In my younger days I used to spend New Year’s Eve engaged in merry making and loud music followed inevitably by a desperate search for the hair of the dog on New Year’s Day. These days I rarely get to see the ball drop at Times Square and the loud music has been supplanted by something more like Lawrence Welk and his bubble machines. The change is due in part to concessions to age and in part to the onset of wisdom
I like to think of this all as a quintessentially American tale, a metaphor for how America has lurched from merry making to bubbles for the past twenty years. In the nineties it was all about the sure bet of initial public offerings and Silicon Valley, followed by the dot com bubble that brought the partying to a screeching halt. Then one millennium ended and a new one began. The dot com lessons, if there were any, were forgotten. America plunged headlong into the world of easy credit and collateralized debt obligations. Americans bought houses they couldn’t afford or flipped them about as soon as the ink dried on the mortgage contracts. It was quite intoxicating and it seemed that the party would never end. But, like all wild parties, it did. The result was an economic hangover the likes of which Americans hadn’t seen since the Great Depression. And, we’re flailing around, desperately searching for the hair of the dog. In my youth pickle juice, a couple of raw eggs, or a bloody Mary would usually do the trick. Unfortunately, they’re no match for what ails America today.
The fact that we’re still hung over has little to do with lack of effort. Our government has poured billions of dollars of stimulus money into the mix. They’ve bailed out automakers and banks. They’ve borrowed trillions from the Chinese, the Saudis, and any other international payday loan shark or hustler they could find. But, the dog that bit us continues to bite. Unemployment is so bad that millions have given up looking for work. Retirement funds have been depleted and a lot of us are walking around with our hats in our hands, pleading “Brother can you spare a buck or two or ten?”
In a couple of days it will be 2011 and there is another bubble that may just be ready to burst. In a recent 60 Minutes report Steve Kroft noted that a financial crisis involving state and local governments is looming: “In the two years, since the “great recession” wrecked their economies and shriveled their income, the states have collectively spent nearly a half a trillion dollars more than they collected in taxes. There is also a trillion dollar hole in their public pension funds.” That would be bad enough, but as financial analyst Meredith Whitney, who was one of the few who predicted the 2008 bubble, warned in the same report, “The most alarming thing about the state and local issue is the level of complacency.”
I’m not sure what that means for Kansas and Emporia. Maybe we’re too small for a bubble. Maybe we’re far away and insulated. On December 22nd, the New York Times reported that Prichard, Alabama, population 27,000, had run out of money. As the Times put it, “So the declining, little-known city of Prichard is now attracting the attention of bankruptcy lawyers, labor leaders, municipal credit analysts and local officials from across the country.”
Prichard had been warned for years that there was a bubble on the horizon, but no one listened. Apparently, Prichard wasn’t insulated, nor was it too small.
Our legislators here in Kansas have billions of dollars in unfunded liabilities to KPERS and keep kicking the can down the road, hoping the problem will just go away. Our city commissioners are so strapped for cash they’re considering fees for putting out fires or extricating someone from a car with the Jaws of Life. Desperation, it seems, may be the mother of invention. As police Chief Gary Smith put it, “It’s not easy to budget some expensive events.”
You’d think that our leaders would get the message. But, it seems that their hearing has gone dim. The Emporia Recreation Commission is talking about building a new, improved center, to the tune of millions. The city and USD 253 are carrying enormous loads of debt. Mill levies continue to climb; Emporia’s population is in decline; household incomes are stagnant.
Something’s gotta’ give. Like the rest of America, Kansas and Emporia are in desperate need of the hair of the dog. The question looming for us and our leaders is whether or not we’ll be willing to take the cure.