Future Farmers of the Mall
by Katie McCaskey / Mar 12th 2010

Quick, name three things in your local mall. Did you say “farm”? Probably not. Perhaps you envisioned listless teenagers, stale pretzels or exercise-minded senior citizens – you would not be alone in listing these ho-hum responses. The country is littered with disinterest in dead malls. But don’t dismiss the shopping temples of yesterday too quickly. Shopping malls may be on the brink of major reinvention and adaptive reuse… as farms.

The Galleria Mall in Cleveland, Ohio is leading the way by growing organic food for mall patrons and local restaurants. The mall has transformed the lost retail space within its glass-top confines into a gigantic, organic-food greenhouse. The idea sprouted when the mall’s marketing and events coordinator Vicky Poole teamed up with Jack Hamilton, a business owner in the Galleria. Together they began operating Gardens Under Glass, a hydroponic garden in the Galleria at Erieview in downtown Cleveland. The project is funded by a $30,000 start-up grant from the Civic Innovation Lab.

“Poole got the idea last year when she spotted a photo of dozens of plants growing on a two-story window grid in a New York cafe. “I said, ‘That’s our food court.”

Gardens Under Glass at the Galleria will start with lettuce, spinach, peas, tomatoes, and herbs, and, if successful, add fruits, more vegetables and edible flowers. Food will be raised hydroponically, aquaponically and in organic soils through a combination of raised beds, vines and vertical structural supports. The plan also includes composting and using nutrient-rich waste from aquariums to nourish the plants. The duo hopes that the project will be a model for sustainable farming, while bringing additional visitors or curious onlookers to the mall’s stores.

If successful and implemented at the mall on a larger scale, Gardens Under Glass could help extend Ohio’s short growing season and increase the amount of food dollars spent locally. It could also serve as a case study for communities struggling to figure out productive uses for otherwise underutilized or abandoned shopping malls.

The adaptive reuse of the space is not without obstacles. For example, even though the glass ceiling provides ample light and the interior location significantly reduces possible pests, the mall was not built to be insulated and heated like a typical greenhouse. So, hardy crops need to be selected. Another challenge — and opportunity — is finding people to tend the mall’s gardens. For now, the workers will be volunteers, but one can easily imagine a future where farmers are hired to work inside the mall. It’s predicted that shopping malls and other “single use” structures will slowly disappear over the next thirty years. That could be the extreme pressure required for positive reinvention.


Millions in Cleveland have passed through the Galleria at Erieview, sun glinting on its barrel-shaped glass roof. But it took a nurseryman’s granddaughter to look up and think: This place looks like a giant greenhouse. Now Vicky Poole, the Galleria’s marketing and events director, who worked on her grandpa’s farm as a child, expects that by late spring or early summer, there will be fresh tomatoes for sale among the shops and galleries at the downtown Cleveland mall. Very fresh — as in vine-grown in bags and troughs hanging from steel stair banisters and ceiling beams in the shopping center that stretches between East Ninth and East 12th streets. Poole got the idea last year when she spotted a photo of dozens of plants growing on a two-story window grid in a New York cafe. “I said, ‘That’s our food court.’ ”

She was reminded of the picturesque glass rotunda in the Galleria’s food court that she often curtains off for wedding receptions. Renting out party space is one of the ways Poole has found to make up for the Galleria’s losing many of its retail businesses. “It’s not really a shopping mall anymore,” she said about the complex that opened in 1987. It wasn’t long until Poole and Jack Hamilton, whose Artist Review Today magazine office and gallery are in the Galleria, teamed up to form Gardens Under Glass, their name for a project they call an “urban eco village.” This month, they were awarded a $30,000 start-up grant from Civic Innovation Lab.

Poole and Hamilton said the project is meant to be a bold statement about sustainability as well as a novel way to attract more people — and their money — to the mall. “I know of no other urban garden in the country like this,” said Hamilton about Gardens Under Glass. He hopes the project will grow every day. Poole and Hamilton put in the first green stuff this week — a 12-foot cart of lettuce and other greens near the Galleria’s first-floor escalators. Their aim is to start an education center and store in a former candy shop, invite sustainable-product makers to display and sell their items, and sell produce to restaurants and individuals.

They dream of hosting school groups and teams of volunteer urban gardeners eager to work beds of herbs and greens and vine systems raised hydroponically, aquaponically and in organic soils. Their giant greenhouse idea has raised interest around town. On Thursday, Poole gave a presentation to the Cleveland chapter of the American Institute of Chemical Engineers, composed of professionals and students. “One of the students came up to me after and said, ‘Have you ever considered growing aereoponically?’ ” said Poole. “I invited him to come in and help me set up a system.”

Because of Ohio’s short growing season and the fact that the Galleria will not be heated to greenhouse temperatures, Poole is focusing on easily raised greens, herbs and tomatoes. That is good news for Saravanan Chandrababu, manager of Sweetwater’s Cafe Sausalito, a long-established Galleria restaurant. He sells a lot of salads at lunchtime. “I’m very excited about the project,” said Chandrababu, who has already given a list of the herbs the restaurant uses to Poole. He doesn’t foresee replacing the five vendors from whom he now buys large orders with Gardens Under Glass’ produce, which will be available only in small quantities at first. But he’s interested in the novelty of mall-turned-greenhouse. “We’ll try it,” Chandrababu said. “We’ll advertise that it’s fresh. Maybe that will bring more people to the Galleria.”

Michele and Mark Bishop, who operate Urban Organics from their Brunswick farm, will soon provide Sweet Peet, an organic mulch, as well as organic soils to Gardens Under Glass. Meanwhile, Poole, 57, and Hamilton, 44, have collected products from other such vendors to grow the plants they are purchasing with grant money. “So far, we haven’t had to pay for a thing,” said Poole, who is also searching for a composting system that would take care of scraps from the food court. Within two weeks, two portable 6-by-12-foot beds will be installed on the first floor of the Galleria, where passers-by will watch greens grow. “We’ll be propagating seeds for that this week,” said Poole. By summer, she expects lush banister mountings of greens and tomatoes. “It will be beautiful.”

