By Bill Breakstone, August 29, 2010
This morning’s New York Times lead editorial is a call for action on the economic front, and it is addressed to President Obama. It is worth quoting in its entirety:
“If President Obama has a big economic initiative up his sleeve, as he hinted recently, now would be a good time to let the rest of us in on it.
News on Friday confirmed that the economy was far weaker in the second quarter than originally believed, growing at 1.6 percent versus an initial reading of 2.4 percent. Grim reports on housing sales indicate that the slowdown has continued. In a normal recession, housing would lead the way up from the depths. Today, it appears to be leading the way back down.
Which brings us back to Mr. Obama. The fiscal stimulus of 2009, coupled with low interest rates and other Federal Reserve interventions, kept the recession from being much worse. But it has not been enough to revive hiring, without which a real recovery is impossible. In the meantime and even more ominously, economic policy making has all but ground to a halt.
Congress is gridlocked. For nearly two months, Republicans blocked an extension of unemployment benefits, a basic recovery measure. They are still holding up a bill to spur more lending to small businesses.
In a much-anticipated speech on Friday, Ben Bernanke, the Federal Reserve chairman, reiterated his vow to do more to boost the economy if conditions worsened. He did not seem particularly convinced that anything the Fed could do would be enough.
The question then is whether Mr. Obama will lead. He cannot force Congress to act, but he could pre-empt Republicans’ diatribes — on the deficit, on small business, on taxes — with tough truths and a big mission that would tie together the strategies and the sacrifices that will be needed to put the economy right.
First, he needs to keep driving home that he is committed to addressing the deficit, and that he will call for widespread sacrifice to do so — starting with letting the Bush tax cuts for the richest Americans expire at year end. Mr. Obama must tell Americans that claims from Republican leaders that the country can both cut taxes and tackle the deficit are absurd and cynical.
Next, he needs to explain why too much sacrifice, too soon, especially from the middle class, would do more harm than good while the economy is weak. More government support is needed until conditions improve.
Mr. Obama also needs to inspire Americans who have been ground down by the economic crisis and Washington’s small-bore sniping. He needs to rally the nation around a big idea — a project that is worth sacrificing for, worth paying for, worth working for. One that lets them know that there is more ahead than just a return to a status quo of lopsided growth in which corporate profits surge while jobs and incomes lag.
That mission could be the “21st century infrastructure,” that Mr. Obama mentioned on a multi-city trip this month, “not just roads and bridges, but faster Internet access and high-speed rail.” It could be energy independence, with high-tech green jobs and a real chance for addressing global warming. Either of the above would make sense, economically and politically.
Mr. Obama and his economic team had clearly hoped for an economic rebound in time for the midterm elections. They are not going to get it. The economic damage they inherited was too deep, and the economic stimulus they pushed through Congress, for all of the fight, was too small. Standing back is not doing the country or his party any good. We believe Americans are ready for hard truths and big ideas.”
What follows below are comments made by several economists at the Jackson Hole Conference:
Paul Krugman
“What will Ben Bernanke, the Fed chairman, say in his big speech Friday in Jackson Hole, Wyo.? Will he hint at new steps to boost the economy? Stay tuned.
But we can safely predict what he and other officials will say about where we are right now: that the economy is continuing to recover, albeit more slowly than they would like. Unfortunately, that’s not true: this isn’t a recovery, in any sense that matters. And policy makers should be doing everything they can to change that fact.
The small sliver of truth in claims of continuing recovery is the fact that G.D.P. is still rising: we’re not in a classic recession, in which everything goes down. But so what?
The important question is whether growth is fast enough to bring down sky-high unemployment. We need about 2.5 percent growth just to keep unemployment from rising, and much faster growth to bring it significantly down. Yet growth is currently running somewhere between 1 and 2 percent, with a good chance that it will slow even further in the months ahead. Will the economy actually enter a double dip, with G.D.P. shrinking? Who cares? If unemployment rises for the rest of this year, which seems likely, it won’t matter whether the G.D.P. numbers are slightly positive or slightly negative.
All of this is obvious. Yet policy makers are in denial.
After its last monetary policy meeting, the Fed released a statement declaring that it “anticipates a gradual return to higher levels of resource utilization” — Fedspeak for falling unemployment. Nothing in the data supports that kind of optimism. Meanwhile, Tim Geithner, the Treasury secretary, says that “we’re on the road to recovery.” No, we aren’t.
Why are people who know better sugar-coating economic reality? The answer, I’m sorry to say, is that it’s all about evading responsibility.
In the case of the Fed, admitting that the economy isn’t recovering would put the institution under pressure to do more. And so far, at least, the Fed seems more afraid of the possible loss of face if it tries to help the economy and fails than it is of the costs to the American people if it does nothing, and settles for a recovery that isn’t.
In the case of the Obama administration, officials seem loath to admit that the original stimulus was too small. True, it was enough to limit the depth of the slump — a recent analysis by the Congressional Budget Office says unemployment would probably be well into double digits now without the stimulus — but it wasn’t big enough to bring unemployment down significantly.
Now, it’s arguable that even in early 2009, when President Obama was at the peak of his popularity, he couldn’t have gotten a bigger plan through the Senate. And he certainly couldn’t pass a supplemental stimulus now. So officials could, with considerable justification, place the onus for the non-recovery on Republican obstructionism. But they’ve chosen, instead, to draw smiley faces on a grim picture, convincing nobody. And the likely result in November — big gains for the obstructionists — will paralyze policy for years to come.
So what should officials be doing, aside from telling the truth about the economy?
The Fed has a number of options. It can buy more long-term and private debt; it can push down long-term interest rates by announcing its intention to keep short-term rates low; it can raise its medium-term target for inflation, making it less attractive for businesses to simply sit on their cash. Nobody can be sure how well these measures would work, but it’s better to try something that might not work than to make excuses while workers suffer.
The administration has less freedom of action, since it can’t get legislation past the Republican blockade. But it still has options. It can revamp its deeply unsuccessful attempt to aid troubled homeowners. It can use Fannie Mae and Freddie Mac, the government-sponsored lenders, to engineer mortgage refinancing that puts money in the hands of American families — yes, Republicans will howl, but they’re doing that anyway. It can finally get serious about confronting China over its currency manipulation: how many times do the Chinese have to promise to change their policies, then renege, before the administration decides that it’s time to act?
