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Chief on my list would be Oliver North, for the usual reasons; "Reverend" Pat Robertson, for terrorizing stupid people, senior citizens afraid to die (some of which belong to the stupid people category), gay men and women, civil libertarians, and anyone with half a brain; Jerry Falwell (see Pat Robertson); Billy Graham, the guy who started televangelist fraud and who is now grooming junior to take over the empire; all members of the American Nazi Party; John Negroponte, who seems to think it's just peachy to shove women out of helicopters; all members of the Klan; all white surpemacist skinheads; ultra-right-wing fundamentalist "Christians"; most of the leadership of the GOP during the Clinton era; Kenneth Winston Starr; and certain others I am too afraid to name because they'll probably shoot me and my family.
Let me tell you this: don't expect to see any TV coverage of our "war machine" attacking Afghanistan or anywhere else as a result of the World Trade Center horror. Aircraft carriers, our boys in uniform departing to tearful hugs from their families, the National Guard call-ups -- that's all you'll see, and it's all for show, much like the opening scene of elder Bush's "Desert Storm", a campaign which had the chance to wipe most of these homicidal lunatics off the map 12 years ago.
...and didn't.
What I do expect is that the Pentagon and cooler heads in the Bush Administration will prevail, taking out known terrorists within and outside of Al Qaeda one by one using Army Rangers, Navy Seals, and a chopper or two (thank the Lord).
Whoever did plan and order the strike on New York and Washington DC accomplished much more destruction than he or she hoped. Let's take a close look at the damage thus far:
· I believe at the end of the clean-up in New York we will learn than nearly 10,000 -- that's right, 10,000 -- were killed as those planes slammed into the twin towers. Do the math: you can assume that 6,000 men and women were left widows, widowers, or without life partners -- with as many as 20,000 kids fatherless or motherless. Children, of course, include grown men and women who lost their parents so cruelly.
· Those in the know say that we can watch for reduction in the third quarter GDP of nearly $30 billion and a negative growth rate.
· Things weren't great for business even before the attack, with predications for the third quarter at -6%; after the attack look for -40%.
· The attack resulted, by current estimate, in more than $15 billion in property losses -- and many feel that's an underestimate.
· The attack triggered a loss in the stock market of more than $1.5 TRILLION! And it could go down even more.
· The 4th Quarter looks worse, depending on which consumer-confidence survey you believe. I and others more respected are betting on an additional -3% in this the biggest shopping quarter of the year, bringing the growth rate down to -0.8%.
· While some are predicting only a sort-of-deep recession, recent lay-offs and corporate shenanigans by the airlines, transportation and other sectors lead one to believe the recession is already fairly deep and will slide toward the "deep" category in January or February as poor holiday sales come home to roost in first quarter reports from the nation's largest retailers, producers and service companies -- even while the Federal Reserve Bank and the Congress have done much to reduce the chance of ever-deepening recession.
· You can count on the Fed to reduce its rate another 50 basis points, but to not much avail.
· You can expect the Congress to spend at least $60 billion of your tax money on a variety of much-needed but non-operable security gizmos, the military, covert operations and further gifts to the airline industry -- which deserves to be nationalized for its gross mismanagement, price-fixing, price-gouging, and selling out YOUR well-being to the lowest bidder. $60 billion is a lot of money -- that's about $215 for every man, women and child living in America (and paying taxes, of course). So say goodbye to that cheap DVD player you bought with your tax rebate check. Guess what? Uncle Sam will need it back -- NOW.
· You can expect personal bankruptcies to reach record levels next quarter as people attempt to avoid the new, harsh and ridiculous bankruptcy laws so eagerly passed by Congress earlier this year.
Yes, these are only projections, but some of these projections are already a week old or more and the stock market keeps turning first-time paper millionaires into debtors ready for Chapter 7 bankruptcy. These projections aren't something I dreamed up, but the result of long hours into the night, reading and calculating and checking my numbers with professionals.
So hang on to your party hats for a while, anyway.
Already half the nitwits in business and in the nation's Capitol are doing the most harebrained things -- and on television, yet. They're telling you to buy stock while they are selling it. They are getting on commercial airliners to "prove" that flying is safe (come on -- it always was). On September 11, arguably the worst day in commercial aviation history, 5,000 planes were in the air Tuesday morning and landed safely (although many not at their scheduled destinations). So get back on those planes, people -- the probability of getting hijacked by terrorists is far, far less today because of new security -- probably over 10,000,000 to 1.
But beware, and stay off cruise ships and trains for some time to come, especially big trains. Experts see these as easier-to-attack targets of the American middle class.
Of course, these projections do not contemplate a huge U.S. military venture, nor do they include good fiscal policy continuing in Congress. They also include a cessation of the continuing dropping stock indices and increased consumer (that's us) confidence.
The question, of course, is this: just what IS consumer confidence?
