Welcome 2009: A Stark Contrast From Last Year?
By MICHAEL SCHENKLER
I’m still not used to writing “2009” — it’ll take quite awhile, as it does every year.
The change from year-to-year is usually without much fanfare. We have the New Year’s Eve celebration, a couple of weeks wishing each other Happy New Year, the temporary resolutions and the date adjustment on forms, checks and the like.
Nine years ago, the world brought the year-change to an international crisis level, spending a year or two promoting Y2K, the fear that computers couldn’t deal with the new millennium and our financial and record keeping systems were in peril. The puffery was the only story. By this time into 2000, Y2K was a logo found on mugs and t-shirts on the clearance shelves.
The change from 2008 to 2009 is more significant for most of us than any previous calendar change.
It marks the moment where we expect our nation to rise up and meet the challenge of the worst financial test of a lifetime. We not only watch with apprehension, we each seem to have cut back personal spending whether or not we have actually been affected by the recession.
The year 2008 ended with consumer spending and business spending grinding to a recent low. The market collapse, the Madoff scheme, the gas price absurdity, devaluation of 401(k) and pension plans, the financial industry distrust, and the US auto industry instability, have created the fear which has driven us all into a cocoon of financial conservatism.
It is that overwhelming feeling of uncertainty and uneasiness – for some it’s much worse – that marks the end of 2008.
And when that little cute 2009 cartoon figure entered the New Year in diapers – as he does every year – we looked to him to bring change.
Tattooed on his tiny rear end were the prayers of “hope” and “change.”
But in this instance, we think it is more.
The year 2009 marks a landmark of change in the spirit of our nation.
We enter the year and recognize we must sacrifice. The over-indulgent American appetite is going on a diet. We are each searching for the diet that will meet our individual need. Can we find the Cabbage Soup diet to cleanse our out-of-control appetites?
I’m looking for the magic prescription that lets me consume all the electronics and food I want, but forces me to curtail on gym membership and dress clothing.
Hey South Beach, here I come.
I’m concerned that my investments are as safe as being in my mattress but will shortly start growing again so that the future looks sunny and bright.
I’m cutting back and waiting for the path to the American Dream. You know, it comes every generation — the easy path to wealth and retirement.
First it was Social Security and then there were pensions, the stock market welcoming middle class investors, mutual funds, brokerage houses sprouting up in every neighborhood — in every bank — financial advisors, financial instruments that allowed us all to be part of the big boy investment community followed. There were the indexed funds, the global mutual funds, you could put your investments in a Chinese menu of funds. Aha, there were the tech stocks – we could invest in ingenuity and the future. And day trading. Oh, real estate was always safe. Or gold? Or oil futures?
Did we really know what we were doing with our money?
Were we all anxious to hand it over to Bernie Madoff and just watch it grow with double digit interest each year?
No, we are much too smart.
It won’t happen again.
Well, wait and see.
Watch Barack Obama come along invest a trillion or two in our economy and turn things around.
Watch us quickly recover and watch those guys from Wall Street – perhaps that’s where they’ll be or perhaps online, or in Chicago, or Dubai.
Watch the next generation of derivatives – whatever they are – or new, safe investment instruments with an aggressive strategy and an insured floor. Watch the new generation of paper thin roll-on-wall flat screens and watch us quickly forget the economic collapse of 2008.
Things in 2009 will return to what Americans know how to do best: spend more than they should, eat more than they should and invest in whatever will return the biggest bucks.
The biggest test of the transition from last year to this may be to remember to write ’09 on the dateline.
And don’t be so surprised if 2009, which arrived with the biggest promise of change in our lifetime, simply results in more of the same ‘ol, same ‘ol.
Happy New Year!
Gov’s State Of The State Was Not New Or Inspiring
The Governor’s State of the State message is usually a major policy declaration of his priorities for the state for the new year. If importance was the yardstick, the speech was a disappointment.
Governor Paterson did say that “the state of the state is perilous,” which, without doubt, it is. But he didn’t say much as to what he and the legislature should do about it. There were a collection of minor initiatives, and we like the emphasis on public health, particularly the sugar tax for sodas.
One of the older taxes in history is the salt tax, which was imposed in France in the 18th century. It was highly unpopular, as was the salt tax that the British Empire imposed when India was their colony over a century ago. The effect of salt on blood pressure was not a factor when these taxes were imposed; their purpose was to raise revenue for the monarch. The Boston Tea Party comes to mind as another occasion where the taxation of basic foodstuffs was not well regarded by the populace.
There was press coverage of the governor’s alleged 60 hours of preparation (a figure that was later disputed) to memorize the 62-minute speech, a feat which shows his extraordinary ability and diligence in overcoming physical challenges. It might have been wiser, however, for him to have given a shorter speech but include more substantive recommendations to deal with the $15.4 billion budget deficit.
Perhaps the painful financial decisions that lie ahead are being left for the governor’s budget, which is due to be submitted on Jan. 15. It is also possible that Albany is waiting for financial rescue by the Obama administration. It will probably take some time, however, to learn what resources New York State will receive from Washington, and for what purposes it may be used. The state’s fiscal year begins April 1, which is the deadline for the Legislature to adopt the budget for Fiscal Year 2010.
Whatever restrictions are placed on spending are often avoided by switching accounts and other budget legerdemain.
Financially, many of the states are in a bad way, with most facing declining revenues as part of the national recession. California, the largest state in population, has the largest deficit, even per capita. Governor Schwarzenegger, now in his 7th year in office, is ineligible to run for re-election, unless he can manipulate the suspension of Constitutional term limits. He showed remarkable powers in his previous two careers, so who knows? However, it is as unlikely that he will make an assault on the California Constitution as it is that he would get the United States Constitution amended to make him eligible to run for President despite his Austrian nativity, odd as that provision may appear today.
Arnold is the pre-eminent Republican candidate in 2010 for the Senate seat now held by Barbara Boxer. 2010 is also the year that incumbent Senator Dianne Feinstein may run for governor, which will then be an open seat because of term limits, which are the law in part or all of 36 of the 50 states, including New York City, which held two referenda on the subject in 1993 and 1996. You may have known that.
For the most part, the media were unimpressed by the State of the State message. Bill Hammond wrote in the News: “Gov. Paterson’s state of the state speech was a lot like that sugary soda he wants to tax – too much fizzy sweet stuff and practically zero nutritional value. Rarely in the history of political rhetoric has there been such high-flying rhetoric to pitch such a humdrum agenda.
Bottom line: Paterson did not once speak to the harsh discipline needed to pull New York out of its mess. A pity. Now he’ll have to work that much harder to get out of the hole.”
In our view, memorizing and delivering the speech was a tour de force. Its substance was mediocre. The governor has been up with the curve, ahead of other officials, when it came to foreseeing fiscal disaster and speaking out. But he has fallen behind when it comes to solutions.
This is particularly the fact when fiscal reality would affect the personal wealth and benefits of over 200,000 state employees, some of whom believe that it is for their benefit that state and local governments are constituted. That belief is nurtured by the bipartisan coterie of elected officials who routinely support the benefit bubble in exchange for contributions, phone banks for campaigns and endorsements, generally of incumbents who have shown their fealty.
“Rock a bye baby, on the tree top,
When the wind blows, the cradle will rock,
When the bough breaks, the cradle will fall.
And down will come baby, cradle and all.”
There are different accounts of the origin of this 17th century lullaby or nursery rhyme. We cite the lines to indicate that too many burdens will eventually overwhelm any system of balances. This is in the same concept expressed by the phrase, “the last straw,” also known as “the straw that broke the camel’s back.”
Not4Publication.com by Dom Nunziato