Monthly Archives: August 2009

When directors and their banks get too close

WICHITA — The Charlotte Observer has a fascinating story today about what happens when members of a bank’s board of directors get too close to a bank whose interest they are supposed to be watching out for.

Of $5 million in loans this director took out from the bank, $3.2 million of the loans turned sour.

And the bank’s failure cost the Federal Deposit Insurance Corp.‘s deposit insurance fund $131 million.

I’m not implying that this director’s action caused the bank to fail. But there clearly was little oversight by the board.

On downtown, jails and redevelopment

WICHITA – A wise person once wrote, “When all is said and done, much more will be said than done.”

That captures the escalating public debate over Sedgwick County’s jail overcrowding problem and what impact, if any, it might have on downtown revitalization.

I have an idea: Let’s get the county, the city, the downtown revitalization folks, the city’s downtown master planner and the county’s jail consultant together at a table to hash this out in a month or so.

To the county and city: My bill is in the mail. Please pay within 30 days.

Seriously, though, some thoughts: I walk away from this raging debate confident that Sedgwick County won’t disrupt downtown revitalization by dumping a work-release center in between Bodacious Bob’s Burger Barn and Selma’s Sundress Senter down by the arena. Admittedly, it doesn’t look like it now, but I have a strong sense that cooler heads are going to prevail.

In the midst of the maelstrom, Sedgwick County Sheriff Bob Hinshaw has been crystal clear, though: His consultant and his criminal justice advisory group will tell him and commissioners whether the county needs a higher-security lockup near the county courthouse downtown, a work-release center that can be dropped on any city bus route or a minimum security commitment center that can go anywhere.

Instead, we’ve got claims, counterclaims and enough backpeddling to make a defensive backfield coach deliriously happy.

It’s unnecessary. What we have here, folks, is a failure to communicate. So let’s talk and fix it.

Wichita fake-out claims another

WICHITA — Check out this ranking from U.S. News & World Report. It puts Wichita in the top 10 in the nation for jobs — Hah!

Every few years Wichita sucks in a bunch of people who put together those national rankings. They sit in some office in Washington or New York and look at employment rates around the country and what kind of money people make, etc. and Wichita looks darn good. What they don’t fully grasp is that our economy goes up and down about a year after the nation as a whole. If they looked at numbers even 6 months old, Wichita still looks OK. Today, with 9.9 percent unemployment, Wichita doesn’t look so hot.

On the other hand, when Wichita shows up 230th out of 250 on the 2011 list, don’t feel bad about the Peerless Princess of the Plains. Our time is coming.

Field day to address animal rights concerns

In recent years, livestock organizations have tried to address what they consider to be unfair criticism from animal rights activists. They have taken a more active role in explaining the care ranchers and farmers take in handling their livestock.

Today, at a field day near Hutchinson, Animal Agriculture Alliance executive vice president Kay Smith will explain how her organization is helping the industry respond to concerns about animal care. Other topics will also be discussed. All livestock producers and others involved in the business are invited. The event starts at 3:30 p.m. at the Jon Mollhagen family’s Reno Ranch. Go here for directions.

Tell your statistics to shut up

There’s an old Peanuts cartoon with the beleaguered Charlie Brown on the baseball field, absorbing another beating. One of the characters begins quoting a line of statistics, and is told, “Tell your statistics to shut up.”

Nice analogy on how numbers can say whatever you want them to say, a subject that’s been bouncing around the newsroom as we weigh how to best report the highs and lows of the Wichita housing market.

There’s a different set of numbers out there called “pending home sales,” or sales gone to contract. The National Association of Realtors produces a Pending Home Sales Index, and trumpets it as a “leading indicator of housing market activity.”

Check this link for NAR’s definition of a pending home sale.

The pending sale numbers first reared their heads down here at the Eagleland Businessplex last year as the Wichita housing market began its slide downward from record levels. It came as a small portion of the local residential industry began to implore the Eagle to put a more positive spin on the declining monthly home sales numbers.

Today, a year later, we tend to look at the pending sales numbers this way: A contract is not a sale until the deal closes. NAR states in its link that it believes 80 percent of all pending sales close; after some anecdotal checking locally, agents and brokers put that number at 65 to 70 percent in Wichita.

