Bernanke must be on something, because he is hallucinating and seeing "green shoots" while the economy is still taking a beating. Unemployment has definitely already hit 10% (although BLS won't report the numbers till July 2), gasoline prices are high once again, and I can't tell the difference between graphs of the Dow and blueprints for a rollercoaster (except for the fact that Six Flags has gone into bankruptcy, so probably no one is making rollercoaster blueprints right now). Anyone who sees green shoots is probably on an acid trip.
My mother just got laid off a few days ago, after a 30-year tenure at her firm. To add insult to injury, HR tried to cheat her on her severance by telling her that she had only been with the firm for 25 years. Come on, people. Really, now.
Friday, June 26, 2009
Tuesday, May 19, 2009
Dispatch from the Northwest
Special guest post by Jason Weill, New Depression Era Seattle Bureau Chief.
In Seattle, we thought we were special. We had great companies like Microsoft, Washington Mutual, Boeing, and Weyerhaeuser. I've lived here for just under three years. Since 2006, Boeing and Microsoft have stopped renewing contracts and have started to cut full-timers. Weyerhaeuser has cut back too as its timber isn't needed to build as many houses anymore. WaMu's name graces two skyscrapers downtown but the bank occupies neither of them, having been seized and sold to JP Morgan in the biggest bank failure in history.
Me? I work at Amazon.com, now the biggest company headquartered in Seattle according to Fortune magazine.
Ever since Microsoft turned the world's smartest engineers into millionaires and even billionaires, Seattle and its eastern suburbs (such as Redmond, Microsoft's home) have been forever transformed. Last generation's farmland is now a premium-brand housing development complete with a pretentious name and an upmarket shopping center. Closer to downtown, near where I live, venerable local bars and restaurants have been fighting losing battles with developers who promise bigger, better, more modern developments targeted at young affluent professionals.
Consider how many techies in Seattle grew up outside the country — many in India, where the American dream is seen through the lens of the American TV and movie camera. Consider coming to the U.S., getting a great job, and staying on a visa where if you lose your job, you pretty much have to leave the country a month later. Can you blame even the newest software engineer for taking his signing bonus and catching a ride to the nearest BMW dealer? Amazon.com is famously frugal as a company, but take a stroll through the parking lot and you'll find that many of its employees are not.
As the economy sours, Seattle is starting to face reality. We've lost the Seattle Post-Intelligencer newspaper in print although young tech-savvy Seattleites can still read it and untold hundreds of Seattle blogs on their smartphones. Some of our promised new condominium projects are just holes in the ground. Others sit completed and vacant until 70% of their owners secure financing, a goal that might take years to achieve. Some of these buildings have converted to apartments (or in some cases, back to apartments) driving rents down to their lowest prices in years as supply grows and demand flags. On the once-confident east side, signs on every residential corner plead for buyers to take cul-de-sac homes off their owners' hands before foreclosure proceedings start.
Seattle is getting a reality check that it sorely needs. I won't miss the huge waits for tables at restaurants that charge $10 for a bowl of olives. Instead, we have lighthearted lines for locally-made $3 gourmet ice cream and for tacos that sell based on taste and price, not on attitude and decor. My local farmer's market is even bigger this year and the crowds are still out in force. Now that homebuyers have some time to look before they leap, values of pressboard townhomes and hasty condo conversions are falling back into line with their real competition. Seattle's innate value is still in its stunning natural beauty that's visible just an hour's drive from the center of town. One can only stay in Seattle as an optimist today; there are rewards ahead.
In Seattle, we thought we were special. We had great companies like Microsoft, Washington Mutual, Boeing, and Weyerhaeuser. I've lived here for just under three years. Since 2006, Boeing and Microsoft have stopped renewing contracts and have started to cut full-timers. Weyerhaeuser has cut back too as its timber isn't needed to build as many houses anymore. WaMu's name graces two skyscrapers downtown but the bank occupies neither of them, having been seized and sold to JP Morgan in the biggest bank failure in history.
Me? I work at Amazon.com, now the biggest company headquartered in Seattle according to Fortune magazine.
Ever since Microsoft turned the world's smartest engineers into millionaires and even billionaires, Seattle and its eastern suburbs (such as Redmond, Microsoft's home) have been forever transformed. Last generation's farmland is now a premium-brand housing development complete with a pretentious name and an upmarket shopping center. Closer to downtown, near where I live, venerable local bars and restaurants have been fighting losing battles with developers who promise bigger, better, more modern developments targeted at young affluent professionals.
