Posted on 09/07/2001 4:29:07 PM PDT by Libloather
Friday September 7, 7:02 pm Eastern Time
New Yorkers feeling sting of economy, market meltdown
By Philip Klein
NEW YORK, Sept 7 (Reuters) - A pleasant, late-summer Friday should have been the perfect opportunity for New Yorkers to forget their worries, but concerns about job losses and the slumping stock market brought out the blues.
With the Standard & Poor's 500 index (^SPX - news) hitting a three-year low, the Dow Jones industrial average <. DJI> plunging over 200 points, and U.S. jobless data showing a worsening economy, New Yorkers headed into the weekend with a worried state of mind.
Friday's announcement that the unemployment rate reached a four-year high of 4.9 percent and the markets' tumbling to low levels not seen in months just confirmed many people's fears about the state of the economy.
``I think it's going to get a lot worse before it gets better,'' said Robert Nelson, a New York-based carpenter. ``Everyone in the union is talking among themselves, and no one says it's getting better.''
Nelson said jobs were plentiful just last year when the construction of high rise buildings was still booming, but now carpentry firms have been forced to accept smaller jobs that require less workers. While he used to be able to be placed on a job within a day, now it sometimes takes several weeks.
``You know things are slowing down when you used to be number 100 on the waiting list for jobs, and now you're number 3,000,'' he said.
Les Ericson, 51, who works as a freelance writer and paralegal in a small New York City law firm, said that he started investing in the stock market for the first time two years ago, hoping to earn enough money to write full-time, only to see his portfolio deteriorate by 60 percent since January alone.
``It feels like a mugging,'' he said, while lunching in New York City's Bryant Park.
``I invested $100,000, within six months I was up to $200,000, and I thought I would be able to retire with a half a million,'' Ericson said. ``But, I was an idiot.''
``Now I got nothing, I got bubkes,'' he said, using the Yiddish term for zero.
Ericson said he can now forget about quitting his full time job, and with the economy continuing to deteriorate, he's even unsure if that's stable.
``I wouldn't count on anything at this point,'' he said, fearing that the economy may take years to recover and that there could be a protracted recession reminiscent of the 1970s.
Al Fiorito, 63, a bus driver for the Bethlehem, Pennsylvania-based Transbridge Lines was getting his shoes shined in New York City's Port Authority Bus Terminal as he reflected on the slumping economy and stock market.
``For me, personally, it's been catastrophic,'' Fiorito said. When the stock market was surging he had rolled his 401k into a mutual fund portfolio and planned to retire this past May, but this year's collapse forced him to delay that for at least another year.
Resilient consumer spending has been largely credited with keeping the economy out of a recession so far, but Nelson, for one, is cutting back.
With an abundance of carpentry jobs, he once felt comfortable running his credit card bills up to $4,000, but said he now doesn't let them hover above $1,000.
``Before, I could charge it, because I knew the overtime was coming,'' he said. ``But not anymore.''
And this is precisely why Kari Bobko, 21, who does product planning for discount clothing chain Ross Stores Inc. (NasdaqNM:ROST - news), said she feels job security.
``Now everybody is looking for cheaper clothes,'' she said. ``It's helped us a lot.''
Nah. Just look at how much loot was held, on your behalf, by being a part of the largest tax increase in world history. Big Gubmint's budget will increase across the board this year and they'll even have some leftover. Maybe sign up for some...
Lemme guess - your freshman Senator wants to raise your taxes - right?
If I were the President I would review the following editorial by Daniel Mitchell (Pioneer Press). It reads as follows:
Congressional liberals seem to have come down with a bad case of "buyer's remorse." They're using the prospect of a smaller-than-expected budget surplus to say they wish they could take back a part of President Bush's tax cut.
But if they understood how tax cuts work, they'd realize how absurd this is. If anything, Congress should increase the size of the cut, or at least speed up the time when all its provisions take effect. The economy has been softening since the middle of last year -- long before the cut was approved -- and lower tax rates are a sure-fire way to restore growth.
Unfortunately, the Bush tax cut is back-loaded. The lower rates aren't fully phased in until 2006, and the reduction for the next three years is only 1 percentage point. The death tax, meanwhile, isn't repealed until 2010. Worse, thanks to arcane Washington budget rules, all the tax cuts disappear in 2011. A future tax cut is better than no cut at all, but it won't help the economy now. That's why lawmakers should immediately -- and permanently -- implement all the cuts.
But that should be just the beginning of the tax-cut agenda. Other steps could help rejuvenate the economy and make America more competitive globally. Lawmakers should:
-- Cut capital gains taxes. If there's an elixir for economic growth, it's this. The money used to invest in new businesses is the lifeblood of any economy, but risk-takers are hindered by an onerous and complicated capital gains tax. Ideally, the tax should be repealed, but reducing the rate would be a good interim measure, especially since history shows that lower capital gains tax rates lead to more tax revenue rather than less.
-- Stop taxing income earned abroad. American companies have a hard time competing in the world economy because the Internal Revenue Service taxes the income they earn in other nations -- even though that income is already taxed by the countries where it is earned. This added burden is so harmful that some companies, such as Fruit of the Loom, are actually moving their headquarters out of the United States. Rather than chase businesses away, Congress should shift to a territorial tax system, which is based on the common-sense notion that governments only tax income earned inside their borders.
