Sunday, July 26, 2009

A Street Does Not a Nation Make....

Roger Cohen has a brightly optimistic op-ed piece in today's NY Times, carrying the headline "A Nation Hard to Short." He was up early the other morning to see:

"...The rising sun just knotting its tie over the serried high rises of midtown and the Upper East Side.

It was a magnificent sight, the city resplendent. New York has recovered, if not its stride, at least its balance."

On that very same day, Cohen had seen Warren Buffet on MSNBC making the claim that “It’s hard to short America in the long term.”

The beauty of New York at dawn - Warren Buffet's happy optimism on MSNBC - these elements of Cohen's day leave him filled with hope for "the land hardwired for the future," and renewed by the "enduring belief of millions in America as a transforming power."

I read this today in my house in a suburb of a city that is posting an unemployment rate of 11.3 percent.

And I think that there is a certain myopia to much that I read about the crisis - the sense that the recovery of Wall Street is all we need to be recovered from this terrible fiscal catastrophe that has beset our nation.

Goldman declares record profits, so Wall Street is clearly recovering. Never mind that Goldman would have been as bankrupt as Lehman Brothers had the feds not stepped in. A financial system that requires such a huge bailout in order to post profits is a signal that our financial sector is exceptionally damaged - and not even close to recovering.

Unemployment continues to rise - but that's okay - New York is beautiful at dawn. Our belief in the "transforming power of America" is more powerful than our reality.

For those in a particular location - Manhattan or Washington, D.C. - there seems to be a feeling that the crisis is over. We can breathe a sigh of relief.

For those not lucky enough to live in those zip codes, the crisis continues unabated. A jobless recovery does not bode well for the nation. The bonuses fed to a sector propped up by the most extraordinary federal intervention into private business is a terrible business model. That the "too-big-to-fail" institutions have grown only bigger leaves our financial sector in an even more fragile position. The federal government has created a situation where the mistakes of the biggest will always need a bailout - or else collapse will be inevitable.

It may be "hard to short America in the long term," but having to live through the short term catastrophe without employment is something millions are experiencing today. Dawn may be rising on Wall Street, but its shadows continue to darken the rest of the country....

Cohen's op-ed piece to follow....

"July 27, 2009
GLOBALIST
A Nation Hard to Short

By ROGER COHEN
NEW YORK — The other morning, I caught Warren Buffett on MSNBC. The Sage of Omaha was in sprightly form, perhaps buoyed by the market’s summer surge. He was asked where the market was headed in the next few months and he said he had no idea but he knew one thing: “It’s hard to short America in the long term.”

All the debt, personal and national, notwithstanding, I have to second that. As it happened, I’d been up very early that morning to talk to CNN’s excellent John Roberts about Iran. Waiting for the show, I looked east across Central Park to the rising sun just knotting its tie over the serried high rises of midtown and the Upper East Side.

It was a magnificent sight, the city resplendent. New York has recovered, if not its stride, at least its balance.

Ten months ago, when Lehman Brothers went poof in the night, and its spooky chief executive Richard Fuld hustled off to sell his Florida mansion to his wife for $100, the city was shell-shocked. It was intact, but emptied and drained, its density gone, as if a neutron bomb had struck.

The sidewalks seemed too wide for scattered people. You could hail a cab in the rain at 6 p.m. on Fifth Avenue with ease. Waiters stared out from empty restaurants as if trapped suddenly in some Hopper painting. Jobs vanished faster than you could say leverage.

The damage from Fuld’s follies — and that of other 31st-floor types giddied by their ephemeral mastery of the universe — has not stopped giving. Credit appraisal is stuck on stupid. If you couldn’t fend off a loan in the days of mortgage madness, now you can scarcely get one with a perfect credit score.

An executive on the board of a large regional bank told me the other day that 95 percent of time is now spent on compliance, which does not leave a lot for doing business. That’s the world of TARP (Troubled Asset Relief Program), the opposite of the former PRAT (Please Reserve a Table) world of bankers.

Unemployment is still rising, and could hit 10 percent in the fall. Real estate has scarcely stabilized its free fall. Corporate profits, returning, seem based more on inventive cost-cutting than new revenue flows.

If moribund is 1 and feverish is 10 on the New York restaurant-and-taxi gauge, the city is hovering at about 4.

But it’s come back. It’s righted itself in short order. That has something to do with smart governance but more to do with the gritty culture of the city, its work ethic, its inspiring sense of its own grandeur, its shared knowledge of the personal struggle that goes into a day. A Fuld, who never took the subway, never sat in Bryant Park with a sandwich, knew nothing of what makes the city tick.

My dawn moment with the skyline is a moment every New Yorker knows, when the demanding city suddenly gives back, yields beauty from its pounding restlessness, grants some miracle of iron and light, and in so doing summons the energy and civility that has helped set things right.

Frank McCourt, the Pulitzer Prize-winning author who died last week, used to talk about that New York skyline, about the way he would dream of it during his miserable childhood in Limerick, Ireland (the inspiration for his hugely successful “Angela’s Ashes”), and about his fights with his brother Malachy over who should own the right to have such dreams.

He was talking about the summoning power of America, a land hardwired to the future; and, in his way, about the deeper reason why Buffett is right to say, “It’s hard to short America in the long term.” That reason is the enduring belief of millions in America as a transforming power.

The close to my day had a certain symmetry. I found myself in Queens that night, looking at the now glittering towers of midtown from the far side of the East River. Their orange glow was gone but not their beauty. I thought that New York was always surprising.

Some Iranian-Americans had invited me to a wonderful dinner complete with crispy rice (our “vegetarian crackling” as one woman once put it to me in Tehran) and unctuous beef simmered in bitter herbs. Their families had all fled Iran at different times — before the Revolution, in 1979, or in the tumultuous years afterward. Various odysseys had eventually brought them to New York.

Where they had begun again, giving their part to the city’s compact and reserving part of themselves for the memories from which America is only partial deliverance.

The talk of the revolution made me think of Walter Cronkite, the CBS anchorman whose death had immediately preceded McCourt’s. From day 50 of the 1979 U.S. hostage-taking in Tehran, Cronkite always told Americans what day the crisis was in, right up to the 444th day.

Perhaps Buffett has succeeded Cronkite as “the most trusted man in America.” My day of connections was over, a full day in an America that’s hard to short in the long term."

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