Category: Main Street

I had the opportunity to talk with three folks representing what I think are interesting data points regarding the economic situation and its effects over the last three weeks. Again, comments are paraphrases, not quotes:

From a car repair place: Business is about the same… but folks are being more careful about what they’re repairing. And they’re holding off on repairs, especially if they have high deductibles.

Top Line Liquor From a liquor store owner: I’m still selling. But people (gestures toward single malt scotches), are buying the cheaper stuff, not the expensive. (Points at the bargain, economy priced bourbons and scotches.) More like these, and less (waves hand upward to the $70 bottles) like those. But hey, things will get better eventually. I’m downgrading this guy from owner to manager… clearly he hasn’t looked at credit terms lately.

What’s interesting is that I’m getting a fairly homogenous set of responses (this post and the last) in terms of the economic impact. Everyone seems to be getting hedgy with their investments. Everyone seems to be acting, if not executing, on a more conservative, less confident, track.

I think this is how the 1929 crash started, except they didn’t have folks like me making connections quite as fast. (No, that’s not a reason to self-sensor!) I predict we’ll get to the 8,000 range well before the winter holidays. Unless Obama gets elected, in which case all bets, unfortunately, are off. At least with McCain/Sarah [mammoth hunter] Palin we know where we’re headed. [Okay, that was partisan, but if you’ve been reading this blog… you know where I stand.]

I’ve been collecting comments from people running or managing retail businesses, to see what changes consumers have been made.

From a gas station manager: People are pumping differently. They’re not filling up, but I see them around more often. They’re topping off, like on their way home and stuff.

From a hair stylist: Business is down. Not during the weekends, then we’re real busy. But people aren’t coming around during the day. Like now (gestured at the empty store): between like one and five in the afternoon it’s totally dead.

From a supermarket manager: Overall receipts hasn’t changed. But people are buying less each time, and coming more often instead. And they’re coming in more with shopping lists; they’re not shopping casually.

People are talking about Main Street, and the reality of the economic impact on plain folks. These observations, to me, mirror more the crisis of confidence precipitating the Great Depression rather than technical credit crisis. 401(k)s, pension plans and the credit markets will eventually recover, with or without a government bailout (and yes, I still think it’s a bailout, no matter what the pundits might opine). The crisis that has to be overcome now is the one of consumer confidence, and there are several relatively inexpensive, non-pork ways to ameliorate consumer fears:

• Eliminate short stock purchases. Period.
• Extend unemployment benefits to a full year.
• Freeze all foreclosures for the next eighteen months, and have local bankers, a representative from the mortgage company and the homeowners sit down and try and figure out how not to foreclose on the property. The feds should give local banks (not parent companies, or at a national level) funds relative to the mortgage stresses in that area to help underwrite these new loans. Only after there’s no agreement, or it’s clear the homeowner would be unable to pay even a reworked mortgage, would the foreclosure continue.
• Underwrite ‘pay for play’ programs, where unemployed people who successfully complete training and certification courses have a free ride — but are personally liable for the courses if they do not complete them (this cuts the ITT Tech student loan scam out of the loop).

There are other ideas, ones that we’d need to think about, ideas that might not be right for every region of the country, but workable in some. But what we really need is time. Time not to rush, time not to act hastily. And if that results, as President Bush said last week, in the loss of $1.4 trillion in “value” to the country, in the form of a loss of stock value, then so be it.

Calm, thoughtful action is economically more prudent than rash, panicky and doom-driven action.