A Receding Tide

57 thoughts on “A Receding Tide”

  1. Johnny, off topic, but may I ask you a question about the research you did on generators and propane conversion? If this is too far afield or you don’t want to put any more time into the topic, no problem.

    I see that Costco has several dual-fuel generators available (and they are “inverter generators.” Do these meet the criteria you’d set for what you need? They’re several hundred dollars cheaper than the Honda/Hutch Mountain combination you’d linked to previously and I wonder if that translates into cheaper quality as well. I suppose with the non-Costco version you’d linked to, you’re paying for Honda’s (perceived?) quality/reliability – but honestly, I’m a total beginner at even considering this, hence my question.

    Thanks!

    1. I just did a quick search for Costco dual fuel generators. I see a Champion for $900 and a Fireman for $780.

      https://www.costco.com/champion-2800w-running–3100w-peak-gasoline-or-propane-fuel-powered-digital-inverter-generator.product.100284958.html

      https://www.costco.com/firman-2900w-running–3200w-peak-electric-start-gasoline-or-propane-fuel-powered-inverter-generator-gas-and-lp.product.100481637.html

      I’m agnostic about which brands other people buy. If I were on a super tight budget with hard limits and pressing trade offs in my life (as was always true when I was younger) I’d probably get one of the cheaper units and hope for the best. But for my current situation when I do get a generator I’ll pay a bit more and buy a Honda.

      1. Yeah, those are the two I saw. I guess my question boils down to is “hope for the best” the main difference? The specs are otherwise similar to the Honda, as far as I can tell, or am I missing something. I can swing the cost of the Honda – but have to somehow convince the husband that the price is worth it. I suppose I can always quote my mechanic “Hondas and Toyotas have fewer problems” – though of course he’s not exactly speaking of generators.

        [and agnosticism in the face of other people’s purchases seems to be an appropriate attitude – however, I’m curious about your reasoning for YOUR purchase]

        1. I start by asking myself why I’m buying something in the first place. How long does it need to last? What are the consequences if it fails? What’s the opportunity cost if I spend the money on X instead of Y?

          Over the years I’ve bought plenty of cheap rakes, cheap wheel barrows, cheap power tools, cheap kitchen appliances, cheap shoes… Some do exactly what I need and they’ve been just fine. But mostly they last for a while then fall apart. They’re designed in such a way, or made of materials, that don’t lend themselves to repair. It’s like the old joke about beer. You don’t really own it. You just rent it for a while.

          What really bothers me is the ever increasing “cheap creep” that slowly oozes into more expensive products. An internal metal part is replaced by a plastic part during manufacture to shave off a few cents and make it lighter for shipping. Then the formerly good brand is slightly less reliable than it used to be.

          For example, when we had to replace our old toilet some years ago we selected a Kohler which had been a high quality American brand for over a century. We went through two Kohler toilets in a couple of years and neither ever worked properly. Turns out Kohler now outsources the porcelain to China and the mechanical parts to Mexico. (I don’t care so much about nationality, just the quality – which was compromised.) The third replacement toilet was a Toto from Japan. Worked perfectly with no problems ever since. That wasn’t even about spending more money since both brands were comparable in price. One was just better.

          I’m also peeved by the amount of unnecessary tech bells and whistles attached to everything now. I much prefer a plain old white fridge instead of the French door, ice dispenser, WiFi enabled, touch screen TV, blah, blah, blah. Those are just more things to create complications and break without really adding value to an insulated box and a compressor.

          Well… you asked. I’m officially in cranky old man territory here.

          1. Me too! (cranky old fogey, I mean. Cheers!). We just lost a thirty year old tank of a washing machine to a dead transmission. Replacements, admitted to by the people who SELL the things, will never live up to that. “These days we’re happy if we can get five years out of them. Even the expensive ones, it doesn’t matter.”

            I hate it.

            We bought the most basic thing we could. Counting down until the next one.

            I’d also hate it if the expensive option crapped out.

