Archive for March, 2009

Mar 12 2009

Bigger is always… Bigger

Published by under American Society,Cape Cod,Chatham

The most recent solution-in-search-of-a-problem championed by the local media is regionalization of government services. Sewers. Fire. Police. Schools.

Now, I am sure there are some savings that can be found when you have over a dozen municipalities occupying an area roughly the same square mileage and population as Jacksonville, Florida.

But the justification for regionalization now seems to be that this will help stem the tide of young adults leaving Cape Cod. Like maybe lower taxes? Or better schools because they’re bigger and cheaper? Sorry, I’m trying to play devil’s advocate here, but coming from a small town with a very low tax rate, by this reasoning we should have tons of young families. Instead, we’re the oldest town in the state. Maybe we’re just not doing it BIG ENOUGH?

This is how I summed up a query on Facebook, posted to friends who grew up on the Cape but have since moved away these two questions:  1) Why did you leave? and, 2) What would induce you to return?

The answers were not terribly surprising.  Not having any 4-year institution of higher learning in the area, many said they went away to school and then became ensconced wherever they were.  They liked what they found in the wider world.

It may sound heretical in this resort community, but yes, there are many, many other beautiful places in the world.  They are as much in competition with us for tourists as for that most locally-undervalued person – the full-time, year-round, wage-earning 25-45 year-old resident.

But, greater, was a theme of opportunity.  Specifically, one respondent answered why she left Cape Cod:

  • a) Nowhere to work
  • b) Nowhere to work in winter (yes, two things entirely)
  • c) No career opportunities (see a and b)
  • d) Its once cool austerity and grittiness has been replaced with cheesy gift shops and “quaint” cuteness imported from cities in an attempt to make it something it’s not
  • e) Arts, shopping, etc.

She went onto explain, “I’ve lived in NYC for over 16 years. My living space is extremely small, my housing expenses astronomical and taxes are through the roof-BUT I have opportunity here — to make money, work in any industry (almost) I choose. Almost everything is accessible. I sorely miss the ocean, but the benefits outweigh the costs. Lower taxes and better schools would never entice me to move back. Even if housing were free, it would still make more financial sense to pay $90 per square foot and live some place where I could make a living. Simple as that.”

As for what would get her to move back:  “Jobs, jobs and jobs.”

Another friend who has worked both on and off-Cape (and likes performing those small town self-services like bringing his own trash to the dump), has the skills to earn much more elsewhere.  But the opportunities just aren’t there for his highly-trained spouse.

Talking directly to my concern, he observed, “Regionalization of services is a partial solution to budget woes, but it’s long-term and painful, and it’s not at all a reason someone moves to an area.”

Now, certainly this is an unscientific sampling, and I do not pass this off as representative of a cross-section of the Cape Cod Diaspora.  But they are for the most part well-educated, high earning, upstanding, responsible adults.  Just the sort of people you would want living next door, who on those rainy days when you get back from the supermarket and are trying to get everything inside, offer to lend a hand.  Or when the power goes out.  Or to check on your house when you’re on vacation.

The media here on the Cape have failed its expatriate children by failing to ask them what THEY WANT.  Instead, powers-that-be have announced what they are willing to do: make local government more efficient by making it bigger.  I’m reminded of a quote from the movie “Contact” – “First rule in government spending: why build one when you can have two at twice the price?”

Specifically, and to its credit, The Chronicle has deflated the argument that there will be any reduction of costs by regionalizing Chatham and Harwich schools.  That there would be a greater benefit to students by more educational programs is, however highly dubious.  Perhaps marginally, but no serious claims are being made that SAT scores will jump, or we’ll be getting state of the art gymnasium or science lab.

Worse, the “big schools” idea flies in the face of reams of studies that suggest what parents and teachers want most, and the environment in which students thrive best, are small, neighborhood schools with low teacher-pupil ratios.  So even if the argument is that better schools will attract more families to move here, we’re offering a Chevy Suburban when the customer clearly wants a Toyota Prius.  They want smaller, not bigger.  More control, not less.

