations if they meet a certain quota.

No question, I like Ignatieff's innovation and I like the principle... except it sort of backfires if you don't want your MP to run again. In my riding, Kitchener-Waterloo, our MP was recently defeated, but if he hadn't been defeated I would feel the need to avoid giving any money and would need to make sure I didn't encourage any other people in my riding to join the party. (As it is, I don't know if we're going to have a nomination vote even though he lost.) I don't like to be mean, but it sometimes happens that successful people stay longer than they should.


Monday, March 09, 2009

Inflation is Coming! Inflation is Coming!

One of the biggest complaints about our current economic crisis is that it was so unexpected. Why couldn't economists predict it? If we had only had a little advance notice, we could have protected our life savings.

Well, the next stage of the crisis has been predicted and we should all be planning for how to deal with it: inflation. Not just inflation, but possibly hyper-inflation of the like we haven't seen since the early 80s. We can predict the possibility of inflation because of the size of the economic rebound that's coming. It will probably be exacerbated in the US and Canada by the poor implementation of the stimulus packages - particularly, by the delay in implementing them. In the short term we're all focused on the possibility of deflation, but once recovery kicks in inflation will be the problem. That may happen in spring 2010.

How can we deal with inflation?

Inflation erodes wealth, so savings and investments suffer unless they're protected by returns that are higher than the inflation rate. Locking in savings at today's rates is a bad idea. On the other hand, if you can lock in fixed rates when interest rates are high you can do very well. (This was a common success story in the 80s and 90s.) So there's some wisdom in staying liquid.

Inflation erodes the value of debt. Say you put $10,000 on your mortgage this year to pay it down; next year that might only be worth $9,000. On the other hand, interest rates rise due to inflation: mortgage rates got as high as 22% in the early 80s. So locking in mortgage rates is a good idea.

If you don't get cost of living increases in your salary, your real salary decreases. It's a good time to start strategizing on how to keep your salary from eroding.

Of course, inflation isn't going to hit immediately. It will probably take six months to a year before we start to see it, and our central banks may be able to head it off so that we don't get walloped by it at all.

It's going to be a bumpy ride, and new crap is going to be flung at us before it's over. We can't fully protect ourselves, but we can at least brace for the next shock. We should all be planning for how to survive three more years of horrible economic conditions: unemployment, inflation, moribund markets, rollercoaster interest rates, corporate collapses, and the fallout from crisis in government budgets at all levels. An extra concern for Canadians is that our experience in past recessions is that unemployment remained high for a couple of years after the US rebounded.