Vicky Poole & Jack Hamilton
e-mail : gardensunderglass [at] yahoo [dot] com

The Curse of Zombie Shopping Malls
by Katie McCaskey / Mar 4th 2010

What happens to “zombie” commercial spaces and, in particular, those dead shopping malls? Is your local “zombie mall” the masked, serial slasher in your hometown’s struggle for economic recovery? The recession has left many desolate malls and office buildings in its wake, and this poses a potential economic crisis. If these malls and commercial properties fail, they could take down hundreds of small and medium-sized banks with them. This, in turn, may lead to reduced lending and even eviction of families from rental properties, MSNBC recently reported. Shopping malls were particularly hard hit by the economic crisis that began in 2008, as consumers reined in their legendary spending and national chains such as Circuit City, Sharper Image, and Lillian Vernon went bust, leaving gaping vacancies at many shopping centers. Suddenly, the mall — the temple of American consumerism — was in trouble. Today, consumer spending is still down and commercial property values have fallen 40 percent from their peak. The landscape is littered with struggling or dead malls.

There are no government programs for underwater commercial property owners who owe more than the property is worth. Has the time come for the shopping mall to be reinvented? For many people, the answer is yes. In fact, you might be surprised by some of the folks who have publicly rejected the mall concept. Victor Gruen, the Los Angeles-based architect credited with building the first shopping malls, said in a 1978 speech that he swooned in horror at “the ugliness…of the land-wasting seas of parking” around most shopping malls, and the soul-killing sprawl beyond. The recession may only hasten cultural changes already underway. Today, people have embraced online shopping and big-box discounters such as Wal-Mart. Wal-Mart models itself as a “mall” which provides an array of deeply discounted items under one roof. A full thirty percent of Americans are said to shop at Wal-Mart every week.

After decades of furious growth, no new malls have been built in the last two years. And in 2008, more than 150,000 individual mall stores closed, according to a report by CBS News Early Show. Once the anchor tenants leave or default (hello, Circuit City), smaller stores frequently suffer from significantly decreased foot traffic and eventual closure. (That’s one reason why General Growth Partners, one of the nation’s largest mall operators, filed for bankruptcy protection last year). If the inventor of malls isn’t too happy with the result, and shoppers are pinching pennies or buying online, what will become of the once-mighty American mall that has become a central feature of the landscape?

Some malls are simply torn down. Others are rebuilt. Some are revamped to resemble a “town square” with play areas, dining, and even apartments or condos in a compact, walkable format — a sort of Disneyfied downtown. Others are rebuilt as strip malls with side-by-side individual stores sharing a common parking lot. Some more creative thinkers envision a future where dead malls will be remade into “water parks, wave machines, or other fascinations.” Meanwhile, the zombies lurch forward. For a glimpse of our mall-challenged future, take a look at the difficulties experienced by Chicago’s “Block 37” project, which was hardly filled to capacity when it opened. Here’s a video showing its multiple empty floors. There’s even a web site that tracks the decline of this cultural and economic institution:

Good riddance, you might say. But a dead mall creates more than just job losses and built-environment waste. These zombies can also damage your hometown in other, less obvious ways. Smaller banks are more vulnerable to dead mall losses since commercial real estate makes up a larger portion of their portfolios. A shopping plaza project turned disaster can wreck a small bank, bringing down every other depositor and small business with it, or curtail lending in the area. Small banks, however, might be bolstered by the grassroots movement to do business with small institutions, rather than large mega-banks — you know, the ones that brought on all of the trouble we’re now in. (See Huffington Post’s call to action as well as the website Move Your Money). More deposits could cushion the loss of a dead mall for a local bank. Still, with the mall model heavily reliant on cars and fuel, shopping malls may soon exist as dinosaur parks of another age.

Dawn of the Dead Mall : The landscape is littered with the giant carcasses of failed retail emporia. Ideas for what’s next are no less visionary. But are they any more practical?
by Mark Dery / 11.09.09

Dead malls, according to, are malls whose vacancy rate has reached the tipping point; whose consumer traffic is alarmingly low; are “dated or deteriorating”; or all of the above. A May 2009 article in The Wall Street Journal, “Recession Turns Malls into Ghost Towns,” predicts that the dead-mall bodycount “will swell to more than 100 by the end of this year.” Dead malls are a sign of the times, victims of the economic plague years. The multitiered, fully enclosed mall (as opposed to the strip mall) has been the Vatican of shiny, happy consumerism since it staked its claim on the crabgrass frontier — and the public mind — in postwar America. The nation’s first enclosed shopping mall, the Southdale Center, opened its doors in Edina, outside Minneapolis, in 1956. Southdale was the brainchild of the Los Angeles– based architect (and Viennese refugee from the Anschluss) Victor Gruen. A socialist and former student of the modernist designer Peter Behrens, Gruen saw in the covered mall a Vision of Things to Come.

In his dreams, Southdale would be the nucleus of a utopian experiment in master-planned, mixed-use community, complete with housing, schools, a medical center, even a park and lake. It was all very Gropius-goes-Epcot. None of those Bauhausian fantasies came to pass, of course. (Do they ever?) On the bright side, Southdale did have a garden court with a café. And a fishpond. And brightly colored birds twittering in a 21-foot cage. Reporting on the opening, Architectural Record made it sound like the Platonic Ideal of Downtown — what downtown would be “if downtown weren’t so noisy and dirty and chaotic.” A town square in a bell jar: modern, orderly, spanking clean. But it wasn’t Gruen’s Mad Men take on the Viennese plazas he remembered so fondly that made his Ur-mall go viral. Developers liked the way Gruen used architecture to socially engineer our patterns of consumption. His goal, he said, was to design an environment in which “shoppers will be so bedazzled by a store’s surroundings that they will be drawn — unconsciously, continually — to shop.” (Remember, Gruen was from Freud’s Vienna, where psychoanalysis was a growth industry.)

