Bismarck Tribune - North Dakota News - Is N.D. way the model?

Is N.D. way the model?

Mar 27, 2008 - 04:05:44 CDT

North Dakota's economy, though strong right now and in some ways even vibrant, of course has its problems. While there are jobs to be had, many of them good jobs, well-paying, there are too many others that pay low wages.

But on the whole, we're not bad off. States struggle with deficits. North Dakota legislators debate how much of a comparatively enormous surplus to spend.

There's an inborn sense of restraint, not only among our elected representatives but also found in most of us. Our law shows that. The people require the Legislature to balance the budget.

Perhaps an attitude of restraint explains why North Dakota isn't affected by the mortgage industry mess to the extent many other states are. Lenders and borrowers here tend to be careful.

In 2007, North Dakota ranked No. 46 among the states in foreclosures as a percentage of households. There were 308 filings. Granted, that was a 74 percent increase over 2006. While Nevada's foreclosure rate amounted to 3.4 percent of households, North Dakota's was less than one-tenth of 1 percent. The number of foreclosure filings in California in 2007 was 481,392. Florida and Michigan were hit hard.

The North Dakota economy is not invulnerable. The energy industry is solid, and oil production produces delicious tax revenues - but the price of crude oil is both boon and bane. Its impact on the prices of various kinds of fuel is painful. Farmers are grim about their diesel bill prospect.

Yes, there's the fact that some good money can be made in agriculture right now. But a worsening in drought conditions could change that quickly.

The debate over a new farm bill is a perfect illustration of our society's being perpetually engaged in determining what the role of government should be. And there probably isn't a single right answer to whether the federal government should have taken a more active role in preventing the mortgage malady by zealously regulating the banking industry.

Economists are arguing with each other about whether a law that is dead and gone should have been let to live on and perhaps prevent the mess. Part of the Glass-Steagall Act died in 1999, by the will of Congress and the approval of President Bill Clinton. The old act was a means of preventing the kind of over-eager, unsound investing that led to the Great Crash of 1929. Among many other provisions, the law forbade brokerages, commercial banks and investment banks from owning each other. The Gramm-Leach-Bliley Act took away the ban by repealing the 1933 act. Financial giants were given the green light to became more gigantic - Citigroup being a main player.

It's the same Citigroup that got so deep into mortgages. And lost billions. The sober fact is that nearly 9 million households owe more on their mortgages than the houses are worth. Mortgage debt nationwide is larger than equity, according to an Associated Press article quoting Merrill Lynch research.

All these matters, including whether tighter regulation is needed, must be campaign debate topics.

In the meantime, perhaps the North Dakota way of spending, borrowing and lending bears emulating.

News > Opinion

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Comments

Farmers wrote on Mar 27, 2008 10:48 PM:

" Farmers have more safety nets than any other person or "private" business owner. Lets see they have disaster payments, subsidized crop payments, carbon credit payments, tax rebates on fuel, low interest loans, CRP, act of God clauses on sunflowers, etc. What other "private" business has that many "safety nets". They are hauling in the cash. "

Razor's Edge wrote on Mar 27, 2008 8:06 PM:

" To JeffS:

I won't say I'm against everything the farm bill has, but I think CRP was a joke, and this ethanol subsidy is a joke. We pay people not to farm. That has worked out great for NE MT (where I just moved from). I have a lot of places to hunt (which I like), but all the farmers moved away, and just collect their money. With the current food prices I think farmers are doing just fine without a whole bunch of free money.

As for ethanol...do I have to spell this one out? We subsidize it, more farmers are growing it instead of other crops, it uses drove up the prices of fertilizer like 200% or more, it's no better for the environment than fossil fuels, and it raised food prices. Was this a good idea?

