In his column today, Nobel Prize-winning economist and New York Times columnist Paul Krugman writes about the steep decline of American financial prowess and influence in the world:
"Indeed, these days America is looking like the Bernie Madoff of economies: for many years it was held in respect, even awe, but it turns out to have been a fraud all along."
I'm no economist – far from it; I have to hunker down and sweat through balancing my measly bank account each month – but even I knew there was something terribly wrong going on with our economy throughout the Bush years. It niggled. I edited a weekly newspaper from 1998 through 2006, and I watched in fascination as the Sacramento bedroom community it served grew from a small collection of nice neighborhoods governed by the county and a community services district (CSD), into the county's prime money-making behemoth.
When I started editing the paper, there was a single grocery store in a strip mall, two fast-food restaurants, a pizza parlor and two gas stations, the nice neighborhoods, a high school, a middle school and a couple of elementary schools, and a brand-new, very exclusive country club and golf course with a fabulous"gated" community that was still mostly a gleam in the developer's eye. All these were on the north side of the highway. On the south side was another gas station, another fast food joint and a small mobile home park, the "poor" end of the community. A couple of miles further south down a two-lane country road was a slowly growing industrial park.
When I left, there were three giant grocery stores in their ubiquitous strip malls, four more gas stations, an eight-theater movie complex, a Mercedes Benz dealership, a huge, high-end retail center, a gigantic sports club, and several more restaurants, including one that claimed four-star status from the moment it opened. More neighborhoods were constructed seemingly overnight, including several high-priced "gated communities" that quickly sprawled out and dominated the surrounding, once-pristine hillsides. A second middle school was constructed, along with two more large elementary schools, and plans were in the works for another high school. The industrial park filled up so quickly with huge office buildings, techie firms, storage facilites for boats and Rvs, and light manufacturing centers that it had to expand. A gigantic company that did billing for other companies across the nation built a monster "campus" there and quickly became one the county's largest employers. And the sleepy local chamber of commerce grew into a powerful political entity with hundreds of active members.
At the same time, a huge migration of people, taking advantage of the suddenly inflating real estate prices in the San Francisco Bay Area and southern California, used the profits they made on the sale of their houses and bought themselves new ones in the growing community. They wanted a better, safer place to raise their children while enjoying far more house than they'd enjoyed before. Real estate prices, naturally, skyrocketed. It was nothing for a modest, 30-year-old home to go for well over half a million dollars; the new ones – the now infamous McMansions – sold for far more than that, some of them easily approaching two million bucks. If the house sat on a little land, too, the sky was the limit.
To serve the exploding community, the local fire department grew from two small stations to four, and added ambulances, a water engine, a ladder truck and many more firefighter/EMTs. One of the new stations was huge and included heated bays for its trucks, a marble-floored lobby and a gigantic kitchen, dormitory and gym for the firefighters. A fifth fire station south of the highway, was under construction when I left in 2006. It was slated to become a state-of-the-art firefighter training center for northern California, along with providing wildfire protection to the new retail centers and homes that were rapidly sprouting up all around it.
It was all dazzling. As a newspaper editor, my salary was peanuts, though I worked as hard as anyone else in the community. I couldn't afford to live there myself – as time passed, I could barely afford to buy groceries there. And I wondered how the residents could afford those gigantic houses. Even making $5-$6K or more a month (an income I could hardly imagine) their mortgages had to be crushing. And then there was the expense of furnishing the many rooms, of landscaping the yards and then maintaining them to the satisfaction of the snooty neighborhood associations and the CSD, the cost of cooling those houses through the long, sweltering valley summers and heating them through the mild winters. Yet everyone drove SUVs, gigantic trucks and high-end cars, even the high school students. Hummers abounded. And one of the main "issues" in the community was an increasing irritation with traffic gridlock as residents commuted to and from work each day.
Then it all started melting down. The year I was laid off (because my paper's parent company was "downsizing"), the real estate market was already tottering, and in spite of my attempts to get them to do so, no one was talking about it out loud yet. Some of the new, upscale stores had already gone under and the fancy four-star restaurant was barely getting by, depending heavily on evening alcohol sales in its beautiful bar. Construction was slowing down. One of the big homebuilding firms went into bankruptcy and the powerful local developers were putting some of their plans into holding patterns.
Today, my old weekly newspaper is about a third of the size it was when I left. It's struggling and no longer maintains an office in the community itself. Because its big advertisers have vanished (real estate and car sales) and the smaller businesses haven't got the money to advertise as much as they used to, the paper's editorial and sales staff has been decimated. A second weekly newspaper the parent company started in an adjacent, also-exploding community no longer exists at all. The parent company is shrinking as I write and layoffs have already put many local journalists and newspaper production workers out of work. One of the papers in this newspaper "family" now publishes only online.
Lots of the community's new storefronts and office buildings stand empty and echoing. There are many fewer Realtors. A lot of those pricey McMansions are dead husks and families are quietly moving away, victims of employer layoffs, guttering new companies and "creative" mortgages.
A lot of Americans knew the galloping economy was a fantasy, even if we couldn't prove it and were prevented by the prevailing attitude in the nation from even whispering much about it. I knew, even though I don't know much about economics. That old adage, "you can't get something for nothing" was ringing in my ears even as I watched the bubble grow and grow … and grow.
Well, it popped. As one of the millions of unemployed persons in America today, I don't feel so alone anymore, but that sure doesn't make me feel any better.