Sunday, February 27, 2011

The Irish Uprising

Overlooked in all the turmoil in the Middle East is the outcome of the vote in Ireland.

Fianna Fail, the party that was in charge of negotiating the "bailout" of Ireland after the financial crisis, was thrown out of power by the historic vote. Over 70% of Irish voters turned out to make sure that Fine Gael (the Irish center-right party) and Labor (center-left) took control of the government.

Fine Gael had campaigned on renegotiating the terms of the EU bailout that would have effectively put 80% of the Irish budget by 2012 to paying back the bailout of the banks. Fine Gael and the people of Ireland have said, "thanks, but no thanks".

Fine Gael also will be insisting that BANKS that lent the money to failed institutions take a haircut on the money that is owed to them. This act alone will have reverberations throughout the EU and the world. Expect that the Euro will take a hit and that other countries that accepted bailouts from the EU and IMF will follow suit. Spain, Portugal, and Greece will be watching the outcome of the Ireland situation quite closely.

For more on this story, see these links:
Reuters story on the elections.
Irish Default the Best Option
Irish Government on Collision Course with the EU

Right now, this is the biggest story that most major news outlets in America are missing (CNN has it in it's "Other News" section barely visible on its front page. Drudge has it at about the same place as CNN). That's not surprising given the situation in the Middle East, especially in Libya. However, the fact that the Irish situation could spread to other European countries could have a greater effect on the world's economy than $100/barrel oil.

What has become clear is that the people (ie voters) have become fed up with policies that bail out banks on the backs of taxpayers. The new Irish government is about the show the world how to force senior bondholders to take a haircut on a bad investment.


Tuesday, February 22, 2011

Assuring Another Uprising

I am not one to post many international stories but in this case it is worth making an exception.

My flight to China leaves on March 4th and I will be spending about 10 days in Chengdu. Chengdu is hardly the hotspot for pro-democracy demonstrations but both Shanghai and Beijing have seen their share of people joining in the Jasmine Revolution.

In both Libya and Zimbabwe the tide has turned against their respective leaders. If you want to assure yourself of losing power in a short amount of time, fire on your own people with military jets like Libya has done. In Zimbabwe, Mugabe has decided that watching all video of the Jasmine Revolution in other countries or watching BBC or Al Jazeera reports is grounds for a 20-year jail sentence.

Below is an excerpt from the Zimbabwe article:
“Indeed, the single most important lesson from Tunisia and Egypt is that we as Zimbabweans are our own liberators,” Trevor Ncube, owner of three independent newspapers in Zimbabwe and The Mail & Guardian in South Africa, wrote this week in The Mail & Guardian. Mr. Ncube added later, “The world will only help us when we stand up and fight for our freedom and reclaim our country from Mugabe and the arrogant clique around him.”
This is similar to the statement made by Google executive Wael Ghonim prior to the Egyptian people overthrowing Mubarak.  Video of his interview is below:

As in Egypt, negotiation with rubber bullets, real bullets, military jets, and 20 year prison sentences, will all lead to the same outcome.

I have a great friend who is in the Middle East on behalf of the State Department. He wrote me last night to say, "One can't stifle people's political expression forever, but the result is going to be a lot more dynamic and less comfortable than we are used to."


Monday, February 21, 2011

On the bright side

This isn't us:

Michigan orders DPS to make huge cuts

Lansing— Swift and severe changes are coming to Detroit Public Schools.
State education officials have ordered Robert Bobb to immediately implement a financial restructuring plan that balances the district's books by closing half of its schools, swelling high school class sizes to 60 students and consolidating operations.

While the financial picture is still murky for many state and local governments, the Detroit Public School system


New Ward 5 Commission Race Website

Kelly Fraasch has officially launched her website in her race for the Ward 5 Commission seat.

Please visit to get the latest news and information about the race.  In addition to having information about some of the issues facing Ward 5, Kelly has a list of people who have lent their support to her campaign.

If you have suggestions or questions, please feel free to email me or Kelly.  You can reach her at

Wednesday, February 16, 2011

Walkable Communities on the Rise in Pennsylvania

I have been wanting to share this article for some time and am finally now getting around to it.

There was an article in the Tribune Review with the same title as this blog post. Please see the entire article here.

Sunday, January 30, 2011

Egypt and the US Loose Money Policy

I've said many times in the past that loose Keynesian monetary policy that is followed by Ben Bernanke will create more problems.  It was with interest that I read two writings over the last few days from people that I follow which suggest that United States loose money policies have a hand in creating the recent spate of uprisings in the Middle East.

The theory is that rampant creation of credit and money creates bubbles.  All that money needs to find a home. In this case there has been speculation in commodity and food futures creating huge increases in the prices for necessities.  In Tunisia and now in Egypt they are calling this the Jasmine Revolution.

From Mish over at GlobalEconomicAnalysis (a top ranked economics blogger):
Most of the increases in food prices are due to droughts in South America, floods in Australia, and poor growing conditions in many places.

However, Bernanke's "Quantitative Easing" policies combined with rampant credit growth in China and India have led to increased speculation in commodities. That speculation has forced up food prices.
Then from Chris Wiles, CFA at Rockhaven Capital I received an email with the subject, "You Say You Want a Revolution".  In the email was the following:

Another question to be asked is why now? First Tunisia, then Egypt, and Yemen, is there a common thread other than long-term oppression. Yes, there is a common thread to the timing of these uprisings. The Fed's massive printing of dollars has led to commodity inflation around the world, and commodity inflation (especially food) strikes the worlds poor the hardest. When you have 25%+ unemployment among the young and they are hungry, angry, and have the ability via social networks to organize, you get revolutions. 