Until Southdale, shopping centers had been “extroverted,” in architectural parlance: store windows faced outward, toward the parking lot, as well as inward, toward the main concourse. Southdale’s display windows were visible to the mall crawler only; from the outside, it was a blank box, blind to its suburban surroundings — the proverbial “world in miniature, in which customers will find everything they need,” as Walter Benjamin put it in his Arcade Projects description of the proto-malls of 19th-century Paris. In Gruen’s galleria, shopping becomes a stage-managed experience in an unreal, hermetically sealed environment, where consumer behavior can (in theory, at least) be scientifically managed. This innovation, together with Gruen’s decision to squeeze more stores into a more walkably small space by building a multistoried structure connected by escalators, and his decision to bookend the mall with big-name “anchor” stores — magnets to attract shoppers who, with luck, would browse the smaller shops as well (a strategy James Farrell, author of One Nation Under Goods: Malls and the Seductions of American Shopping, calls “coopetition”) — cut the die for nearly every mall in America today, which means Gruen “may well have been the most influential architect of the twentieth century” in Malcolm Gladwell’s hedging estimation.

Unfortunately, Gruen made the fatal mistake — fatal for an arm-waving futurist visionary, anyway — of living long enough to see American consumer culture embrace his idea with a vengeance. In a 1978 speech, he recalled visiting one of his old malls, where he swooned in horror at “the ugliness…of the land-wasting seas of parking” around it, and the soul-killing sprawl beyond. Good thing he didn’t survive to see the undeath of the American mall. Most economic commentators attribute its dire state to the epic fail of the American economy. In April of this year, one of the country’s biggest mall operators — General Growth Properties, owner and/or manager of over 200 properties in 44 states — filed for bankruptcy, mortally wounded by the exodus of retail tenants.

“Renting the building under an anti-squat lease, RotterZwam collects bags of old coffee grounds (a universal fungal base) and hangs them around a former water park”

Good riddance to bad rubbish, some say. In the comment thread to the November 12, 2008, Newsweek article, “Is the Mall Dead?,” a reader writes, “The end of temples of consumerism and irresponsibility? Sweet. The demise of a culture of greed? No problem.” But wait, my Inner Marxist wonders: isn’t that the voice of bobo privilege talking? Teens marooned in decentered developments didn’t ask to live there; for many of them, the local mall is the closest thing to a commons, be it ever so ersatz. And malls are employment engines. Sure, in many cases the jobs they generate are low-skill and low-wage, but From Each According to His Ability, etc. “I’m fine if some malls die,” says Farrell, “but it’s important to remember that malls had good points too. In a world in which no-new-taxes has made most new public buildings look like pole barns, malls have provided an architecture of elegance and pleasure — they are some of the best public spaces in America. In a country of cars, malls have provided a place for the pleasures of pedestrianism, and for the see-and-be-seen people-watching that’s one of the delights of the mall experience.”

Still, Woodstockian dreams of getting ourselves back to the garden — demolishing every last mall and letting the amber waves of grain roll back — are popular these days: “tear them down, recycle what can be recycled…and turn them back into carbon-absorbing, tree-filled natural landscape, habitat for wild animals,” a reader writes, on The New York Times site. For many, malls have come to symbolize the culture rot brought on by market capitalism: amok consumption, Real Housewives of New Jersey vulgarity. Visions of taking a wrecking ball to malls everywhere are satisfyingly apocalyptic. But sending all that rebar, concrete, and Tyvek to a landfill is politically incorrect in the extreme. Already, architects, urbanists, designers and critics are thinking toward a near future in which dead malls are repurposed, redesigned and reincarnated as greener, smarter and more often than not more aesthetically inspiring places — seedbeds for locavore-oriented agriculture, vibrant social beehives or [fill in the huge footprint where the mall used to stand].

Brimming with evangelical zeal, New Urbanists are exhorting communities with dead malls to reverse the historical logic of Gruenization, turning malls inside-out so storefronts face the wider world and transforming them into mixed-use agglomerations of residences and retail; repurposing parking lots into civic plazas; infilling the dead zones that surround most malls with transit-accessible neighborhoods checkerboarded with public spaces (a rare commodity in sprawl developments),and weaving the streets of said neighborhoods into those of the surrounding suburbs. The more visionary ideas sound a lot like what the cyberpunk designeratus Bruce Sterling calls “architecture fiction,” somewhere between Greg Lynn and Silent Running, Teddy Cruz and Ecotopia. The San Francisco-based Stoner Meek Architecture and Urban Design, finalists in the 2003 Dead Malls competition launched by the Los Angeles Forum for Architecture and Urban Design, propose a post-sprawl take on the Vallejo Plaza in California: deconstruct the moribund mall, they advised, and reconstruct it as a shopping center-cum-ecotourist attraction, its stores squatting, half-submerged, in the nearby wetlands remediation project. For his third-place-winning entry in the Reburbia competition, Forrest Fulton wonders, in “Big Box Agriculture: A Productive Suburb,” why a ghost-box grocery store can’t morph “from retailer of food — food detached from processes from which it came to be — to producer of food”? The store as lookalike outlet for the trucked-in, tastealike products of factory farming is reborn as a grocery store Alice Waters could love. The box transforms into a restaurant; a greenhouse pops out of its roof. Where the desolate parking lot once stood, a pocket farm springs up. Light poles turn into solar trees studded with photovoltaic cells. Fulton imagines “pushing a shopping cart through this suburban farm and picking your produce right from the vine, with the option to bring your harvest to the restaurant chef for preparation and eating your harvest on the spot.”

“To deal with a mosquito outbreak, locals business owners took it upon themselves to introduce freshwater fish into the flooded mall to eat the insects.”

Two other entrants, Evan Collins (“LivaBlox: Converting Big Box Stores to Container Homes”) and Micah Winkelstein of B3 Architects (“Transforming the Big Box into a Livable Environment”), envision the radical re-use of ghost boxes as termite mounds of domestic, retail and agricultural activity. Collins conjures Legoland stacks of brightly colored modular homes, fabricated from a recycled store and its discarded shipping containers. Where his “vacated megastore” now stands, Winkelstein sees a “behemoth structure” that is home to a mini-city of lofts, its ginormous common roof crowned with solar panels and carpeted with gardens and landscaped greens, wind turbines sprouting everywhere. Radiant City, here we come. But Farrell spots some potholes in the road to Erewhon. Projects that resurrect dead malls “are visionary and wonderful,” he says, but many of them “involve a sense of public purpose that seems absent in America just now. I would love to see malls function as a commons, with public-private purposes, addressing the environment we really live in instead of the consumer fantasyland that has been the mainstay of mall design so far.”