As for safety nets let's talk about SS. I pay into it every paycheck, and yet there's no chance it will be there in 39 years. Probably longer than that since they will probably raise the SS age again. Wish I could opt out of that. I just don’t like bailing people out for their stupid mistakes that’s all. "

seven gone wrote on Mar 27, 2008 7:48 PM:

" maybe thirty years ago it was, but north dakota surely isn't now ... there will always be those who love the country openness and/or have a good financial/work situation, but by and large the low #s of people in the state say it all ... it's a model for a few, but by far and away there are more who want to go than want to come ... "

Better outlook wrote on Mar 27, 2008 3:32 PM:

" I feel yes the economy in North Dakota is better than other parts of the region, but at the same time, we could have better procedures in place in helping to bring oil companies to North Dakota for each community and as a state, we need to lower property taxes, we need to listen more closely to those who aren't from North Dakota, but choose to make North Dakota their home because I am tired of hearing of this is how we always do it, and we need to pull our resources together on one page in helping those looking for grants, monies and proceeds. I also feel that North Dakota needs to listen to its young professionals now just like Iowa does to really help them feel a part of making a difference and the efforts in the economy now and not later. I don't want to one day wake up and be 40 and wishing things could have been different or hearing my self saying I told you so. "

JeffS wrote on Mar 27, 2008 2:12 PM:

" To Razor's Edge, I trust that since you are againest safety nets, you are againest all of the ag related programs as well - "

independent wrote on Mar 27, 2008 1:24 PM:

" I agree almost completely with the article and it's cautionary tale. There is one minor quibble that would have made the opinion clearer. One sentence should have read "Part of the Glass-Steagall Act died in 1999, by the will of the Republican Congress and the approval of President Bill Clinton." Once again, both parties were at fault but when was the last time anyone saw any good come from Congress from either party? I agree with Razor's edge and others. From the disaster provisions of the farm bill to the mortgage and bear stearn's bailout to those who build on a floodplain over and over again, why should the government bail out folks taking unnecessary risk? "

Razor's Edge wrote on Mar 27, 2008 12:33 PM:

" When we start legislating CO2 it will greatly affect ND, and prices. So I hope they keep as much of this surplus as we can, and not be greedy. As for the housing and stock market, our Congress is stupid. We shouldn't be bailing out anyone. If you bought a $300,000 house and can't afford it then you deserve to lose it. If you lent to people with bad credit then you deserve to lose that money. Whoever came up with this "everyone deserves a safety net and the government will provide it" should be shot. That or I need to go buy a $300,000 house and than have the government bail me out. Good use of your tax dollars? "

Joe wrote on Mar 27, 2008 12:17 PM:

" kk: I apparantly didn't read into the article the same way you did. It clearly indicates our economy in ND is vulnerable, especially in the energy and agricultural industries. I don't think this article was glorifying or indicating the state was above any other state. "

My 002 Cents wrote on Mar 27, 2008 11:15 AM:

" If high ed wants more $, it would make sense that the money go towards areas in the state where more jobs are needed (energy for instance), rather than investing in programs where job opportunities are limited. "

Dale A. Swenson wrote on Mar 27, 2008 10:22 AM:

" Thank you for approaching the major considerations of economy in ND. You are well worth reading. No trustworthy predictors exist for this type of economic times and simply stating what we do know is reassuring.
Please state more sometime about how oil production is boon and bane. Seeing both sides will improve our judgment and prepare us for the future unknowns. "

to Concerned wrote on Mar 27, 2008 10:20 AM:

" You should run for office since, obviously, you think you have all the answers (though I didn't see any). This was a very thought provoking (not, the sky is falling) editorial. "

Concerned wrote on Mar 27, 2008 9:58 AM:

" It is true, there are a lot of positives about the North Dakota economy. However, let's be fair and look at the total picture. Social Security will go insolvent, which will hit us. Higher Education wants more and more, which will hit the surplus. Jobs which should be moving here are not - because we are not a growing state but an aging state. The list can expand. What we need to see is leadership. Our Congressional delegation provide lip service but no fundamental action to change the dynamic. Our state politicians are basking in the glow of a surplus and failing to make good decisions for our future - not to mention ridiculous decisions like taking an government activity and putting it in the hands of the legislature for direction (WSI). I have little confidence we will continue to enjoy the fruits we have gained in the past few years. I fully expect us to decline - partially because of outside forces and partially because of internal malaise. "

kk wrote on Mar 27, 2008 8:54 AM:

" What NORTH DAKOTA are you living in? Give me a break~ this state is not above any of this happening to them~ ND is BEHIND so it takes longer "

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