More Dogs on Main Street
September 11, 2009
It’s been a year since the financial world went off the tracks. Time flies when you’re eating cat food. I remember turning on the TV one morning and, in the time it took for the Pop Tarts to heat, I had lost about half of my assets. The Bush administration went into full panic mode and convinced Congress to print billions of new dollars to throw at bankrupt banks. By week’s end, the Lehman Brothers were both sleeping in their mother’s basement. Everything that was too big to fail was failing.
Obama took over the mess in January and, before long, the taxpayers owned AIG, Citicorp and General Motors. GM is being taken apart, with Hummer sold to the Chinese, Saturn sold to Penske, and Pontiac taken out behind the barn and shot. We had TARP, TALF and a whole bunch of other programs that nobody understands, but all involved shoveling money into the black hole of Wall Street. Meanwhile, the folks on Wall Street whose crack judgment caused the problems in the first place were whining about burdensome regulations and the threat of reduced compensation for doing such fine work. They wanted the taxpayer money but didn’t want to be told what they could do with it. It’s kind of like food stamps you get them, but you can’t buy beer.
The general consensus is that we have averted Great Depression 2.0. I guess that’s good, but it’s a pretty low standard to aim for. Yes, the car was totaled when you crashed into the bridge abutment, but at least the taillights weren’t damaged. Unemployment is very close to 10 percent, and that doesn’t take into account all the people who are working reduced hours, or have had to take lower-paying jobs. The construction industry is grim, to put it mildly, and here, where our primary industry is real-estate bubbles, we have a long way to go before anything is back to normal. Credit is still not really flowing.
For all the angst, we have managed to get through it. There’s still a long way to go, and the new "normal" probably won’t look a lot like the years leading up to the bust. Americans are actually saving money again. Maybe we have learned something from all of this.
The big question locally is whether conditions have stabilized enough that people will be taking ski vacations this year. If you are struggling to make the mortgage payment, it’s pretty easy to cancel the ski trip. Last year, in the thick of the panic, skier days stayed remarkably strong. If I remember right, the total skier days were down only about 10%, and that was coming off a record year. The big difference was that while they were skiing, they weren’t spending any money. Instead of outfitting the kids with entirely new gear, parents replaced lost mittens (and tried to buy them one at a time if only one was missing). Duct-tape sales were up sharply. Restaurants couldn’t sell appetizers or desserts, and the average ticket plunged.
So this year everybody is cautious. Inventories will be lean. Main Street restaurant prices might actually come down a little, now that it’s hard to get long-term financing for dinner. Nobody knows what to expect. Will they come at all? If they do, will they be camped out at Jordanelle and eating at Burger King instead of Grappa? Like the weather itself, it’s just too early to predict.
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We’re already pretty deep into September without a good frost. Last year, Miners Day got snowed out, and a little snow in early September is pretty typical. Not this year. What that means anything for the coming winter is anybody’s guess. The patterns have been extreme, from that rain-soaked June to bone-dry August, and now a hot September.
There ought to be some way to take the risk out of it. Maybe the guys at AIG could come up with some kind of financial derivative based on deviations from average snowfall. We could have tourist-default swaps that would pay merchants if the travel season is a bust. And then we could slice up the default swaps and securitize them, selling little pieces of them to unsuspecting foreign banks after some clueless credit rating agency calls them AAA investments.
Yeah, that’ll work. What could possibly go wrong?
Tom Clyde served as Park City attorney in the 1980s and is the author of "More Dogs On Main Street." He has been a columnist at The Park Record for more than 20 years.