Tuesday, January 20, 2009

race calendar (or maybe not)


so there was a rather sobering article in the LA Times this past weekend:

in case the link doesn't work, i put the full text of the article below (even though the article itself has some pretty illustrative charts).

essentially, the article says that the U.S. economy may remain in its current moribund/comatose/catatonic state for years, and that things may actually get worse in the near term before any possible change under the new Obama administration. it observes that the global crisis has served to remove any potential sources of economic growth, leaving the world--and the U.S.--economy in a state of utter stagnation with nothing to lead it out of its quagmire.

ah yes, how lovely.

as part of its commentary, it notes that the U.S. situation may mirror the Japanese collapse of the 1990s. because both were driven by financial-sector meltdowns, with similar effects on their wider economies, the argument is that the U.S. economic recovery may mimic Japan's.

which is fine, except that it took Japan YEARS to recover, and some say it is STILL recovering (or was, until now)...making it more than 15 years for Japan's economic "recovery."

uh, ex-squeeeeeeeeze me?

yeah, i know, America is a bigger economy, and our society is quicker to adapt and adopt new and necessary solutions, and we're just plain, well, better, because we're Americans, dagnabit. but even if all that is true, i'm not so sure it's really that comforting...because even if it does shorten the time frame for economic recovery, it still likely means things are going to be the way they are for year(s).

great. just great.

especially for you and me.

because you see, economic malaise of this magnitude has a tendency to trickle down (get it? ha ha. sorry, couldn't resist. well, i could, but chose not to. just getting a little nutty from the utter enormity of the gigantic crater that is our economic system...). funny and ironic, i know, since "trickle-down" theory originally dealt with the benefits of economic health--but you know, it's only consistent with Murphy's Law that it's only the bad things that trickle ever down, and none of the good things ever do.

and it all trickles down to you and me.

in my case, i'm dealing with 2 major uncertainties:

1) tenure-track jobs have evaporated. colleges are not hiring, because their endowments have tanked. tenured faculty are not retiring, because their retirement portfolios have also tanked.

2) the adjunct positions that exist are on very quick ground. mine, in particular, are on contracts that expire in October, and the schools are not even sure they have the money to afford any professors at all.

these add up to 1 very clear priority: save money, because i don't know where i'm going to get any more.

this carries with it an implication to reduce spending whenever and wherever possible. and that means all stopping discretionary spending (travel, clothes, books, gas, etc...although, you know, at the end of the day, everything is discretionary) and holding to only necessary spending (but again, see previous).

this includes, unfortunately, race fees. yes, it does. i know racing is the ontological focus of training (i mean, why train if not to race?). but let me put it into a different light with this: a year from now, will i be unable to pay a month's rent because i spent the money to register for an Ironman?

okay, yeah, i hear you say "credit card." but dude, how did we (me, you, this society, this country, this world) get into this problem? exactly. kind of stupid to repeat the same mistake, yeah?

let me say it like this: only a fool throws away water in the middle of a drought.

so it's down to this: no racing. and for the foreseeable future. i'm just that worried about money. and i'd rather not see it go out without knowing that i'm going to see some more come in.

oh, i'll still train. there's just no way i'm going to let that go. there's just too much for me (and of me) wrapped up in training, physically mentally spiritually, to let endurance sports go so easily--it'd be tantamount to not being who i am. and i am who i am.

just like you are who you are.

just like we are who we are.

and we're all in this together.

i'll see you at the races in awhile. eventually. but just not now.

for now, let's just make plans for the day when we do race again...and let's ride out this storm in the meantime.

U.S. economy may sputter for years
Unemployment could be worse than now by the time President-elect Barack Obama's first term ends.
By Peter G. Gosselin
January 19, 2009

Reporting from Washington — Transfixed by the daily spectacle of dismal economic news and wild Wall Street swings, few Americans have looked up to see what a wide array of economists say lies beyond the immediate crisis.

And with good reason: The picture isn't pretty.

The sleek racing machine that was the U.S. economy is unlikely to return any time soon despite the huge repair efforts now underway. Instead, it probably will continue to sputter and threaten to stall for years to come.

The prospects are so gloomy, according to a recent study, that unemployment may be slightly higher by the time President-elect Barack Obama's first term ends.

The damage done by plunging house and stock prices, the failure of other major economies to be independent sources of growth and hidden weaknesses in America's past performance have crippled nearly every actor in the nation's economic drama.

None -- save perhaps the government -- retains the power to push the economy back to speeds it regularly achieved during much of the last generation, economists say.

The result: An economy that once averaged 3% or better annual growth would be lucky to grow 2% a year during the entirety of the new president's term.

"That is going to feel like stagnation" to most people, said John Lonski, chief economist at Moody's Investors Service.

"We're in a post-bubble global recession, and post-bubble recessions are lethal for growth," Stephen S. Roach, chairman of Morgan Stanley Asia, said from Beijing. "It will be a long time before the world experiences anything more than anemic recovery."

Obama and his economic aides seem to understand the painful prospects they face.

Obama misses no chance to temper hopes for a quick and complete comeback. A recently released study by Christina Romer, his nominee to chair the Council of Economic Advisors, and Vice President-elect Joe Biden's chief economist, Jared Bernstein, concluded that, even with an $825-billion stimulus package, the unemployment rate at the end of Obama's first term would be one-half to one full percentage point above where it was before the start of the recession.

That would mean as many as 1.5 million additional jobless workers. And some independent economists say that number could be much higher.

