Indianapolis vs Lubbock (Global Economy vs Local Economy) a Contrast in Economies
Indianapolis vs Lubbock (Global Economy vs Local Economy) a Contrast in Economies
Indianapolis vs Lubbock The difference had deep implications. Both are great “Heartland” cities, and great places to live and raise a family. But the economic differences present stark differences that provide insights into our financial system.
Indianapolis, Indiana has an unemployment rate of 9.7%, Lubbock, Texas 4.8%. The national unemployment rate is 10%. the State of Indiana shows 10.1% and Texas at 8.5%. A careful look at the details provides good insights.
The foreclosure rate indicates that of all homes in Indiana that 4.5% are being foreclosed.
Yet in Lubbock, the foreclosure rate is less than .0025%.
Third quarter reports indicate that in the USA, 937,000 homes were foreclosed during the third quarter of 2010.
If 10% of the people are unemployed in the USA, what does that mean?
* One out of 10 families will not buy a new car this year
* One out of 10 families will not take an expensive vacation this year
* One out of 10 families will see their doctor less and will delay if not cancel medical procedures
* One of our 10 families may forgo sending their kids to college
* One out of 10 families may not go out to dinner, theater, or sports events
* One out of 10 families will not be buying expensive consumer goods
* One out of 10 families may not be making house payments, bank payments or taking care of monthly obligations
* One out of 10 families may be dependant upon some kind of social security, charity, or state funded welfare.
In terms of real estate values, our valuation team said: “While the Indianapolis metropolitan area has been heavily impacted by foreclosures, the northern sectors or Carmel, Zionsville, or Whitestown have seen fewer foreclosures. Market values have not declined much, but there simply are not many sales due to lack of bank financing.” source Valuation Experts
The lending market for home mortgages in Indianapolis and Zionsville, is dominated by big banks. Since it appears that the giant national bank franchises are in trouble, they simply are not doing much new financing. One person reported going to 6 banks in Zionsville, and Carmel (most being branches of big Wall Street involved banks such as Chase). They wouldn’t even make loans with 50% down and offsetting deposits. So, the appraisal impact of the area is significant due to the external factor of unstable financial markets on Wall Street and in the “giant banking industry sector” causing a lack of lending availability. (For appraisals and appraisal information contact: http://www.benboothe.com)
Indianapolis has a good mix of agricultural, industrial, commercial, medical and high tech industry. Eli Lilly headquarters in Indianapolis. Indy also has numerous colleges and educational institutions. But the industrial, commercial and banking sectors of Indianapolis are heavily dominated by giant, national firms, most with close Wall Street ties. As energy prices have increased, the agricultural sector economy has improved, but this is being offset by negative business trends of the national globalized financial and commercial firms.
It would seem that most of the nation is enmeshed in an economy dependent upon the Wall Street banking financial system and the giant business model of the nation. America was not always this way and in former generations the economy was diversified and largely protected from anomalies such as the “Home Mortgage Fiasco”. That is why leaders followed the great depression of the 1929-1933 period with layers of regulations and protections. Those protections were meant to protect communities, small business and consumers from massive economic domination and periodic “busts”. But over the 30 year period from the 1970’s to 2010 there was a deliberate and systematic effort to deregulate industry, especially the financial sector, and then to concentrate economic power into fewer and fewer hands, most of which were on Wall Street.
When Wall Street sneezes, the rest of the nation gets a cold.
While the USA is suffering through the worst economy in 40 years, there are interesting sectors that are prospering, and doing very well. They are the very sectors that have not become involved in the “Global Business” of Concentrated power and wealth. One example is Lubbock, Texas. Only 1 out of every 4218 homes was foreclosed last month, .002%, well below the national average. The unemployment rate is 4.8%, less than half of the national average and half that of Indianapolis. We asked local business people why and the reasons were simple.
Lubbock has many agricultural industry businesses, with a strong commercial, retail, and banking sector, as does Indianapolis. It also has stable hospital and educational institutions. But the commercial and banking sectors of Lubbock are not dominated by national firms or Wall Street connected commercial interests, as they are in Indianapolis. As energy prices increased, so did commodity prices, creating a positive impact upon the agricultural sector.
* Banks in Lubbock did not participate or engage in giant Wall Street financing and investment pools. Instead they loaned money to their customers, who they knew, and loaned to people who kept their banking business local and with Lubbock banks.
* The general economy of Lubbock is more independent from the giant monolithic business model that most of the USA has adopted. There are more locally owned businesses, more community shops, stores, retailers, and manufacturers. Lubbock still has locally owned independent banks, in which the capital and profits stay in Lubbock, instead of being drained to Wall Street.
* Lubbock, has not furiously engaged in enmeshing its economy with the “Wall Street” or the “Global Economy”.
Thus the stores are busy, automobiles are selling, banks have money, people have jobs and the community (and those similar to it and in the same area) are doing very well. Why? Lubbock is less tied to, less dependant upon the “Wall Street” centralized, concentrated power concept.