Which of these options should policy makers pursue? If I had my way, all of them.
I know what some players both at the Fed and in the administration will say: they’ll warn about the risks of doing anything unconventional. But we’ve already seen the consequences of playing it safe, and waiting for recovery to happen all by itself: it’s landed us in what looks increasingly like a permanent state of stagnation and high unemployment. It’s time to admit that what we have now isn’t a recovery, and do whatever we can to change that situation.”
Nouriel Roubini
Nouriel Roubini, the New York University professor who forecast the U.S. recession more than a year before it began, said the Federal Reserve is running out of effective ways to stimulate the economy. We cannot prevent slow economic growth for a number of years,” Roubini said an interview on Bloomberg Radio. “We are running out of policy bullets.”
“Banks are “sitting on” $1 trillion of excess reserves and cutting the interest rate on excess reserves to zero from 25 basis points isn’t going to make them lend money. Additional quantitative easing through purchases of securities also won’t jumpstart economic growth. The point is monetary policy is becoming ineffective.”
Mohamed El-Erian
U.S. economic data are “alarming,” signaling the recovery is losing momentum, Mohamed A. El-Erian, Pacific Investment Management Co.’s chief executive officer, wrote in an opinion piece in the Washington Post.
Unemployment is high, consumer credit is shrinking and small companies are having trouble obtaining bank lines of credit, wrote El-Erian, who is also co-chief investment officer at Pimco, which runs the world’s largest bond fund. Increased government spending and additional debt purchases from the Federal Reserve are unlikely to spur a rebound, he wrote.
“Throughout the summer, data signals have become more alarming,” wrote El-Erian, who is based in Newport Beach, California. “Current policy approaches here and abroad are unlikely to deliver a durable and robust U.S. recovery.”
Housing is waning and home values are set to fall further as foreclosures increase, El-Erian wrote in the article.
There is a need for tax reform, housing-finance reform, infrastructure investment, support for education, job retraining, removal of barriers to interstate competition and stronger social safety nets, he wrote.
Sovereign bonds are rallying globally as economists trim their growth forecasts and stocks tumble.
“The equity markets are again under pressure while yields on Treasury bonds have collapsed, reflecting that market’s growing concerns about the weak economic outlook,” El-Erian wrote.
Economists who decide when recessions begin and end in the U.S. are divided over the odds of a renewed downturn, underscoring the challenge faced by Federal Reserve Chairman Ben S. Bernanke as he vows the Fed “will do all that it can” to sustain growth.
Martin Feldstein
“There’s still a significant risk, maybe one chance in three, that there will be a double dip,” said Harvard University Professor Martin Feldstein, who sits on the Business Cycle Dating Committee of the National Bureau of Economic Research. Fellow panel member and Princeton University Professor Mark Watson said those odds are “way too high” and puts them instead at “one in 10 or maybe one in 20.”
Such differences over the outlook marked discussions of policy makers and economists gathered in Jackson Hole, Wyoming for the Kansas City Fed’s annual symposium. The tone was set by a reduced estimate of second-quarter growth and then by Bernanke’s speech Friday outlining possible options the Fed could take to ensure the recovery continues.
Henry Kaufman
“There is a searching as to where events are going from here because there has been a slowing in the pace of economic growth,” Henry Kaufman, president of New-York based Henry Kaufman & Co., said in an interview at the conference. “The Fed is at a stage where it is tilting to further accommodation, but it’s not guaranteed.”
Carmen Reinhart
As a seven-year-old in Cuba, Carmen Reinhart memorized the routes of ships carrying silver from Peru and Bolivia to Spain. By 16, she had moved to Miami and got a job at a Sears Holdings Corp. store reviewing credit applications and payment records.
That fascination with history and data has propelled a career at Bear Stearns Cos., the International Monetary Fund and the University of Maryland in College Park. Now Reinhart, 54, is using a paper studying 15 economic crises since World War II to warn Federal Reserve Chairman Ben S. Bernanke and fellow policy makers that sluggish growth and high unemployment in the U.S. might persist through 2017 or longer.
“Whether one looks at advanced economies or a whole sample that includes emerging markets, the picture is one of lower growth during the decade that follows the crisis,” she said in an interview from Washington this week. “We are already three years into this post-crisis window. The clock starts ticking in the summer of 2007.”
Reinhart’s work has made her the female economist most frequently cited by other economists. Her latest paper, “After the Fall,” co-written with husband Vincent Reinhart, is being presented today at the Fed’s annual symposium in Jackson Hole, Wyoming.
An unemployment rate of 8 or 9 percent over the next seven years is not “outside of the experience that we have documented,” she said. Her studies of crises in Finland, Japan, Norway, Spain and Sweden that started between 1977 and 1992 show median per-capita economic growth declined by 1 percentage point in the decade following the shock.
The pessimistic outlook in her paper presented at Jackson Hole contrasts with the view of Treasury Secretary Timothy F. Geithner, who said this month that the U.S. economy is “gradually healing.”
The nation has more than a 50 percent chance of experiencing a lost decade like Japan, when a collapse in land and stock-market prices gave way to economic stagnation and deflation starting in the 1990s, according to Reinhart. To avoid that outcome, policy makers should immediately announce a plan to increase taxes and cut spending in about a year, she said, adding her husband generally shares the same position.
“We have the pretty clear view that you want to not necessarily implement austerity right now, but you certainly want to announce it right now, with plans to deal with the deficit and debt in a realistic time frame,” she says.
“Our recovery still leaves a great deal to be desired,” Carmen Reinhart said. “My concern is that because the U.S. is the world’s reserve currency, we can still borrow in bad times, and that a more Japan-like scenario lies in store. A lot of the forces are already in place.”
With the U.S. government’s gross debt rising to about 90 percent of gross domestic product as tax revenue declined during the recession, “we have to pay future attention to the debt.”
“You don’t want to pull the plug out completely on stimulus,” Reinhart said. Still, “you have to start thinking about what measures are required to curb the deficit, and cap or reduce the debt. You don’t have the luxury to focus on the choice of one or the other. You have to deal with both.”
