Commercial Real Estate Blog

It certainly didn’t take long for San Jose councilmemebers to take notice of the Los Angeles city council decision to ban fast food restaurants. Now Nora Campos, Forrest Williams, and Kansen Chu, councilmembers in the City of San Jose are proposing a one-year moratorium on new fast-food restaurants.

I’ll try and keep this post from turning into a tirade, but I am disguested with this trend, and sorely disappointed with San Jose city leaders. The last time I checked, liberty and free will were a fundamental part of this country. What we have now are city leaders and legislators working to limit what we can and cannot eat; this is something which needs to be stopped. In the San Jose Mercury News today, the article quoted councilmember Kansen Chu (which I have a lot of respect for) as saying, “When you talk about fast-food restaurants, you’re thinking burgers and fries and chips and pizza.”

First of all, it sounds like they don’t even have a way to classify what “fast-food” is. Second of all, they are working to ban this city-wide. This is unfair to the restaurants, entrepreneurs, and citizens. There is indeed a problem with obesity in this country, but the solution is not to ban a certain type of restaurant; the solution is better education and better opportunities. That is the job of our leaders.

Instead, our leaders feel compelled to effect change by going after supply. That is their fundamental mistake - what they need to do is to lead in ways which will reduce demand. Imagine banning MP3’s because people pirate music, or banning credit cards because of identity theft, or banning large SUV’s because they burn too much gas. That is not the solution. The solution to the problem is creating an environment where people choose not to pirate music, or to buy a Hummer, or better safeguard against identity fraud.

What our leaders are doing by proposing such legislation is sending a signal that says they have given up. That is not the type of leadership I would want running my city and I encourage those that agree to write Chu, Williams, and Campos and let them know now and give them an opportunity to reverse their decision. Or you can wait and do it on election day.

The city of Los Angeles council has unanimously approved an ordinance which puts a moratorium on any new fast food restaurans in an “impoverished” area. This is likely the first time something like this has been passed in an effort to fight obesity. Unfortunately, the problem goes beyond simply blocking any further fast food restaurants and hoping people will lose weight. It is also an issue of economics and choice. People can walk into McDonald’s and get a salad, but they simply choose not to. That choice is a function of economics and free will.

Laws are popping up every day which seek to curtail supply in the hopes that demand will fall. In the past big box stores or “formula retail” stores were banned in many communities, but now for an entirely different reason, fast food restaurants are being barred.

I’m sure some of the people in these communities could stand to lose some weight, but they could also stand to gain from better education, and economic opportunities. Passing laws like this are nothing more than an effort to hide the failures of our leadership. I hope the restaurants, or their association challenge this ruling in court and help put the spotlight back on what the real underlying problems are.

A conspiracy is nothing but a secret agreement of a number of men for the pursuance of policies which they dare not admit in public.” - Mark Twain

Normally I don’t get to engrossed in conspiracy theories and the such, but what is happening with oil and the financials and the dollar is becoming so gross that it is difficult to ignore. We talk about here the impact, whether directly or indirectly, all these forces have on the commercial real estate market and the general situation we find ourselves in today, but I felt compelled to write a post about what I believe is happening with the economy, financials, and the bailout underway at the hands of the populace.

First, a graph showing the Dow Jones Financial Services Index vs an ETF tracking the price of crude oil since the credit freeze began in earnest last summer (click for full-size).

I am of the camp that is fascinated by Wall Street. The ability with which Wall Street has managed to screw up, only to find a creative solution to the problem has been one which amazes me. They’ve managed to do this time and time again. This time, it goes without saying, they’ve managed to dig a giant hole. One where losses are into the hundreds of billions, with some estimates pegging total losses to be at over a TRILLION dollars when this is all said and done. That’s a lot of cheddar.

It seems Wall Street has again found a cure. Over the past few years, we’ve started to hear the term Sovereign Wealth Funds (SWF). These are funds which are state-owned investing in assets, projects, and securities worldwide. Over the past year, since the credit meltdown hit Wall Street, SWF have been running around Wall Street investing in everything from Citigroup, Morgan Stanley, Merrill Lynch, and real estate as well to the tune of billions and billions of dollars.

The SWF of Kuwait, UAE, and Saudi Arabia seem to me to be working in concert with the investment banks to bail them out. The same investment banks who are blaimed for “speculating” the oil price to where it is right now are benefitting from huge cash infusions from the very same SWF benefitting from high oil prices.

Thus it is easy to see that Wall Street has once again managed to find a cure by getting the public to bail them out at the gas pump. The investment banks drive the price of crude up (and thus gas prices). The money flows into the oil producing countries and their sovereign wealth funds, which in turn reinvest the premium the investment banks created for them back into our financial institutions, with all of this financed by the public without having to mess with a tax increase or a congressional bailout replete with lobbying, hearings, public scrutiny or outcry. Absolutely Genius.