Friday, May 27, 2011

Waiting for the Revolution...

Just some of the business space for rent, sale, or lease in and around downtown Bellingham.

 "Though national economists have declared a technical end to the deep recession that has plagued our country since at least 2008, we would be hard-pressed to find many in the local economy who feel that is true, based on the continuing financial pressures in their lives and businesses. "  Mayor Dan Pike from 2011 Budget Message

They say we have hit another "soft patch" (1, 2, 3, 4, 5) - too many disasters, too little GDP, too much unemployment and under-employment, abysmal housing stats.  Productivity is up, Corporate profits, savings and earnings (in some cases) are sky high but...small businesses and families are collapsing in city after city across middle America. Residential construction activity levels are some slight level above rigor mortis.

It can't go on like this forever. At some point we will either have to:

  • acknowledge a permanent change in our socio-economic fabric
  • have a recovery
  • throw a Marxist revolution
I came across an OECD chart that sums up how the Western world got to this dark place.  Unions may not always be the correct solution, but they made the small business economy work by driving wealth into the hands of consumers, who promptly recycled it into the main street economy. They are not doing that now.
"Trade union density(%) in OECD countries, 1960-2008"
The result is ever decreasing consumer expenditures and ever decreasing service sector performance and tax revenues. We can let a few of Bellingham Finance Director John Carter's slides make this clear for us: 

"2010 Year End Presentation"

This is despite over $139 million in 262 separate recovery spending awards for Whatcom County alone to date. Our official Whatcom County employment rate is 10%.  But this hides, as it does for the rest of the nation, a nearly calamitous fall in employment participation numbers. spending comparsions
Despite all this recovery spending and billions of dollars of 'quantitative easing'  we still have high foreclosure rates and bankruptcy rates in Whatcom County. For the last 28 months we have averaged 68 bankruptcies per month. For  April 2011, we hit 82:

It can't go on like this forever. Where do we go from here?

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