Alan Blinder
Federal Reserve Chairman Ben S. Bernanke may be reluctant to ease monetary policy further with unconventional steps in the near term, former Fed Vice Chairman Alan Blinder said.
Bernanke’s speech Friday on policy alternatives stressed “if necessary,” Blinder, a Princeton University economist, said in an interview on Bloomberg Radio’s “The Hays Advantage,” with Kathleen Hays. “He is not on the verge of doing anything. I thought he was relatively pessimistic about the efficacy of the actions.”
Bernanke said the U.S. central bank “will do all that it can” to ensure a continuation of the economic recovery and said more securities purchases may be warranted if growth slows.
“If it were just Ben Bernanke acting on his own, some further action might be closer,” Blinder said. “He has some significant resistance from within the FOMC.”
Lowering the interest rate on banks’ deposits at the Fed to below zero may be the “best option” to support growth, Blinder said. Still, “the heavy artillery has already been fired,” he said.
The Fed two weeks ago decided to keep its bond holdings at $2.05 trillion by reinvesting the proceeds from maturing mortgage-backed securities into Treasuries. The Federal Open Market Committee, seeking to spur economic growth, held the main interest rate at zero to 0.25 percent, where it’s been since December 2008, and affirmed a pledge to keep rates low for “an extended period.”
Blinder said he continues to back additional federal spending by Congress to support the recovery, especially directed at jobs programs.
Olli Rehn and Joseph Stiglitz
Those who oppose watering down the various stimulus packages that are keeping the economy alive see warning signs everywhere. Europe is looking anxiously to the East, concerned that China will be too successful at reining in growth. Olli Rehn, the European Union’s economics chief, says that slowing Asian economies would have a “serious negative impact” on his region.
The U.S., meantime, frets that Europe will slide back into a recession, making the dreaded double dip a reality. “Cutting back willy-nilly on high-return investments just to make the picture of the deficit look better is really foolish,” Nobel Prize-winning economist Joseph Stiglitz told Dublin-based RTE Radio in an interview broadcast on Aug. 24.
And almost every supporter of doing more, not less, to resuscitate animal spirits is looking to the recent history of Japan as the chief reason why austerity should not be the new black. “What we’re doing is setting ourselves up for a longer- term Japanese-style malaise of weak growth for an extended period of time,” Stiglitz says.
Conclusions
Although Fed Chairman Bernanke, Treasury Secretary Geithner, and various Administration officials are trying to put a positive spin on economic data and recovery efforts, it flies in the face of all the deteriorating conditions that continue to emerge day after day. The general consensus among economists is that things will only get worse during the third and fourth quarters of this year.
Paul Krugman’s suggestions noted above make perfect sense to this writer. I would add to those by saying that a drastic shake up is needed in the Administration’s economic team. A firm signal needs to be sent that current economic conditions are NOT acceptable. Chief economic advisor Larry Summers should be relieved of his post and replaced with an economist more committed to a pro-active approach towards growth creation. Bernanke should be persuaded to take the Fed in the direction outlined by Krugman. And, finally, taxes on business investment should be cut. This would spur job creation, and is the only politically viable course to take at this point in time.
Sunday, August 29, 2010
Wednesday, August 25, 2010
THE SOCIETAL CONSEQUENCES OF ECONOMIC STAGNATION
By Bill Breakstone, August 25, 2010
The economic news continues to be unrelentingly disappointing, to say the least. This morning, the Commerce Department said orders for goods expected to last at least three years (durable goods) rose just 0.3 percent last month. That was much worse than the 2.8 percent growth economists had forecast, according to Thomson Reuters.
Excluding the volatile transportation sector, orders actually tumbled 3.8 percent in July. Economists were expecting 0.5 percent growth.
The weak report adds to evidence that the manufacturing sector is weakening as the year wears on. Manufacturing activity had shown some of the most consistent growth during the first half of the year, but reports recently have shown that growth is fading.
Adding up the damage reported over the past three weeks, we have seen a GDP growth rate in the second quarter of 2.4%, down from a revised first quarter figure of 3.7%, and well below economists’ expectations; unemployment remaining at 9.5%; initial claims for unemployment insurance climbing to 500,000; sales of existing homes falling by 27.2% over the past month and 25.5% from year ago levels; and now, the unexpected drop in durable goods orders.
As many economic commentators have suggested, a “new normal” appears to be taking hold, a period of economic stagnation that threatens to last for an extended period of time, perhaps as long as a decade. What is missing from these analyses is what the societal costs could be.
First, continued high joblessness will lead to decreased expectations on the part of wage earners and a feeling of helplessness, as opportunities for personal improvement and wealth creation evaporate. As millions of people remain among the ranks of the unemployed, the drag on economic activity will continue unabated. GDP growth will fall to levels that will not create new employment; many economists are revising their forecasts for future GDP down to a level of between 1% to 2%, a full percentage point below their previously disappointing number. Compare that with the average growth rate during previous recoveries of 5% to 6%.
This dire scenario will have a marked effect on the public. Frustration on their part will lead to calls for remedial action, but the options available to public officials will continue to be extremely limited, given the state of nearly total political paralysis. What emerges could be social unrest.
Should this occur, people will become increasingly susceptible to rhetoric promising “easy” solutions, based upon simplistic answers to what are very complex economic challenges. It may be a rather large overstatement to compare our present day situation, as bad as it is, to the state of affairs during the Great Depression. On the other hand, the effects of the 2007—2008 crash was far greater than economists originally foresaw, and the recovery is thus far more fragile.
What must be avoided, at all costs, is a repeat of the German experience during the inter-war years of the 1930s. For it was exactly the economic frustrations of that period that gave rise to the most virulent form of demagoguery the world has ever witnessed.
The economic news continues to be unrelentingly disappointing, to say the least. This morning, the Commerce Department said orders for goods expected to last at least three years (durable goods) rose just 0.3 percent last month. That was much worse than the 2.8 percent growth economists had forecast, according to Thomson Reuters.
Excluding the volatile transportation sector, orders actually tumbled 3.8 percent in July. Economists were expecting 0.5 percent growth.