            1. After having 2 mid-range front loading washers half-heartedly function for maybe 5 years each (with frustrating issues and multiple repairs), we bought a minimal feature top-loading Huebsch set. They’re rated as a “commercial” set and were recommended by a local repair shop. We’ve had zero issues 4 years and hundreds of loads of laundry later. Unfortunately that same repair shop can’t find any stoves or fridges they can recommend with the same enthusiasm. There don’t seem to be many trustworthy brands anymore. Gone are the days of 30 year-old appliances, regardless of initial investment.

  2. re: “negative growth” I don’t think it’s actually a euphemism. I think it’s just the result of watching the world through plotting numbers and trends on graphs. On the way up, the y-axis can be labeled “wealth”, and its first-derivative labeled “growth”. On the way down, as wealth is destroyed, the derivative goes negative, but the label on the axis is still “growth”, because of inertia.

    When the wealth value goes negative, we don’t relabel “net worth” as “net worthlessness”, but maybe we should. 😉

  3. In future, shopping malls will be turned into apartment complexes! There are articles talking about this very fact.

    1. I’ve lectured on this topic for years. There are two routes for the mall-to-housing transition. One is to lovingly deconstruct, then reconstruct the mall shells into fully conforming apartment / condo complexes at great expense. The other is to simply put lots of people into the buildings more or less as they are. A commissary in the old food court, open concept bunks lined up in old storefronts, shared public restrooms down the corridor…

      1. Back in the 1980s, Digital Equipment (DEC) took over an old shopping mall and did a minimal remodel. People’s office were in the smaller stores. Some of the bigger stores were computer rooms. The main aisles and atrium were lobby and lounge space.

      2. At least dead malls have plenty of parking and generally good access to major roads. With enough residents in a converted mall, it might even make sense to set up a communally funded shuttle bus to get people to jobs.

        1. Here’s where I think people make faulty assumptions. Parking and highway access aren’t the factors that will be most salient in the future. That was the old formula. The new dynamic will be different.

          How much of North America sits right next to a major road? Lots and lots. How much of North America has abundant free surface parking? Lots and lots. How much of that property essentially has no value? Lots and lots…

          At the moment we have an ever increasing percentage of the population that is either unemployed or under unemployed. Even after the Covid-19 situation ends many businesses will never reopen. The economic landscape was already shifting and the pandemic accelerated the process.

          So we’re going to see households lose their ability to keep up with car payments, insurance, maintenance, gas etc. And they won’t have jobs to travel to anyway or money to spend at the mall.

          We’re also seeing a massive decline in tax revenue which is required to maintain the road network. The gas tax which funds the national interstate highway system hasn’t been sufficient since the 1990s. Local sales and property taxes have never been enough for local roads without state and federal transfer payments.

          The group shuttle bus thing is probably accurate, but they will be tailored to specific industries and favored demographics.

    2. Yeah, and there are articles talking about colonizing Mars as well, but few discuss the real cost or actual probability.

  4. I read somewhere that San Francisco rents have already dropped 12% year-over year. I live within view of Sandy Hook, New Jersey, and beach traffic is backed up over the Highlands bridge every morning now instead of just on weekends. So some places are benefiting more than others, I guess.

    As for me I made my career in live entertainment and my industry has just been absolutely devastated. I made it through the last two downturns just fine, thrived even, and figured I was recession-proof. Was not expecting a “negative externality” that would specifically target the most salient aspect of my business, i.e. large groups of people gathering indoors. Guess I’ll have to find a new field. One colleague of mine just took a job with an insurance company.

    1. I know the Highlands well. Had friends with a big house up on the hill overlooking Sandy Hook in the 80s. Sweet spot. Good luck reinventing your career these days. You won’t be alone in that endeavor.

  5. When does your friend who owns the construction company expect to start business up again? You wrote a while back that he wound down all of his work and put his business on hold since he (correctly, we can say now) saw a recession coming.

    1. I’ll have to ask him the next time I see him. My guess is that he’ll take on work selectively as conditions shift. It’s all about risk management moving forward.