There are other interesting parallels. MaryAnne Doyle is on the board of directors of a historic site (Maplefarmstead.org) at Zionsville, north of Indianapolis called Maple Farmstead. For over 130 years, this beautiful farm was a self-sustaining economic unit. The farming family grew their food, canned and stored “back up supplies” of food. They grew and used their own crop seed. They Sold their excess production for cash and capital and developed a livestock program where cattle and livestock would breed and expand naturally. The farm became a centerpiece of prosperity. It was an economic unit not tied to Wall Street, Giant Banking Firms, or big monopolies that would pull capital away from it, or turn it into a “franchise” that stock traders or investment managers could leverage into quick stock market profits. That farm in Zionsville, represents the economic system that built the United States into a prosperous nation. Big banking, Wall Street and big business did not create the prosperity of the American system, they simply exploited it and changed the flow of funds from local communities to Wall Street or money centers far removed from local sources.
Many community leaders as well as investors are evaluating how they can become more independent of the “System” that ties them to risks and fluctuations of Wall Street and the deregulated interconnected “Global Network” of giant business interests.
Many are trying innovative ways to bring production closer to “home” and cut the ties to far away influences. Cornucopia Greenhouses (http://www.cornucopia-enterprise.com) is a new company encouraging local greenhouse food production near urban centers powered by solar and wind. It’s central philosophy is to “grow it here” and “consume your growth” and to opt out of the national food production chain. Another company, the Capital District Community Loan Fund, (CDCLF) in Albany, New York is an example of a local bank, that actually serves it’s community, while avoiding Wall Street entanglement.
Even companies in Europe are concerned that instability of integrated financial systems can be dangerous. One example is the concern that a nation such as Ireland, might destabilize the entire continent. More and more visionary leaders are thinking “How can we insulate ourselves from being driven down, by market forces or issues that originate far removed from our company?”
15 years ago, Ben Boothe, Publisher of Global Perspectives and author of 8 books did a 5 year study research program, including interviews and visits with business leaders from Los Angeles to Wall Street, from Europe to Asia, to identify “The Winners and Losers of the Global Economy”. Boothe interviewed over 90 bankers and economists in 20 nations. In the text of a speech that he made in India for the World Bank and economic leaders he said:
“An integrated Global Economy increases the risk of global economic disaster substantially. If we are to develop an integrated global economy, we must then develop an international system of financial and economic regulation to stabilize it, otherwise deregulation, abuses, corruption can bring economic anarchy, and could lead us into global economic collapse.”
This analysis has now been proven true, especially in the past 24 months. Boothe has been recognized internationally.The World Bank adopted his research and teaching materials and research in over 30 nations. PhDs for the World Bank, & IMF, such as Dr.Demir Yener and Dr. Helmut Fischer (consultant for George Soros) have copied and used Boothe’s research. Some of that research is posted and of record in the article archives at: http://www.bootheglobalperspective.com.
Economists, business leaders, as well as community leaders like MaryAnne Doyle, (Director of Maplewood Farmstead and participant in numerous Zionsville community projects) are evaluating the economic and financial system that has evolved over the past 30 years. There is a trend to develop business and communities so they are more able to be self-sustaining, with more ability to be free-standing economic units that can prosper and find stability. These entities must have more independence from the instability of a nationalized banking and economic system dominated by Wall Street or giant central business interests. This has elements of great importance to political
and social community leaders. “City builders” and social engineers realize that we are entering a new phase of economic and community development, where new emphasis will be on companies that are locally owned and controlled. This requires integration of environmentally friendly technology such as solar water heating systems (http://www.wind-inc.com) as well as wind power and renewable energy systems. Local economic and financial companies, are being asked to reinvest profits and capital to community development. Giant “Wall Street” national chains will be required to create loan pools to support new local business development and will rebuild sectors that have been in decline because of competition with “Wall Street Giants”. Tax incentives will be provided to local business as well as entrepreneurs that invest time, money and capital to form new economic entities that will support local economies. The future will be a time of transfer of assets and control back to “heartland”. Financial institutions such as banks will be regulated, but independent community banks will slowly assume leadership again, because they will have “hands on” knowledge of their local customers and will not engage in the centralized power scheme of Wall Street, with its CED and CFO pools of investments. Never again will conglomerates be allowed to come into a community and gut the local economy while sending profits and capital to money centers on Wall Street. The new fundamental economy will reassert the essential basic financial treasure of America, which was the ability and right of an individual to achieve his own potential, without the domination or control of some giant of wealth or control.
America developed and grew because millions immigrated to a nation where they could hope to start a local business, farm or company with a hope of success. That somehow got distorted and changed as we allowed the giants of business to “buy” politicians and deregulate the system. This allowed them greater power and concentrations of wealth.
The Wall Street crash and worst economy of 40 years, proves that a fundamental change of our economic system is inevitable. We are told that the 5 largest banking systems in America are at risk of insolvency, especially should the illegal handling of foreclosures of mortgage pools be considered and enforced by the courts. Trully these banks have violated SEC disclosures and other legal elements, but there is no assurance that regulators will pursue these violations. Some say that they will eventually either be “nationalized” or reorganized with new oversight and some will sell their branches and assets back to local investors. While the transition back to a diversified, locally controlled economy may be difficult, it will be a foundation for long-term stability and growth in the USA.
It is the challenge of community and corporate leaders with vision to rebuild America with a new model, which the Maplewood Farmstead symbolizes. Local control, innovation, and incentive for success without domination of the giants of wealth and power.