Wednesday, November 26, 2008

It's logical to plan for the illogical.

And it's rational to include the irrational in your plans.

Did you folks read the story about Madras retail? Stores falling like flies, declines in sales of 50 and 70%.

Can't happen in Bend, right?

Why not?

I think a 10% unemployment rate in Bend is more than possible. And I believe that -- for some stores, at least -- 50% declines in sales are also more than possible.

In fact, I think logical and rational.

It's the irrational and illogical I'm hoping for. That Bend will see an Obama surge, that the 'rich' will drive down from the West Hills and do all their Christmas shopping in downtown Bend. That tourists will feel they need a break from the bad news and come to Bend.

It could happen, couldn't it?

A couple of years ago, it was the other way around. Planning for the logical, thinking we'll hold our own or see a small decline. But also including the possibility of an 'irrational' collapse.

The national news is so much more dire than I could have ever known. It really does lend credence to the saying, what happens locally is happening nationally. I saw the local bubble, but didn't realize it was not only happening all over the U.S. but even in places like Ireland and Spain.

The very fact that they are throwing something like 5 to 7 trillion dollars at the problem just to plug some holes -- how big is the underlying problems that are creating those holes? Will those holes become a breach, and a burst dam?

The Rachel Maddow Show had a graph that showed that amount of money was more than; (if I can remember) all the money spend on the Marshall Plan, all the money spent on the Vietnam War, the Great Society, the Nasa programs, including the moon race, the New Deal, the Manhattan Project, oh, I don't know, JUST ABOUT EVERY BIG MONEY PROGRAM IN THE LAST 75 YEARS COMBINED!

Does that give you pause. Shivers?

It does me.

The irrational and illogical now look to be the normal.

3 comments:

E said...

Happy Thanksgiving, Dunc. I mentioned your blog on my blog today. One of my favorite quotations comes from John Maynard Keynes, who observed in 1923. "This long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again."
Unfortunately, few of us are given second sight or even a really good grasp of what will happen in the near future. I think you do better than most and that's why your blog enjoys some popularity as well as some controversy.

People can handle negative information as long as it's leavened with some insight into what to do with it. I was once on a boat on the Pacific Ocean when the guy who was "the captain" announced that he thought there was a strong likelihood we were going to sink. Given that this information was unaccompanied by any advice about what to do, it occurred to me that I would have preferred that he keep his pessimistic thoughts to himself. We did not, as it turned out, sink; and I would have been happier, less anxious and probably a more able crew member without the erroneous prediction.

I enjoy the blog and refer folks to it on a regular basis. Give our best to Linda and come to visit when you get the chance.

Regards,

Wes

Duncan McGeary said...

Well, Wes, since you're dealing with the real small town problems on a daily basis, I appreciate it.

Looks like I'll be running the store myself next year, so may not be able to get away the way I've been in the near past.

You know where to find me, you and Ev come by any time.

Dunc

Bend Economy Man said...

I think it's a good time to look back at this Bulletin article from April 2006 to see just how wrong our local talking heads got it: High Desert economy staged for more growth, experts say.

Basically an article from just when it was becoming clear that all was not well in the real estate markets in the USA. You had a bunch of local banks and economists saying ridiculous things like "Central Oregon's physical attributes should buffer it against many external economic influences."

Their main argument was that no matter what happens nationally, Bend and Central Oregon are special and the RE market here will continue to perform well.

Of course, now these same people are saying that, hey, we did everything right, we just couldn't have predicted the national downturn which is affecting everybody.

Too bad that these predictions and bold statements never get tossed back at them when the news is reported today.

Something like "Patty Moss, Cascade Bancorp CEO, you said a year-and-a-half ago that even if California's real estate market turned bad, it might affect the velocity of growth in Central Oregon but there would still be growth. Any comment?"

Or "Jim Gardner, land developer and partner at Ranch at the Canyons in Terrebonne, you said in 2006 that Central Oregon 'is not a bubble but rather multiple waves.' You care to expand on that in light of what's happened since then?"

Of course, in April 2006 the only time you saw the word "bubble" in The Bulletin was where someone was denying there was one. Today, The Bulletin reports regularly on the "bubble" like the fact it is.