Posted inUncategorized

Add cities to the list of victims of the Great Disruption

Some of America’s most prosperous cities are also among the casualties of what I’m calling the first stage of The Great Disruption — the current financial crisis.

Charlotte, a middling Southern town built into a city by two money center banks, will see its world changed radically whether Wachovia is bought by Wells Fargo or Citigroup. At least one-fifth of its jobs are in banking, and these are high-paid corporate jobs with benefits. Virtually every advance in Charlotte, particularly its revived downtown, came from the leadership of Wachovia and Bank of America. Now half of that will be gone, and the claim to being America’s second-largest banking center.

I make a prediction: Bank of America will soon move its headquarters to New York. The decision will likely be camouflaged in language of "dual headquarters" or some such corporate claptrap. But BofA’s best and brightest will feel an increasing need to be in what’s left of America’s financial capital. After all, the men who built these powerhouses as a powerful, personal gift to Charlotte are retired.

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Posted inPolitics: National

Can candidate Hoover fool us again?

John Sidney McCain III said today "the fundamentals of our economy are strong," sounding exactly like Herbert Hoover after the crash of 1929. The parallels are interesting. Republican policies largely caused the Great Depression. Hoover had done honorable and even miraculous work before the presidency (feeding World War I refugees). He was a progressive Republican but became a reactionary. The biggest similarity, besides "the fundamentals" lines, is that the world had passed both men by. The world had become too complex for their remedies or policies. They were/are overwhelmed. Except Hoover didn’t have Karl Rove, "the base" (which interestingly translates in Arabic as al Queda) and so many ignorant, easily led voters.

On the other hand, maybe the key word in McCain’s statement is "our" economy. As in the economy represented by his rich friends and supporters, the nationless corporate oligarchy and his Treasury secretary-to-be, former Texas Sen. Phil Gramm (also prime architect of banking and Wall Street deregulation). He of the "nation of whiners" and "mental recession." For them, the winners at a time when income inequality is worse than anytime since before the crash of ’29, the economy is strong. So maybe unlike his campaign of late, McCain actually spoke the truth.

The recession that’s all in our heads claimed two of the most powerful and influential investment banks in the world over the weekend. Anybody who claims to tell you what will happen next — much less that the worst has passed — is about as reliable as all those telephone mortgage chislers during the housing bubble. What is more clear is how it happened, and, perhaps, some of the ramifications.

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Posted inUncategorized

Charlotte faces its moment of truth

Around 1996, when I was the business editor of the Charlotte Observer, I provoked the ire of the president of the chamber of commerce — as I so often do with such caudillos — by pointing out an inconvenient truth: the city’s economy was too dependent on two big banks. Charlotte was in the middle of a historic boom that turned a sleepy, mid-sized Southern city into the nation’s second-largest banking center.

An Oz-like skyline shoots up dramatically from the flat treeline of the Carolina Piedmont. Signs of fabulous wealth are everywhere, from the expensive cars on the street to the beautiful people shopping at Dean & Deluca. It’s an amazing testmony to what money can do — to what being positioned at the heart of the capital markets can do. And it’s mostly because of the two money center banks, what are now Bank of America and Wachovia, that are improbably headquartered there.

Then came the subprime and credit crises, partly authored by the smartest people in the room in Charlotte. Now, as the Wall Street Journal put it, "Charlotte is fretting over whether it can remain the last great U.S. banking center outside of New York." It should be fretting over more than that.

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Posted inPhoenix Phoenix 101: History

Class, power and downtown development

Back when I was a college right-winger (and in those days we were few and had no pretty girls), I wrote fierce papers demonstrating the murderous fraud that was Karl Marx. A professor gently cautioned me that even if I disagreed with Marx, he offered another way of "seeing through history." He was right, of course. Marx's ideas led to some of the most bloody deeds in history. But his emphasis on class (and this was not original to him) is indeed useful.

I think about this as I watch downtown revivals and their failures. A city such as Seattle preserved most of its core buildings, many businesses and the downtown evolved organically and with all sorts of people. Phoenix and Charlotte, on the other hand, clear-cut most of their downtowns and started from scratch. If you arrived in Phoenix after 1980, you'd think the downtown was always vacant lots, government buildings and a few towers. Of course, Phoenix had a thriving downtown into the 1960s. Charlotte was similar.

Their results have been vastly different. But the class and power undertones are unmistakable and they have shaped the fate of each downtown and city.

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