  6. Things have a tendency of correcting themselves. It seems evident to me that we’ve had a vast nationwide overshoot in the amount of residential & commercial square footage. We’ve begun to see some of that “fix” itself over the last 12 years. Retail square footage per capita is down slightly. We’re not building it as fast as we’re growing… but that’s the tip of the ice berg. The real change is the square footage built now 10, 20, 30+ years ago that’s just peeling apart, much of which will be going to seed.

    Household size is actually projected to grow for the first time in 100 years, while homes aren’t being built quite fast enough to keep up with population growth, so we’re probably going to see less residential square footage per capita too. It seems clear to me that much of our single family housing will be turned into roommate situations, chopped into boarding houses, and/or households will adapt to what’s available by having combining into larger households different from the 1960s post card nuclear families.

    1. Funny thing, our household acquired another member during this crisis who was seeking psychological support rather than material. It’s been a benefit to everyone. David Holmgren’s book, “Retrotopia”, talks about how one of the most important things in rehabilitating suburbia is to add more people per household.

      1. “Retrotopia” is actually a book by John Michael Greer. You’re probably thinking of “Retrosuburbia”, by Holmgren. (But Retrotopia is a good read, too.)

          1. That phrase has been a lodestar for me.

            The rush is on, now, but it may pause the next time things seem to stabilize (or even improve slightly). The general trajectory seems inexorable, though.

  7. I’m recalling an old Warner Bros Bugs Bunny cartoon. Bugs went on a drive and got lost on a, then new, freeway interchange. He drove around and around always coming back to the same place. Eventually he opened a hot dog stand so he would not starve.
    Later Elmer Fudd got lost on the same interchange. Elmer kept stopping at the hot dog stand to ask Bugs “How can I get off this thing?”. At the end Elmer opened a condiment stand next to the hot dog stand.
    It was never explained how they got the hot dogs and condiments to sell.
    Similar to today’s reality, there is a way out, but most are not able to ‘see’ it.
    After all, we don’t want to go back to living in caves and shivering in the dark.

  8. First you’d have to allow the manufacturer to actually build a factory.
    ==================================
    There’s a picture advocating for a factory in the last post. An ad from a Detroit company called Shinola that sells $1000 watches and other luxury goods. I had to LOL when I saw it.

    1. The last time I was in Detroit I went to the flagship Shinola shop. I understand the marketing dynamic. They’re combining aga urban vibe with a luxury brand motif. Versace from the banlieue. A North American manufacturer can’t compete on price against the Asian competition. And it can’t compete against European glamour. So Detroit is a post industrial upscale niche. The glamping Gucci.

  9. Your comments can be applied to any town or neighborhood that relies heavily on tourists such as Carmel, Sonoma, Healdsburg or even North Beach in SF. If the tourists stop coming, as happens in every recession, the businesses that are dependent upon them suffer. Of course, even in a recession tourists come, just fewer, but if they are not allowed to come then those businesses may well not survive.

    Nevertheless, most of these towns are a bit more than the historical and cute tourist areas. The Marin Gateway Shopping Center in Sausalito has all the big stores selling everyday stuff you’d expect in a shopping center and it probably generates a significant volume of tax receipts to the city. Likewise residents of Carmel, Sonoma and Healdsburg have ready access to hardware stores and Safeways close to, but not right in, the touristy parts of town.

    Taking advantage of a fortunate geographic location or an abundance of old and historical buildings that can be restored to their earlier splendor has proven to be not a bad strategy time and again. Even Lodi, off the beaten tourist track and forever memorilized in a somewhat disparaging way by John Fogarty, has capitalized on a pleasant little downtown that can be a bustling place some days (though you have to drive through the usual gauntlet of used car dealerships and fast food joints to reach it).

    I do agree that we may be looking at a more severe recession than many people are prepared to believe, but I do remember all the vacant “see through” buildings in Silicon Valley following the dot.com bust in the early 2000s and collapse of construction and all the related businesses following the 2008 financial crises. In fact, even the early ’90s and early ’80s were pretty rough around here. Eventually, there was a recovery, and those weren’t fun years but they do happen. The old advice about being prepared for rainy holds. But I’m not convinced that a town with a historic and attractive downtown should downplay that attractiveness.