Consider how many techies in Seattle grew up outside the country — many in India, where the American dream is seen through the lens of the American TV and movie camera. Consider coming to the U.S., getting a great job, and staying on a visa where if you lose your job, you pretty much have to leave the country a month later. Can you blame even the newest software engineer for taking his signing bonus and catching a ride to the nearest BMW dealer? Amazon.com is famously frugal as a company, but take a stroll through the parking lot and you'll find that many of its employees are not.
As the economy sours, Seattle is starting to face reality. We've lost the Seattle Post-Intelligencer newspaper in print although young tech-savvy Seattleites can still read it and untold hundreds of Seattle blogs on their smartphones. Some of our promised new condominium projects are just holes in the ground. Others sit completed and vacant until 70% of their owners secure financing, a goal that might take years to achieve. Some of these buildings have converted to apartments (or in some cases, back to apartments) driving rents down to their lowest prices in years as supply grows and demand flags. On the once-confident east side, signs on every residential corner plead for buyers to take cul-de-sac homes off their owners' hands before foreclosure proceedings start.
Seattle is getting a reality check that it sorely needs. I won't miss the huge waits for tables at restaurants that charge $10 for a bowl of olives. Instead, we have lighthearted lines for locally-made $3 gourmet ice cream and for tacos that sell based on taste and price, not on attitude and decor. My local farmer's market is even bigger this year and the crowds are still out in force. Now that homebuyers have some time to look before they leap, values of pressboard townhomes and hasty condo conversions are falling back into line with their real competition. Seattle's innate value is still in its stunning natural beauty that's visible just an hour's drive from the center of town. One can only stay in Seattle as an optimist today; there are rewards ahead.
Wednesday, May 6, 2009
Another Hit in the Making
I will be visiting the little strip mall at the corner of Wilson and N. Quinn (in Arlington, VA) more often, and, no, it's not because some famous people were seen dining there recently. Michael Landrum, the genius behind Ray's the Steaks and Ray's Hellburger, will be opening a new seafood restaurant in the empty space where Ray's the Steaks used to be before it moved to Court House Station. This new restaurant, which will be called Ray's the Net, should provide the same great value as the others in the Ray's family. Ray's Hellburger offers 10 oz. burgers starting at $6.95, while Ray's the Steaks offers steaks on the caliber of Morton's or Ruth's Chris starting at around $25. I'm very pleased by Landrum's complaint in the linked website about the insane mark-ups on seafood. Let the good deals roll!
Tuesday, May 5, 2009
Signs of the Times
Wal-Mart managers may be the first to know when the economy starts to recover because they see consumer shopping behaviors firsthand. So far, customers have been shopping with lists, abandoning items at the checkout line in order to meet strict budgets, and buying inferior goods. When the good times return, many customers may stop shopping at Wal-Mart and go back to their usual (pricier) stores.
There are still 3 million job openings in the US; it's just that the currently unemployed are not qualified to fill those jobs. The sad fact of the matter is that Americans have become complacent. Instead of constantly trying to improve ourselves and our skill sets, we have developed the mentality that we're the best in the world and whatever skills we bring to the table should be enough. This type of inertia creates a situation in which the labor market can't clear because there aren't enough qualified candidates to fill the open positions. We have been surpassed by other countries in college attendance and graduation rates. While some European countries require retraining as a condition for receiving welfare and unemployment benefits, we do not. The US has fallen behind the curve and needs to get its act together!
There are still 3 million job openings in the US; it's just that the currently unemployed are not qualified to fill those jobs. The sad fact of the matter is that Americans have become complacent. Instead of constantly trying to improve ourselves and our skill sets, we have developed the mentality that we're the best in the world and whatever skills we bring to the table should be enough. This type of inertia creates a situation in which the labor market can't clear because there aren't enough qualified candidates to fill the open positions. We have been surpassed by other countries in college attendance and graduation rates. While some European countries require retraining as a condition for receiving welfare and unemployment benefits, we do not. The US has fallen behind the curve and needs to get its act together!
Saturday, May 2, 2009
Economic Recovery? Not So Fast!
