Charlie Brown and Lucy go To Washington on Your Nickel

We depart from  our usual topics of eminent domain and land use law to take a look at another subject that is worthy of your attention, namely, what has been happening, or more accurately, not happening to interest rates. For the umpteenth time, the Fed announced last week that it is leaving interest rates alone and leaving them at nearly 0 percent as far as the banks are concerned. What a deal if you are a banker! You get the Fed’s money at the rate of .001 percent and then you loan it to your prime borrowing customers at 3.25 percent. Do the math sometime and see what rate of interest you get. Our calculator says it’s over 3000 percent. Not a bad profit margin, if you are a banker, particularly when loaning other people’s money.

But what if you aren’t?

Then, if you put money in a bank, you have to pay income tax on the pittance your bank has the nerve to call “interest” (Our bank pays us the munificent rate of .02 percent on our account). Of course, inflation has been doing its thing relentlessly, and has been hovering around 2 percent per annum. So without dwelling on the depressing arithmetic, you lose over 2 percent by saving money and putting it in the bank. Does that sound right to you? Not to us. To us, since this situation prevails by government decree, it’s a form of institutionalized theft, mostly from the middle class.

So who benefits from that? (Or cui bono? as the Romans used to ask.) First and foremost, Uncle Sam. The feds are borrowing trillions but don’t have to pay anything remotely resembling reasonable interest on their borrowings. Any increase in prevailing interest rates would thus hit Uncle Sam harder than anyone else because no one else can run up a multi-trillion dollar debt. Second, the big banks, the ones that get their money from the Fed at an effective rate of zero percent, and get to loan them out at real interest rates. And when it comes to that double-digit interest they charge on credit card debt, don’t ask! Third, extremely low interest rates prop up the stock market that goes into a swoon whenever it perceives an imminent increase in interest rates.

But since there is no free lunch, who gets screwed? Primarily, savers, which is to say the middle class – the folks who are hard put to put some money aside, and who got burned in 2008. They have been driven out of the stock market because they are unable to risk its collapse that many believe to be imminent and that has been foreshadowed by the recent multi-hundred point up-and-down swings. Extremely low interest rates also inflate a housing bubble because, as we surely need not tell you, extremely low interest rates drive the housing market by encouraging people to buy homes at prices they cannot otherwise afford, because the prevailing low rates keep the monthly mortgage payments low. But just you wait until interest rates rise to more reasonable levels, the all-cash buyers realize that they can’t get their money back, and those poor suckers who took on large loans try to sell their high-priced houses when interest rates return to normal.

The Fed has been stalling, as they just did this week, for years. This process has now assumed the proportions of parody; sort of like the annual shtick of the “Peanuts” cartoon strip where every year Lucy faithfully promises Charlie Brown that this time, this time for sure, she will hold the football for him so he can kick it, but at the last moment snatches it away. So, year after year, poor ol’ Charlie Brown winds up on his little keester. Same with the Fed. Chair Janet Yellen keeps promising an increase in interest rates in a month or two, when the financial moon is in the recovery house, but when the time comes, she and her merry men keep things exactly as they have been for years, thus benefiting Uncle Sam, the big banks, and the stock market, and of course screwing the middle class savers.

Folks, this isn’t good. That sort of policy that tries to fool and stall the Great Unwashed may put money in big-time stock market players’ pockets, and make for an entertaining cartoon, but at bottom it is a bait and switch scheme.

Like him or not, Donald Trump’s abrasive but successful campaigning has demonstrated that if politicians keep lying to the people long enough, and feeding them their conventional-wisdom bullshit about how they will make things great if you only elect them — whereupon they do nothing or even do the opposite — there comes a point where the people lose not only their faith but their cool as well, and widespread anger replaces thinking and judgment. Which is a prescription for ultimate destruction of civic values and what is left of good governance. And, as we have seen in this year’s presidential politicking, one day  you look up and see the establishment types standing there babbling away as usual, with people increasingly not listening to them, while smart political outsiders make a virtue out of inexperience but make political hay nonetheless. Is that better? That remains to be seen.


