Over the weekend Barron's
ran an interview with two hedge fund managers and dedicated short
sellers, Lee Mikles and Mark Miller, who argued that we were at a
dangerous juncture vis a vis the economy and stock market. Since short
sellers benefit from falling stock prices, they're prejudiced to the
down side, but that doesn't mean they're wrong. (The italics below are
mine.)
Barron's asks: "Why do you think we are at an inflection point?
"Mikles: Bottom line, the consumer is broke and he doesn't know it yet. But he is about to find out.
All the buckets that propelled consumer spending are empty now, whether
it is the increase in mortgage debt, the increase in consumer debt or
the reduction in the savings rate. No one statistic will tip the scale
at the end of the day. But one very obvious and very curious statistic
is that we have dipped into a negative savings rate for the first time.
That is not only unsustainable, it is sustainable only for a few
months. That's important to note because it tells you consumers are
borrowing money to make debt payments. The U.S. consumer has become
payment driven. He is driven not by the aggregate amount of debt he
possesses but by the amount of the payment. And now the consumer has
not only taken his savings rate to nothing, it has turned negative.
"Miller: Every month there is some increase in consumer borrowing
that has to occur just for the consumer to stay level. The consumer is
treating his balance sheet much the way the government is treating
theirs, but, of course, the consumer can't create currency like the
government can. The point is the consumer cannot continue to borrow to
make his debt-service payments for very long. How did we get here? We
got here because of the huge differential between wage growth and what
we spend and what we consume.
"Q: What about the argument that consumers may not be saving but the
appreciation they have seen on their houses is a form of savings?
"Mikles: The consumer doesn't know he is broke because his house
hasn't stopped going up yet. It hasn't starting going down, it just
hasn't stopped going up. Once it stops going up, the consumer will immediately -- and I mean a matter of months -- find out that he is, in fact, broke."
James Howard Kunstler also sees in the back ground in the wake of Katrina.
"Meanwhile momentous things are swirling in the background. The
price of gasoline may retreat sometime in two to six weeks, but I doubt
it will fall below the $2.50 range again. In fact, having gone way
above the psychological barrier of $3.00, the gasoline retailers may
resist falling below that. There have been no new oil refineries built
in the US since the late 1970s. There will be no new ones built now,
despite the crunch on refined 'product.' Why? Because the oil companies
understand that they are in a twilight industry and refineries
represent huge investments in future activity, which the corporations
correctly perceive will be shrinking as global oil production passes
peak.
"The biggest shock to the public lies a couple of months ahead when
the cost of natural gas for home heating (50 percent of the dwellings
in America) combines with stubbornly higher pump prices to whap them
upside the head. Natural gas at around $12.00 is now many times what it
cost as recently as 2003 ($3.00).A lot of Americans will be shivering this winter and some of the weak, old, and poor will die as a result....
"Strapped for cash from filling their gas tanks, unable to buy
Christmas presents at WalMart, and huddled around space heaters, the
public will be wondering why they were so poorly prepared."
Bradshaw and Slonsky
are paramedics frorm California, who were attending a paramedics’ conference in New Orleans, staying in the
French Quarter, when the hurricane hit. Afterward, they were in the
same situation as other survivors in the city: no food, no water, no
transportation, and no help from the outside world: [Story Link]
On Day 2, there were
approximately 500 of us left in the hotels in the French Quarter. We
were a mix of foreign tourists, conference attendees like ourselves,
and locals who had checked into hotels for safety and shelter from
Katrina. Some of us had cell phone contact with family and friends
outside of
New Orleans. We were repeatedly told that all sorts of resources
including the National Guard and scores of buses were pouring in to the
City. The buses and the other resources must have been invisible
because none of us had seen them.
We decided we had to save ourselves. So we pooled our money and came
up with $25,000 to have ten buses come and take us out of the City.
