Frozen In Time

I started working in Chicago in the early ’90s. At that time, we had a hangover from the ’80s building boom, with a number of completed but vacant buildings. Our firm moved in at 161 N Clark Avenue, the Chicago Title and Trust Building, which was almost totally empty at the time. I remember walking through the floors and around the halls to get a 360 degree view of the city. Later Accenture (the consulting firm) moved in and ultimately the building seemed to get totally filled up.

After the ’80s building boom which tailed off in the early ’90s, Chicago construction went dormant. Nothing significant seemed to get built for a few years since no one could put an economic case together for more building while so much was vacant.

In the late ’90s and into the ’00s, Chicago construction boomed again. Per this Chicago Tribune article,

For a decade now, Chicago has been on an astonishing building binge. Since 1998, developers here have completed or started construction on more than 195 high-rise buildings, according to the Emporis building database. (A high-rise is defined as a building at least 12 stories tall.) That’s more high-rises than there are in all of Detroit (132), St. Louis (106) or Milwaukee (83).

But now it is all grinding to a halt. Some sky scrapers are stalled for lack of funding:

Work also is frozen at 111 W. Wacker Drive, home to Chicago’s other stalled supertall skyscraper, the Waterview Tower and Shangri-La Hotel. (To be considered “supertall,” a skyscraper needs to be at least 1,000 feet high.) … the project is stuck on the 26th floor, its exposed concrete frame looming over Wacker … (the project requires more) than $300 million in construction financing to finish the job.

Here is a view of the construction of the Shangri-La from my window… note the other building still under construction on the left.

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The Choice

A vote for Obama on Tuesday is not just a vote for Obama himself, but rather a vote for the triumvirate Obama-Pelosi-Reid…a vote to transfer enormous power to the leadership of the Democratic Party.

I’m convinced that across multiple sets of issues, the country will be far better off with a victory for John McCain and Sarah Palin. Here are some of the key factors as I see them:

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Pirates and Insurance Blackmail

I have previously discussed how effective measures to combat modern day piracy on the high seas won’t come about until the insurance costs get too high. Piracy will continue until the the increase in insurance premiums for getting attacked by pirates exceeds the amount the underwriters will charge if armed guards are placed on board.

This recent post at StrategyPage.com pretty much says the same thing. NATO warships might be tasked with anti-pirate patrol, but they won’t actually shoot anyone for fear of bad press. The pirates know they have a good thing going, and there will be more attacks in the future. The shipping companies aren’t about to place armed guards on board their vessels since the higher premiums they have to pay for pirate insurance is less than what the underwriters will charge for having private troops on the vessels.

I figure one of two things will happen.

The gangs will continue to raid enough ships for them to have a big (in Somalian terms) payday through ransom money, but not enough for it to make sense to actually attack the outlaws. It will be the same-old, same-old for years to come.

More pirate gangs will form to grab a slice of the pie. Either the number of attacked ships passes an economic tipping point, or some undisciplined criminals start slaughtering innocent crew members that they have taken hostage. Eventually NATO starts to clean house, and the number of pirate attacks are reduced for decades afterwards.

It looks to me like more of the same-old, same-old is more likely in the foreseeable future.

Important Reading

Ralph Peters on some of the foreign policy and national security issues at stake in this election.

Those planning to cast their votes based primarily on economic issues should consider: there is a strong link between national security and the economy. If we have multiple terror attacks of the 9/11 scale (or higher), the economy will be in shreds. If the Iranians close the Straits of Hormuz, gasoline prices will soar. If the Russians bully Western Europe with sustained natural gas shortages, the result could be an actual global depression.

(via Maggie’s Farm)

Opting for a Really Big Deductible

Our fellow Chicago Boy, Steven den Beste, has posted some thoughts about piracy on his own personal blog. He thinks that the recent plan to allow NATO warships to form an anti-pirate patrol off of Somalia is not the optimal solution to the problem. Instead he thinks that a few heavily armed squads of soldiers, placed on a civilian ship as it traverses pirate infested waters, would do the trick.

I have been writing regularly about maritime piracy for years now. Most of my previous posts were lost when my former ISP abruptly terminated service, but the idea of hiring mercenaries for short term security in dangerous waters is hardly new. The concept of having regular military troops perform the same job merely transfers the cost from the private shipping company to the taxpayer.

But the same problem which prevented the shipping companies from hiring private soldiers keeps them from allowing government troops on board. And that problem is higher insurance premiums.

Back when I first became interested in the problem in 2001, ship captains who had to navigate through areas with heavy pirate activity were given $20,000 in cash. The idea was that the money was to be kept in the ship’s safe, and paid to any group of pirates who managed to make their way on board. Danegeld on the high seas.

But we all know what happens if you pony up the Danegeld. The idea that a mere $20K would satisfy a self respecting pirate band today is ludicrous. And it will probably get worse before it gets better.

Anyone interested in maritime piracy is encouraged to read the ICC Piracy Report, a free weekly update listing attacks on shipping. One thing that becomes painfully obvious very quickly is that pirate attacks are becoming more frequent, the pirates are demanding ever increasing amounts to return control of the ships they take, and the pirates are becoming ever more violent in an effort to coerce the shipping companies to pay up.

One would assume that the huge amounts demanded by pirate bands recently is a prime motivator for shipping companies to hire some mercs, but that is only if you discount the enormous number of vessels that daily move through the major shipping lanes. Four, eight, ten, a dozen ships might be held for big money, but hundreds more manage to move through those waters every day without having any problems. The increase in money paid to the insurance companies if troops were allowed on board is still greater than the cash paid out to the pirates.

Right now we are seeing a fluid situation that is trying to reach equilibrium. The pirates won’t stop because they get some really good money for attacking maritime vessels, and there is very little risk. The shipping companies will continue to pay ransom money as long as it is cheaper than increased insurance premiums. The pirates will continue to demand ever larger payouts as long as they are ultimately handed the cash.

If things are allowed to develop as they have been, eventually the shipping companies would begin to balk at the huge amounts that the pirates would demand. Then I expect the pirates would turn into terrorists, executing the captured crews in public and highly visible ways in an attempt to get the money spigot turned back on. It would only be at this point, with insurance premiums climbing because of the increased chance of murder, that the shipping firms would begin to look to resisting piracy in an aggressive and effective way.

The decision by NATO to begin anti-piracy patrols is probably seen by the shipping companies as a possible solution, and one that they won’t have to pay for out of their own pocket. It would work if the warships tasked to hunting down the pirates would actually shoot a few of them, but I really don’t expect that to happen.