    1. One of the problems we are going to have with recovery is that so much of our economy revolves around services for the elite, the top 10% or so. They stopped spending before the shut down and they won’t start spending again until they feel safe. Their spending accounts for as much as 25% of our economy, and it shows in the profusion of districts that provide goods and services to better off residents and visitors.

      As manufacturing has contracted, these districts have become workplaces and given new life to areas devastated by factory closings. Now they are closed or minimally operating, and the workers have been laid off. My only hopeful thought is that recovery is possible. It would be hard to replace Sausalito with a fishing village in China, e.g. Shenzen. If they come back at lower intensity for a while, it might be a good thing as this would allow their economies to diversify.

      P.S. Has anyone else noticed that the intensification of these districts correlates with the decline of shopping malls as recreational centers?

      1. I think it has a lot to do with the idea that in today’s world, increased discretionary income = increased discretionary spending on food and entertainment (village district stuff) instead of hard and soft goods (mall stuff). You didn’t say so exactly, but right there is the “safety” issue: when will people with money start eating out again?

        A stat in a business article yesterday caught my eye: in the US, 50% of meat sales are (well, until 2020, WERE) through restaurants! With that channel all but shut down for a significant part of the year, meat sales per capita will drop in 2020. (Negative growth, which bodes ill for the multinational multicompanies that borrow multibillions for acquisitions in the expectation that there will be positive sales growth.)

        On the other hand, the home-service and contractor folks I know are keeping busy. Especially remodelers, as well-to-do folks may simply spend their entertainment budgets on permanent home improvements this year (outdoor living space, finished basement space, upgraded kitchens, etc.).

        1. Meat sales are going strong but that’s because meals that are no longer being eaten in restaurants are still being eaten, but at home (and some takeout). Grocery stores are ordering more meat than usual. There are, of course, longer term trends toward eating less meat unrelated to Covid19.

          The owner of a small local hardware store says that his business has doubled in the past two months. People are making home improvements whether doing the work themselves or hiring contractors. The local Home Depot parking lot is always full.

          RV sales are also growing. I keep thinking about getting one and then wondering whether I’d really use it much. Amazon is booming. My Kindle downloads are booming.

          Obviously, most businesses are suffering as are their furloughed or former employees are, but there are some businesses for whom this has provided a boom.

          1. At home, most of us don’t eat the same size portions we get in restaurants. If the three of us at my house grill a 12-ounce steak, we normally divide it among us. But eating out we might each get a 6-ounce. That’s a net reduction.

            Meat demand worldwide has been rising as developing economies consume more and more meat protein. The trend toward vegetarian/vegan cooking and less-meat eating in the US is not enough to counterbalance this. (Note that the big meatpackers are multinationals, not strictly US-based.) My point is, flat growth (0, +/- 1%) is enough to put a hiccup in their growth plans and debt-fueled expansions.

            In the short term, the US Fed and other central banks’ near-zero interest will help them, but eventually the principal comes due. If the growth projections baked into leveraged purchases/expansions don’t happen, there’s not going to be enough cash to pay off the loans, and bankers/bond markets are less likely to extend favorable terms going forward.

            1. Yeah, I’ve considered an RV rental. But it’d probably be $200-250 per day for any RV I’d want to rent, and then $35-50 per night in most parks. (I’m not considering clunkers and remote BLM camping down 50 miles of rough track). I can stay in some pretty nice places for that. Perhaps one day.

              The demand for meat in this pandemic is actually strong. A constraint is that the abattoirs have had to reduce their staffing in order to get some distancing between employees which has cut production. I do agree about eating smaller portions at home.

              1. Lol. Yeah, $300 a day for me is better spent on a nice hotel and dinners out.

                I honestly don’t get spending upwards of $150K to buy (or even $1000/week to rent) a rolling miniature house that eats diesel and tires. But plenty of people do it.

  10. “Negative growth” is modernity’s way of continuing the March of Progress (no one ever really defines where, exactly, “progress” is taking us). It’s a lie that cannot be refuted, because right now we are ONLY suffering through “a period of negative growth”. The blind lead the blind. It’s dark at both ends.