The weak report adds to evidence that the manufacturing sector is weakening as the year wears on. Manufacturing activity had shown some of the most consistent growth during the first half of the year, but reports recently have shown that growth is fading.
Adding up the damage reported over the past three weeks, we have seen a GDP growth rate in the second quarter of 2.4%, down from a revised first quarter figure of 3.7%, and well below economists’ expectations; unemployment remaining at 9.5%; initial claims for unemployment insurance climbing to 500,000; sales of existing homes falling by 27.2% over the past month and 25.5% from year ago levels; and now, the unexpected drop in durable goods orders.
As many economic commentators have suggested, a “new normal” appears to be taking hold, a period of economic stagnation that threatens to last for an extended period of time, perhaps as long as a decade. What is missing from these analyses is what the societal costs could be.
First, continued high joblessness will lead to decreased expectations on the part of wage earners and a feeling of helplessness, as opportunities for personal improvement and wealth creation evaporate. As millions of people remain among the ranks of the unemployed, the drag on economic activity will continue unabated. GDP growth will fall to levels that will not create new employment; many economists are revising their forecasts for future GDP down to a level of between 1% to 2%, a full percentage point below their previously disappointing number. Compare that with the average growth rate during previous recoveries of 5% to 6%.
This dire scenario will have a marked effect on the public. Frustration on their part will lead to calls for remedial action, but the options available to public officials will continue to be extremely limited, given the state of nearly total political paralysis. What emerges could be social unrest.
Should this occur, people will become increasingly susceptible to rhetoric promising “easy” solutions, based upon simplistic answers to what are very complex economic challenges. It may be a rather large overstatement to compare our present day situation, as bad as it is, to the state of affairs during the Great Depression. On the other hand, the effects of the 2007—2008 crash was far greater than economists originally foresaw, and the recovery is thus far more fragile.
What must be avoided, at all costs, is a repeat of the German experience during the inter-war years of the 1930s. For it was exactly the economic frustrations of that period that gave rise to the most virulent form of demagoguery the world has ever witnessed.
Tuesday, August 24, 2010
A DEEPLY TROUBLED ECONOMY; SOLUTIONS NEEDED NOW!
By Bill Breakstone, August 24, 2010
I received a survey from the Democratic National Committee last week asking respondents to rate President Obama’s performance on five key issues ranging from the economy to international relations. I completed this survey, and was quite surprised at my answers. I imagine I am similar to many other politically aware individuals, in that my enthusiasm for our President has been tempered by both the difficulties posed by economic conditions and an opposition party that has refused to compromise on policy that could alleviate the challenges we as a Nation face in recovering from the worst economic conditions since the Great Depression.
The survey asked what issues individuals ranked as most important today, and I immediately and unhesitatingly checked off “our economy.” As to Obama’s performance in that regard, I rated it as “poor”, and that is what surprised me. Yet how could it be viewed otherwise?
Looking back 18 months ago when the Administration was formulating the Economic Stimulus Act, several Nobel Prize-winning economists were of the opinion that the size of the stimulus fell far short of what was needed, and that the Administration was making a serious mistake in not asking for a stronger package, as going back later for more would be impossible given the political realities. However, Obama and his economic team decided to seek what was possible rather than what was necessary. Was this decision politically savvy, or indicative of a lack of courage? Whatever the answer, the fact is that we now are facing economic conditions that are reverting to the initial slump of 2008, and, seemingly with no options available to once again reverse that trend.
There were two ingredients, among others, in the Stimulus Act, that were successful in creating increased consumer demand and halting, temporarily, the rapid increases in unemployment: the First Time Homebuyers Tax Credit and the IRS Tax Credit for New Automobile Purchases. Both of these programs were designed as intermediary economic boosts, and have expired. They both achieved the results they were designed for. The economic floodwaters receded; but now they are returning, and with a vengeance. This morning, the National Association of Realtors announced that existing home sales declined in July by a record 27.2%, and the sales volume likewise decreased to a record-low $3.83 million, while inventories rose to 12.5 months from the June level of 8.9 months. This data far exceeded expectations of economists prior to the news release.
The auto industry is faring better, though the pace of its recovery is uneven at best. July marked the eighth consecutive month that U.S. auto sales rose from year-earlier levels but also the lowest percentage growth since November 2009, when sales were flat. Our two government-backed automakers, GM and Chrysler, continue to post good sales data, but Toyota and Honda, the two largest foreign auto companies, posted disappointing sales figures.
Both the housing and auto industries are crucial to our economy, and economic recovery. Perhaps no other segments are so subject to a trickle-down effect on jobs and sales activity. If President Obama and his economic team want to take action to revive economic activity and avoid the fate that Japan suffered during their “Lost Decade,” here is where the focus should be directed. But given the political climate, what can be done? Legislation, for the time being, is out of the question. Thus what options exist for our leadership? Does the answer lie in tax policy? Economists view the importance of increasing what they term “aggregate demand” as a key to long-term economic health and a sustainable recovery. It directly affects consumer confidence and job growth, other key economic indicators. And all three of these factors are currently at extremely low levels.
A quick read of today’s economic news headlines reveals the following:
Nobel Prize-winning economist Joseph Stiglitz said the European economy is at risk of sliding back into a recession as governments cut spending to reduce their budget deficits.
“Cutting back willy-nilly on high-return investments just to make the picture of the deficit look better is really foolish,” Stiglitz, a Columbia University professor, told Dublin-based RTE Radio in an interview broadcast today.
Euro-area governments stepped up efforts to cut their deficits to below the European Union limit of 3 percent of gross domestic product after the Greek crisis earlier this year eroded investor confidence in the 16-member currency union. While the economy expanded at the fastest pace in four years in the second quarter, the recovery is showing signs of weakening.
“Because so many in Europe are focusing on the 3 percent artificial number, which has no reality and is just looking at one side of a balance sheet, Europe is at risk of going into a double-dip,” Stiglitz said.