Gideon Kanner is professor of law emeritus at the Loyola Law School. This article appeared in modified form in the Los Angeles Daily Journal on September 22, 2015.

Edited 9/22/15

“Kelo” Movie Back On

The Day, the New London, Connecticut, newspaper reports that the movie about Susette Kelo’s battle with the New London redevelopment machers over the taking of her home — now known as the “Little Pink House” — for the failed Fort Trumbull redevelopment project, is back on. It’s in production in Vancouver.

Catherine Keener has been cast as Susette Kelo. Keener was nominated for the Academy Award as supporting actress in “Being John Malkovich” (1999) and in “Capote” (2005).

We hope this time this effort will make it to the big screen, so stand by.

Eminent Domain Makes it Into Presidential Politics

What with Donald Trump running for President, it seemed to us to be only a question of time before someone would take out after him in the matter of his reliance on eminent domain. A while back, the Donald tried to get Atlantic City to take an old lady’s home for “public use” in the form of convenient extra parking for limos of the heavy rollers using his casino. The Institute for Justice represented her and persuaded the court to deny the right to take.

Now, that event has been brought up as a negative factor in Trump’s campaign for the Republican presidential nomination.

Click here:

Still Time to Register for the Brigham-Kanner Property Rights Conference

The 12th annual Brigham-Kanner Property Rights Conference will take place on October 1-2, 2015, at William & Mary Law School in Williamsburg, Virginia. This year’s winner of the annual Brigham-Kanner prize is Prof. Joseph W. Singer of Harvard Law School.

It’s usually a good show, both intellectually and by way of taking in Colonial Williamsburg.

Registration deadline is September 18, 2015. For details and a brochure call Megan Wyatt at W & M, (757) 221-7466.

New Book on Kelo

Book Review by Justin Torres,                                                                                                                                                                   The Grasping Hand: Kelo v. City of New London and the Limits of Eminent Domain, by Prof. Ilya Somin, U.Chi. Press, 2015, 336 pp.

Where There’s a Book, There’s a Book Review

There is a new book out, this one by Professor Ilya Somin of George Mason University, that takes a look at the wretched case of Kelo v. New London, in which the U.S. Supreme Court, by a 5 to 4 vote, approved the eminent domain taking and destruction of an unoffending lower middle-class neighborhood in New London, Connecticut, in order to raze it and redevelop it with spiffy shops, condos, a marina and a five-star hotel. The city sold a bill of goods to the Supreme Court, convincing it that this would be a well-planned project that would serve well-paid professional employees of the nearby Pfizer pharmaceutical company and add tax money to the city coffers, thus creating a “public benefit” that Justice Stevens, in a twisting of the English language, thought would be a “more accurate” way of saying “public use” which the Constitution requires when private property is taken.

Somin’s book, in addition to the usual journalistic story of the Kelo debacle, also provides its readers with the legal, doctrinal history of eminent domain, and that should be useful to lay readers who most of the time espouse myths and don’t know from shinola about the nuts and bolts of eminent domain law

Much has been written about the Kelo legal, moral and semantic atrocity, so we won’t go into all that. Suffice it to quote here the conclusion of Torres’ book review::

Kelo has only one real set of supporters: legal academics, who defend its deference to planners and politicians and its watered-down redefinition of “public use.” The continued defense of Kelo by the professoriate—a group normally inclined to side against corporate interests and in favor of the underprivileged—suggests that the case had less to do with corporate greed than it did with social class.”


Suffice it to add to that that what the city sold the Supreme Court turned out to be a load of BS. Those “carefully vetted” city plans turned out not to be worth the proverbial paper they were written on. Susette Kelo’s neighborhood was destroyed but nothing was built on its site. No new structures, no benefits, no new taxes, no nothin’. The 90-acre waterfront site has been sitting vacant and neglected for the past decade. Indeed, after Pfizer exhausted its tax benefits that came with this deal, it moved out of town, lock, stock and pillbox, and took some 1400 jobs with it. This caper wasted over $100 million in public funds and produced nothing, nada, zip, bobkes. The city’s chosen redeveloper wasn’t even able to line up financing. So what the city got was just deserts, and the taxpayers got screwed.

