Monday, January 25, 2010

A YEAR OF OBAMANOMICS

We were fans of the promises made by Obama to spend Federal dollars to rebuild our Nation’s roads, bridges, power grids, and fund an alternative fuel and energy program to end our dependence on imported oil. Sadly, those projects have yet to be funded by Congress while a lot of other very expensive and bizarre programs have been funded. Instead of rebuilding our country’s infrastructure and getting people back to work, Congress funded a $787 billion economic stimulus plan to entice Americans to increase their consumer debt, punish them for saving, and provide gigantic bonuses for the executives that nearly bankrupted our financial and insurance institutions.

The $4 billion Car Allowance Rebate System (CARS) program gave $4,500 in cash to anyone willing to demolish their older working car or truck and buy a new one for up to $45,000. To qualify, clunkers had to be owned at least a year, built since 1984, and be completely demolished so that even their valuable reusable parts like pistons, engines, and drive trains could not be reused. Americans traded their paid off cars in exchange for debt on new cars with only a 10 mile per gallon difference in fuel usage required. SUVs and even Hummers qualified, while used cars with substantially better gas mileage did not.


Americans were encouraged with up to $8000 in tax credits to buy a house this past year even as job losses and overspending by Americans led to an ever increasing number of foreclosures. The Treasury spent over $400 billion on underwater mortgage-backed securities to keep banks, Fannie Mae, Freddie Mac, and Ginnie Mae afloat from their bad home loans. Subsidizing the failed housing market has kept mortgage rates at a record low and builders afloat in a market awash with houses. Meanwhile, Obama’s $75 billion Home Loan Mortgage Modification Foreclosure Prevention (HAMP) and Homeowner Affordability and Stability Plan (HASP) programs are not keeping up with the accelerating number of Americans unable to afford their payments while their housing values and salaries continue to decline.


The Treasury paid over $700 billion in cash bailouts to 770 recipients including banks, mortgage servicers, insurance providers, auto companies, and government backed institutions under the Troubled Asset Relief program (TARP). TARP allowed US Banks to not have to trouble themselves with the usual bank business of luring depositors, thus creating record low interest rates in government protected FDIC savings accounts and discouraging Americans from saving their money. These same banks are getting 29% interest and higher on credit card balances. We guess this bizarre business model is one of the reasons bank executives feel justified in giving themselves gigantic bonuses. The Treasury’s actions resulted in a US stock market bump in 2009 of 28% (S&P 500) and a global securities bubble where some international stock markets gained over 160%, further feeding Wall Street’s unrepentant attitude for the damage they caused with their creative mortgage-backed securities

The loss of income to the State of Hawaii due to sinking property values, rising unemployment, fewer tourists, increased bankruptcies and foreclosures had a big impact on life in Hilo in 2009. Hawaii’s cost reduction programs and cutbacks combined with Congress’s stimulus plan programs created some bizarre situations.

1 The concept of “Furlough Friday” has entered into the collective consciousness and almost come to seem “normal”. Hawaii State, Education, and soon County workers are on various forms of “Furlough Friday”. Traffic and shopping on the Big Island now revolve around Furlough Fridays and new businesses and services have emerged to take advantage of the new habits and needs of the growing number of furloughed workers and children.

2 The acceptance of the lowest number of instructional days in the US (down 17 days to only 161 days) at Hawaii’s public schools has become the new reality after lawsuits and a national scolding had no effect. Hawaii’s children had already lost their State’s Universal Child Health care program at the beginning of 2009. Yet, Representative Abercrombie garnered $59 million in 2009 earmarks for education, health care and activities only for Native Hawaiians excluding Hawaii’s children furloughed from the State’s public school system (ironically founded by King Kamehameha in 1840) due to a $38 million shortfall.


3 Hawaii’s Food Stamp program (SNAP) has the highest income limits in the US allowing 94,000 residents to collect the awesome benefit. On Food Stamp day (the day the State loads up the EBT plastic card holders) the Hilo grocery stores’ parking lots are packed. The strange thing is that the autos are mostly brand new, large SUVs, we presume bought through the clunkers program. The rest of the month, the lots have fewer, older, and smaller sized cars.

4 The rapid rise of unemployment, particularly among young Americans, has made enlisting in the US Military look attractive. If the fitness requirements and background investigation can be passed, being a solider is one of the few full-time, full-benefit jobs available without job experience and the only Federally supported employment for those without college degrees. While Obama was wringing his hands over sending more soldiers to Afghanistan, we met many young people in Hilo waiting impatiently for their acceptance into the US military knowing they would immediately be sent into a violent war zone if they were able to get through boot camp. This is a bizarre departure from the 1990’s when parents and public officials scolded gamers and game developers about the harmful effects of violent video games.


We are disappointed that during the first year of our new administration, Congress and Obama have not chosen to invest in America’s infrastructure, jobs, or college tuition support. We heard from our grandparents how strange things were in the Great Depression and as the bizarre become normal in these times we wonder what the next year of Obamanomics will look like in Hawaii.

Tuesday, January 19, 2010

A NEW VIEW OF WAIKIKI

We just returned from a wonderful week in Waikiki. We tagged along with our kid starting college in Oahu and celebrated by taking some time to enjoy Waikiki beach and take advantage of the Outrigger hotel chain’s Kama’aina (Hawaii resident) rates.