On CNBC’s Squawk Box, guest host Stephen Roach of Morgan Stanley and Credit Suisse economist Doug Cliggott discussed our worsening economy at length. Both agreed that there is an increasing likelihood of a double-dip recession, at worst, or a prolonged period of economic stagnation and deflation, at best. They see interest rates remaining at historically low levels for the foreseeable future and a continuation of risk aversion in the capital markets, draining equity investment in favor of the bond markets for perhaps the next decade. Both see an increased possibility of the feared double-dip.
In this economic scenario, doing nothing simply doesn’t seem to be a reasonable position for the Administration, or The Fed, to take. And yet, that appears to be where both are at. Something needs to be done, and the failure of our leadership to come up with some creative economic thinking is what most bothers this writer, and the public at large.
I received a survey from the Democratic National Committee last week asking respondents to rate President Obama’s performance on five key issues ranging from the economy to international relations. I completed this survey, and was quite surprised at my answers. I imagine I am similar to many other politically aware individuals, in that my enthusiasm for our President has been tempered by both the difficulties posed by economic conditions and an opposition party that has refused to compromise on policy that could alleviate the challenges we as a Nation face in recovering from the worst economic conditions since the Great Depression.
The survey asked what issues individuals ranked as most important today, and I immediately and unhesitatingly checked off “our economy.” As to Obama’s performance in that regard, I rated it as “poor”, and that is what surprised me. Yet how could it be viewed otherwise?
Looking back 18 months ago when the Administration was formulating the Economic Stimulus Act, several Nobel Prize-winning economists were of the opinion that the size of the stimulus fell far short of what was needed, and that the Administration was making a serious mistake in not asking for a stronger package, as going back later for more would be impossible given the political realities. However, Obama and his economic team decided to seek what was possible rather than what was necessary. Was this decision politically savvy, or indicative of a lack of courage? Whatever the answer, the fact is that we now are facing economic conditions that are reverting to the initial slump of 2008, and, seemingly with no options available to once again reverse that trend.
There were two ingredients, among others, in the Stimulus Act, that were successful in creating increased consumer demand and halting, temporarily, the rapid increases in unemployment: the First Time Homebuyers Tax Credit and the IRS Tax Credit for New Automobile Purchases. Both of these programs were designed as intermediary economic boosts, and have expired. They both achieved the results they were designed for. The economic floodwaters receded; but now they are returning, and with a vengeance. This morning, the National Association of Realtors announced that existing home sales declined in July by a record 27.2%, and the sales volume likewise decreased to a record-low $3.83 million, while inventories rose to 12.5 months from the June level of 8.9 months. This data far exceeded expectations of economists prior to the news release.
The auto industry is faring better, though the pace of its recovery is uneven at best. July marked the eighth consecutive month that U.S. auto sales rose from year-earlier levels but also the lowest percentage growth since November 2009, when sales were flat. Our two government-backed automakers, GM and Chrysler, continue to post good sales data, but Toyota and Honda, the two largest foreign auto companies, posted disappointing sales figures.
Both the housing and auto industries are crucial to our economy, and economic recovery. Perhaps no other segments are so subject to a trickle-down effect on jobs and sales activity. If President Obama and his economic team want to take action to revive economic activity and avoid the fate that Japan suffered during their “Lost Decade,” here is where the focus should be directed. But given the political climate, what can be done? Legislation, for the time being, is out of the question. Thus what options exist for our leadership? Does the answer lie in tax policy? Economists view the importance of increasing what they term “aggregate demand” as a key to long-term economic health and a sustainable recovery. It directly affects consumer confidence and job growth, other key economic indicators. And all three of these factors are currently at extremely low levels.
A quick read of today’s economic news headlines reveals the following:
Nobel Prize-winning economist Joseph Stiglitz said the European economy is at risk of sliding back into a recession as governments cut spending to reduce their budget deficits.
“Cutting back willy-nilly on high-return investments just to make the picture of the deficit look better is really foolish,” Stiglitz, a Columbia University professor, told Dublin-based RTE Radio in an interview broadcast today.
Euro-area governments stepped up efforts to cut their deficits to below the European Union limit of 3 percent of gross domestic product after the Greek crisis earlier this year eroded investor confidence in the 16-member currency union. While the economy expanded at the fastest pace in four years in the second quarter, the recovery is showing signs of weakening.
“Because so many in Europe are focusing on the 3 percent artificial number, which has no reality and is just looking at one side of a balance sheet, Europe is at risk of going into a double-dip,” Stiglitz said.
On CNBC’s Squawk Box, guest host Stephen Roach of Morgan Stanley and Credit Suisse economist Doug Cliggott discussed our worsening economy at length. Both agreed that there is an increasing likelihood of a double-dip recession, at worst, or a prolonged period of economic stagnation and deflation, at best. They see interest rates remaining at historically low levels for the foreseeable future and a continuation of risk aversion in the capital markets, draining equity investment in favor of the bond markets for perhaps the next decade. Both see an increased possibility of the feared double-dip.
In this economic scenario, doing nothing simply doesn’t seem to be a reasonable position for the Administration, or The Fed, to take. And yet, that appears to be where both are at. Something needs to be done, and the failure of our leadership to come up with some creative economic thinking is what most bothers this writer, and the public at large.
Tuesday, August 17, 2010
A HIGH SIERRA ADVENTURE
By Bill Breakstone, August 17, 2010
INTRODUCTION
Since my youngest days, I have always been drawn to the mountains, whether they were in the northeast, the Rocky Mountains, or in Europe. There is just a magnificence in the high alpine surroundings that is incomparable for one, like myself, who grew up in an urban setting like Manhattan. As a young teenager, I shared a summer-long road trip with my family across America, with stays in several National Parks, including Yellowstone, the Grand Tetons, Yosemite, and the Grand Canyon. That was over half a century ago. Last summer, I added Glacier National Park in Montana to the list. This year, I planned a tour of the High Sierra, including a re-visit to Yosemite, and the other National Parks in Eastern California on the Sierra Crest.
This past winter, the PBS Network presented the newest film by Ken Burns, “The National Parks: America’s Best Idea.” It was a wonderful six-part series that traced the history of our National Park System, and how important it was, and is, in conserving our Nation’s environmental treasures, and making them available to the peoples of our country and the world. It was only fitting that on the long flight out to California, a portion of that documentary was available on the plane’s DVD system, and I chose to watch that two-hour segment. It was a perfect prelude to the tour I had planned.