-- Repeal limits on IRAs. Individual retirement accounts are a good thing, but the bean-counters in government have imposed draconian limits on IRAs. These limits should be repealed. So-called "universal" IRAs would allow workers to save and invest as they see fit without being punished for being frugal.
-- Stop overtaxing businesses. Imagine if you were forced to overstate your income every April 15 so the government could collect more money. Sounds outrageous, but it's what American businesses have to do every year. Companies are supposed to be able to deduct all their expenses when calculating their taxable income, but the money spent on new investments has to be deducted over a period of years, even though the cost occurs right away. This provision of the tax code should be repealed so businesses can deduct costs as they occur.
Big spenders will complain that we can't afford a bigger tax cut, but they assume that your income belongs to the government. In reality, both the administration and the Congressional Budget Office estimate the government will collect more than $3 trillion of extra tax revenue over the next 10 years -- a projection made after the Bush tax cut was enacted.
The real debate is what will happen to this money. Some argue that Washington politicians should be allowed to spend the money on pork-barrel projects, and special-interest groups have lined up at the Treasury door in hopes of getting their slice of the pie. This is what Europe's welfare states have done every time they got hold of some extra money, and the result is double-digit unemployment and economic stagnation.
The other alternative is returning the money to the private sector. Tax cuts and Social Security privatization would reduce the burden of government and increase incentives to work, save and invest. This, not tax-cut repeal, is an agenda that will boost America's competitiveness and ensure faster growth. Lawmakers in Washington should choose growth over government -- and they should do it sooner rather than later.
Mitchell is the McKenna senior fellow in political economy at The Heritage Foundation, a conservative public policy research institute. Readers may write to the author in care of The Heritage Foundation, 214 Massachusetts Ave. NE, Washington, D.C. 20002.
If I were President I would also call in Chairman Greenspan. He has to decide where the short-term rates should go and get there. If it is 3% or 2.5%, then go there. Then go neutral. Many of the big players are sitting around wondering what the fed will do next. It is time to come up with a plan and stick to it for six months or more. The markets hate uncertainty.
If I were President I would tell the DOJ to finish up the Microsoft case ASAP. MSFT is held in retirements plans by more people than any other stock. The market began to crater when WJC and his DOJ finally got a judge to find against MSFT. Finish this up now!
Finally, if I were the President I would call this a “faltering economy” which must be addressed now if it is to recover in the latter part of this year or next. The President should not promise a recovery without a concerted effort by Congress and the people. The recovery must begin with the private sector. He might also point out that all wealth comes from the private sector and the “surplus” is a result of a successful private sector. There is no way to have a "surplus" in the Treasury without a successful economy and stock market.
Nah.
It all sounds good - but if I were Dubya, I would begin the next economic announcement with a small joke - "Ladies and gentleman, the best model we can find comes from the last administration. In order to get the worst economy in the last 58 years going again, we have no choice but to raise your taxes without regard to your financial status. You did it once, you can do it again. Contribute until you can't contribute anymore!"
Then explain, "Dang, that sounds sooooo stupid - doesn't it?"
I just spoke to a seasoned citizen. She says it hasn't been this bad since the last world war. I don't see it, but she does...
Let's see...in round numbers, each 150,000 workers represents about one tenth of one percent of the unemployment.
With the canning or 300-400 K technology workers alone, plus double that in unrelated but dependent industries, etc., If that Unemployment Number had remained where it had been, the books would have been "cooked" for sure.
Times were, under Truman, Ike, Kennedy, Johnson, Nixon, Ford, Carter, and even Reagan, the numbers coming out of the Bureau of Labor Statistics and Commerce could be trusted and taken to the bank, The Federal Reserve Bank. No one dared manipulate them. They were considered too important to the functioning of Government.
Starting under Bush I, plug numbers representing Employment figures were introduced. Late in the administration, they began to be clumsily and ineffectively "massaged."
But under good ole Promiscuous Bill, data manipulation was elevated to a high art. Times were, a hurricane could be tracked in the unemployment Numbers, first as people lost jobs, then as even more were hired to rebuild. Wall Street reacted negatively to the first, positively to the second.
In addition to the Bush I plug number manipulation, the Clinton Administration redefined Seasonal Adjustments. It depends on what the meaning of 'SEASONAL' is! NOT winter spring summer fall, but "Flood Season", and Hurricane season, and other seasons. They were caught Red Handed in 1994-1995 by some Nerdy Economics Prof who held the quaint view that we should check the Government's methodology.
As the boom unfolded, and Wall Street Soared, even more "adjustments" were added. Gasoline going up at the pump? Why, it must be OPEC season...Seasonally Adjusted, gas is going down, so it doesn't get into the inflation numbers. And so it went...until the Largest Bubble in WORLD HISTORY happened.
Of course, it began to unravel Jan 14, 2000 on the Dow, and March - April on the NASDAQ, but, by January of this year, only Greenspan, that poor hapless consumer of Books Cooked A la MODE, was left as Scapegoat in Chief , and "Room Temperature IQ" Dubya left to take the blame.
And, as the Great Unwinding Happens, the Junior Senator from New York is making plans.
One of the things that amazed me was I knew people who had made 5 to 10 times the money they invested in NASDAQ stocks. When Y2K came along with all the uncertainty and gloomy predictions, I would have though they would have gotten out of the market the summer before and gone into bonds or some other investments, and waited to see what happened. But greed motivated a lot of them to stay the course.
When they didn't get out with their winnings before Y2K I realized they were in for the long haul right through to the trainwreck. - Tom
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