Gridlock Recipe

"One Step Backward,
Two Steps Forward" Dept.

Never in the field of human conflict has so much been owed by so many to so few.

--Winston Churchill

Never in the history of Twin Cities road construction have so many been inconvenienced by so few for so long.

--Ross Kaplan

Take two of the Twin Cities' biggest traffic arteries (Interstate 35W and Crosstown, also known as 62).

Funnel their combined 7 lanes of traffic into . . . one.

At rush hour.

What do you get?

Predictably, (one of) the world's biggest traffic jams.

Flunking "Cost-Benefit"

I conservatively estimate that I -- along with perhaps 50,000 other Minnesotans -- lost at least a half hour this morning navigating the 35W-62 bottleneck about 6 miles south of downtown Minneapolis (OK, I recouped a little of that making cell phone calls).

Multiply that number by 2 (evening rush hour), then by $25 (a guesstimate of what the average commuter's time is worth), and you get $2.5 million. Per day.

That's a helluva a productivity wallop to the Twin Cities economy, especially when you consider the Crosstown Project has been going on for years.

Adding insult to (financial) injury: no more than 100 construction workers -- max -- were visible on the half-mile stretch of construction causing the massive backup.

Ever hear of night construction? Adding workers? (Apparently, some in the construction biz are looking for work now).

Thankfully, the project is apparently now in the home stretch -- and I don't need to traverse South Minneapolis on my (mercifully short) daily commute.

U.S. Dollar Rally

Consider the (Currency) Alternatives

Democracy is the worst form of government -- except for all the others.

--Winston Churchill

Substitute "U.S. dollar" for "democracy," and "currency" for "form of government," and you have a succinct explanation for the major rally in the dollar the last two weeks or so.

Actually, it's really not true that all other currencies are worse.

What is true is that the currencies that are stronger -- for example, Australia's and Canada's -- simply don't have the circulation and scale to substitute for the dollar.

Think of it like the stock market: it's a lot easier to buy or sell 10,000 shares of ExxonMobil than a little, over-the-counter stock.

Homes as Investments

WSJ: 'Homes are Poor Long-Term Investments'

Today's Wall Street Journal is running the latest in what has become a perennial real estate subject: how do homes fare as investments? ("Is Your Home a Good Investment?").

Its (non-groundbreaking) conclusion: long-term, homes barely beat inflation.

In fact, depending on your starting point, statistics indicate that annual home appreciation nationally averages just 4%-5%.

Of course, that assumes you paid cash for your home. Factor in leverage, which is what putting down 10% and borrowing 90% is, and those returns go up dramatically.

Such articles also typically omit:

--the tax savings associated with deducting mortgage interest;
--if you're an investor, the benefit of depreciation and other deductible expenses;
--if you're not an investor, what economists call "imputed rent" -- the benefit homeowners get from, well, living in their homes ("except for that, Mrs. Lincoln, how was the play . . . ?").
--the tax-free status of long-term capital gains when it comes time to sell (up to $500k for couples, $250k for individuals)
--the fact that renting and owning are not perfect substitutes: at least in the Midwest, renters simply don't have the same breadth or quality of housing choices that owners do (to pick just one example, I'm aware of very few homes for rent in Edina's tony Country Club neighborhood).

Of course, given what's happened to stocks -- the last year, the last 10 years, etc. -- homes' investment returns recalls Churchill's line about democracy: 'the worst form of government . . . except for all the others.'