Short Term Memories
1. From McClatchy Washington Bureau (6/14/2009):
“WASHINGTON – Unlike the labor market collapse that killed millions of U.S. jobs in a matter of months, the nation’s return to peak employment will not be nearly as uniform or swift.
“While signs indicate that the worst of the recession may be over, only six metropolitan areas across the country are expected to regain their pre-recession employment levels by the end of 2009, according to projections from IHS Global Insight, a leading economic forecaster …
“Most of the country – 286 of 325 metro areas covered in the IHS analysis – aren’t likely to regain their pre-recession levels until at least 2012 …
“The bleak jobs picture underscores the long, tough road ahead in rebuilding the U.S. economy after the worst recession since the Great Depression.
“Of the 6 million jobs lost since the recession began 18 months ago, nearly 4 million were eliminated between November and April. The six-month freefall included a record four straight months with more than 600,000 job losses.”
2. From the Journal of Commerce (6/18/2009):
“FedEx reported an $ 876 million loss in its fiscal fourth quarter ending May 31 on Wednesday but company chief Frederick Smith said he believes the economy likely appears to have reached the bottom.
“‘We believe the worst of the recession is likely behind us,’ Smith told a conference call on FedEx’s report on its 2009 fiscal year. ‘We do see signs of stability.’…
“What Smith called the ‘most difficult economic conditions in our company’s history’ sent overall revenue at FedEx down 20 percent in its fiscal fourth quarter, to $ 7.85 billion.”
3. From The New York Times (6/23/2009):
“HONG KONG – Companies in Japan and Germany may have become less gloomy about their prospects in recent months, as surveys showed Monday, but neither they nor businesses elsewhere have much to cheer about as the world economy remains mired in a recession that could see it shrink by about 2.9 percent this year …
“More detailed forecasts released Monday showed that much of this pain will be in high-income areas like the euro-zone, the United States and Japan …
“The World Bank’s forecasts Monday echoed this caution: ‘While the global economy is projected to begin expanding once again in the second half of 2009, the recovery is expected to be much more subdued than might normally be the case,’ the bank said in its report. ‘Unemployment is on the rise, and the poverty is set to increase in developing economies, bringing with it a substantial deterioration in conditions for the world’s poor.’”
4. From reporter Jack Healy of The New York Times (6/23/2009):
“Was all that optimism about an economic recovery a bit too hasty?
“Resurgent fears about the struggling economy jolted Wall Street on Monday, dragging stocks broadly lower after their first losing week in a month. The Dow Jones industrial average slumped to its lowest levels since late May, and the Standard & Poor’s 500-stock index slipped back into negative territory for the year.
“A new report by the World Bank underscored broader concerns that the global economy is not ready to snap back from the worst downturn since World War II. The bank predicted that the global economy would shrink 2.9 percent this year before rebounding in 2010, and said that the world was ‘entering an era of slower growth’ that demanded tighter oversight of the financial system …
“Unemployment is rising and expected to reach 10 percent or more, even after the broader economy begins to recover. Hundreds of big and small banks across the country are still on government lifelines. And while credit markets are returning to normal after last year’s financial crisis, analysts say higher interest rates on Treasury notes and mortgages threaten to disrupt the government’s attempts to right the economy.”
“Was all that optimism about an economic recovery a bit too hasty?” Mr. Healy asked.
What optimism? “The bleak jobs picture … an $ 876 million fourth quarter loss … the world economy remains mired in a recession … Unemployment is on the rise, and the poverty is set to increase in developing countries …”. Those are all “signs of stability”? That’s what you call “optimism”?
Tell that to the people of Merced, California. That terrific and once-beautiful community is now a “Ghost Town”. Ghost towns, by the way, are not reflections of “recessions”. Ghost towns are positive indications of depressions … like in the Great Depression of the 30s.
5. From Yahoo! News (6/22/2009):
“The housing crisis is creating ghost towns of once-bustling communities like Merced. In largely abandoned neighborhoods, paved sidewalks and driveways lead to empty lots strewn with utility coils. Unfinished frames with rotting rafters and rusted hinges sit alongside occupied homes. Roughly 40% of the homes in Merced are considered distressed, meaning owners are behind in their mortgage payments or can’t make them all. The toll is expected to rise, even though California extended its moratorium on foreclosures for another 90 days.
“Merced, situated in Central California’s San Joaquin Valley, is an extreme example of what’s happening across the country. As the economy tanks, foreclosures are soaring. Roughly one out of four subprime mortgages nationally is in trouble. Even so-called prime borrowers, who had good credit when they got their loans, now are having trouble keeping up; about 5% of these loans are in foreclosure, up from less than 1% in 2007, according to the Mortgage Bankers Assn. Rates are even higher in cities like Merced, Fort Myers, Fla., and Bakersfield, Calif., where the bust has been brutal.
“Such markets will continue to suffer as they work through the inventory of foreclosed properties. In Merced, property values have dropped 70% in some cases. With banks and borrowers dumping distressed homes, prices could fall by 30% more, according to Karen Weaver, a Deutsche Bank analyst. Merced, say analysts, will hit bottom by mid-to late 2010 – after the rest of the country.”
We had the good fortune to visit Merced a few years ago. A beautiful city with charming people. It’s difficult to imagine the sad conditions described in the above report. They deserve better.
So how is the so-called “stimulus” helping the occupants of Merced? It isn’t. Because it can’t. A single payment of a few hundred dollars couldn’t feed a family for even a month, but that’s the kind of bone they were thrown. Those folks in that “ghost town” are distressed because they’ve lost their jobs, and they’ll remain down and out until they find gainful employment. But that’s not likely. It takes a steady paycheck to keep up with one’s monthly mortgage payments, to put food on the table, to make car payments, but a steady paycheck can only come from a steady job. Feigned “optimism” and “signs of stability” don’t pay the rent.
Not too far away from Merced one can still see the remnants of the once-prolific Mare Island shipyard. It’s shuttered now, like so many other great shipyards in this country, but when our economy had stagnated during the Great Depression and employment was nowhere to be found, it was Mare Island and other coastal shipyards that beckoned to the millions of unemployed. And the unemployed answered the call and came scurrying for relief.
First established by the Navy in 1854, Mare Island was the Navy’s oldest base on the West Coast. The 4,351 acre facility, at one time the nation’s largest shipyard, employed 46,000 workers at the height of World War II, and a number of imposing graving docks can still be seen at that location. Among the more than 500 ships built during its tenure were 17 nuclear submarines, 4 subtenders, 31 destroyer escorts and hundreds of landing craft.
Workers at Mare Island had the distinction of building the only battleship on the West Coast – the USS California (BB-44) – and to their credit, the destroyer USS Ward was built by those craftsmen in the record-setting time of 17 ½ days.
Building our patented container ship design would be child’s play at Mare Island. Providing shipyard jobs for some 20,000 of the West Coast’s presently unemployed – along with approximately 300,000 offsite supporting workers – would be a boon for the communities in San Joaquin Valley.
“Bailing out” job-producing shipyards like Mare Island – instead of flushing taxpayer dollars down Wall Street drains – would turn cities like Merced into bustling communities again.