What most worries analysts is not a cataclysm such as the Great Depression but the sort of economic morass into which Japan fell after its stock and real estate markets burst in the late 1980s and early '90s.

Daily life for most Japanese citizens wasn't terrible. There were few company shutdowns or mass layoffs. Indeed, the Japanese came to call their economic condition the "golden recession," said Simon Johnson, a senior fellow at the Peterson Institute for International Economics.

The problem was that the country simply didn't grow -- and that, economists worry, is what could happen in the U.S. and around the world.

"Four years from now, I suspect that we'll be pretty much where we are today," Johnson said. The question he predicts people will then ask: "Why can't we get growth going again?"

Four factors -- like the cylinders of an engine -- power an economy: consumers, investors, the government and a favorable balance of trade with other countries. And for many years, the most important of these has been the American consumer. U.S. households long have accounted for the lion's share of economic activity not only here but also in much of the rest of the world.

Although U.S. consumers constitute only about 4.5% of the global population, they bought more than $10 trillion worth of goods and services last year. By contrast, said Roach of Morgan Stanley Asia, Chinese and Indian consumers, who together account for 40% of global population, bought only $3 trillion worth.

In the last decade, a new generation of financial engineering -- complex deals involving home equity loans, subprime mortgages and other devices that provided easier access to credit -- seemed to make it safe for Americans to save less and consume more. That further expanded their share of global economic activity and made them even more indispensable here and abroad.

U.S. consumer spending shot up from a little over 73% of the economy to nearly 77% from 2001 to 2007, according to government statistics.

Initially, the expansion was heralded as evidence of economic vitality. But by now, it has become apparent that the growth was largely a debt-driven bubble -- and a double bubble at that, in housing and in personal consumption.

As the elaborate superstructure of easy credit began to pop rivets, consumers found themselves caught dangerously short. They have reacted by drastically cutting back on purchases, particularly those that are discretionary.

Retail sales in the last three months of 2008 plunged 7.7% compared with a year earlier, the government said last week, making it the worst sales quarter in more than 40 years.

At almost any other time, economists would write off such a drop as sharp but short-lived and predict that Americans would return to their spendthrift ways as soon as the economy began to recover. But many veteran forecasters say this time is different.

"Decades of borrowing have finally caught up with consumers; they realize there is no more easy money left," said Allen Sinai, chief economist of Decision Economics Inc. "This is going to scar this generation of consumers the way the Great Depression did our fathers' and grandfathers'."

For the first year of the current crisis, which began in the summer of 2007, there was hope that a replacement for U.S. consumers and a new source of economic strength had been found in the rest of the world's economies, especially such giant and newly industrializing nations as China and India.

Economists pored over figures suggesting these economies were continuing to boom even as the U.S. tottered on the financial brink. There was much talk about other countries having "decoupled" from America and begun their own, internally fueled expansions.

But by last fall, the hope had faded. The economies of most of the world are either slowing sharply or actually shrinking. Asian powerhouses such as China are doing so because of a bust in exports to the U.S.

Worse yet, much of the Asian boom appears to have sprung from a sort of financial engineering that served as a matched set to that in the U.S. By keeping their currencies undervalued, they kept export prices low and encouraged others -- especially Americans -- to keep buying.

China and other Asian economies "were driven by export bubbles, which, in turn, were a play on the U.S. consumption bubble," Roach said. With the bubbles on both sides now burst, the U.S. and Asia are dragging each other down, he said.

If renewed consumption isn't going to revive the U.S. economy, and a growing world able to buy more U.S. exports has vanished, one of the few options for recovery that's left is business investment.

But investment, especially in high technology, was barely growing even during the boom years of this decade. With the economic crisis, it has plunged.

Lonski, the Moody's economist, used government statistics to examine business investment in such high-tech items as computer and telecommunications equipment.

What he found was that in most previous cycles, companies quickly resumed investing after the economy moved from bust to boom, pushing computer and telecom orders back above their pre-bust highs. But not in this decade.

Between the last recession in 2001 and the current one, high-tech investment has barely crawled upward. That has left telecom and computer orders still down nearly 50% from their previous highs.

"This shows that technological progress was lagging" during the decade's good years, Lonski said. It seems unlikely the pattern should improve now that times are bad.

That leaves only government to power the renewed growth. Every Economics 1 textbook introduces the economy with the same simple equation. It reads: consumption + investment + net exports + government spending = gross domestic product or output.

It's an equation that the new president and his top economic aides know well. With the first three elements negative or contracting quickly, the new administration sees few alternatives but to sharply expand the fourth factor -- government spending.

It's not a surefire solution. But the hope is that something eventually catches and the nation's economic engine begins turning over again on its own.


Bob Almighty said...

sorry been a while since I've commented.
I hear you on the distress in the economy leading to distress in academia.

with the job thing, while the pay maybe peanuts,and NCLB is a pain there are still jobs in education granted it's most likely on the sceondary ed level or in private institutions. There is work out there it might mean leaving Cali or even the country or working in the high schools until some of the tenured guys shift off or ship out...but there are opportunities out there for guys with PhD's.

Hope everything goes well for you.

Trihardist said...

All great points. And I admire your resolve. I've told myself time and time again that I don't need to race. It's a luxury. I don't need new gear. It's a luxury. All I really need is food to eat and a place to sleep.

And also, apparently, I need to race, because I just can't let it go. I have no idea why, but I can't make the decision you've made, for some reason.

I admire your resolve.