Consumer confidence is a belief that things will get better than they were -- let's say last year or the year before, when tricksters from the dot.coms were lining their pockets with your sure-bet investments in their insane schemes.
Nope. Not gonna happen -- at least not soon.
Consumer confidence will come when the world becomes more confident in us, and when we become more confident in ourselves, the Congress and the White House to do the right thing.
Far be it from me (well, that's an overstatement) to predict what will happen, but so far the Bush report card on everything else... well, frankly, it sucks.
And that report card, read by our allies and our foes alike, does not bode well.
Let's see if George W. is as humbled by this experience as we all seem to be. Let's see if he sticks to early morning forays against known terrorists. Let's see whether or not he revisits our air, water, national wildernesses, and judicial policies now that he's seen the ghost. Let's see if he does anything about reining in John Ashcroft -- if W. thinks that letting this guy who prays on his knees every morning to "do the Godly thing" and then asking the President to allow him to eject anyone he sees fit from the USA, including American citizens, mind you, without due process and stripping that person of his or her citizenship, is okay, then he's not getting it. Bush didn't even slap his hand, and the Attorney General is proceeding to convince the Congress that it's his right.
I bet W. won't.
And don't say we haven't warned you that ID cards -- "Federal" ID cards that amount to passports in your own country -- were on the way. I happened to know that not only are they on their way, but that dingbats like Larry "Oracle" Ellison are suggesting they can contain retinal scanners, thumbprint readers, DNA samples and your entire health and credit history. ID cards that can be demanded by any motorcycle cop in Mississippi, where the illiteracy rate is a staggering 70% -- now that's scary. The honchos in Washington -- especially the ones trying to pass themselves off as "small government" ultra-conservatives -- have been dropping hints in dribs an drabs they want this for years now. The September 11th attacks are the excuse they needed. So get a haircut and a shave -- make sure you look good and American on your holographic picture. Remember the ID cards that Hitler made Germans carry? Well, I won't say it -- but perhaps the new team at "Homeland Defense" will explain.
Like all Americans, however, who are or were scared half out of their wits, it doesn't look likely that George W. will mend his other ways.
But we can pray he will.
Lets take a look at the impact of this single incident of insane murder that we now label "terrorism" on the economy.
Retailers reported that chain store sales dropped, on an annualized basis, by 72% the week after the terrorists struck continues. Now the chance of this is very low -- most Americans were home with their heads cemented to television sets watching the horror unfold. Even the World Wrestling Federation's usually lucrative pay-per-view bout suffered deep viewership losses because of the real death on cable news outlets.
Trading volume on Wall Street, in Philadelphia and Chicago were at record high the week after the stock exchanges reopened and were so large as to make up the entire volume loss of the four days lost the week before. While volumes were up, all the indices reported devastating losses. This past Wednesday thing began to pick up, and hopefully the NYSE and the NASDAQ will "rise" to the occasion. But don't count on it in the near term; some experts predict that America is over its love affair with Wall Street, and was teetering on that precipice months before the terrorist attacks in New York and Washington. I, for one, am not sure. As of the day of this writing, the markets were dropping, but just a hair.
I do not believe the airlines have even a slight chance of recovering from these terrorist attacks. For one thing, all Americans with minds are alert to the fact that the wheeler-dealers in airline boardrooms are dumber than we thought when they decided to strip airline timetables of thousands of flights and make all but the citizens of our largest cities change planes about a dozen times in order to reach their "final destination." In truth, passengers have become convinced, over a period of the last few years, that airlines have little or no concern for the comfort or well being of passengers and are simply out to acquire other airlines so they can REALLY fix prices, instead of simply looking like they do. They didn't want to spend more on security, and they didn't.
Ten thousand are dead as a result.
Congress, last week, loaned airlines $15 billion, but it won't be nearly enough. Passengers, prior to the attack, were spending $80-100 million PER DAY on air travel. Airlines lost nearly $ 1 billion while they were kept grounded, and another few hundred million getting their systems back on line and their planes ferried to the proper airports to resume normal schedules. This month alone. airlines will lose $1.7 billion in revenues, and an additional $1.4 billion next month. In the ensuing six months they will lose an additional $3 billion in revenues and perhaps as much as an average of $3 billion each year for the next several years as passenger loads decline. If attacks continue using aircraft, or on aircraft, the losses could be deeper.
Not a pretty picture, unless the American flying public resumes its normal travel patterns sooner than later.
The saving grace for airlines is that air freight must, and therefore will, continue at levels prior to the attacks. Well-run airlines will lower air freight prices and increase volume and profits to stem some of the losses from passenger traffic. Be prepared for a large increase in airfares as just one of many ways that airlines will seek to recoup these losses after the first of next year -- but right now, there are bargains galore! A colleague told me that some airlines are actually haggling over prices on the phone. He offered them 30% of the first class fare from New York to L.A. (about $8,000 now) -- and they took it! Now this doesn't mean you should begin to haggle with an operator taking reservations, but do expect that bargain flying will continue until load factors on airplanes begin to normalize.