Those who did not have the requisite $45.00 for a ticket were
subsidized by those who did have extra money. We waited for 48 hours
for the buses, spending the last 12 hours standing outside, sharing the
limited water, food, and clothes we had. We created a priority boarding
area for the sick, elderly and new born babies. We waited late into the
night for the "imminent" arrival of the buses. The buses never arrived.
We later learned that the minute the arrived to the City limits, they
were commandeered by the military.
By day 4 our hotels had run out of fuel and water. Sanitation was
dangerously abysmal. As the desperation and despair increased, street
crime as well as water levels began to rise. The hotels turned us out
and locked their doors, telling us that the "officials" told us to
report to the convention center to wait for more buses. As we entered
the center of the City, we finally encountered the National Guard. The
Guards told us we would not be allowed into the Superdome as the City's
primary shelter had descended into a humanitarian and health hellhole.
The guards further told us that the City's only other shelter, the
Convention Center, was also descending into chaos and squalor and that
the police were not allowing anyone else in. Quite naturally, we asked,
"If we can't go to the only 2 shelters in the City, what was our
alternative?" The guards told us that that was our problem, and no they
did not have extra water to give to us. This would be the start of our
numerous encounters with callous and hostile "law enforcement".
We walked to the police command center at Harrah's on Canal Street
and were told the same thing, that we were on our own, and no they did
not have water to give us. We now numbered several hundred. We held a
mass meeting to decide a course of action. We agreed to camp outside
the police command post. We would be plainly visible to the media and
would constitute a highly visible embarrassment to the City officials.
The police told us that we could not stay. Regardless, we began to
settle in and set up camp. In short order, the police commander came
across the street to address our group. He told us he had a solution:
we should walk to the Pontchartrain Expressway and cross the greater
New Orleans Bridge where the police had buses lined up to take us out
of the City. The crowed cheered and began to move. We called everyone
back and explained to the commander that there had been lots of
misinformation and wrong information and was he sure that there were
buses waiting for us. The commander turned to the crowd and stated
emphatically, "I swear to you that the buses are there."
We organized ourselves and the 200 of us set off for the bridge with
great excitement and hope. As we marched pasted the convention center,
many locals saw our determined and optimistic group and asked where we
were headed. We told them about the great news. Families immediately
grabbed their few belongings and quickly our numbers doubled and then
doubled again. Babies in strollers now joined us, people using
crutches, elderly clasping walkers and others people in wheelchairs. We
marched the 2-3 miles to the freeway and up the steep incline to the
Bridge. It now began to pour down rain, but it did not dampen our
enthusiasm.
As we approached the bridge, armed Gretna sheriffs formed a line
across the foot of the bridge. Before we were close enough to speak,
they began firing their weapons over our heads. This sent the crowd
fleeing in various directions. As the crowd scattered and dissipated, a
few of us inched forward and managed to engage some of the sheriffs in
conversation. We told them of our conversation with the police
commander and of the commander's assurances. The sheriffs informed us
there were no buses waiting. The commander had lied to us to get us to
move.
We questioned why we couldn't cross the bridge anyway, especially as
there was little traffic on the 6-lane highway. They responded that the
West Bank was not going to become New Orleans and there would be no
Superdomes in their City. These were code words for if you are poor and
black, you are not crossing the Mississippi River and you were not
getting out of New Orleans.
Why should people be prohibited from leaving New Orleans on foot, but
the same people be allowed to leave if they're in cars and trucks? We
already knew the people stuck in the city didn't have cars. That's why
they're stuck there. Gretna law enforcement panicked at the prospect of letting some
half-starved shell-shocked hurricane survivors, grannies and little
kids and all, come limping on foot through their area. May they be
ashamed of themselves forever.
Our small group retreated back down Highway 90 to seek shelter from
the rain under an overpass. We debated our options and in the end
decided to build an encampment in the middle of the Ponchartrain
Expressway on the center divide, between the O'Keefe and Tchoupitoulas
exits. We reasoned we would be visible to everyone, we would have some
security being on an elevated freeway and we could wait and watch for
the arrival of the yet to be seen buses.