This trip was a solo adventure. I’m sure there are some who would question why anyone would undertake a two-week excursion such as this without a travel mate to enjoy it with; and there were nights when a warm body beside me would have been more than welcome. On the other hand, being on one’s own allowed a freedom of choice that would have been compromised in the presence of a partner. There were no arguments on when to arise and start the day; how far to drive before taking a break for rest or lunch; or when to push on for the next view of that canyon or waterfall.
A tour such as I had in mind requires some detailed advanced planning. Lodging during the summer months in our National Parks is almost impossible to come by on short notice. Thus, at least a four-month lead-time is a minimum requirement. Our National Parks are administered by the U.S. Forest Service, a division of the U. S. Department of the Interior. Ranger Stations are located at each, and in towns along the way that serve those who wish to make use of the National Forests for camping or just plain sightseeing. They are a good place to visit before venturing further, and the personnel who staff them are always more than helpful in answering questions, issuing camping permits, or suggesting itineraries within the Parks and Forests.
YOSEMITE NATIONAL PARK
The Nation’s first National Park was Yosemite, and it is the closest and most convenient to the “San Francisco Gateway.” It is also within a three-hour drive from Los Angeles, which makes it the most accessible National Park to major population centers in California, and the international transportation hubs that serve the West Coast from Asian originations. It’s accessibility results in an enormous popularity, which in turn equates to overcrowding, that is hard to imagine given its awe-inspiring natural beauty. There are no restrictions for vehicle entry to the Valley, and mid-day traffic is similar to what one would expect in a major urban setting. There are just too many people in too small a geographic area.
The Yosemite Valley lies at an elevation of 4,000 feet above sea level, and the surrounding cliffs rise another 3,500 feet. The grandeur of the surroundings are awe-inspiring from the Valley floor, but an equally impressive perspective is available from the canyon’s rim, especially from the overlook at Glacier Point, at close to 8,000 feet of elevation. From there, one can look down at the Valley floor, but also up at the high peaks of the Sierra Crest some 50 miles to the east and at elevations of 13,00 feet and higher.
The combined natural forces of plate tectonics, volcanism, and glaciation created Yosemite. Millions of years ago, the Pacific Plate subducted under its Continental counterpart, releasing an uplifting that resulted in the Sierra rift. During the most recent ice age, glaciers then descended to a geographic location some 200 miles to the south of Yosemite, covering the alpine valleys from the high Sierra down to the valley floor. As the glaciers moved to lower elevations, they carved the cliff walls, and as they receded, they carved the sidewalls further and left what are called moraines in the valley, damming the river flows and creating a large lake that filled the Valley. Over time, the terminal moraine at the Valley gates was penetrated by both natural and man-made forces, draining the Valley of its lake and leaving the meadows that we see today at the base of the 3,000+ foot cliffs of El Capitan and its neighbors.
The resultant landscape almost defies human comprehension. The dimensions are just too extreme. But as much as those are unimaginable, the size of the forces that created them is even more so. The plate movement that created the uplift consisted of a combination of rock and molten lava that was in the neighborhood of five miles in depth, or over 25,000 feet, some six times as great as the difference between the elevations of the present valley floor and the valley rim. That is truly hard for mortals like us to comprehend.
In addition to the immensity of the valley landscape, another natural feature that adds to the impression are the numerous waterfalls that dot both the lower and upper valleys of Yosemite. Three are visible from the Valley floor: upper and lower Yosemite Falls, and Bridal Veil Falls. From Glacier Point, three others are visible: Illilouette Falls, that drains its namesake creek down into the Merced River, and Nevada and Vernal Falls, on the Merced proper.
Lodging in Yosemite is unconscionably expensive. The Forest Service manages the natural environment, but subcontracts the lodging, food and touring concessions to a private corporate entity, in this case the Delaware North Corporation. This for-profit organization charges what the traffic will bear, and since the traffic is so great, the lodging fees are commensurate with that great volume. My stay the first night was in an annex to a hotel that dated back to the early 1920s. It was no Ritz Carlton! There was no bathroom; showers were in a communal bath that served the dozen or so rooms in the annex. The cost of that room was over $200.00 per night. I was forced to spend my second night in a tent with a wooden floor, one light bulb, and two blankets for the single bed cot, and it was darned cold that night; I ended up sleeping in my clothes, and had to walk some 300 yards to the communal showers in the morning. That night cost me $130.00! Without doubt, the greatest lodging rip-off I had ever experienced.
An alternative would have been the magnificent Ahwahnee Lodge, one of the most beautiful hotels I have ever seen. I enjoyed a wonderful dinner there, and a most civilized breakfast the following morning. The overnight fee at Ahwahnee ran $575.00, making The Ritz Carlton in San Francisco pale by comparison.
Yosemite also includes the first of the Giant Sequoia groves located in the Sierra, the Mariposa Grove. These magnificent behemoths rise to over 250 feet in height, 25+ feet in diameter, and are close to 3,000 years old. Standing at their base, it is really hard to imagine how nature created such beauty.
If one is travelling to the eastern side of the Sierra from the Yosemite Valley, the only route of choice is Tioga Pass Road, which runs up and along the north rim of the Valley, eventually reaching an elevation of 9,500 feet before descending to Mono Lake and the Owens River Valley to the east. Before the descent, one drives through the beautiful Toulumne Meadows at the headwaters of the Toulumne River, which parallels the Merced River as both head down water to California’s Central Valley.
Before describing my next destination, a word would be appropriate concerning the alternatives facing the Forest Service in its future management of the Yosemite Valley. As any viewer of Ken Burns’ documentary will appreciate, our National Parks serve a dual purpose. They were created to preserve natural beauty, conserving our Nation’s natural and irreplaceable physical assets on the one hand; on the other, they are there for the enjoyment and appreciation of our citizens, who as Burns says are their actual owners. Thus the issue is accessibility.
However, even the most ardent conservationists over the past 100+ years since the founding of our Park System have acknowledged that there are limits to the degree of that accessibility. Is it in keeping with the nature of these natural wonders to have their beauty despoiled by crowds that turn them into miniature “Times Squares” of traffic congestion? Or should limits be placed upon usage? I spoke with several Park Rangers about this dilemma, and all agreed that something needs to be done. But none looked forward to making that final determination.
