The Week That Was, january 27, 2013

     Economically speaking, 2013 and 2014 are going to look like a slightly improved version of 2012, according to the International Monetary Fund. The fund’s latest World Economic Outlook predicts a 3.5 percent increase in global growth this year and a 4.1 percent increase next year, just a tick stronger than the tepid 3.2 percent increase posted in 2012. Nonetheless, the fund’s chief economist has reason to believe that “optimism is in the air,” perhaps because he knows that “global growth could be stronger than projected” if world-wide financial conditions continue to improve. But before you get a contact high, remember that global economic growth was ranging between 4.5 percent and 5.5 percent a year before the planet fell into the grip of the Great Recession.

     It’s worth noting that all economics, like all politics, is local, and that some nations rise while others sink. So let me call your attention to this report from Bloomberg, which notes that Dubai’s economy is posting its fastest rate of growth since 2007. Over the next three years, the nation expects to record growth rates ranging between 4.1 percent and 5.4 percent, which is comfortably above what the IMF predicts for the planet as a whole. And if you think that Dubai is hopping, Bloomberg points out that Saudi Arabia’s economy has grown at an average rate of 7.7 percent over the past two years.

     We all thought Phil Mickelson was simply passing a little self-deprecating humor when he said, after blowing the U.S. Open in 2006, “I am such an idiot.” But maybe he was telling the truth. Mickelson, who earned something like $47 million last year, kicked off

the week by complaining about the unfairness of his tax burden, which he estimates to be in excess of 60 percent. “There are going to be some drastic changes for me,” he told reporters, “because I happen to be in that zone that has been targeted both federally and by the state, and you know, it doesn't work for me right now.” Then, after accountants suggested that only idiots would pay such a ridiculously high tax rate, he was forced to issue what passes these days as an apology. “I’ve made some dumb, dumb mistakes,” he acknowledged, “and obviously, talking about this stuff was one of them.” Unfortunately, Mickelson couldn’t leave well enough alone. For some inexplicable reason, he had to put his foot in his mouth again. He had to say, “I’ve never had a problem paying my fair share.” Who in his right mind is buying that lame declaration? Didn’t Mickelson’s reluctance to pay his share, fair or not, get him into this sorry mess in the first place? Stop the world, Phil Mickelson needs to get off. It’s not easy being a poor little rich man.

     Home buyers in the United States have cooled to the idea of living along the fairways of a golf course. Citing research by the National Association of Home Builders, the Dallas Morning News reports that almost two-thirds of prospective purchasers say “a golf course community [is] definitely something they don’t want.” In fact, the newspaper says, the only amenity less desired is an in-house elevator. “There has been a major shift in lifestyle,” a home builder told the newspaper. What are home buyers looking for? Community gardens.

     If a recent news account is a true reflection of reality, golf clubs in northwestern England are experiencing acute levels of financial suffering. “A perfect storm of recession, bad weather, and lifestyle changes have battered traditional revenue streams,” reports the Manchester Evening News, “and it is a case of adapt or die for many historic courses.” The newspaper says that most of the area’s clubs are taking “drastic measures” to stay alive, including eliminating initiation fees, slashing maintenance budgets, and eliminating superfluous personnel. It’s a tale we’ve heard many times since the onset of the Great Recession, and this one, like the others, notes the nefarious influence of overbuilding. “There was the boom in golf clubs in the 1980s, when every farmer who had a patch of land built nine holes,” recalls an official of the Club Managers Association. “Now we’ve probably got more golf clubs than we need.” Probably? More like definitely.

     A recently published survey has determined that England’s golf clubs are “more accessible and inclusive than ever before.” Given the current state of the U.K.’s golf business, of course, the phrase accessible and inclusive is probably best understood as losing money and desperate for members. “These are very difficult times for golf clubs,” an official with England Golf points out, “both in terms of the economy and overcoming the effects of the wettest summer for 100 years.” On the bright side, the group believes that the British golf industry has “a product which could be in demand if packaged correctly.”

     The mortgage lending division of Textron Financial Corporation has relieved itself of five headaches. Late last year, the Providence, Rhode Island-based lender sold troubled assets in four states to affiliates of a $31 billion hedge fund, New York City-based Och-Ziff Capital Management Group. The collection consists of Legacy Golf Club in Bradenton, Florida; Bermuda Run Country Club in Advance, North Carolina; Firethorne Country Club in Marvin, North Carolina; Steel Canyon Golf Club in Sandy Springs, Georgia; and Temple Hills Country Club in Franklin, Tennessee. The purchase signals a major move into golf by Och-Ziff, which had acquired another distressed property, Ford’s Colony Country Club in Williamsburg, Virginia, earlier in 2012. Och-Ziff calls its golf operation Stratford Golf Partners.

     Speaking of big golf transactions, the sale of PGA West, the Great White course at Doral, and two other U.S. golf properties to Singapore’s sovereign wealth fund may not be completed anytime soon. The hang-up: The Internal Revenue Service suspects that the seller, an entity affiliated with Paulson & Company, is trying to stiff the people of the United States out of $331 million in tax liabilities.

     Another ostensibly communist nation in Southeast Asia may be cashing in on the ultimate decadent capitalist sport. Nearly 40,000 South Korean tourists visited Laos during the first nine months of 2012, an increase of 50 percent from the number recorded in 2011. The Bangkok Post credits “the lure of new golf courses” for this increase, although it unfortunately doesn’t specify how many of the vacationers actually played golf during their visits. The newspaper has determined, however, that South Korean investors now operate “several” courses in the impoverished nation and that the greens fees there are “a fraction” of what they are back home. If you’re wondering, a grand total of 3 million tourists found their way to Laos last year, an increase of 14 percent from 2011. They had their choice of five golf properties, according to a British source.

     By now, you no doubt know that 2012 was the hottest year on record in the United States. What you may not know is that our nation hit 34,008 daily record highs against only 6,664 daily record lows, according to data collected by the New York Times. Or that one-third of our population sweated through 10 or more days of temperatures above 100 degrees. Or that our 10 warmest years have all been recorded within the past 15 years. Or that last year we suffered through 11 weather-related disasters that will cost us $1 billion or more. Or that our weather-related experiences in 2012 are just a preview of things to come.