Bad economic news can have an impact even when it's not based
on fact but on political expediency. If enough employers believe
we're headed toward a recession, then they are less likely to
expand or hire extra personnel.
"It's the economy, stupid," heralded the Clinton
presidential era and New Yorkers, in particular, were eager for a
recovery from the loss of jobs and wages from the so-called Bush
I recession. Whether the recovery was real is a matter for
debate.
In 1991, the city was going through tough financial times. Taxes
were raised and jobs cut. All in all, 27,000 employees were laid
off by the Dinkins administration. One city worker committed
suicide after getting his pink slip. Yet the very next year the
city had a $2 billion surplus just in time for the upcoming
reelection campaign. Many New Yorkers credit the Clinton
administration for the economic boom, but my family did not fare
as well. I was laid off from my job, and my family came very
close to losing our home in foreclosure. None of our financial
misfortune had anything to do with the president, yet those
facing these same problems today are being told: "It's all
Bush's fault."
Now that the news coming from Iraq is so positive that even the
mainstream press has no choice but to report it, Plan B for the
Blame Bush Coalition is to zero in on negative economic news. The
stock market goes into a tizzy whenever the financial news is
pessimistic. Today it's up, the next it's down.
When the London Daily Telegraph ran an article last month
headlined "Jim Rogers Quits Dollars After Declaring U.S.
Recession," it noted: "Mr. Rogers' comments are
followed slavishly by many members of the international
investment communities, and his view that the US economy is in a
worse state than that suggested by most economic commentators is
likely to add to pessimism in some quarters about its
health." Well, what I learned from the article is that Mr.
Rogers was once George Soros's partner, and the "aha"
factor kicked in.
Dare I say it? Our economy is booming, and for the segments that
are not responding to it, individual responsibility is more
likely to be at fault. Consider Citigroup, which was just bailed
out by Abu Dhabi. In January of this year, I interviewed and
quoted a partner of the Free Enterprise Action Fund, Thomas
Borelli, who noted that Citigroup is "denying loans because
of green pressure not to give loans to the developing world.
That's a decrease in revenue. Look at their citizenship report;
they're not lending 75% of their loans to the developing world
because of non-financial criteria." My article was headlined
"Earth First Radicals Bully CEOs," and warned that
companies caving into radical environmentalists were doing their
stockholders an injustice.
Recently, a Staten Island paper reported the woe of a woman who
was in danger of losing her home because she defaulted on a
subprime mortgage that climbed to $2,800 a month from $700. Local
politicians sought photo ops to commiserate with her, suggesting
that the government might intercede. Most of these subprime loans
involved fraudulent documentation and shady brokers who falsified
financial income data to secure the bank loans. Many of these
initial low-interest loans are very short term and can increase
dramatically within a few months. Doesn't anybody read the fine
print anymore?
I sympathize with those homeowners who fall behind for one reason
or another (I've been there), but expecting a bailout from the
taxpayers is disgraceful. We need to educate borrowers, not
rescue those with poor judgment.
In the current meaning, a recession is a decline in economic
activity spread across the country for several months, but
because so much of our economy is underground, how can we
determine its true state? There are innumerable businesses and
brave new entrepreneurs on the Internet. If stores aren't
bursting at the seams, it's because we're buying online and
avoiding the crush. I buy on eBay, craigslist, and other online
auction sites.
Naturally, Governor Spitzer was eager to start taxing these
transactions, but fortunately he came to his senses. Manhattan
hotels are booked solid for the rest of the year. Tourists from
Europe are buying suitcases to truck home the tons of merchandise
that is now bargain-priced due to the shrinking dollar. There are
help wanted signs in the windows of shops all over town. Business
is booming regardless of what the naysayers are spouting.
I say, "It's all Bush's fault."