The answer lies in limiting the number of vehicles that have access to Yosemite. If private vehicles and tour busses would have to park off-site and transfer passengers onto shuttle buses for access to the Park, congestion would be greatly reduced. But such a solution would be fought tooth and nail by the Park’s concessionaire, whose profit would be detrimentally affected. These are hard choices, but sooner or later, the issue will have to be addressed.
THE EASTERN SIERRA—AN OVERVIEW
As one drives from the San Francisco Bay area to the Central Valley, the physical environment changes dramatically. Before entering the San Joaquin watershed, one passes over an arid, almost burned out foothill area. Then the traveler enters the lush growing area of what many call the Nation’s breadbasket—a long and wide valley that produces much of our produce that ships throughout America and supplies our supermarkets with fresh produce. The gradual ascent into the western Sierra passes through increasing stands of conifers into a high, relatively dry, but still non-arid landscape.
The descent to the eastern Sierra and the Long and Owens River Valleys brings the traveler into another climate entirely. These valley floors are semi-arid, almost desert like in summer. What water exists, and there was plenty of it with the immense amount of winter snows, has been diverted through canals and aqueducts over the past 80 years to the Los Angeles Metropolitan area, leaving much of the valleys high and dry. At the northern extremity lies Mono Lake, which until three years ago sat half empty; at the southern end is Lake Owens, which as of last week is nothing more than a dry lakebed.
In 2007, the eastern Sierra counties sued the State of California, demanding that a good portion of the water being diverted to Los Angeles be restored to the originating valleys. The courts ruled in favor of these local municipalities, and the water levels in that part of California are slowly being restored.
MAMMOTH LAKES
Mammoth is a destination ski resort in winter, and a recreational play land in the summer months. This past ski season lasted until July 5th, as the area received a record amount of snow and colder than normal temperatures. It is unheard of for a season to last that long. My home mountain out west is Aspen, where the season ends on or about April 10th.
The town of Mammoth Lakes is located but 5 miles from the base of the mountain, and it has undergone a modernization over the past decade which has brought it up to speed with the Nation’s best resorts, albeit on a somewhat smaller scale than Aspen or Vail. The base altitude is at 7,500 feet, and several medium-sized lakes are within a few minutes drive from the town.
The ski gondola operates during the summer months, and the ride up to the top, at 11,200 feet, is breathtaking, providing views to the north up to Mono Lake, and to the Sierra Crest to the west with peaks up to 13,600 feet. Just west of the mountain is the Upper San Joaquin River Valley, and the Devil’s Postpile National Monument. A stranger geologic site is hard to imagine. It was created by a lava eruption, followed by cooling and cracking, thus forming hexagonal columns which were exposed some 15,000 years ago when a glacier flowed down the Middle Fork of the San Joaquin River and overrode the fractured mass of lava. The moving ice carved away one side of the postpile, exposing a sheer wall of columns 60 feet high.
A two mile hike downstream leads to Rainbow Falls, a 100-foot waterfall on the San Joaquin River. The hike was a bit
too strenuous for this adventurer at the 7,600-foot elevation; thus I reluctantly passed.
The restaurants in Mammoth were varied, delicious, affordable, and a great place to meet and mingle with locals. The two where I had dinners offered Happy Hours from 5 to 6:30 PM, when the food and drink were 50% off. I met a lovely couple at Whiskey Creek, proprietors of a local Austrian-style lodge, with whom I enjoyed a convivial 90-minutes. The next evening was spent at Roberto’s, another local hangout featuring Tex-Mex cuisine; best enchiladas I ever had.
BISHOP
A half hour drive to the south of Mammoth lies the town of Bishop, largest of those that are located on US 395 to the east of the Sierra Crest in the Owens River Valley. On the drive down, I made a quick stop at Hot Creek Mineral Springs, some 3 miles east of US 395 into the Valley. Hot Creek lies at the bottom of an ancient caldera, the scene millions of years ago of a titanic volcanic eruption. The underlying molten core of the volcano is still active, some 5 miles below the surface, and here a vent exists that brings the super-heated steam to the surface turning the otherwise cool waters of Hot Creek into liquid too dangerous for humans or animals to enter.
All but one of the 14,000+ peaks in this part of California are located along the Sierra Crest, just to the west of US 395. The exception is White Mountain Peak, at 14,246 feet the third highest in elevation of the region, and the monarch of the White Mountains. It is located some 12 miles to the north of Bishop and about 15 miles to the east of the Sierra Crest at the eastern end of the Owens River Valley. Its slopes are more or less devoid of vegetation, as the climate is high desert compared to the coniferous forests of the Sierra Foothills.
Some 10 miles to the south of White Mountain Peak, also in the White Mountains, is the Ancient Bristlecone Pine Forest, yet another National Monument, this one located at an elevation of 10,000 feet. The drive up to this Forest is an adventure unto itself, as the roads are narrow, winding, and perched at the precipice of a 5,000-foot drop to the Owens Valley floor, with NO guardrails as protection.
These conifers are far different from the giant sequoias. They thrive in the high desert environment, on soil that is highly alkaline in nature, and in an area that receives very little participation during the spring and summer months. They are also the oldest living things in existence on the planet, some over 5,500 years of age. Whereas the sequoias grow to between 270 feet to 350 feet in height, these ancients are no more than 35 feet. The Park Rangers at the Forest give guided walking tours amongst these trees; the one I was with took a core sample of a tree that was relatively young—
only 500 years old. When examining the sample, one could see the age lines within the core and smell the extremely tannic nature of the wood.
Immediately to the west of Bishop is California Highway 168, a recently upgraded two-lane highway that leads 12 miles up the Bishop Creek Valley to Sabrina Lake at an elevation of 9,500 feet. Surrounded by 13,500-foot peaks, this rather large water body is as picturesque as any found in the high alpine settings of Switzerland. The Lake itself is man-made.
A dam at the southern end funnels the torrents to a hydroelectric plant that supplies electricity to Bishop and its environs.
