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March 2009
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The End of the Suburban Development?

Peter Schiff, an economic commentator that is said to have predicted the ‘bust’ we are currently in. Last night he was hosted by George Stroumboulopoulos on the Hour. Schiff stated that the down turn in the economy has happened before and will happen again. He said that every 40 years we experience a contraction. Why? Because a large percentage of the population surpasses the age of 50 and at that point in our lives we become savers, no longer spenders. Look at the baby boomers, the majority of that population is passing the age of 50 and the economy would tell us that they are now starting to save, not spend. Schiff also compared it to the ‘Roaring 20’s,’ where after the Great War, WW1, people were massively consuming and then in 1929 things changed; people decided they had purchased enough and it was time to change.

All of this has happened before and all of this will happen again.

These long range predictions are nothing new. Russion economist Nicolai Kondratieff wrote a book in 1925 summarizing his theory. The four stages, spring (growth), summer (recession), fall (plateau) and winter (depression) summarize what happen long term in our economy. Schiff believes we’re in the winter. When do things start blossoming for a new spring?

Those who invest in infrastructure weather the winter storm best.

So what does all of this have to do with transportation and sustainable infrastructure? Last night Schiff stated that the economic bailout package from the US government will only have a micro-stimulation. Much like the January thaw in Ontario things will return to their frozen, stagnant way again. Schiff predicts that the economy will start to grow again sometime around 2013-2014.

Likely after all of this China will emerge as the super power. Having invested in infrastructure, in its people and in the country’s future, China will be at the forefront of the economy. And likely China will have to bail out the US.

What’s more the $1million plus homes on the golf course won’t be selling anytime soon. Places like Florida, Arizona, and Nevada (mostly Las Vegas) have seen up to 60% declines in housing values. The boomers are downsizing and those following in their paths can’t afford to buy the homes. The next generation still cannot afford the massive suburban home; they want condos in the city centres and small starter homes. Unfortunately those in the basic suburban developments will be hurt the most.

It will be interesting to see if we change our living habits during the recession. Will more people move back to the city? As the price of gas and energy rises again people may be less willing to use the personal automobile as it becomes too expensive and heating and cooling a large home may no longer be feasible. On the positive side living in the city in smaller dwellings does have great environmental returns.


Pingback from Posts about Economy as of March 24, 2009 |
Time March 24, 2009 at 12:34 pm

[…] … to stave off further layoffs. The dismal economy functions as the nail in the coffin The End of the Suburban Development? – sashaonthestreet_ca 03/24/2009 Peter Schiff, an economic commentator that is said to have […]

Comment from AMH
Time April 18, 2009 at 1:15 pm

Don’t forget aout Kunstler.