Saturday, March 28, 2009

Fantasizing Growth: The 2016 Olympics

Used to be a woman living here in Rogers Park who you might remember if you live in the vicinity of the block bounded by Pratt, Sheridan, Farwell, and Lakewood.

She was an older lady somewhere in her sixties; an extremely small, delicate,thin white woman with reddish hair, who was usually dressed in shabby clothes and who I saw often at the 7-11 at Pratt & Sheridan. She was an immensely likeable woman, always friendly, and baked absolutely delectable sweets, which she offered to people who she talked to. She lived in the small, decrepit blond brick apartment building on Farwell close to Lakewood, right next to the alley.

Well, I had always assumed she was poor, based on her appearance and place of residence, and was really surprised when, on our last meeting a couple of years ago, she told me she was moving out of the neighborhood to Skokie, because she'd bought a house there. Wow, I thought, this lady has the wherewithal to buy a house? I immediately assumed that there was a sleazy mortgage broker mixed up in the deal somewhere, for she told me the house cost about $350,000, so I asked her what kind of financing she got.

"I didn't get any," she replied in a factual manner. "I paid cash."

I almost choked. She paid cash, I thought numbly, and suddenly I felt overwhelmed with shame for my own carelessness, extravagance, and wastefulness; in general, for my misspent life. This woman had simply done what I and most other Americans just can't find it in themselves to do, which is stop spending and put money away and forget about what other people think of you and your old clothes and decrepit furniture.

Actually, Rogers Park has a lot of residents like this, but you don't know who they are because they tend to hide. Not only do they not walk around bragging about their means and position, but they often look very unfashionable, to say the least. And they don't give a damn what we think of their appearance, because they have enough money socked away that they don't need to worry about what anyone thinks of them, but instead, would rather no one noticed them at all.

Now, I have people in my personal circle of acquaintances of another sort, people who have made over $200,000 a year for years past and still don't have a dime saved, can't afford to retire, and have tens of thousands of dollars of credit card debt, oftentimes delinquent. They live in large houses and pricey condos in prime neighborhoods,wear Rolex watches and Bruno Magli shoes,and always have lavish cars and boats, as well as every electronic gadget ever invented, but they are swimming in so much debt that all that needs to happen is for their commissions to slump for a month, and they're buried- and you'd better believe those commissions are slumping these days.

And sometimes they don't even need a drop in their incomes- a number of years back, I prospected a United Airlines captain who was then pulling about $250,000 a year, and he told me he wouldn't be doing any investing because he and his wife were doing a Chapter 7, on over $343,000 worth of unsecured debt. That's debt over and above the house and car loans, which are secured (sort of), for things like Disneyland and jewelry and furniture and clothes and gameboxes and whetever else you can think of to shoot this kind of money on over a short span of time.

You can't help but dwell on these two very different types of people and how the second sort has set the tone in our culture for the past 60 years and has helped sink this country into a world of trouble, especially when you consider our national commitment of over $7 Trillion in all towards bailing out the financial and housing industries, and Daley's obsession with winning the bid for the Olympics and the rapidly escalating taxes in Chicago, and increasing costs of doing business here. Has anyone told this guy that we are in the deepest economic pit since the 30s and that there's more to a city than monuments and sports venues?

We can now see that our local leaders, along with municipal authorities everywhere else, bought eagerly into the Ponzi mentality of the past decade, and were clearly basing their projections of future tax revenues on double-digit yearly increases in home values and on a economy that would surely keep expanding forever. Now that a massive shift has occurred, it is clear that revenues not only won't meet the projections that were used to justify lavish projects, but will fall substantially short and will also continue to drop as we enter a period of unavoidable economic contraction. That contraction won't be halted by printing trillions of more dollars, as Obama and Geithner are doing now- the additional government debt, in a time of falling incomes, will not only prolong the misery, it will endanger us all the more as the U.S. Treasury lurches toward insolvency. The yearly deficit is now $1.75 Trillion, over half the budget of $3 Trillion, for an overhang of public debt larger than has ever existed in any country in history, and which, judging by history, is unsustainable. And it is already affecting us, for the deterioration in our currency is driving oil prices back into the $50/barrel range, before the driving season even begins. If you think that we are not in danger of defaulting on our soveriegn debt, read history, and read about what happens to the economies and the citizens of countries that go into default. Read about Weimer Germany and Argentina, read about the whellbarrows of money to buy bread and the millions of people booted out of the middle class and plunged into desperate poverty as a result of their leaders' economic ignorance and financial malfeasance.

The 2016 Olympics is only one of the many Vanity projects Daley has his heart set on and is determined to ram down our throats at whatever the cost, which he and his people are being less than forthright about. There is also the Block 37 El Superstation Boondogle; at the latest writing, the station has lurched way over budget and sucked up over $300 Million, and is now stalled and left to rot in its incomplete state. This is money that could have been used to rebuild the decrepit Red Line and could also have gone toward expanding the system with service we really need, such as a circular connecting rail line, and lines that run east and west on the city's congested north side, to relieve the horrendous congestion on Belmont, Fullerton, and Chicago Avenues, so that life without a car might be possible at some point for the unaffluent denizens of the city's outer neighborhoods.

Our police department is steeply underfunded and undermanned, what consideration might be sufficient to kill our Olympic bid in any case, especially if considered alongside our decrepit and inadeqaute public transportation.

It's sad, scary, and somehow unbelievable, that one of the nation's richest and most successful cities should have so much difficulty meeting its basic needs and paying its bills, and it's so typically American that we could be in such a difficulty and still be arranging to lay out tens of billions of dollars we really don't begin to have for vanity projects whose costs to the public will result in profits only for a few crony "entrepreneurs", while disrupting the lives of tens of thousands of people and running up at least $20 billion in costs to the public, if not much more, if the $44 Billion Bejing games are any indication. Anyone who thinks that costs will be capped at $2 Billion or less, and will be paid mostly by private donors, is naive and credulous in the extreme.

But Americans as a whole tend to be extremely credulous and naive, which is why we are in the mess we are in to begin with. We have had it so sweet and easy for so long that we tend to think that we have a God-given entitlement to things like 20% a year appreciation on our houses, and that there's no bottom to the well of public money. Life for the past 60 years for Western countries in general and the U.S. in particular has been one long debt-and-oil fueled bacchanalia; an incredible feast of technological advances , material surplus, and easy credit; and it has gulled us into incredible complacency while humoring us in our fantasies of perpetual world dominance and our overweaning sense of entitlement.

Well, pinning our future on "growth" triggered by the expenditure of billions of borrowed dollars on glitzy projects with high glamor quotients but limited scope and utility, isn't any wiser for a city, or a country, than it does for an individual citizen who's already losing his job and in up to his eyeballs in debt, to borrow twice his yearly income to buy a Mercedes on the premise that driving an impressive auto will help him score more clients or get a better job. The Olympics is a costly and disruptive indulgence for which the usual justifications, trotted out for every public gift of hundreds of millions of dollars to privately owned sports venues, will no longer serve, and so are numerous other projects that Daley has on his plate; and our numerous bailouts of failing industries and escalating public spending sufficient to double the federal deficit will most likely only produce results on a national level comparable with what a major debt-spending binge does to an individual who's already on the ropes financially.

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