How long? How deep? That’s the kind of questions confronting our economy. To help you better understand the business climate’s challenges, here’s another round in ongoing debates about economic conditions between two veteran Register business journalists — Colin “Mr. Optimist” Stewart and Jon “Mr. Pessimist” Lansner.
Mr. Optimist: I missed a free smoothie at Lee’s Sandwiches in Westminster Mall, but I’m still encouraged by the $10 million-plus renovation the mall just finished. To celebrate, the mall’s merchants offered freebies and “deals galore” on Saturday. (MORE HERE!)
Mr. Pessimist: Speaking of iced economy, gourmet ice cream chain Cold Stone Creamery is shutting about 100 stores — none in O.C., Colin. And it’s tinkering with its menu. (MORE HERE!) Will four-buck ice cream go the way of four-buck lattes? I personally enjoy the $1.19 ice cream cones at Rite-Aid!
Mr. Optimist: Another bright spot is downtown Huntington Beach. A mixed-use development will begin opening this week, including a 157-room boutique hotel and 100,000 square feet of restaurants, stores and offices. (MORE HERE!)
Mr. Pessimist: Did you see Target’s results? Profits down 24%! Now the chain says they’ll aggressively cut prices to give consumers bargains during the holiday season. (MORE HERE!) I’ll bet some of these new shopkeepers don’t want to compete with an agitated Target!
Mr. Optimist: Down the coast, San Clemente also is welcoming new businesses. Four restaurants and a jewelry shop have opened at Talega Village Center, a 103,000-square-foot shopping center … and it’s 100% leased! (MORE HERE!)
Mr. Pessimist: But what about Opera Pacific, the county’s only major opera company? The Santa Ana-based troupe, early in its 23rd season, abruptly shut down. (MORE HERE!) Dare I say something about a heavy female singing?
Mr. Optimist: The national scene has fewer bright spots, I’ll admit, but the Federal Reserve did announce today that industrial output rebounded last month. October’s figure – a 1.3% increase in output – was better than economists expected. I don’t want to be reminded about what economists are predicting for the months ahead. (MORE HERE!)
Mr. Pessimist: Can I simply say: Citicorp axes 50,000 workers? (MORE HERE!)
Mr. Optimist: Here’s one for the Department of Just Deserts. The good news is that the boss of Goldman Sachs and six of his executives said “No thanks” to 2008 bonuses, recognizing that the company has fared poorly. In the recent past, a pitiful performance wouldn’t necessarily limit greedy top leaders’ compensation, but perhaps those crazy days have vanished. (MORE HERE!)
Mr. Pessimist: No sympathy for Goldman execs. Let’s look at the bottom rung of society. If the economy collapses, who’ll provide help for the little guy? Charities will get smacked. We’re already seeing that O.C.’s United Way is now feeling the economic pinch. (MORE HERE!)
Mr. Optimist: With my Optimism Telescope, I think I spy a slimmer, trimmer U.S. auto industry somewhere in the future. How to get there? I suppose bankruptcy might be one route. That’s the path that airline companies took. President-elect Barack Obama sketched out another possibility in an interview on “60 Minutes” last night. “My hope is that, over the course of the next week, between the White House and Congress, the discussions are shaped around providing assistance but making sure that that assistance is conditioned on labor, management, suppliers, lenders, all of the stakeholders coming together with a plan — what does a sustainable U.S. auto industry look like?” (MORE HERE!)
Mr. Pessimist: Paul McCulley — Pimco’s top Fed watcher in Newport Beach — is a bright guy, yes? I think he summed the economy up well on Monday, telling The Register’s John Gittelsohn: “I don’t envision a magical Nirvana anytime soon” (MORE HERE!)
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Most people really don’t like being negative & pessimistic. Those people that are constantly negative, are generally no fun to be around. But at the same time, rational debate and common sense should never be ignored. Those Carnival Barkers that make outlandish comments like Gary “in the bag” Watts, or Larry “goldilocks” Kudlow, should be quickly challenged and peppered with questions. This is mainly the media’s job, but because they were so entrenched in the problem themselves, they chose to ignore the obvious. But what’s new — snake oil salesmen weren’t challenged until science proved they were liars. Chuck Ponzi, of all people, was allowed, and actually was assisted by the media to rip-off hundreds of people .. In fact, in July of 1920, the Boston Post printed a favorable article on Ponzi and his scheme that brought in investors faster than ever. At this time, Ponzi was making a quarter million dollars a day.
It didn’t take a PHd in Economics, or a “pessimistic” attitude to figure this housing bubble out … too bad so many with PHd’s never saw it coming. I’ll tell you how so many people missed this. When you live in a box, and all you want to see and hear is the side your interest rest in, the other side becomes irrelevant, even as the facts turn against you. What’s the cost? Answer: Thousands of families lose their homes, and are likely forced to rent for many years to come.
The same thing has happened in the stock market … a little over a year ago the Dow was at an all-time high. This despite the fact all the warning signs were there, including the savings rate at zippo for the first time since the depression, and nationwide real estate prices declining for the first time in post WW 2 history. Yet we fast forward to today, and the Dow trades near a 10 year low, with more declines likely. What’s the cost? Answer: We’ve probably lost a generation of investors who will never return.
One more point.
This Housing Bubble & Economic Collapse makes me think of the song “Space Oddity”. It is the exact way I felt as this massive ponzi scheme was allowed to roar on, and for the most part was ignored by the media and a lot of very smart people. Wrong became right, stupid became smart, logic was completely ignored!
For here
Am I sitting in a tin can
Far above the world
Planet earth is blue
And there’s nothing I can do
Though I’m past one hundred thousand miles
I’m feeling very still
And I think my spaceship knows which way to go
Tell me wife I love her very much she knows
Ground control to major tom
Your circuits dead, theres something wrong
Can you hear me, major tom?
Can you hear me, major tom?
Can you hear me, major tom?
Can you….
http://www.youtube.com/watch?v=R03O_bI4tyE
When You’re Drowning In Debt Taught By: Rick Warren
Date: Sunday, November 16, 2008
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