All day long, we saw other families, individuals and groups make the
same trip up the incline in an attempt to cross the bridge, only to be
turned away. Some chased away with gunfire, others simply told no,
others to be verbally berated and humiliated. Thousands of New
Orleaners were prevented and prohibited from self-evacuating the City
on foot. Meanwhile, the only two City shelters sank further into
squalor and disrepair. The only way across the bridge was by vehicle.
We saw workers stealing trucks, buses, moving vans, semi-trucks and any
car that could be hotwired. All were packed with people trying to
escape the misery New Orleans had become.
Our little encampment began to blossom. Someone stole a water
delivery truck and brought it up to us. Let's hear it for looting! A
mile or so down the freeway, an army truck lost a couple of pallets of
C-rations on a tight turn. We ferried the food back to our camp in
shopping carts. Now secure with the two necessities, food and water;
cooperation, community, and creativity flowered. We organized a clean
up and hung garbage bags from the rebar poles. We made beds from wood
pallets and cardboard. We designated a storm drain as the bathroom and
the kids built an elaborate enclosure for privacy out of plastic,
broken umbrellas, and other scraps. We even organized a food recycling
system where individuals could swap out parts of C-rations (applesauce
for babies and candies for kids!).
This was a process we saw repeatedly in the aftermath of Katrina.
When individuals had to fight to find food or water, it meant looking
out for yourself only. You had to do whatever it took to find water for
your kids or food for your parents. When these basic needs were met,
people began to look out for each other, working together and
constructing a community.
If the relief organizations had saturated the City with food and
water in the first 2 or 3 days, the desperation, the frustration and
the ugliness would not have set in.
Flush with the necessities, we offered food and water to passing
families and individuals. Many decided to stay and join us. Our
encampment grew to 80 or 90 people.
From a woman with a battery powered radio we learned that the media
was talking about us. Up in full view on the freeway, every relief and
news organizations saw us on their way into the City. Officials were
being asked what they were going to do about all those families living
up on the freeway? The officials responded they were going to take care
of us. Some of us got a sinking feeling. "Taking care of us" had an
ominous tone to it.
Unfortunately, our sinking feeling (along with the sinking City) was
correct. Just as dusk set in, a Gretna Sheriff showed up, jumped out of
his patrol vehicle, aimed his gun at our faces, screaming, "Get off the
fucking freeway". A helicopter arrived and used the wind from its
blades to blow away our flimsy structures. As we retreated, the sheriff
loaded up his truck with our food and water.
There are no available shelters in New Orleans. Poor pedestrians
aren’t being allowed to leave the city. Since they’re stuck in the
city, the freeway cooperative people are taking care of each other and
organizing the provision of food, water, sanitation, and other basic
needs. Nobody is using their chunk of freeway. What possible reason can
there be for destroying their encampment and scattering its inhabitants? What legitimate use could the sheriff have for water
and C-rations, other than to put them into the hands of refugees?
Geraldo tried to describe the inhuman
conditions at the shelter, then
broke down and cried as he begged the authorities to let people still
stuck in the convention center walk out of town. Shepard Smith
confirmed that the authorities had set up checkpoints, and were turning
back people who tried to leave. Furthermore, what reason can there be
for keeping obviously harmless
people from walking along public roads in order to get out of a
dangerously unlivable situation and into safer areas where the civil
authorities could give them assistance and get them into shelters? What
bloody right did the Gretna police force have to keep people from
walking across that bridge? And why didn't other agencies tell them to
knock it off?
Once again, at gunpoint, we were forced off the freeway. All the law
enforcement agencies appeared threatened when we congregated or
congealed into groups of 20 or more. In every congregation of "victims"
they saw "mob" or "riot". We felt safety in numbers. Our "we must stay
together" was impossible because the agencies would force us into small
atomized groups.