Respected energy economists do not expect big increases in oil prices. Saudi Arabia and other oil producing countries now have oil gluts and spare capacity because the attacks in New York and Washington have slowed the global economy at less but similar rates to ours. Other oil producing states (including other Arab states) are also showing their loyalty to their biggest customers (the US and its allies) by at least pretending to be "anti-terrorist" -- and many oil producing heads of state are sending condolences as well -- but their people, well they seems to be a different story in too many cases.
Some worry that military use of fuel during the hunt for terrorists will drive oil, gas and fuel prices higher, but inasmuch as I don't expect any protracted or even near-term massive military assaults, I don't believe that.
The cost of owning stock and underwriting loans has gone sky high. These costs reflect the lessening value of shares and returns on investments. The risk of lending -- and ergo borrowing -- are also sky- high at this juncture, so don't expect to see your local bank having a loan sale. They may advertise loan sales, but try to qualify without at least an "AA" rating from Experian and its fellows.
One bright spot, believe it or not, is the high tech sector which will rake in revenues from the replacement of nearly every computer, telephone, router, fiber-optic cable, transmitter, and techno-gizmo taken out by the two terrorist-piloted jetliners.
Sales of computers, servers, and wireless equipment will soar, and techies are continuously and obstinately spending billions on infrastructure that will guarantee ultra-high-speed Internet connections for the entire country. In addition, most corporations that don't have intricate and complex backup systems for their data and communications are scrambling to get them. And don't forget the computer-driven and technology- supported security industry whose stocks have already jumped in anticipation of tens of billions of new spending on monitoring systems, hardening, and all the associated costs.
Keep your eye on tech stock leaders and you'll see what I mean at the end of next quarter.
While tech companies have a long way to go, they are, in my opinion, the General Electrics of tomorrow and have the best chance, along with pharmaceuticals, food, and -- believe it or not -- transportation stocks, to come back more strongly than other sectors.
Some increases in construction spending are sure to seen, most of it government financed. Just the cleanup and eventual rebuilding of the financial district of New York will exceed $70 billion over the course of the next several years. Added to this will be new "hardening" projects -- largely government and large-corporate based for added protection from terrorist attack. But residential building will still be hurt. Even though interest rates will be even lower than today, banks will be demanding and consumer lack of confidence, loss of employment and of wealth in general will leave new residential construction spending in the pile of downturns I discussed above.
On the other hand, look at government spending.
The White House and the Congress have already appropriated nearly $60 billion as a result of this terror, and I think one can count on seeing another $25-30 billion appropriated as other matters come to fore. In addition, don't be surprised to see the defense appropriations bill pass with a whopping $25 billion in added spending for fiscal 2002.
The Bush people and the Congress are whispering in the halls that they may propose another one-time tax break of $50 billion before the holidays in December -- but don't count on it. That would put total federal spending as a result of the attack at nearly $175 billion dollars. If that happens, you will get your tax break -- but later next year you'll get your tax increase, and it will be on PERSONAL income, as industry is already on its knees. That tax bill could average as much as $500 for every man, woman and child in America, which means that if you have two kids you might be paying Uncle Sam another $170 bucks each month to pay the tab!
The financial consequences in Washington are more severe. The Treasury Department has put off several scheduled repurchases of outstanding debt -- our debt -- and has also postponed additional bond auctions to raise cash. Yields on Treasury notes are backed up and this is hurting the impact of the easy-money policy of the Federal Reserve and other financial institutions.
One of the finest consulting and accounting firms in the world, Ernst & Young, are recommending a kind of "decision tree" as a template to plan for risk.
· The first level deals with the most important areas to watch: strength of political leadership and potential for more terrorist attacks.
· The next level is the outlook for fiscal policy. E&Y comments that if Congress fails to provide sufficient fiscal stimulus, the outlook is dimmer than if they act quickly and appropriately.
· The last tier deals with consumer and investor confidence. If investors sit on the sidelines, asset values will weaken further and negative wealth impacts -- for many people -- will ensue. If consumers feel poorer and freaked out by all sorts of anti-terrorist spending, then their spending could decrease even further -- which would, of course, impact capital spending, the job market, confidence at all levels and corporate spending -- which would in turn exacerbate the downward trends that could result in a sea-deep recession.
So keep on your toes, watch your pennies and look for good investments.
DON'T sit on the sidelines -- but be very cautious. If you have cash you might think about investing, but if you need that cash to live and for emergencies, then don't. Again, if you have your money in a savings account, now, or very soon, may be the time to begin buying mutual funds that specialize in the safer segments described above.
Most of all, however, love your family, your friends and yourself.
After all is said and done, this terrorist attack has taught us what money cannot buy.
Copyright © 2001, 2000, 1999, 1998, 1997, 1996, American Politics Journal Publications, Inc.