“No word yet if you can set up your fishing pole on the escalators.”

As we cling by our hangnails to the historical precipice, with ecotastrophe on one side and econopocalypse on the other, that consumer fantasyland is an economic indulgence and an environmental obscenity we can’t afford — the dead end of an economic philosophy tied to manic overdevelopment (codeword: “housing starts”), maxed-out credit cards (codeword: “consumer confidence”) and arcane financial plays that generate humongous profits for Wall Street’s elite but little of real worth, in human terms. It’s the last gasp of the consumer culture founded on the economic logic articulated early in the 20th century by Earnest Elmo Calkins, who admonished his fellow advertising executives in 1932 that “consumer engineering must see to it that we use up the kind of goods we now merely use,” and by the domestic theorist Christine Frederick, who observed in 1929 that “the way to break the vicious deadlock of a low standard of living is to spend freely, and even waste creatively.”

“Whispers of Bangkok’s curious fish mall spread, attracting enough visitors that local merchants now sell fish food to tourists outside the mall.”

The extreme turbulence that hit the American economy in 2008 offers a rare window of opportunity to hit the re-set button on consumer culture as we know it — to re-tool market capitalism along greener, more socially conscious and, crucially, more profoundly satisfying lines. Because an age of repurposing, recycling and retrofitting needn’t be a Beige New World of Soviet-style austerity measures. On the contrary, while we’ll likely have far fewer status totems in the near future, the quality of our experiential lives could be far richer in diversity, if we muster the political will to make them so. “The most important fact about our shopping malls,” the social scientist Henry Fairlie told The Week magazine, “is that we do not need most of what they sell.” Animated by the requisite “sense of public purpose,” the post-mall, post-sprawl suburbs could be exuberantly heterogeneous Places That Do Not Suck, where food is grown closer to home, cottage industries are the norm and the nowheresville of chain restaurants and big-box retailers and megamalls has given way to local cuisines, one-of-a-kind shops and walkable communities with a sense of place and social cohesion. Or we could persist in the fundamentalist faith in overproduction and hyperconsumption that has brought us to this pass. In Dawn of the Dead (1978), his black comedy about mindless consumption, George Romero offers a glimpse of that future, one of many possible tomorrows. Two SWAT team officers have just escaped from a ravening horde of cannibalistic zombies, into the safety of an abandoned mall. “Well, we’re in, but how the hell are we gonna get back?” Suddenly, they realize no one’s minding the store.

Peter: Who the hell cares?! Let’s go shopping!
Roger: Watches! Watches!
Peter: Wait a minute man, let’s just get the stuff we need. I’ll get a television and a radio.
Roger: And chocolate, chocolate. Hey, how about a mink coat?

Shopping ‘zombies’ offer US hope
by Julian Delasantellis / Jan 3, 2008

Like salmon driven upstream by instinctual forces beyond their control, there is something deep down, probably at the core of our DNA programming, that forces pundits to make predictions for the new year in early January. Here’s my economic prediction for 2008. The American economy may very well come to resemble scenes from the two Dawn of the Dead movies. And that’s the good news. First made in 1978 by horror maestro George Romero, as a sequel to his 1968 classic Night of the Living Dead, remade by Zack Snyder in 2004, Dawn of the Dead tells the story of the human race under siege from hordes of recently deceased risen zombies, ambulating about with no higher brain functions, only existing to feed lustily on the rapidly decreasing numbers of actual people still around. In both the 1978 original and the 2004 sequel, a hardy group of human survivors seeks shelter and security in an abandoned shopping mall, barricading themselves from the zombies until some salvation for the human race can emerge. But the zombies still come. They mill around aimlessly in the parking lot, (making them fine sporting practice for the survivors, with their high-powered rifles filched from the mall’s sporting goods stores, shooting away what used to be the zombies’ brains) occasionally attempting to overcome the survivors’ improvised defenses to gain access to the mall. The survivors are astounded, but then they come to realize their mistake in seeking shelter in a shopping mall. The zombies, even with most of their brains decayed or shot away, still carry an inherent memory of the malls as a place that once held a central focus of their lives. As one of the survivors put it: “They’re after the place. They don’t know why, they just remember. Remember that they want to be in here.”

Mindless zombies haunting shopping malls as if by instinct, for reasons they barely know. You don’t have to wait until the end of the world to see that – you can see it all the time, including during the recently concluded holiday shopping season, in any American shopping mall. And that just may be the salvation of the American economy after all. We’re now coming up on what I consider to be the first anniversary of the starter’s pistol of the subprime crisis, HSBC Holdings’ February 5, 2007, announcement of the problems at its Household Bank subsidiary that first alerted the financial world to the putrescent swamp that US housing finance had fallen into over the past few years. I started writing about the seriousness of the problems with subprimes in March; slowly, a lot of the pundit community has followed suit. Many prominent economic analysts and forecasters, among them former Federal Reserve chairman Alan Greenspan, Economics Nobel Prize winner Joseph Stiglitz and Goldman Sachs chief US economist Jan Hatzius, are now putting the odds of a US recession (technically defined as two quarters – six months – of negative economic growth) at roughly 50-50. Maybe they’re right. But as someone who has followed every twist and tribulation of the subprime crisis since its inception, I’m starting to wonder if subprime’s hype has outrun its reality.