Thus, we’re not inclined to attach much value to a “pending home sale” report. If the deal closes, it’ll show up in the Wichita numbers a month or two later. But I’m interested in your feedback. Let me know what you think about the pending home sale as a reliable measure of real estate activity.

Canicular what?

WICHITA — Though the dog days of summer fortunately have thus far failed to visit Wichita, professional management coach and speaker, Marsha Egan, says she’s got a few tips for “canicular claustrophobia,” which means being holed up in the office all day because it’s too hot to go outside.

Egan, who also blogs about e-mail and the workplace, says when office workers need a break but the mercury reading makes it too uncomfortable to do so, they can:

– Shift gears by working on a new task or reading a magazine

– Find new places inside the office building to take a break

– Exercise by walking the halls or stairs, or lifting weights at your desk

We like the first two options best, by the way.

Wells now the king of SBA lending

WICHITA — Wells Fargo, which operates in Wichita as Wachovia bank, has assumed the spot as the country’s biggest SBA lender.

That’s according to a Forbes story, and based off of research by Foresight Analytics.

The story says that Wells, which has 7.7 percent of the country’s market share in SBA loans, moved up to the top spot because of CIT Group’s struggles with heavy debt.

Has the unemployment rate peaked?

WICHITA — I was shocked when I saw the July unemployment numbers for Wichita. It was 9.9 percent for the metro area, 10.2 for Sedgwick County and 11 percent for Wichita city. That’s up 1.4 percentage points from June.

Will it go down? Very likely, but it doesn’t mean the economy is improving. Unemployment rates are calculated two ways: seasonally adjusted means statisticians have taken out the regular yearly ups and downs to look at the underlying trend; and not-seasonally adjusted, which is the actual rate. Kansas had a 7.4 percent seasonally adjusted rate in July and a 7.7 not-seasonally adjusted rate. The U.S. rate (9.4 percent) is always seasonally adjusted.

The state figures the Wichita rate as not-seasonally adjusted, which means July is almost always the highest rate of the year because some workers are regularly laid off in July and rehired in August and September. Just because the rate may go down in September, doesn’t mean the city’s economy is creating new jobs again.

And, Wichita has a history of taking more than a year to hit bottom as the downturn ripples through the service economy. That may mean that unemployment rate in July 2010 will be over 9.9 percent.

One dip or two on recession

WICHITA — Had a chat with Malcolm Harris this morning. He’s a professor at Friends and an economist. He had some encouraging speculation.

He doesn’t think the U.S. economy will go back into recession next year, as a lot of people think, despite remaining weak. This is called a W-shaped recession or a double dip. We had one in 1979-82.

Harris said it takes a shock to push the economy, even a weak one, into recession. A shock is any kind of sudden disaster. The subprime explosion is the latest.

On the other hand, he joked, he didn’t foresee the 9/11 attacks and the anthrax scare in 2001 when he was forecasting for the US Postal Service, so there’s no telling.

Debit card use tops credit card use

Call it a sign of the financial times.

Use of debit cards has surpassed credit cards, accounting for slightly more than 50 percent of non-cash transactions.

That’s according to research from the TowerGroup.

But is this a trend or just a flash in the pan? Are people just temporarily suspending their debt-quenching tendencies, or have they learned their lessons from taking on too much debt?

Time will tell.

Farmers keeping up with social media

Farmers aren’t ignoring social networking. According to a  recent survey, Agriculture New Media Usage Study,  found 62 percent of large crop growers have sent or received text messages during the past year and 63 percent of the respondents have taken pictures with mobile phones.  Facebook and Twitter are also attracting farmers.

Think housing has bottomed? Not so fast, my friend

It’s everywhere in the media: The U.S. housing market has bottomed out. The worst is over.

Well, with apologies to Lee Corso, not so fast, my friend, as this AP story from the last week indicates.

Excellent analysis, and it fits well with a growing fear among Wichita brokers and agents: Sales may bottom again if the government doesn’t renew or expand its tax credit program for homebuyers.

We’ve talked a lot about the fundamental strengths of the Wichita market – pricing, inventory, values.

But, I have my doubts that this market is ready to breathe on its own.

Your thoughts?