I had a healthy dose of billable work this week. Just when I started to believe that maybe, just maybe, the economy was starting to turn the corner, I read an article in the Opinions section of the New York Times, discussing the still dismal state of the global economy, how certain European nations (e.g., Germany) are trying to argue their way out of a badly-needed stimulus, and the many countries that are threatening to renege on G-20 pledges to preserve free trade. What a bummer! We really need to think of a way to bring our zombie banks back to solvency and calm consumer jitters without bankrupting the country and making problems worse. Any ideas (other than creative accounting)?
Another article in the New York Times talks about the wealthy residents of the Upper East Side cutting down on conspicuous consumption and enacting a kind of neighborhood protectionism by only patronizing businesses in the UES. It makes sense to me to dine at the restaurants in your own neighborhood to make sure they don't go out of business (and turn into abandoned storefronts, thereby decreasing your property values). However, spending $500 to $600 now (and $1,800 to $2,400 pre-recession) on a DOLLHOUSE makes absolutely zero sense to me. When I was a child, I had a few (I could count them on one hand) Barbie dolls, that cost around $15 each, and I was quite happy with them being homeless. When maximum unemployment benefits in New York are $430/week, who would spend $500 on a dollhouse?! "We're homeless, but at least our child's Barbie isn't!"
Another article in the New York Times talks about the wealthy residents of the Upper East Side cutting down on conspicuous consumption and enacting a kind of neighborhood protectionism by only patronizing businesses in the UES. It makes sense to me to dine at the restaurants in your own neighborhood to make sure they don't go out of business (and turn into abandoned storefronts, thereby decreasing your property values). However, spending $500 to $600 now (and $1,800 to $2,400 pre-recession) on a DOLLHOUSE makes absolutely zero sense to me. When I was a child, I had a few (I could count them on one hand) Barbie dolls, that cost around $15 each, and I was quite happy with them being homeless. When maximum unemployment benefits in New York are $430/week, who would spend $500 on a dollhouse?! "We're homeless, but at least our child's Barbie isn't!"
Thursday, April 30, 2009
Recession Restaurant Deals in NYC
Given the high cost of living in New York City and the painful blow dealt to our wallets by the current recession, I thought it might be helpful to post some restaurant deals for those of us who enjoy fine dining but understand the concept of value. New York Magazine and BlackBook have compiled impressive lists of restaurants that are offering specials such as modified menus and prix fixe deals. My personal favorites are the restaurants in the Jean-Georges family. Nougatine offers an amazing three-course lunch (choice of any two plates and dessert) for only $24.07, and a delicious four-course dinner for $35. The dinner deal at Nougatine, which runs from 5:30-6:30 and 10-11 PM every day of the week except for Saturday, featured a roasted beet and Greek yogurt salad, salmon with julienne vegetables, roasted chicken, and chocolate cake with ice cream when I ate there last Sunday. An unintended perk of the dismal economy is that one can now eat at Michelin-star restaurants on a budget. A two-course prix fixe lunch at Jean-Georges is $28, with the option to add more courses for $14 each.
Wednesday, April 22, 2009
Apparently "John" Isn't the Only One
"Confessions of a Bailout CEO Wife", published on Portfolio.com, indicates that John isn't the only one who tries to hide his expensive purchases. The author of the article admits to having Bergdorf Goodman ship presents to her friends to avoid being seen getting into a taxi with branded shopping bags from the luxury retailer.
Monday, April 20, 2009
Avoiding Conspicuous Consumption At All Costs
In the face of the current prolonged recession, frugality has become the new social norm. Sales of high-end goods have fallen off a cliff, and even consumers who have not felt the effects of the recession are cutting back on spending. In a time when shopping for clothes at Target is considered too much of a luxury, it seems that a class of consumers has emerged - individuals who don't want to abandon their materialistic ways but who wish to escape the ire of their peers and avoid conspicuous consumption at all costs, often by lying about the prices they pay for their upscale items so as to seem cost-conscious deal mavens.
Let me give you an example. My friend "John", a male in his late 20s, recently booked a trip to Australia for late April/early May that cost $1,200, inclusive of airfare from California to Brisbane, a domestic flight from Brisbane to Sydney, and a one-week hotel stay. Instead of thanking his lucky stars for being able to land such an awesome deal because of the effect of the recession on bleeding airlines and hoteliers, John began to complain to me via Gtalk that he was starting to feel that "the trip might not be worth it" and that he was afraid that "the $1,200 could make the difference between life and death" if he were to become hungry and homeless.