Rising Inflation + Poor + Unemployed + Ability to Organize = Revolution
Bernanke continues to pursue policies that will create more credit and money.  The unintended consequences of such actions just are not part of his thinking process. 


Thursday, January 27, 2011

Announcing Candidacy for 5th Ward Commission Seat

With Dan Miller announcing that he will not seek a second term on the Commission, the following email was sent out last night.

Dear Friends:

After thoughtful consideration, I have decided to run for the Ward 5 Commission seat.

Dan Miller has been a wonderful advocate and served our Ward and Mt Lebanon with the utmost integrity. 
His service has inspired me to want to work for my neighbors and fellow community members to ensure our voices are counted.
While his shoes will be extremely tough to fill, I believe I have the leadership and ability to be a strong commissioner for those in my ward and in Mt Lebanon.

Kelly Fraasch, President/Founder
 I can't think of a better person to sit on the Commission.  Stay tuned for more announcements.


Tuesday, January 25, 2011

Public Sector Unions Take Big Hit in California Supreme Court

Having been on both sides of the negotiating table with Unions, I can't overstate how important this decision was by the California Supreme Court.

The City of Richmond had argued that it could lay off union workers (in this case firefighters) due to financial stress without the need to consult with the union.

From the article:
Under California law, "a local public entity that is faced with a decline in revenues or other financial adversity may unilaterally decide to lay off some of its employees," Justice Joyce Kennard said in the ruling, which upheld lower-court decisions.
All over the country public unions are having to decide on whether they will accept pay cuts for all employees to save jobs, or to preserve pay and salaries for the most experienced employees while sacrificing numbers.
In Camden, New Jersey, this is exactly what happened.  The Camden Police Union decided that preserving pay for senior officers was more important than saving the jobs of the junior officers.  In fact, the union just the other day voted 300-1 to preserve salaries of senior officers rather than to rehire 100 laid-off officers.
The fact is, not a single job need be lost when it comes to these budget cuts.  With thoughtful concessions, all of those officers and city workers could still be employed, albeit with lower wages and less benefits.
This decision by the California Supreme Court will certainly strengthen public employer position in negotiating budget cuts.


Sunday, January 23, 2011

Articles Put Mt. Lebanon in Positive Light

There were two articles related to Mt. Lebanon over the weekend that I found in the Tribune-Review.

First was this article, "Walking Communities on the Rise in Pennsylvania" from Sunday's paper. This article talks about the demand for having walking communities, especially for those older than 60.  According to the article there is a waiting list 40 people deep for 58 townhomes being built at McCandless Crossing, a 130 acre development off McKnight Road.  The South Side Flats are seeing even more demand for residential where the developer plans to create an additional 1000 units on top of the 87 that exist today.

My take on this is that, despite a tough economy, if you build the right project, there will be demand for the property.  Perhaps giving TIF money to a developer for a project to build high-end condos was not the right move, but, assuming the lesson was learned, there appear to be at least two, maybe three places where Mt. Lebanon has an opportunity to capitalize on the trends outlined in this article.  With the Bower Hill/Washington Rd development seemingly derailed for the time being, maybe it is time to hammer out a different agreement.  It seems like the Kossman property is in about the same state.  The other project that this seems to make a lot of sense for is for the TRID project or "air rights" over our T stop.

These three locations appear to be the best opportunity we have as a community to find new revenues for both our municipal and school district budgets.  While Mt. Lebanon is already known as a "walkable community" the plans outlined in this article suggest more mixed-use development (residential/retail/commercial) would put a little twist on the traditional walkability of our town.

The second article appeared as the lead in the Weekend Edition of the Trib.  "Doing Without: Falling property values, lack of growth put tax revenue pinch on many towns".  This article gives a nice roundup of where each municipality in Allegheny County ended up with their millage changes for 2011.  It details how many of the municipalities, understanding their resident's inability to dig deeper for more tax payments, decided instead to cut services to avoid tax increases.  From the article:
Seventeen communities, including Castle Shannon, Fox Chapel, Homestead and Penn Hills, raised taxes. Three -- Chalfant, Liberty and Mt. Lebanon -- lowered them.
Decreasing property values, a slowdown in spending and a lack of population growth all translate to lowered tax revenue.
Mt. Lebanon plans to implement a $5 to $6 per month per-dwelling fee to pay for operation and maintenance costs related to draining and flooding problems but reduced property taxes from 4.89 to 4.76 mills by cutting the budget for its street reconstruction program from $1.8 million to $1 million, saving on health care costs and refinancing four bonds, said Marcia Taylor, finance director and assistant manager.
It seems like municipalities understand the significance of falling revenues.  Falling earned income tax receipts reflect an inability of residents to fork over more money for maintaining existing levels of services.  These municipalities, including Mt. Lebanon, have turned to cuts in service (like less street paving) to offset the dwindling revenue.  While I understand there was some controversy to the plan to reduce millage, the move did put some much needed positive light on the current Mt. Lebanon tax situation.


Wednesday, January 19, 2011

On Tuscon

I am heading down to Tuscon tomorrow. While there I am going to stop by an pay my respects at the store where the terrible shooting took place on January 8th.

There is no easy way to make sense of something so senseless.  I won't try to attempt to do that here. But, I will say that the way to heal is to remember the beauty that surrounds us.

To that end, please take a moment to listen to this Paul Simon song Under African Skies:

Lyrics from the song:
In early memory
Mission music
Was ringing 'round my nursery door
I said take this child, Lord
From Tucson Arizona
Give her the wings to fly through harmony
And she won't bother you no more

This is the story of how we begin to remember
This is the powerful pulsing of love in the vein
After the dream of falling and calling your name out
These are the roots of rhythm
And the roots of rhythm remain

Please read that a few times.