L[i/o]ving cities

Posts tagged ‘traffic’


Here at City Lines I enjoy talking about some of the new paradigms that are arising in our society because the financial crisis, that we are still suffering, is a great opportunity to reflect on this type of issues. One of those paradigms that we are living is the one related with property.

The strongest example about the property crisis could be related with Cloud Computing. The new technologies are going through a new path where the consumer will have the use rights of the servers, software, hardware, contents, etc, but not the property rights of them.

As in the Cloud Computing example, transport is also facing the challenge of carsharing and carpooling policies as part of this property paradigm changes. As I try to analyze it, these new transport policies have several positive impacts into the economic, social and environmental criteria.

For instance, economically, if we share our cars, we will use them more efficiently, because they wouldn’t require so much “parking” time as they do now. Economically, as well, if you manage a great amount of cars you have a better bargaining power to obtain better prices or, alternatively, to have better technologies that will go on the direction of having a better environment.

Environmentally, managing a great car fleet also means that you can change them sooner and through that you can have the best environmental technologies. These car fleets also allow to program car replacements, which is a way to stabilize the car market. These can also be a good social criterion, because you can also stabilize the car labour market. Talking about social criteria, you can also say that sharing cars you, individually, can be more flexible if you have to change your place from a city to the countryside or vice versa.

I think that all these criteria are good to start a discussion about using or owning a car, but we have to be conscious about one last question, which is that when we are resigning to property, we are renouncing to the decision rights upon that good. So, for a good carsharing policy it is necessary that customers have a discount on the price of the service (use of cars) that will make it attractive to use them instead of to own them.

Well, I think that if you live in a rented flat you will understand it perfectly.



In this post, I have linked to a video about the suburban housing problems and its relations with a new risk, the increasing of transportation cost. It’s a very illustrative example, sited in Phoenix but that could be sited anywhere, which doesn’t need further explication. Despite this, I think that the declarations of the Grossos family and the housing businessman are impressive.

Enjoy the video clicking here


The economic crisis has blown up several mantras that had been repeated in recent times in Spain. There is no doubt about the first mantra, the one that says that the price of housing never lowers, just a short drive away is the one that ensures that the traffic estimates always fall short.

However, assuming these two topics have generated two situations hardly affordable by those who invested in assets related to housing and infrastructure. Thus, without addressing the causes that led to such investments, the need for concessions or the traffic calculation methods, we observe quite different consequences in the decision being taken to both problems.

Let us start with housing, we have two main stakeholders, mortgage holders and borrowers, which are citizens and financial institutions respectively. In this case, as it is well known, the Spanish mortgages have had to pay its debt under the possibility of losing the ownership of its assets in the event of default, also assuming, in most cases, an underestimation on the market prices of their assets.

Let us continue with infrastructure concessions, we already have two key stakeholders, concessionaires / construction companies and the state. In this case there is underestimation of investments due to lower traffic levels in the concessions and, therefore, the state is going to rescue several concessions (http://urlcut.com/1xvha). In this case, the state seems to be paying for the initial mispricing made. This payment, in one way or another, seems that must be settled by generating more national debt, and we already know who finally pays for it. It should be noted that in this case, there seems to be a surprising parliamentary consensus about the need for rescuing the concessions.

As we can see, we are confronted with two quite different ways to proceed with two similar problems of undervaluation of assets and lack of income to debt payments. However, in my opinion, the headline comes now. Even if we understand the concessions rescue, what will happen with the ownership of the infrastructure assets? In the case of housing, as seems reasonable, the property passes to the ones who finally take over the debt. This is not the case for infrastructures. The argument put forward is that when you are talking about concessions, the infrastructure is public in itself, since it will finally reverse as a public property, therefore, little can be done on the subject property.

To that argument, I venture to point out that the concessionaires have a market value which reflects the value of their investments in infrastructures. Thus, if the concessions are doing well, their stocks go up and if concessions are doing badly, their stocks go down. Therefore, I understand that it is fully justified to enter in the capital of the concessionaries, which are the organizations that are supporting the concession, because, as I explained above, you cannot enter in the property of the infrastructure.

This can be defended through three points that reinforce the central idea. Firstly, the concessionaries paid dividends to shareholders regardless of whether the money comes from profits or form the rescue of the concession (Link to information on the provision of dividends of companies in the Spanish IBEX35 in 2010 http://urlcut.com/1xvkp). Secondly, the concessionaires have the “healthy habit” to renegotiate each concessions independently, i.e., if one goes wrong, they renegotiated that concession regardless of the overall balance of their entire investment that may well be positive (suppose we have three factories, one is wrong and the other two are well. Well, we could try to collect benefits from the factories that do well and raise money from the government for the factory that goes wrong).Thirdly, no one remembers Gordon Brown nowadays, but neither the acclaimed Obama, Merkel or Sarkozy dared to do what this leader did during the banking crisis. He provided capital to financial institutions, but in return the British government became part of the shareholders of the banks that were intervened, reaching, for example, up to 70% of the shares of Royal Bank of Scotland (http://urlcut.com/1xvhd).

Summarizing what we said, it seems that we are paying even we bet to both red and black.

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