We’re Sitting in the Crow’s Nest?
Our City of Rockwall mayor recently spoke before the RCRMC (Men’s Club). On the issue of City finances and the effect of the national economic recession, he acknowledged the “ship” is sinking – but not to worry, because “We are in the crow’s nest.” By this I suppose he intended to say that despite what happens on the national and State of Texas scenes, the general economy is going down, but our beloved City of Rockwall will be immune – we’ll keep our feet dry, so to speak.
Business Insider lists ten states likely to default, based on the proprietary Fitch CDS-IR model.
State Rankings in Descending Order – Number 1 is most likely to default
Rank State CPD
1 Illinois 41.2%
2 California 39.3%
3 New York 35.3%
4 New Jersey 34.7%
5 Michigan 33.8%
6 Nevada 32.0%
7 Massachusetts 22.0%
8 Ohio 20.9%
9 Texas 15.0%
10 Virginia 12.3%
CDS = Credit Default Swap
What to Do?
I hope by now we are in general agreement that one cannot spend oneself out of indebtedness. For those who believe we can, you go right ahead and race your credit card charges against your credit card payments. Let’s see which comes out ahead.
Does it make sense to go the bank, borrow money, then borrow more to repay the first loan? No? Then why does it make sense to borrow money from China so we can repay loans from China, and Japan?
What’s the Point?
The City of Rockwall, city staff and council, are “looking ahead” to meet the needs of a growing city. However noble that may sound, the big need they overlook is this: how do we pay for it?
All around the “crow’s nest” homeowners lose their properties to foreclosure. Renters default on rental agreements. Unemployment runs high, very high. Unemployment is not solely the problem of low-income residents, professionals and highly educated specialists and even lawyers are either pounding the pavement or have given up altogether.
We can’t all get rich in the stock market. And, only a few will win the state lottery. Somehow, someway, someone has to actually produce something of value.
Produce something of value? Do you mean some kind of profitable enterprise? Indeed. Rockwall needs profitable enterprises – enterprises founded, funded and operated by entrepreneurs who are willing to take risks.
My opinion: City Staff and Council seem to be pushing for uniformity in building design and construction – monotonous stone appears everywhere we have new buildings. Which one is the doctor’s office?
Signage is another issue, all unto itself. Let’s make them small, very costly and difficult to be seen. There. That ought to improve a business owner’s chances for success.
Formula for Success
Profitability is really quite simple to understand. Buy low, sell high. Keep operating expense low. At the top of the list: location, location, location.
Question number 1 | Which state has the most Fortune 500 companies?
Question number 2 | Which city has the most Fortune 500 companies?
Question number 3 | How did that city with the most Fortune 500 companies grow so large and have such a diverse economy?
Okay, boys and girls, here are the answers:
Number 1 | Texas
Number 2 | Houston
Number 3 | No Zoning
How did all those ignorant Houston millionaires make their fortunes without the help of a Planning and Zoning commission and the oversight of a panel of elected officials and bureaucrats?
Is the point obvious, or do I need to fill in the blanks for you?
People smart enough, clever enough and daring enough do the best job of building a successful business. Would it not seem logical that a city staff member or a city council member who thinks himself/herself so wise as to dictate how, where and when a business can operate should go out and prove to the world they know what they’re doing?
I invite the City of Rockwall, Rockwall County and surrounding municipal governments to realistically evaluate our situation. We need wealth-building enterprises that employ income-producing workers to pay government-sustaining taxes.
Income-producing workers rent or buy homes that produce property taxes. These same hard-working folks purchase their daily bread and other material goods from local merchants, thus generating sales taxes.
Sales taxes and property taxes are the fuel that sustains local government.
We need to cut spending and to cut taxes: municipal, county and school district. Tough economic times are rapidly coming upon us. The time to prepare was yesterday – but it’s never too late to start.
As it goes with the nation, so it goes with Texas, and Rockwall. We may very well end up with a lot of expensive buildings, like my customer Dallas, but we will have to cut payrolls to pay for them.