    Change (as opposed to “progress”) happens. It’s good to see how strong local economies remain, even if they are not perfect.

  11. I live in a small, Upstate NY Village and have been surprised at how well we’ve fared. The municipality has allowed outside dining on the sidewalks (it was a bone of contention for years then suddenly – poof – it’s okay now). They put out picnic tables in the parks so people had some place to eat takeout in the Village but they’ve become the meeting spot for the guys to drink coffee before heading out to work in the morning and lots of kids use them too. People are staying put and spending their money locally. The hardware store in town has the problem of not being able to keep enough stock. I suspect that our sales taxes will be down a bit from the shutdown but will rise slightly over the next few months.

  12. One sees the same dynamic in NYC. Look around my neighborhood in Brooklyn and it doesn’t seem like too much has changed. You have some vacant storefronts, the result of high rent blight, but enough older establishments owned their buildings to have kept things as they are.

    If anything local sales have increased, as locals are not getting on the subway and going to work in Manhattan, and buying things on their lunch hour.

    Manhattan, however, is hollowed out. It isn’t just the tourists who are gone. It is the workers, and the wealthy locals, to their summer places or anyplace they could find to rent.

    1. A shoestring relative is a mid-level executive for a Big Bank in Manhattan and lived (past tense) on the (way) Upper East Side, almost to Harlem. They moved out during the quarantine, and will likely settle in “commutable” PA or Jersey. Since they had two kids in a two bedroom apartment, I think they were itching to get out anyway.

  13. Although I see you are exploring these images in financial terminology(?) As a complete outsider; in a place not ravished with Covid-19; the financial side seems the least important right now (though if you have no money..) I wonder if ‘Receding Tide’, ‘Contraction’ ‘Negative growth’ are strong enough. After reading your article and looking through your pictures (I did get confused between the identities of local Chinese community and ‘Chinatown’, though it did click second run through. I Look at whats happening across the US and at your local story; I thought that what I see is more Reverse Velocity. A hard reverse. After a few reads of your articles I’m kind of curious too about your use of photography to illustrate a business/political agenda. It’s very different to the approaches I’m used to see to a photo-essay (is this a photo-essay?) and writing. It’s good to be challenged! Thanks.

    1. People tend not to read much anymore so photos help tell a story in an easily digestible manner.

      Everyone has an agenda. People on the Right run things through their filter and reverse engineer their conclusions. Same same on the Left. I just like to look at reality and document what’s actually going on around me. If that seems unusual… it is.

      1. For what it’s worth, unless you directly refer to the pictures in the text (like in this post), I scroll past your photos mostly ignoring them to get to the prose. I realize I may be an outlier.

        1. I can rarely get the photos to load (advance guard of the end-of-fast internet?), so I rely on the text. Problem is as each photo finally shows up, the text jumps down and down and down again. Eventually I look at the photos.

  14. Great compare and contrast photos. Yeah, you’re right, major pillars of the California economy – tourism, conventions, prestige office space, etc – are falling like dominoes and this is just the beginning. And yeah, city governments are in deep denial. Just “shelter in place” until this Covid thing blows over. Then we’ll get back to raising the hotel tax, right?

    Part of me relishes the destruction. The housing bubble will pop! CalPERs can walk the plank! Chinese tourists can stay home! Finally I can (insert financially irresponsible artistic dream goal here), whilst living in an abandoned Malibu mansion that I bought for 10k in gold bullion because I saw this all coming!

    A more sober me realizes this could be a Greece/Detroit moment for the state. Taxes will remain high whilst city services degrade and crime explodes. I’ll struggle to pay the bills (SSI will get “reformed” away in the late 2020s). I’ll be forced to spend my golden years clipping hedges for a corrupt oligarch, my only joy the mangoes growing in my Northern California backyard (because climate change).