Subprime is one crisis with multiple manifestations. First is the effect on the US housing sector. A core reason why it is frequently so difficult to get a grip on just where housing is at any one moment is the fact that there are so many varied metrics that seek to provide snapshots. You have reports on home sales. Home prices. Home inventories. New-home sales prices and volumes, existing-home prices and sales volumes, new-home starts, pending home sales, mortgages becoming delinquent, mortgages entering foreclosure; all available for the nation as a whole, and, more importantly, for the widely varied individual regional markets that, amalgamated, comprise the national housing picture. It is true that, for the past year, most of the indicators have marched in lockstep in one direction – down. Still, you occasionally get outliers, reports that indicate things may not be as bad as they seem. Among these was the report on December 31 that sales of existing homes actually rose 0.4% in November. In contrast to sales of new homes – those omnipresent cookie-cutters, New England-style in the Arizona desert housing-development monstrosities that despoil the virgin landscape like indelible ink spots around America’s outer suburbs – existing home sales seemed to have reached a plateau late in 2007, stabilizing at around an annual rate of about 5 million units. Home prices are falling in the US, but it is important to keep that data in a geographical and historical perspective. On all but the most superficial level of analysis, it is probably incorrect to think of a unified US housing market. The housing picture in the US more closely resembles an agglomerated average of all the different individualized local and regional housing markets. Thus, the current price declines in US real estate values are concentrated in places such as the US Midwest, devastated by the continuing contraction in the US auto industry, and southern California and Florida, where real estate speculation was at its irrationally exuberant best up to the end of 2006. Most other markets have real estate prices stable to only declining marginally; in some markets, such as the Pacific Northwest and the area around Charlotte, North Carolina, real estate price appreciations continue, albeit at a more reasonable pace.

Here it is also important to look at the bigger picture. According to the Case-Shiller Real Home Price Index, US home prices fell about 3.4% in 2007. Even with the declines seemingly accelerating to around a 10% rate by the end of the year, that should be looked at in the context of a 52% rise in prices since 2001. In other words, if you bought your home before, say, mid-2005, and unless you borrowed away the appreciated value of that home with home equity loans, your home can still be your piggy bank. You can still head to the mall with the other zombies. It’s true that every month about a quarter of a million Americans are losing their homes through foreclosure, and that number should continue through 2008. The subprime “teaser” mortgage resets should peak in April, then taper off into mid-2009. Still, if one is expecting the American consumer to go into spending mourning over the fate of his poor foreclosed brethren, one has not spent all that much time with American consumers lately. Just before Christmas, the US television network ABC had on its Nightline news program the most insightful broadcast report I’ve seen yet on how American society is adapting to the subprime crisis. Far from being a dour and foreboding account of sad homeowners gathering their paltry belongings in preparation for foreclosure, the report showed happy, giddy prospective homeowners on big tour buses, on an excursion, organized by a Stockton, California real estate agent (who provided the snacks and drinks), to view recently foreclosed properties. The atmosphere on the buses was more approbation than Armageddon, more game show than Gotterdammerung: “You wanna get a good deal off someone else’s life-wrecking misfortune – come on down!” “It hadn’t crossed my mind,” one prospective homeowner replied when asked if he was giving any thought to the misfortunes of the previous homeowner. “I look at it as more or less an opportunity.” An opportunity to then join the zombies at the mall’s home furnishing store, no doubt.

The other side of the subprime crisis coin is what the subprime securities did to the balance sheets of America’s proudest and most austere names of commercial finance. Through much of the late summer and autumn, I elaborated on this site how it was then being revealed how some of the bluest names of American blue-chip finance, names like Bear Stearns, UBS, Merrill Lynch and Citibank, had treated subprime-related and originated debt securities not as the highly speculative investments they have now revealed themselves to be, but as hot dogs at the quintessentially American “sport” called competitive eating, greedily stuffing as many subprime securities down their fat portfolio gullets as their trading desks could find. When it became obvious just how little real value these securities actually contained, the tumbrels rumbled down Wall Street and the heads rolled, most prominent among them Merrill Lynch chief executive officer (CEO)Stanley O’Neal and Citigroup CEO Charles Prince, along with roughly 100,000 other finance-related jobs. So far, US financial conglomerates have “written down” (ie admitted as most likely worthless) about US$80 billion of subprime-related debt. Everybody knows there will much more to come; that the total amount of writedowns may finally end up in the $250 billion to $400 billion neighborhood. Still, as 2007 drew to a close, Wall Street seemed quite complacent with the prospect of around another $300 billion or so of American finance capital being wiped out of existence. With the exception of mortgage insurers such as MBIA (who probably sang “Auld Lang Syne” for themselves after learning that they will soon have a Warren Buffett financed entity as a competitor), most of the stocks of America’s finance industry have held at the lows of mid-November, before Federal Reserve chairman Ben Bernanke raised the white flag and indicated his willingness to continue cutting rates. Some, like Morgan Stanley and Goldman Sachs, even show signs of the beginnings of a rally.

Perusing comments from traders, I see some credit accruing to Bernanke from this at least temporary respite from the long fall off the cliff that most of the financial sector suffered in 2007. A lot more is being given to the real heroes of the end of 2007, the sovereign wealth funds (SWFs) , the huge Asian and Middle East pools of government capital that are beginning to fulfill my prediction that, flying out of the sun like Han Solo in the Millennium Falcon, they would save the day for plucky little American finance capital. ( I first wrote of the likelihood of US finance capital being rescued by SWFs in my August 21 ATol piece When the big guns fail, call in China, and when the rescues actually commenced, my November 29 ATol piece, Selling the US by the dollar). With the belief now pervading the markets that the SWFs are going to be buying up American finance, US traders are commensurately less willing to sell its stocks, figuring that it’s better to hold on to them now in order to sell them dearer to the SWFs later. Am I saying that the subprime crisis is over, that its once again morning in America, that all Americans can once more, after morning services at the megachurch, settle down in front of the 50-inch plasma TV with rack upon rack of baby-back pork ribs to watch Dallas defeat all comers in the NFL playoffs? Not in the least. If it turns out that the total subprime bill is substantially in excess of the current projected figure, say past $500 billion or more, the bloodletting on Wall Street will resume, as it will should a major financial institution actually shutter its doors and fail. What I am saying is that for the first time since at least last spring, Wall Street seems to think that it can see the far side of the subprime crisis. Yes, there’s plenty of bad news now, and plenty more to come, but bad news is an essential component of rising stock prices – the time to worry is when the news is all good, not all bad. An old stock market adage is that bull markets climb a wall of worry. At least for now, Wall Street seems to think that it can at last see over the wall.