I then reminded John that he recently spent close to $1,000 on a Prada messenger bag and did not lament about that purchase, and that the current complaints seemed to indicate an inconsistency in his behavior. (I was being kind in not mentioning the $900 Burberry coat, $1,200 Ermenegildo Zegna suit, and several hundred dollars of shoes that John has also recently acquired.) In response to my observation, John claimed that he had only spent $500 on said Prada bag. This disturbed me greatly, since I remember very clearly when John showed me the bag on a website a few months ago and told me that he purchased the bag for $900, less a 10% discount.
The next day, I told John that this issue was bothering me, and that it would make me a lot more comfortable if he could check his credit card statement to make sure his $500 claim was accurate. John's response was: "Well, maybe the $500 was a little bit of an underestimate, but I'm sure the actual price was much closer to $500 than $1,000." Unsated, I repeated my request for him to double-check. After what seemed like an eternity, I finally received a Gtalk message stating that he paid $794 for the bag. "Does that include shipping?" I asked. John gave a negative response. "Well, how much did it actually cost you, after shipping?" was my follow-up question. "$812," John replied, more than slightly flustered.
The reality of the matter is that $1,200 for a one-week (excluding flight time) trip to Australia is an amazing deal that one could not in his (or her) wildest dreams have imagined to land but-for the current global recession. I confirmed that John was not understating the cost of his trip by checking the prices on Expedia.com. I remember when I went to Australia three years ago in the dead of the Southern Hemisphere winter, I paid $2,200 for a roundtrip flight from New York to Brisbane and close to $150/night for my hotel. (All prices are in US dollars.) I find it sad that John would complain about the cost of an incredibly low-priced vacation while trying to mask the depth of his shopaholism.
Incidentally, John is a former hedge fund manager who left his job to return to graduate school after receiving a "measly" $10,000 bonus in 2008.
Let me give you an example. My friend "John", a male in his late 20s, recently booked a trip to Australia for late April/early May that cost $1,200, inclusive of airfare from California to Brisbane, a domestic flight from Brisbane to Sydney, and a one-week hotel stay. Instead of thanking his lucky stars for being able to land such an awesome deal because of the effect of the recession on bleeding airlines and hoteliers, John began to complain to me via Gtalk that he was starting to feel that "the trip might not be worth it" and that he was afraid that "the $1,200 could make the difference between life and death" if he were to become hungry and homeless.
I then reminded John that he recently spent close to $1,000 on a Prada messenger bag and did not lament about that purchase, and that the current complaints seemed to indicate an inconsistency in his behavior. (I was being kind in not mentioning the $900 Burberry coat, $1,200 Ermenegildo Zegna suit, and several hundred dollars of shoes that John has also recently acquired.) In response to my observation, John claimed that he had only spent $500 on said Prada bag. This disturbed me greatly, since I remember very clearly when John showed me the bag on a website a few months ago and told me that he purchased the bag for $900, less a 10% discount.
The next day, I told John that this issue was bothering me, and that it would make me a lot more comfortable if he could check his credit card statement to make sure his $500 claim was accurate. John's response was: "Well, maybe the $500 was a little bit of an underestimate, but I'm sure the actual price was much closer to $500 than $1,000." Unsated, I repeated my request for him to double-check. After what seemed like an eternity, I finally received a Gtalk message stating that he paid $794 for the bag. "Does that include shipping?" I asked. John gave a negative response. "Well, how much did it actually cost you, after shipping?" was my follow-up question. "$812," John replied, more than slightly flustered.
The reality of the matter is that $1,200 for a one-week (excluding flight time) trip to Australia is an amazing deal that one could not in his (or her) wildest dreams have imagined to land but-for the current global recession. I confirmed that John was not understating the cost of his trip by checking the prices on Expedia.com. I remember when I went to Australia three years ago in the dead of the Southern Hemisphere winter, I paid $2,200 for a roundtrip flight from New York to Brisbane and close to $150/night for my hotel. (All prices are in US dollars.) I find it sad that John would complain about the cost of an incredibly low-priced vacation while trying to mask the depth of his shopaholism.
Incidentally, John is a former hedge fund manager who left his job to return to graduate school after receiving a "measly" $10,000 bonus in 2008.
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