I’m building a wall. Not in the figurative or symbolic sense, but an actual, solid masonry wall in my backyard, simply because there isn’t one there. A perfectly logical endeavor in a heat wave. Until this point my hands have been useful for typing, forming a fist to shake madly at the heavens and guiding utensils from plate to mouth in what is commonly referred to as eating. Never have I been accused of being handy, making my latest pursuit slightly quixotic to those who love me.
Upon learning of this latest quest, my friend Johnny Gallo immediately understood the anodyne meaning behind it. It was Johnny whose quiet inspiration prompted me to turn my dream of a backyard vegetable garden into a reality by offering encouragement, with a measured degree of sarcasm, and the necessary tools to get started. I have written before of his stoic, old-school character, which explains why he showed up one day with a tamper, trowel, level and well wishes as I began excavating the area that will someday be framed by this wall.
Johnny instinctively knew my undertaking was, as he referred to it, therapy. It’s why he demurred when our wives implored him to partake in my madness, lest I mutilate myself in the process. He simply said, “Let the man be.”
Part of the insanity that my profession breeds is an incessant preoccupation with how things work, or more often than not, why they don’t. In this instance, constructing a secure and level foundation has my mind drawing the inevitable comparisons to the global economy, which is collapsing under its own weight.
Even my diminutive contribution to our home landscape requires careful planning and assiduous attention to detail, particularly to the foundation. The foundation itself changes slightly, however, with every layer of dirt that is uncovered. Like anything built to be sustainable, it’s what is below the surface that is most important to the future. You cannot plaster over pieces of our infrastructure without properly incorporating or eliminating them altogether. Consider the living—or dying—case study that is Detroit. Public officials there are contemplating, and in some cases already executing, a plan to raze enormous tracts of blighted development with the realization that a barren landscape is perhaps better than a crumbling one.
There is little doubt our current economy must be rebuilt and history may or may not provide the answers and insight we seek. For better or for worse, the financial markets in the post-bailout period are acting as opiates and somehow shifted from being leading to lagging indicators. Bankers and traders are surrounding the hookah and inhaling the smoke being burned by Congress and the Fed, engaging in what my friend Peter Klein from UBS calls “interest rate euphoria.”
In theory, low interest rates encourage lending and, as a result, growth. But our interest rates are so low the banks have been playing the ultimate arbitrage game by taking cheap money from the government and investing it in securities with a higher yield. And despite the decade-long data from Japan, who handled their enduring recession in precisely the same manner without success, we continue to blithely walk the same path. At some point, interest rates must rise and federal dollars must be put to some use other than filling bankers’ coffers.
Nevertheless, the administration is in a no-win position. We will never know whether or not we avoided a total cataclysm in the months following the banking collapse in late 2008. Perhaps we did. It’s hard to argue with the logic that the combination of stimulus dollars and miniscule interest rates staved off a second Great Depression. Even if this is the case, we are simply extending the pain and laying the groundwork for a deep and long-term recession.
Perhaps the most positive sign to come from the White House recently was President Obama’s decision to make a $2 billion investment into two huge solar manufacturers in the United States. Generating this level of interest in micro-renewable technology will put more than just the manufacturing companies to work; it will have a ripple effect to the building trades and ultimately benefit the residential market.
Everywhere, that is, but here on Long Island.
The one gigantic, jagged rock in our foundation that makes it impossible to build anything sustainable and participate in the renewable energy revolution is the debt load that drowns our local utility. Until our federal and state elected officials come to the realization that forward movement is impossible as long as we are hamstrung by the $6 billion albatross that is Shoreham, we are destined to tread water, or worse.
Biotech, pharmaceuticals, medical research and information technology are all sectors of our local economy poised for explosive growth. For years, business leaders and elected officials have been calling for a renaissance in these areas, but have been stymied by the intractable high cost of living. While school taxes receive the majority of our ire, the fact is our primary export is the talented youth we educate on the Island; the trick is to create a job market and economic climate that encourages them to stay. Working on a plan to reduce the Shoreham debt over the next decade will help level the playing field to attract companies to the region and allow LIPA to encourage and finance residential investments into renewable technologies. Perhaps we can dream so far as to close one of our inefficient, belching gas plants on the Island and even imagine the day LIPA is no longer necessary.
Should we continue to ignore this debt on Long Island, our foundation will remain insecure. And while America may indeed succeed in establishing a new foundation and build a new wall we can be proud of, Long Island may find itself on the other side of it.