Another old Wall Street adage, sometimes attributed to one of the barons Rothschild, is to “buy when there’s blood in the streets”. Maybe Stan O’Neal and Chuck Prince’s headless corpses fit the bill for that. What about the American consumer and homeowner, the other main actor in the subprime drama? A backbone of conservative, free-market economic theory is what is called the “rational expectations” school of economic thought. This theory states that economic actors, be they investors, business owners, farmers or consumers, keep tabs on the economic news of the day, make an informed assessment of what the news means for their individual future prospects and then act accordingly. They spend and/or invest more should they believe future prospects are bright and cut back if things look less promising. If rational expectations were right there is no way we would have seen the roughly 3.6% rise in holiday retail spending that America saw for this just concluded holiday season. This was less than in the booming years of 2004-2006, but still, you only had to go back to 2002 to find a similarly “bad” holiday season. If you listened to many pre-holiday economic prognosticators, you might have thought that America was facing the worst holiday season since the soup kitchens and breadlines of the Great Depression, maybe the worst shopping season since the British burned Washington in the war of 1812. Why didn’t rational expectations work? Why did Americans ignore all the bad news to once again be zombies at the mall? One thing that the rational expectations theorists probably didn’t factor into their calculations as to why Americans ignore economic news is that Americans just hate economic news. Whenever it comes on the TV there is a mad, desperate scramble for the remote control to change the channel; anything, whether it be meetings of the local sewage treatment committee on the community affairs cable channel or Venezuelan soap operas, will get some viewing time in preference to actually watching economics news on TV. Had it not be for the fact that the viewers of business cable channel CNBC have the most desirable demographics of all US television, in other words they’re rich, the meager ratings of business and economics TV in America would not have survived past the 1980s.

So the reason that the news of the subprime crisis has not led to a greater contraction of US consumer spending is that most Americans have little or no comprehension or understanding of what the subprime crisis actually is. They know it involves big words and complicated concepts, and in high school or college they got out of their economics requirement by substituting another elective, basketweaving or woodworking, maybe “Contextual Critical Analysis of Bruce Springsteen-101”. What Americans do know is that they have jobs. At 4.7% the US unemployment rate is still very low, just 0.3% off the low for this cycle set in March, 2006. Former US president Harry Truman once said that Americans define a recession as a neighbor losing their job, a depression as them losing their own jobs. By that measure, with American employment still strong, Americans just don’t see that much urgency in cutting back spending. And that’s what’s keeping the US economy humming. If they don’t see a few of the people they used to see in the neighborhood, because they’ve been foreclosed on and are thus now living in a rental property in a far less desirable location, well, that is sad, but look at the bright side. There’s a lot less wait for the swings on the neighborhood jungle gym, or to get a latte every morning at Starbucks. This is why it is so absolutely critical to follow the monthly US employment reports, starting with the report for December due out on the morning of January 4. As long as the US consumer has a job he is going to keep spending (“Saving? What’s that, oh, I know, it’s what the goalkeepers in soccer do!”) and as long as the spending spree continues there is a safety net as to just how bad the subprime crisis is going to hurt the American, and by extension the world, economy.

Americans feel more secure if they see the headline unemployment number still low. A factor that is probably artificially keeping the employment numbers rosy is the fact that the layoffs in the US construction industry don’t really show up in US employment numbers. That is because it has been an unacknowledged but obvious fact that, for most of this decade, the boom in US real estate construction has been populated by America’s signature reserve army of the unemployed, its undocumented, primarily Hispanic, illegal alien workforce. These workers weren’t really counted among the officially employed during the boom, and, as housing construction employment now evaporates, they’re not now counted as among the unemployed in the bust. (I wrote on the phenomenon of illegal immigrants building US housing in my March 29, 2007 ATol piece Exurbia-built on paradox and hypocrisy.) The hard-working builders of America’s homes and hearths are proving to be as disposable as tissue paper, which, if you ever talk to the immigrants themselves, pretty much sums up how they feel America always saw them in the first place. Like many other observers, I have been astounded at the continuing prosperity of the US economy during the latter half of 2007, a time when the nation’s financial system essentially became dysfunctional. The financial sector and “real” economic sectors are supposed to work in close tandem, with the financial system providing finance for investment and then having the real economy place the profits from that investment back into the financial sector to be turned into more productive new investments.

By all accounts, this transmission procedure broke down in the second half of 2007, as credit quality concerns arising from out of the subprime crisis caused lenders to pull back from loans to even the previously most creditworthy borrowers. Still, consumers kept spending, and the economy kept chugging along, posting a very impressive 3.9% growth rate for the third quarter of 2007. Maybe we need a new metaphor for the relationship between finance and the real economy. Instead of being something like twin brothers working together in the family business, the free-market ideologues’ total deregulation of the financial services industry in the early years of this decade has turned the real economy into the sound, sensible brother capably managing the family business, with the financial sector being the uncontrollably bipolar sibling, prone to extremes of giddy elation (as in the credit creation orgy of 2003-2006 that stoked the subprime crisis) and suicidal despair (as in the current crisis). Meanwhile, the real economy goes to work each day, earns a paycheck, supports its family and the country. Squeezing the metaphor until it screams, proper regulation of the financial sector is like Prozac. In the colloquial jargon of psychopharmacology, the financial sector needs to get back on its meds. In what is, according to some media reports, the bleakest time in finance history since the moneychangers were driven from the Temple, Americans keep spending. How can they not? As that the French are justifiably proud of their culture and cuisine, the Germans their engineering and manufacturing prowess, what is it that Americans can be more proud about than their continued willingness to exhaust 200 years of built-up treasure on cheap trinkets that they will dispose of and replace in six months? No matter what the politicians bleat on in the Iowa cornfields about the centrality of Jesus in American life, the country’s real unifying faith, affirmed no matter what race, color, creed, gender, or sexual orientation, is mindless consumerism.

In this, the nation’s 1,100 enclosed shopping malls are temples to this national faith, with the 500-store Mall of America, in Bloomington, Minnesota, the faith’s new Vatican, its shining food court on a hill. With the consumerist religion flourishing as it is in America, it will take more than what we’ve seen from the subprime crisis so far to shake the foundations of the faith. A moral philosopher or theologian might question the value of the new creed to its believers’ souls; then again, isn’t the whole point of being a zombie that you’ve lost your soul?