Sounds like Somin did a good job, so if you have an interest in this subject, go out and get yourself a copy of his book.

For our own commentaries on the Kelo case, See Kelo v. New London: Bad Law, Bad Policy, and Bad Judgment, 38 The Urban Lawyer 201 (2006). Enjoy!





LA: Prophecy Come True

In 1979, Justice William P. Clark, Jr., of the California Supreme Court stated in a dissenting opinion, criticizing the court’s abject deference to extreme land-use regulation in California:

“Many landowners — particularly small ones — will be economically unable to challenge even a confiscatory enactment, being compelled to walk away from their properties.


“Perhaps of greater concern is the consequence that Tiburon — and many other govenmental agencies enacting similar land use plans — will price properties within their control out of reach of most people. Only the most wealthy will be able to afford purchase of and construction on lands in such areas. The environment which Tiburon seeks to preserve will disproportionately benefit that wealthy landowner, whose home will be surrounded by open space, unobstructed view and unpolluted atmosphere.” Agins v. City of Tiburon, Clark, J. dissenting


And so it came to pass thirty-five years later. Today,

“California has both the most “ultrarich” (people worth more than $30 million) and the worst poverty rate in America. Even though San Francisco recently overtook Los Angeles in ultrarich residents, ostentatious affluence and permanent poverty live side by side here.” Hector Tobar, How Los Angeles Is Becoming a “Third World” City, NY Times, July 6, 2015, on line


Latest Dispatch from the Environmental Front

As you may recall, sometimes we leave the topic of eminent domain aside and take a peek at environmental doings. Here is one such post, and it’s a doozy.

We were in Honolulu last week, and enjoyed it very much. But as we strolled along, we came across an item that just cries out for sharing. The tail (Western) end of Kalakaua Avenue, the main drag of tourist Honolulu, is the place where you find the real upscale shopping, along with some downscale Japanese ramen joints.

So there we were the other day, passing in front of the posh Louis Vuiton store from whose interior flowed a blast of cold, air-conditioned air. So as is our wont, we wondered: what sort of lunatics would do that — leave big double doors wide open, let the cold air flow outward thereby de facto trying to air condition  the great outdoors on a hot August day? Answer: your government — that’s who. As we were strolling past ol’ Louis’ digs, we noticed an official notice painted on the lower edge of the store doors: “These doors must remain in the locked, open position during business hours.” No, we are not making this up. In this day of energy conservation, reduction of the carbon footprtint, and all that other good stuff, the government, it would appear, requires store keepers in the hot climate of Hawaii to keep the doors to their air-conditioned places of business wide open in the most environmentally wasteful manner possible.

We’ll let you explain that one to us if you can, and if you can’t, feel free to sputter in disbelief. We did.

Eminent Domain Programs Coming Up

First. The annual Brighm-Kanner Property Rights Conference at William & Mary College Law School, Williamsburg, VA, will take place on October 1 – 2, 2015, at the law school. It will consist of the award of the 2015 Brigham-Kanner prize to Prof. J. W. Singer, on October 1, at the Wren Hall. The four panels which will take place on the following day, October 2, 2015, are named respectively: (a) Property as a Form of Governance, (b) Civil Forfeiture of Property, (c) Of Pipelines, Drilling, and the Use of Eminent Domain, and (d) Property Rights in the  Digital Age.

For a program brochure, further information, or registration contact Megan Wyatt, William & Mary Law School, P O Box 8797, Williamsburg, VA 23187-8795, or at

Second. The annual ALI-CLE program on Eminent Domain and Land Valuation Litigation, will take place on January 28-30, 2016, at the Hotel Van Zandt in Austin, Texas. For further details, the faculty list, and registration information, contact the program organizers by e-mail at  WWW.ALI-CLE.ORG/CX015  or by phone (in Philadelphia) on 800-CLE-NEWS.