    Probably somewhere in-between, but the future is far from certain. Results may vary. Times they are a changing…

  15. Presumably this is what Duvall Street and Mallory Square on Key West looks like right now without the regular influx of cruise ship day tourists. Even so, it’s hard to imagine the wild pre-cruise ship Key West coming back to life. Too many cameras.

  16. Fabulous juxtaposition between those three neighborhoods. Happily I live in a neighborhood closer to Clement which is why we picked it 4 years ago.

    My brother lives in Juneau Alaska which is Sausalito on steroids. At least the downtown core is. It has evolved to service the 1 million or so cruise ship passengers that pass through Juneau every year between May and September. So nothing but jewelry and curio shops owned by out-of-town corporations of no interest to locals.

    This summer with every cruise ship on the planet grounded, the natives are finally taking back a bit of their downtown. Not the businesses which are, of course, shuttered. But the spaces.

    It will be interesting to see how a lot of these places come out the other end of this. It could be a long time until cruise ship travel gets back to normal so a place like Juneau is going to have a lot longer wait compared to a place like Sausalito.

    1. ” jewelry and curio shops owned by out-of-town corporations”

      I have not been to Juneau, but in many tourist towns the little shops and cafes are part of a whole other industry – strip mining the 401ks of people who decide (or are forced) to retire early. The corporate branded storefronts are mostly franchises.

      The rents for those storefronts are far too high for most of the businesses to be sustainable. The only way they can keep the rents so high is to bring in wave after wave of people who have a few hundred thousand dollars stashed away and think running a little cafe or t-shirt shop in paradise is the soft landing they are looking for. If they go it alone the landlord gets the whole 401k over the course of a few years, then the shop goes bust or gets sold to the next victim. If they open a franchise, the franchisor gets part of the 401k. If they take out a loan the bank gets part.

      Given the number of recent forced retirements, I think there will be at least another wave or two before the rents get down to the level where a normal local business could survive.

      1. “albrt” has articulated what I have been observing for many years. Each of the poser business/franchise owners are filled with excitement, having a purpose. Sadly the result is the same, empty money accounts and little to show for the energetic output. “I have spent many hours pondering what could be done differently with a positive outcome. I just lack the imagination or vision. My youngest son is in a business class and they discuss Product as a Service is the future. Selling Wifi via my Tesla – lol.

  17. You have inspired me to participate in a focus group strategic planning session for my city, which is, for the most part, a retail and residential shell around a large university. The students were sent home months ago. We held our focus-group session via Zoom. When asked about “our vision for the community”, everyone else said things like “better restaurants!”, “affordable housing”, “not high-density (tall) apartment buildings”, “better behavior by students off-campus”, etc. In other words, the same things they were saying five and ten years ago. I said “you want my vision of the city as it will be, rather than the city that we wish for? Plan for a much smaller university population. Plan for development that allows students, faculty, and staff to walk or bike to their classes or offices, because student debt is unsustainable, and oil production is unsustainable.” “Uh, huh. Moving on to our next question…”

    1. Ultimately external reality will do all the heavy lifting. College towns will have no choice but to adapt. Some will reinvent themselves. Others will simply fail.

      1. First you’d have to allow the manufacturer to actually build a factory.

        The “decline” of American manufacturing is actually a bit misunderstood. US manufacturing output is higher than it has ever been, or at least it was before the pandemic. A lot of it has shifted away from areas that used to have a strong manufacturing presence, with the upper midwest being obvious examples but also places like San Jose and LA. Additionally, automation has greatly reduced the number of people required in a factory. So, indeed, we can start making stuff again, but put in a couple of robots and you don’t need all that many people to do it. Just as you no longer need a man, a mule, a plough and a month to prepare 40 acres for planting.

        1. I long ago learned an important lesson as a (failing) small business owner: even if your leveraged business plan can survive flat sales, it can’t survive sales down 10% (or costs increased significantly) for an extended period. Much less this.

          Leverage works at least twice as fast in reverse. And, indeed, cash is king.

          1. Leverage: the tragedy is that if your competition uses leverage on the way up, they can drive you out of business before they go broke on the way down. And then, there’s the pesky issue of “who eats the loss”, when the loan doesn’t get repaid.

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