{Julian Delasantellis is a management consultant, private investor and educator in international business in the US state of Washington. He can be reached at juliandelasantellis [at] yahoo}


Maker Faire 2010: Seed Libraries
by Jaymi Heimbuch / 05.24.10

S.P.R.Out (Seed and Plant Resource Outreach) is a non-profit seed and plant library based in West Marin, and while the project is one that many gardeners are thankful for, it’s also an exercise in nursing along an idea. S.P.R.Out founder Medea Aranda was working hard to not only expand the library, but also just simply keep it going. She spoke with us about her model for the organization, as well as some of the challenges that make seed libraries – indeed most lending libraries – a labor of love.

SPROut is based on gardeners taking only the seeds they need for the plants they’re really going to grow (one doesn’t need a whole packet of seeds of broccoli when they only have room for 5 plants) and bringing back at least one seed of that type of plant. It’s not a whole lot to ask, but it can be difficult to get even a handful of gardeners to grow out a plant, save the seeds, and bring them in for other gardeners to utilize. Still, the seed library is maintaining its existence, and is even expanding a little. Medea Aranda holds events like seed-saving classes to show people how easy it can be to collect seeds from their garden to use during the next season.

Seed swaps and sowing parties are two great ways the library gets people together and creates a community around gardening. When people meet the fellow gardeners they’re helping out by saving seeds and contributing to the library, they’re more likely to go to the effort of growing out at least one of each type of plant they grow and collecting the seeds. Everyone interested in being part of the library signs up as a member, and they can start utilizing the resources. The more gardeners who participate, the more diverse the seed library becomes as members contribute the plants that they enjoy the most.


the ‘DROPOUT’ ECONOMY,28804,1971133_1971110_1971126,00.html
The ‘Dropout’ Economy
by Reihan Salam / Mar. 10, 2010

Middle-class kids are taught from an early age that they should work hard and finish school. Yet 3 out of 10 students dropped out of high school as recently as 2006, and less than a third of young people have finished college. Many economists attribute the sluggish wage growth in the U.S. to educational stagnation, which is one reason politicians of every stripe call for doubling or tripling the number of college graduates. But what if the millions of so-called dropouts are onto something? As conventional high schools and colleges prepare the next generation for jobs that won’t exist, we’re on the cusp of a dropout revolution, one that will spark an era of experimentation in new ways to learn and new ways to live. It’s important to keep in mind that behavior that seems irrational from a middle-class perspective is perfectly rational in the face of straitened circumstances. People who feel obsolete in today’s information economy will be joined by millions more in the emerging post-information economy, in which routine professional work and even some high-end services will be more cheaply performed overseas or by machines. This doesn’t mean that work will vanish. It does mean, however, that it will take a new and unfamiliar form. Look at the projections of fiscal doom emanating from the federal government, and consider the possibility that things could prove both worse and better. Worse because the jobless recovery we all expect could be severe enough to starve the New Deal social programs on which we base our life plans. Better because the millennial generation could prove to be more resilient and creative than its predecessors, abandoning old, familiar and broken institutions in favor of new, strange and flourishing ones.

Imagine a future in which millions of families live off the grid, powering their homes and vehicles with dirt-cheap portable fuel cells. As industrial agriculture sputters under the strain of the spiraling costs of water, gasoline and fertilizer, networks of farmers using sophisticated techniques that combine cutting-edge green technologies with ancient Mayan know-how build an alternative food-distribution system. Faced with the burden of financing the decades-long retirement of aging boomers, many of the young embrace a new underground economy, a largely untaxed archipelago of communes, co-ops, and kibbutzim that passively resist the power of the granny state while building their own little utopias. Rather than warehouse their children in factory schools invented to instill obedience in the future mill workers of America, bourgeois rebels will educate their kids in virtual schools tailored to different learning styles. Whereas only 1.5 million children were homeschooled in 2007, we can expect the number to explode in future years as distance education blows past the traditional variety in cost and quality. The cultural battle lines of our time, with red America pitted against blue, will be scrambled as Buddhist vegan militia members and evangelical anarchist squatters trade tips on how to build self-sufficient vertical farms from scrap-heap materials. To avoid the tax man, dozens if not hundreds of strongly encrypted digital currencies and barter schemes will crop up, leaving an underresourced IRS to play whack-a-mole with savvy libertarian “hacktivists.”

Work and life will be remixed, as old-style jobs, with long commutes and long hours spent staring at blinking computer screens, vanish thanks to ever increasing productivity levels. New jobs that we can scarcely imagine will take their place, only they’ll tend to be home-based, thus restoring life to bedroom suburbs that today are ghost towns from 9 to 5. Private homes will increasingly give way to cohousing communities, in which singles and nuclear families will build makeshift kinship networks in shared kitchens and common areas and on neighborhood-watch duty. Gated communities will grow larger and more elaborate, effectively seceding from their municipalities and pursuing their own visions of the good life. Whether this future sounds like a nightmare or a dream come true, it’s coming. This transformation will be not so much political as antipolitical. The decision to turn away from broken and brittle institutions, like conventional schools and conventional jobs, will represent a turn toward what military theorist John Robb calls “resilient communities,” which aspire to self-sufficiency and independence. The left will return to its roots as the champion of mutual aid, cooperative living and what you might call “broadband socialism,” in which local governments take on the task of building high-tech infrastructure owned by the entire community. Assuming today’s libertarian revival endures, it’s easy to imagine the right defending the prerogatives of state and local governments and also of private citizens — including the weird ones. This new individualism on the left and the right will begin in the spirit of cynicism and distrust that we see now, the sense that we as a society are incapable of solving pressing problems. It will evolve into a new confidence that citizens working in common can change their lives and in doing so can change the world around them.

