Sunday, January 18, 2009

The Economy And Me

Dow Jones Industrial Average

Been feeli
ng a little down-in-the-mouth lately because of the condition of the economy? Yeah, me, too. It seems that everywhere you turn the news is bleak.


For example, I read many newspapers, both in print and online, every day. Sometimes it feels like I'm "water boarding" myself. Among those I read is the venerable Wall Street Journal - the best-written of all those I read regularly.
I've been a subscriber for three decades and like it a lot better since it trimmed it's size and began to use actual, honest-to-goodness photographs instead of etchings.

However, The Journal is not a place to seek refuge from disappointing news about the economy. Here are just a few of the headlines that greeted me in Friday's edition:

"Intel's Net Plunges as Demand Dries Up"
"Clock Ticks for Circuit City Sale"
"MeadWestvaco to Ax 2,000 Jobs"
"European New-Car Sales Hit 15-Year Low"

"Toyota Reduces Production"
"Sanyo Sees
Profit Fade; Factories, Jobs Pared"
"ASML Reports
Loss As Chip Prices Drop"
"Intel's Profit Tumbles 90%"
"Charter Communicat
ions Fails To Make Payments"
"Minneapolis Star Seeks Chapter 11"
"Saks Will Cut Jobs, Outlays"

So, I looked forward to the Weekend Edition on Saturday for some glimmer of hope - some good news to perk me up. Instead, I found these headlines awaiting me:

"Retailer Circuit City To Liquidate" (See Above)
"Finance Shares Take Pounding"

"U.K. Banks Hammered Amid Talks"
"Venture Fun
ding Falls 30%"
"Citi Logs $8.3 Billion Loss, Outlines Split"
"Clear Cha
nnel To Cut U.S. Work Force By 7%"
Pfizer Plans To Lay Off Up To 2,400 In Sales"

Is it any wonder that I begin every day by reading the Comics pages in our local newspapers? Yikes! Today reading the economic news is kind of like
waiting for the proverbial "other shoe" to drop while standing beside a caterpillar. The bad news just keeps on coming, and coming and coming.

I keep looking for some sign that the end is in sight, th
at there is light at the end of the tunnel. So far most of the pundits tell us that what's at the end of the tunnel is more tunnel - with no light in sight.

Now I know there are a few of you true believers out there who are convinced that, come Wednesday - the day after his coronation, er, inauguration - our new President, Barack
Obama, is going to fix everything. You think he will stop the double war we're fighting and solve our economic crisis by the end of the week. Pardon me if I'm just a little skeptical. I didn't vote for him because I think he lacks sufficient experience for this job and I don't like many of his choices for his cabinet and other leadership roles - they're mostly Clinton-era re-treads - but I do wish him and his team well. ANYONE elected President this time around would have his hands full, but I think it's going to be especially difficult for our rookie president - and tough on us, as a result.

In the meantime, the Keystone Kops in Sacramento seemed determined to ru
n our state right into bankruptcy and drag our cities and educational organizations down with it. We should recall the whole bunch and start over - how could we do worse?


Here in our little neck of the world every business with which I've had even the most casual contact over the past couple months is on the decline. Favorite restaurants are seeing patronage drop by 50% or more in some cases. Other retail establishments are liquida
ting or hanging on by a thread. Our local newspaper of record, the Daily Pilot, continues to battle to stay afloat while being burdened by the bankruptcy filing of it's grandparent, The Tribune Company. Our Harbor Boulevard Of Cars looks very much like a dry river bed instead of the rushing torrent of sales tax dollars we've grown to know over the past several decades. It would be no surprise to see even more dealerships shutter their showrooms forever.


It is with great trepidation that I await the mid-year budget review that's coming up within the next couple weeks. I fear the implosion of the housing market - sales prices on local homes are at
2003 levels according to one recent report - and the decline in sales tax dollars because folks are holding onto whatever discretionary funds they have in anticipation that this economic downturn is actually gaining momentum - has created a true municipal fiscal crisis. Without those sources of revenue our city is going to face some extremely difficult times ahead. I worry that our current City Council is ill-prepared to make the right decisions. For example, they've demonstrated poor fiscal judgment recently by perpetuating the RRIP program, which has cost our city a couple million dollars over the past three years at a time when that money was sorely needed.


I fear that our current elected leaders might take the easy way out (for them) and simply instruct the City Manager to make across the board staff reductions at some draconian level instead of permitting him and his staff to present more reasonable, professionally determined recommendations for cost savings. We'll see.. Now, get away from me, darn caterpillar!


Blogger Chris McEvoy said...


Our economy is not looking good and that is understandable because the economy (like anything else) cannot keep besting itself year after year. Eventually we had to have a bad year, hopefully we don't have too many. This is the lesson that our governing bodies need to take from this current situation, start planning and saving for these times and never again assume that the economy will always be good.

Our council does have its work cut out for them. I too would like see the council use the advice of the city staff as a guide to work through this economy. The cuts need to be treated like a surgeon does cancer.

Personally what worries me the most are the bailouts, it seems to me these will compound the economic situation.

There is a silver lining to all this bad economic news, opportunity. These opportunities will save our economy. For example because of the drop in housing prices I almost have an opportunity to own property in this city, I like West Side, no cut through traffic, yet :).

Keep up the great blog.

1/18/2009 10:42:00 PM  
Blogger Unknown said...

Hi Geoff,

I remember when I first started reading your blog last year and posted on the topic of the city budget, asking how the finances would work given the impending decline in tax revenue.

You replied that the city manager(?) said in his presentation that the expected decline in revenue was only 1-3%, and that they could handle that programatically.

Are they still expecting only 1-3% decline?

1/20/2009 04:53:00 PM  
Blogger The Pot Stirrer said...

Alex, that's a very good question. I don't think they have the post-Christmas sales tax numbers yet, so it's hard to predict what the shortfall will actually be. It's a given that there WILL be a shortfall in both sales and property tax revenues. Roeder has directed ALL department heads to come up with cost savings plans. The council is supposed to have it's mid-year budget review soon - within weeks. We'll know more at that time, if not before.

1/20/2009 09:11:00 PM  

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