In the pandemonium of having our camp raided and destroyed, we
scattered once again. Reduced to a small group of 8 people, in the
dark, we sought refuge in an abandoned school bus, under the freeway on
Cilo Street. We were hiding from possible criminal elements but equally
and definitely, we were hiding from the police and sheriffs with their
martial law, curfew and shoot-to-kill policies.
The next days, our group of 8 walked most of the day, made contact
with New Orleans Fire Department and were eventually airlifted out by
an urban search and rescue team. We were dropped off near the airport
and managed to catch a ride with the National Guard. The two young
guardsmen apologized for the limited response of the Louisiana guards.
They explained that a large section of their unit was in Iraq and that
meant they were shorthanded and were unable to complete all the tasks
they were assigned.
We arrived at the airport on the day a massive airlift had begun.
The airport had become another Superdome. We 8 were caught in a press
of humanity as flights were delayed for several hours while George Bush
landed briefly at the airport for a photo op. After being evacuated on
a coast guard cargo plane, we arrived in San Antonio, Texas.
There the humiliation and dehumanization of the official relief
effort continued. We were placed on buses and driven to a large field
where we were forced to sit for hours and hours. Some of the buses did
not have air-conditioners. In the dark, hundreds if us were forced to
share two filthy overflowing porta-potties. Those who managed to make
it out with any possessions (often a few belongings in tattered plastic
bags) we were subjected to two different dog-sniffing searches.
Most of us had not eaten all day because our C-rations had been
confiscated at the airport because the rations set off the metal
detectors. Yet, no food had been provided to the men, women, children,
elderly, disabled as they sat for hours waiting to be "medically
screened" to make sure we were not carrying any communicable diseases.
This official treatment was in sharp contrast to the warm,
heart-felt reception given to us by the ordinary Texans. We saw one
airline worker give her shoes to someone who was barefoot. Strangers on
the street offered us money and toiletries with words of welcome.
Throughout, the official relief effort was callous, inept, and racist.
There was more suffering than need be. Lives were lost that did not need to be lost.
Looks like the entire Gretna PD will
be in line for one of Bush's
Medals of Freedom. Probably on the stage alongside Brownie and
Chertoff. I don't know whether to be pleased or horrified that this
story seems to be credible, but it fills in a bunch of dots for me,
particularly the bit about people showing up at the convention center
and on the highways. I also wondered why people just didn't walk over
the bridges, the way that they did after 9/11 in NYC, and this story
made it clear why.
I'm having a hard time not feeling cynical right now. The situation
in NOLA has illuminated some of the greatest problems in the United
States, and those are poverty and classism. I can't help but fear that,
much like the All-American patriotic comraderie that swelled after
9/11, once the proverbial dust settles, we will all return to the
comfortable oblivion of watching The O.C. and Fear Factor re-runs,
maybe placating a charity or two, getting fired up around presidential
elections, but not reallydoing much of anything that extends
outside of our self-centered comfort zones. I'm guilty of doing it too.
I'm guilty of being too busy, of not feeling like it makes enough of a
difference to even bother, of forgetting how many people I needed and
how many people still need me.
For anyone asking the blame-the-victim question about Katrina's
victims' "They had warning, why didn't they leave?" I recommend John
Scalzi's wrenching blog post, Being Poor.
...John Scalzi offers a great post
to remind us that, in addition to the catastophic consequence of
poverty that we are seeing in NOLA, there are daily tragedies, little
hurricanes (to rephrase Tori Amos), that are "normal" for people who
are poor. There are things you endure that you never forget and
still, there are things that others have endured that I can hardly
imagine.
Being poor is hoping the toothache goes away.
Being poor is Goodwill underwear.
Being poor is a six-hour wait in an emergency room with a sick child asleep on your lap.
Being poor is knowing where the shelter is.
Being poor is a heater in only one room of the house.
Being poor is hoping your kids don't have a growth spurt.
Being poor is people angry at you just for walking around in the mall.
Being poor is never buying anything someone else hasn't bought first.
Being poor is people wondering why you didn't leave.