I am concerned that what really is going on is yet another lurch away from Town Meeting control of any budgetary issues.  When regionalized, a bill for the service is simply rendered upon the Town.  Voters on the floor of Town Meeting do not have the chance, as they do with a purely-municipal budget item, to pick apart the budget, item-by-item.  With regionalization, those who work for the larger bureaucracy serve a larger population — and thus, are accountable to virtually no one.

In essence, we would be going in the opposite direction of what is most desired by those we so righteously protest to help.  But if we are serious about returning to a more balanced community, welcoming those of all ages, the answer bears repeating: “Jobs, jobs and jobs.”

Read this and other columns online at The Cape Cod Chronicle.

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Mar 02 2009

CREDIT CARD COMPANIES: Why the laws they lobbied so hard for won’t help them now

Published by under American Society,General

Cape Codder Elizabeth Southworth, with over fourteen years experience working in the financial industry, offered the following to me, which I feel obliged to pass on:

Last week, Bernanke predicted the recession “could” end this year. Well, he’s out of his mind. Let me re-phrase. He’s lying. This is the same Bernanke who, less than a year ago, offered assurance there would be no recession while I jumped up and down pulling my hair out.

The IMF conducted a study on 124 banking crises over the last thirty years where massive debt overloaded the banking sector. Out of the six that occurred in wealthy nations, the speed of recovery varied from 2 (South Korea) to 10 (Japan) years. I think we can all agree that what’s happening now ain’t a typical banking crisis. Ending this year? No.

What was equally baffling was news that the market rallied on Bernanke’s comments. This was just plain wrong. The market rallied on technicals. As the DOW hit its worst levels since 1997 the market panicked. The “it can’t be this bad” panic actually created a rally and the DOW subsequently bounced off its 7100 level. And it happened again on Wednesday and again on Thursday. This had nothing to do with Bernanke.

I told a friend if the economy does show signs of strength in the next 6 months, to look out for hidden mine fields amongst the smoke and mirrors. In my mind, these will be the credit card companies. I suspect they won’t be racking up interest charges on new purchases these days while the sheer number of credit card defaults could make sub-prime mortgages look like a blip on the radar screen.

As virtually every sector in the stock market plummets deeper into the abyss, one thing eludes me. The credit card companies have remained relatively strong. Mastercard and Visa have actually outperformed the Dow in the last month. This worries me greatly. And it should worry all of you. But don’t be too concerned. Just like credit card debt, we will all simply pay for it later.

The average American household carries $10,700 in credit card debt. What was once a vehicle for emergencies, occasional purchases and travel expenses became a free for all “lay away plan.” And what’s even more outrageous is these companies can charge whatever interest rates they like. I consider their rates “usury” however, it seems the public disagrees given that they kept charging.

In 2005, credit card companies lobbied hard to change the bankruptcy laws in order to “protect” themselves. They won. This was really just an opportunity to eliminate massive amounts of risk while doling out $50,000 in credit to college students with zero credit history. In retrospect, they were just begging to be regulated. These laws won’t help them now. The public will soon want their heads on the chopping block. And I have no doubt the Obama administration will be more than happy to oblige.

How credit cards assess their risk is their business. If they deem it suitable to give an 18-year-old $50,000 in credit, that’s fine by me. However, don’t cry when you don’t get paid. And in turn, I don’t want to hear the whines of consumers who can’t pay their bills because they needed a new plasma TV. Leave me out of it. Cheap, easy credit is what caused the current banking crisis and what could soon create a credit card debt debacle. If you think consumer spending is at an all time low now, wait a few months. You’ll be able to get that $40 sweater at the Gap for $9.99.

Now these companies are offering incentives to people with large balances. American Express is offering $300. $300? Was that the magic number the algorithm machine spat out in order to alleviate their risk? Are they so deluded that they actually believe people have the money? Are they reading the same papers I’m reading? So if I rub the $300 American Express genie, $10,700 will automatically appear in my checking account? Well, if that’s the case, I’ll be swiping like crazy this week at the 5th Avenue fire sales.

This past week reminded me of an old lesson: at the end of the day, from stock prices to consumer spending to credit card debt: something is only worth what someone else is willing to pay for it.

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