We like staying at the Outrigger Regency on Beachwalk because they have family size units with kitchens and it is close to the beaches in front of Fort DeRussy and an easy walk to central Waikiki for shopping.


This trip we stayed at the Outrigger Waikiki for the first time to enjoy its incredible beach front and take advantage of the amazing savings. (Like 75% off)




Waikiki has changed a lot since our trip last September to the Writers Conference. The crazy mess created by the construction of Trump tower was gone and Lewers street was completed with the retail spaces full of interesting stores and restaurants.




The massive amount of retail space in the Royal Hawaiian Center and along Lewers street has consolidated the Waikiki tourist area.



The tourists were concentrated into a small area stretching from Kealohilani Avenue (by the Duke Kahanamoku statue and Hyatt Regency), along Kalakaua Avenue, to Lewars street and the Sheraton Waikiki.





We noticed that book stores and shops that had been several blocks away had moved into the new retail spaces making it a short walk to find everything we wanted near our hotel. The sidewalks in front of the Outrigger Waikiki and along Lewars were so crowded that we could barely navigate them day or night.





But a few blocks away from the central area in any direction, the crowds were thin, the sidewalks empty, and many of the store fronts were boarded up or empty.



Along Beachwalk street (only one block from Lewars) the newly constructed storefronts stood empty.





We went up to the new Trump Tower hotel lobby and admired its great view of DeRussy park and skyline of Waikiki, but the lobby and restaurant were empty.






We walked around the Hilton Waikiki Village, which had a pretty good crowd on the beach. Many of the sunbathers were from the Hale Koa hotel next to the Hilton which was overflowing with military men and women and their families. They filled the tables around us at the Hilton’s ocean side restaurant talking about Iraq and Afghanistan. But the stores and businesses on the streets behind the Hilton were deserted with many boarded up and covered with graffiti.






Staff in Waikiki hotels seemed to have changed too. While checking in, one hotel staff member was surprised that our driver’s license looked like his. It was strange to have to remind him that Hilo was in State of Hawaii and watch him reluctantly agree (or was he just being polite?). “Oh yes, I guess that is right”. Later a shop worker remarked that if we loved Hilo we must also love Kauai because they were exactly the same place in his mind. Most of the workers in Waikiki that we spoke with had never been to other islands in the State. They commented that they rarely see news or hear anything about the “outer islands”. And only the Big Island’s copious volcanic output seemed to remind them that the State extended beyond Oahu, due to our shared experience of sore throats and burning eyes from the Vog.

Though the fall off in tourism in Waikiki has concentrated businesses into a smaller area creating empty retail space outside the zone, savvy businesses with the right location and products are doing well in spite of the downturn.

We believe that as the downturn worsens on the Big Island, with the upcoming increases in furloughs, pay cuts, and layoffs, that businesses will consolidate and concentrate into fewer locations on the island and those businesses in the right location will do well and perhaps even flourish during the downturn.

Wednesday, January 6, 2010

OPPORTUNITY COSTS

People often tell us about opportunies they missed like not joining Microsoft when it was small or not finishing a degree or not buying a piece of beachfront property. The challenge with life’s opportunities is that you can’t take them all; you have to pick them and pick well or live a life of regrets.

We know that taking one opportunity can cost the pursuit of another opportunity so our question is always which of the opportunities available to us are the best ones. During times of great economic expansion there may seem to be countless choices for the profitable uses of one’s time and money while in times of economic contraction, like now, it may seem like there are no opportunities. But our experience is that many of the opportunities in the good times were not real whereas the opportunities during these difficult economic times are greater and more impactful though they don’t have the hype of a booming economy to make them look good.

We have been reading stories about the growing number of the long-term unemployed. Many are spending every day for months and years looking for a job. The use of their time and money to look for a job, when there are none, is the loss of an opportunity to pursue some other activity that may deeply improve their life. For us, lying on a couch under a ceiling fan has been a unique opportunity. It has allowed us to lower our blood pressure, lose weight, figure out how to dramatically reduce our expenses, spend precious time with our son, cook all our meals, meet lots of wonderful people, become detached from our careers, and get over ourselves. The choice we did not take was to collect unemployment in California while looking for a job in a hopeless attempt to retain our old lifestyle

Watching the job situation continue to deteriorate, we feel lucky we did not choose to spend our last two years hunting jobs that no longer exist. We would have missed the opportunity to relax and reassess our life in Hawaii. As we look to the future we continue to see opportunities for us outside of the traditional job and the career arena.

Here are some of the opportunities we find ourselves considering:
· Continue to lose weight and get fit;
· Learn another language; Japanese would be good for us;
· Join the Peace Corps or other overseas volunteer organization;
· Be an English teacher in Asia;
· Train for a marathon race or take on a physical challenge like a month-long hike or pilgrimage;
· Write a biography, poetry, a novel, or a how-to book;
· Join a cruise ship crew or travel group;
· Use a car as a taxi service and give local tours;
· Join the Red Cross or Citizen Corps to new learn skills and aid others in disaster situations.