7 October 2015 AD – 24 Tishrei 5776
Rockwall ISD administrators, the board of trustees and even the Chamber of Commerce eagerly promote the largest bond election in the history of our school district.
What do you know about our economic outlook?
Today’s headlines warn, “THE TIDE TURNS”
“Central banks around the world are selling U.S. government bonds at the fastest pace on record, the most dramatic shift in the $12.8 trillion Treasury market since the financial crisis.
“Sales by China, Russia, Brazil and Taiwan are the latest sign of an emerging-markets slowdown that is threatening to spill over into the U.S. economy. Previously, all four were large purchasers of U.S. debt.”
“China owned $1.3 trillion of U.S. Treasuries as of June, making it the biggest holder of U.S. debt.
“But China’s foreign-exchange reserves plunged by a record $94 billion in August, according to the country’s central bank, leaving it with a war chest of $3.6 trillion. Analysts say it’s very safe to believe a big chunk of that decline occurred due to a reduction in U.S. Treasury holdings.”
“The dollar’s share of China’s huge cache of currency reserves has been slashed to a record low, the Wall Street Journal reports, to which it adds the world hasn’t ended as a result.”
“But more recent Treasury data show China has been selling Treasuries outright. And while the markets have been complacent to the point of snarkiness, MacroMavens’ Stephanie Pomboy thinks that’s wrong. Unlike other Cassandras, she’s been right in her warnings — notably in the middle of the last decade that the U.S. financial system was dangerously exposed to a bubble in U.S. real estate. Hers was a lonely voice then because everybody knew, of course, house prices always rose.”
Tale of One City
What’s to sweat. After all, as we all know very well hordes of out of state people flock to little ole Rockwall County day by day, hour by hour and housing prices always go up? Right, my real estate broker and agent readers?
Allow this old man to tell you a tale of a major city, a Texas city, that enjoyed meteroic rises in property values and a construction boom beyond imagination. Commercial office construction underway in that fabled city was equivalent to all the office space in Atlanta, GA TIMES THREE!
My associates and I enjoyed what seemed to be an endless source of the construction business. Prosperity was at fevered pitch. Executives took to helicopters to get from their respective office towers to airports. At any time of day, easily a dozen of the whirlygigs over my head. It was truly amazing. Until.
As suddenly as the boom started, it stopped. Residents, workers, professionals – all trades – took flight at an estimated rate of 2,000 a day moving away. As business dwindled to a grinding halt, I visited one brand new office tower of over 30 stories on Southwest Freeway (Highway 59) to find a simple “FOR SALE” sign on the padlocked front door. It was a sign you can buy in any hardware store. With a telephone number in black marker. Just like that.
That city I describe above is Houston, Texas.
Tale of Another City
Once upon a time there was a quaint little lakeside city that almost overnight transformed from a bedroom community to a bustling industrial and commercial center. Shoppers from as much as one hundred miles away began swarming to this lakeside city to purchase cars, wholesale lots of food at a COSTCO and to dine at an astonishing array of restaurants featuring food of all kinds. It was truly amazing.
Optimistic planners looked around and said to themselves, “My oh my. Look what we have here!” Those planners set out to provide all manner of services and amenities to satisfy the expected hordes of newcomers. How could such a bounty ever end?
This second city is my town. Rockwall, Texas.
Truth About Economic Booms – They Always Bust
There are historic, natural seven-year and fifty-year cycles. Soviet economist Nikolai Kondratiev discovered it between the years 1923 and 1925. Subsequently, he published his findings known today as The Longwave Principle and the Kondratiev Wave or K-Wave. Not enough?
Let’s look to the oldest writings on earth that described a seven-year/fifty-year economic cycle. Moses recorded this economic cycle in Leviticus Chapter 25. According to Biblical scholars, we just ended the “seven Sabbaths of years” in September. This is the fiftieth year, the year of Jubilee.”
What happened seven years ago? That housing bubble burst. Housing started all over again as it naturally does and today we are probably at the pinnacle of this housing bubble driven by ultra-low interest rates.
What’s My Interest?
Personally, RISD property tax hikes don’t affect me, because of my senior citizen status. My taxes are frozen. It’s for the youth and young families like my own children and grandchildren who live in this district that I do my research and publish warnings.
This bond election, as it was with the last when a real estate broker led the committee, offers no choices to voters. Yes, the tendency is for our folks to vote for any new school construction, but they would oppose much of this bond proposition if they knew more details.
At this point, I encourage voters to Against (En Contra). Let’s demand an accounting and let’s demand more choices. That courthouse on the highway was built contrary to the will of the voters. The natatorium (aka aquatic center) was voted down as a stand-alone proposition, but in the subsequent 2007 election, we no longer had choices. Well, we had one choice: take it or leave it.
We can have the election next year with a new management team and choices we deserve. There is ample unspent bond authority from the last election to fund immediate needs of the district.
I welcome your comments. Use this convenient form below.