We see this individualism in the rise of “freeganism” and in the small but growing handful of “cage-free families” who’ve abandoned their suburban idylls for life on the open road. We also see it in the rising number of high school seniors who take a gap year before college. While the higher-education industry continues to agitate for college for all, many young adults are stubbornly resistant, perhaps because they recognize that for a lot of them, college is an overpriced status marker and little else. In the wake of the downturn, household formation has slowed down. More than one-third of workers under 35 live with their parents. The hope is that these young people will eventually leave the house when the economy perks up, and doubtless many will. Others, however, will choose to root themselves in their neighborhoods and use social media to create relationships that sustain them as they craft alternatives to the rat race. Somewhere in the suburbs there is an unemployed 23-year-old who is plotting a cultural insurrection, one that will resonate with existing demographic, cultural and economic trends so powerfully that it will knock American society off its axis.

{Salam is a policy adviser at the nonpartisan think tank e21, a blogger for the National Review and a columnist for},32068,71274225001_0,00.html

Farmland in Trinoma’s center lobby

Cooperatives: A Better Kind Of Corporation
by Paul Hazen / 05.13.10

The great recession we’ve been going through will lead to nothing less than a new era in the economy and culture of America, a time of vigorous prudence and ethical self-regulation. That’s the prediction of the writer Kurt Andersen in a recent cover story for Time magazine. Like many cultural prophets, Andersen sees us at the end of the age of limitless greed, McMansions and credit default swaps. He doesn’t know what will take their place, but he says he’s sure our innovativeness will come through for us. His cultural reckonings may be true, but he needn’t have such a nebulous sense of our economic and cultural possibilities. We don’t need vast innovations. We already have a business model–the cooperatively owned business–that has been proven to embody just the kind of corporate social responsibility Andersen espouses, in times of both crisis and prosperity. A cooperative is a democratically run business whose members are also its owners. Co-ops aren’t just for alternative groceries. There are some 29,000 of them in all sectors of the American economy, a recent study by the University of Wisconsin found. They have revenues that exceed $3 trillion and employ 856,000 people. Household names among them include Ace Hardware, Ocean Spray, the Associated Press and Sunkist.

Many co-ops exist to bring services to millions of people who would otherwise lack them. Much of rural America, geographically marginalized, didn’t have electricity until residents formed utilities cooperatives during the Great Depression. In the 1970s, communities joined together to create food co-ops, the only stores that would stock natural and organic foods. And in many major U.S. cities, housing cooperatives provide almost the only way people with lower incomes can afford to own homes. All these cases reflect the basic value that guides cooperatives, a value that has set them apart in the current economic crisis. To put it simply, they exist to serve people’s needs rather than to maximize profit. With their shared ownership, cooperatives serve their members’ needs democratically. They offer each member-owner a vote in board elections and a say in the running of the business, thus establishing a greater degree of mutual responsibility and accountability than in investor-owned companies. Member-owners answer to one another rather than to outside investors, and that interrelationship tends to minimize fraudulent, deceptive and damaging behavior.

Investor-owned firms, on the other hand, operate with built-in conflicts of interest as investors dictate the direction of the business and often sacrifice quality or ethical standards to guarantee higher returns. This happened recently on an unthinkable scale in finance and housing. Yet the investors in companies like AIG have escaped with a clean conscience, because they don’t feel any direct connection to the foreclosures on people’s homes that AIG’s actions wrought. This wouldn’t–and didn’t–happen with cooperatives. Co-ops don’t have an inherent conflict between their investors and the customers they serve. Their owners are the people who use their services. This personal involvement makes gambling with their fate much less attractive. The only way an individual’s fortune will grow is if the cooperative grows; a loss for the cooperative is a loss for each individual. Co-op executives don’t have the incentive to pilfer their businesses that executives at investor-owned firms do.

More often than not, co-ops are locally owned and run. For that reason, too, their owners have to bear witness to the effects of their decisions. This isn’t usually the case with investors who own shares in public corporations from a geographical and cultural distance. With all these qualities, cooperatives make much more natural vehicles for corporate social responsibility. Just look at the difference between investor-owned banks and credit unions, which are cooperatively owned financial institutions. Large-scale banks have been publicly flagellated for the risks they took with securitized subprime mortgages and the ways they artificially–and even illegally–inflated the value of their assets. They did all this, we know, because they were under heavy pressure from boards and investors to maximize earnings. Credit unions simply didn’t do that. Credit union executives are unabashed when they say they run boring businesses. No risky, faceless customers, no fancy junk bonds. Banking should be boring and simple, they like to say. At last these conservative practices are beginning to look more respectable, and boring banking has piqued the public’s interest, given the ill effects we’ve all seen stem from the flashy excess of Wall Street-driven banking.

As consumer confidence in investor-owned businesses continues to plunge, credit union membership has spiked. In just the first quarter of 2009, Navy Federal, the nation’s largest credit union, gained 85,000 new members. Other credit unions have reported increased membership, too, and many co-ops, from purchasing ones–people who pool together resources to buy in bulk–to agricultural ones, have reported positive or at least even sales through the recession. Why? Perhaps at least partly because the public has grown more hospitable to cooperative values. Cabot Creamery, an agricultural cooperative that sells dairy products nationally, hasn’t suffered during the recession. The people there believe it’s because of customers’ affinity for their brand, which stresses its ownership by farmers and its stewardship of the land. Most U.S. farmers don’t own the brands under which their goods are sold; they’re just atomized commodity producers. At Cabot each farmer can participate democratically in running the co-op. That and their shared ownership gives them great loyalty to it. Cabot’s strengths have kept it financially healthy even as households have cut back on spending.

So, is the cooperative the perfect business model? Of course not. If your goal is the maximum accumulation of money, the co-op model probably isn’t for you. It may be the best model for combining social and economic progress, but it will never attract as much capital as an investor-owned business. Nor will it prevent human error. The people who run co-ops make management mistakes just like anyone else. Still, they’ve got built-in incentives to avoid error that just don’t exist elsewhere. When the recession’s full force first hit us, people began talking extravagantly of “the end of capitalism.” Of course nothing like that has happened, but we can’t ignore the fact that many of our basic beliefs in truly unbridled capitalism have been shaken. Amid all that shaking, as weak and unstable businesses begin to fall, we should keep our eyes trained on a kind of steady and unassailable business that has lived through crises before and will certainly live through crises again.

{Paul Hazen is the president of the National Cooperative Business Association.}

Paul Hazen
email : phazen [at] ncba [dot] coop