The American Economic Miasma

A. Stout Babbitt


The economy's on the stink, and I don't have one friend that hasn't suffered a layoff, a firing, reorganization settlement, or forced retirement. My lawyer friends all tell me the big 6th avenue firms are tightening their belts and shrinking freshman class sizes, and in some cases deferring whole classes until the following year. And in more drastic fashion some firms are dolling out large sums of cash to twenty-nothing eager-lings who were promised jobs, in order to get them to quit while the quitting's good. I don't know about you, but a fistful of cash is a lot less appealing than steady lawyering, no matter your take on lawyers, Shakespeare, and the pit of hell. The financial services sector seems to have steadied a bit after last years hack through the junior class of traders, analysts, and financial managers. Though it too is roiled in doubt and uncertainty, as financial services giant Citigroup struggles to answer allegations it awarded IPO shares to prospective clients in order to gain banking customers. The tech sector is a shadow of where it was three years ago, and draining its collective cash reserve faster than you can say -- failed IPO. Which in turn creates an economic atmosphere of consolidation, where the big guys dip shallow into deep pockets and acquire ready-made technology solutions, without retaining the payrolls and debt that helped develop them, for a fraction of the true value.

GM and Ford are beginning to show signs of strain as well, sales have plummeted this quarter 13% and 5% respectively due to some of the lowest inventory volumes in years, as a steady stream of 0% financing suckers rolled away slap-happy in the latest Detroit models. Though the sound of those marching feet has begun to wane, as everyone in the country it seems bought a car last year. Detroit while promising to trump the economy and raise consumer confidence by giving consumer spending indexes a shot in the arm, may have just sold itself out of a market for the next few model years. Pushing an already heavily leveraged economy further into debt. As the price of sweet crude rises world wide so too will manufacturing costs, and there is no industry on earth that floats as delicately as a walnut shell in a hurricane as auto manufacturing does; save of course the energy sector itself. But its party time in energy, and I'm sure ex-Enron execs are cursing up and down cell block "A", had Enron only weathered another year or two, the billions in illegally accounted for expenditure could have been glossed over and lost in Fancy-Andy accounting tactics, all the while turning a stiff profit to the beat of American war drums.

So in days like these, turn to the pleasurable things, silky pashmina's, fur coats, 2 ct. yellow diamonds, or whatever Madison avenue declares the it, the now, and the gotta have this fall season. Cosmopolitan and fashion magazines across the country report increased readership, advertisement rates are climbing, and though retail sales are sluggish, suggesting nobody has any real money after gassing up the 2002 PT Cruiser, it signals we're at least hopeful. Fashion it seems is back in vogue for the first time since the last major economic blow-up, when Washington power culture was pure class, and the first lady channeled her spiritual guides from a jelly bean dish in the oval office. When all else fails, dress to impress. An important lesson for one Martha Stewart as Congress calls for documentation and testimony in a growing inquiry into whether or not a little birdy told her ImClone was a sinker, and still worse selling shares in her own garden-variety-hoe empire before news of the investigation could drive her name brand company back into the garage, next to all the other projects that linger for some bright shiny Saturday morning that never seems to come. It seems fitting that the mistress of disguising old yard sale rakes, as classic yard accoutrements, was caught with her hand so deep in the proverbial cookie jar. As the Martha Stewart myth unfolds, so too will wagging heads from Wall Street to Rodeo Drive wake as if from a dream.

So what is a stuttering economy to do? Raise interest rates so consumers get the hint its worthwhile saving money rather than throwing it out with the bathwater, which in turn will convince corporations its time to shift from fiscally conservative estimates of simply treading water, to actually swimming forward. Get rid of the threat of war, by either waging it, or quitting it. And if we do go to war, let Congress establish a groundbreaking precedent of instructing the rebuilding of Baghdad be managed by Martha Stewart and company, shell casing after all make wonderful pot stands, and there's no telling what sort of arts and crafts projects she'll dream up for all those posters of Saddam - paper mache hats, or mobiles perhaps. Iraq, by Martha Stewart.