These are both good programs, with the Brigham-Kanner conference leaning more to an academic outlook, and the ALI-CLE one more practical and of greater interest to practicing lawyers and appraisers.

Take them both in if time and your budget allow it. If you are into eminent domain, it will be worth it.

A Farewell to Raisins

We just read Robert Thomas’ essay summing up in detail the Horne case again on his blog July 21, 2015, and we recommend it highly. See Horne v. USDA: Way More Than Silly Raisin Jokes. We surmise that this will be the backbone of a paper that Mr. Roberts will present at the next ALI-CLE Eminent Domain Program which you should attend on general principles if you practice in this field of law.

The whole essay  is very good, but we note with particular interest Mr. Thomas’ detailed dissection of Justice Breyer’s dissent. The Justice is supposed to be a gonzer khokhem — the real smarty on the Supreme Court — but, alas, in this case he doesn’t seem to understand the basic point of eminent domain law that differentiates between (a) the question of whether a taking has occurred and (b) if so, how to calculate the resulting just compensation that is due. Sort of like the difference between liability and damages in tort law. Anyway, Horne dealt only with part (a) — liability.

Thus, in virtually every part-take eminent domain case, where the taking is established or conceded, the questions that are addressed are: the value of the part taken, the amount of severance damages to the remaining property, and the amount of special benefits conferred on the property that remains in the condemnee-owner’s ownership after the taking. You then offset the benefits against the severance damages, add the net severance damages,* if any, to the value of the part taken and, voila! — just compensation.

In other words, there have been cases in which there have been takings (either conceded or readily demonstrable) in which no compensation was due. In California, the second Tobriner case (partial taking but no damages proven  — long story), and the Ricards case (nominal damages only even though there was taking of access but no damages established.)

So we are baffled why anyone with the smarts of Justice Breyer insisted on putting the cart before the horse by demanding that the amount of damages be determined, and used as a determinant of whether a taking occurred — which in this case could not be in issue because the feds pulled up in trucks at Mr. Horne’s farm and demanded that he physically load ’em up with his some $400,000 worth of his raisins without compensation. If that isn’t a taking, what is?

So our point is that ideology-based judicial result-orientation can be thicker than legal doctrine, and, indeed common sense.


*   Actually, there are variations in this formula, like the before-and-after approach that deducts the property’s “after” value from its “before” value to arrive at just compensation, but we won’t get into all that because our point remains the same no matter which valuation method you use.

This post was edited on 7/27/15


They’re Singin’ Our Song

As readers who have been following our blog and our law journal writings know, for the past decade or so we have been following the decline of urban America, and the factors that have inspired it and continue to contribute to it. See our latest, Gideon Kanner, Detroit and the decline of Urban America, 2013 Mich. State Law Review 1547, which tells the story that neither the general press nor the urban planners like to confront and deal with. And if you do read it, don’t miss the picture on p. 1560.

This morning’s dispatch in the New York Times, made up for that, even if it made us sputter over our morning coffee. In an article in the The Arts section of all places, we came across a piece (Michael Kimmelman, Coping After Renewal Cleaves, NY Times, July 16, so15) that for a change acknowledges the reality that peoples’ wholesale abandonment of cities took place because  on the one hand, over the decades suburban living became more attractive, more lucrative and safer (a huge drawing card for families with children), and cities grew crime-ridden and unpleasant, with quality and safety of urban schools descending to catastrophic levels, to say nothing of the devastation wreaked upon cities by urban renewal, urban highways and redevelopment projects that destroyed modestly priced dwellings and displaced populations that sensibly pulled up stakes and headed out to the suburbs.

Quoth the Times:

“Urban renewal conspired to promote white flight, encouraged gated developments . . . and destroyed traditional African-American neighborhoods, replacing them with with public housing complexes that were left to rot.

And as for urban freeways, we never tire of noting that it was former Detroit Mayor Jeffries who accurately predicted way back in the 1940s that while freeways would provide easier commuting to suburbanites’ city jobs, they would also make it easier for city dwellers to move out to the suburbs with the result that cities — notably Detroit — would become depopulated and go bankrupt. Which is exactly what happened.