At roads end is found a modest restaurant and marina where one can enjoy a lunch on the deck overlooking the Lake (as I did), or rent a powerboat for a half day excursion on these beautiful waters.
A one-block walk from my hotel in downtown Bishop is a branch of one of the restaurants where I dined in Mammoth, namely, Whiskey Creek. Much less crowded, it was a pleasant spot for liquid refreshments, after which I made a beeline to KFC for some delicious fried chicken.
ROCK CREEK PACK STATION
Ten miles north of Bishop is Rock Creek Canyon. A 12-mile drive up the Canyon, to the east of US 395, leads to Rock Creek Lake and the Rock Creek Pack Station. After a quick breakfast, I made the 40-minute drive to the Pack Station for my long-planned day on horseback in the High Sierra. The Station sits at 9,500 ft. in elevation, and the trails are mostly uphill from there.
I was assigned my companion cowboy, “Red,” an out-of-work Missouri native earning some spare change running pack trips to high-country overnight camping sites in the adjacent valleys and high alpine meadows. We had two pack mules in tow, loaded with supplies for overnighters on nearby Hilton Lakes, at the head of a beautiful alpine valley approximately five miles to the northeast at 10,500 feet in elevation.
Although it had been many years since I sat in a saddle, I had many, many years of equestrian experience, almost all on thoroughbreds or mixed breeds experienced in foxhunting, cross-country trail riding, three-day eventing and equitation competition. I was as comfortable on horseback as driving a car or riding on a bicycle. Riding in a western saddle is quite different, but I did have some experience there, and the differences of managing a “western trained” horse was certainly not an impediment.
Before mounting my stead, a 15-3/4 hand handsome pinto named “Shamoo,” I asked Red if anyone had a spare pair of chaps. None were to be found, so off we went, me in my dungarees and boots. The trail up and over the ridgelines was narrow, extremely rocky, and very dusty. I was at the tail end of our four animal caravan, and the ride proved more of an uncomfortable endurance test than a scenic high-alpine sightseeing excursion. It was four hours out, and three-and-a-half hours back to the Pack Station.
As I write this piece, a week has elapsed since the ride, and I am still feeling the results. I now know what saddle sores are all about! Those chaps would have come in real handy, and prevented the discomfort that I will no doubt continue to experience for another two weeks or so. It was nice to be back in the saddle again, but I think I can pass on future pack rides in high alpine settings in the future.
LONE PINE AND THE WHITNEY PORTAL
Mt. Whitney is the highest peak in the continental United States, at an elevation of 14,495 feet. It is located near the southern end of the Sierra Crest, just 9 miles to the west of U.S. 395 and the small town of Lone Pine. I stayed overnight at a relatively new Comfort Inn that was very comfortable and attended by excellent and courteous staff. They recommended two restaurants for dinner, and I chose “The Seasons,” as its menu looked quite appealing. Now, Lone Pine is no bustling resort location. Most visitors to the Mt. Whitney area are back packers who will spend several days hiking the trails up to its summit. No fancy folk there.
It thus came as an unexpected surprise to find a most sophisticated clientele at “The Seasons.” These were no local hicks, but a grouping of well-off businessmen and businesswomen and their families, obviously from urban environments. I enjoyed a cocktail at the bar, then a rather wonderful dinner in the dining room. It being fairly early, I retreated back to the bar for a nightcap and some stimulating conversation with my fellow bar mates, including an economics professor from USC, who had unfortunately just been diagnosed with cancer and was justifiably quite concerned about his future prospects. They were regulars at this restaurant, stopping off frequently on their drive to and from the Reno area far to the north; and they absolutely loved the area. To my right sat a lovely lady doctor from Germany, a lone traveler like myself, who was enjoying a three-week visit to the western states. All of us enjoyed a good 90 minutes of enlivened conversation before calling it a night.
The most demanding drive of the 12-day trip awaited me the following morning. It would be six hours on the road, first south on U.S. 395 and CA 14 to the southern terminus of the Sierra Crest, then west over the Sierra foothills to Lake Isabella and then Bakersfield in the Central Valley, subsequently north on CA 99 up to Fresno, then east back into the Sierra and Kings Canyon National Park. But first the mountains called and I drove from Lone Pine up to Whitney Portal at the foot of the 14,5000 foot peak. The two-lane highway gained some 3,ooo feet in elevation from the 4,000-foot valley floor, with Mt. Whitney’s towering peaks just to the west. A lone coyote, rather sickly looking, was resting on the road as I drove by. The campgrounds at the Portal were crowded with hikers about to set out on their climbs to the summit. There was not much to do at the Portal except browse through the general store and stop and admire the waterfall nearby. Then it was off on the long cross-country drive.
On the way south on 395, Lake Owens was immediately to the left (east). As mentioned above, the many years of water diversion had left its mark here, the Lake being basically a large, dry bed. The climb to the west to Lake Isabella was an easy drive through some lovely and lush farming valleys. The Kern River flows from the northern Sierra into Isabella, then down through Kern Canyon to Bakersfield. The road through the Canyon is narrow and winding, with the River and its gushing torrents to the right. That stretch of water would be a challenge to the most expert white water kayakers. However, with a hydroelectric station at the top of the canyon and another one at its base, I would not imagine any such experts would try their hand at it.
The drive up the 99 to Fresno took another intense two hours. The truck traffic on 99 is incredibly heavy, and combined with a speed limit of 70 MPH, the trip requires the utmost in concentration. There is no way that such a high speed limit is justified given the volume of traffic.
KINGS CANYON AND SEQUOIA NATIONAL PARKS
It’s another 90-minute drive from Fresno up to Kings Canyon and Grant Village at 7,500 feet in elevation. Sequoia and Kings Canyon are immediately adjacent National Parks and are administered by the National Park Service as one entity. Both parks are home to the Giant Sequoia trees, with two standouts. Kings hosts the General Grant Tree, 267 feet in height, 107 feet in circumference, with a diameter of 29 feet, and approximately 1,650 years old. A short distance
away in Sequoia is the world’s largest tree, the General Sherman, which stands 275 feet in height, 103 feet in
circumference, and 2,200 years in age. This is the largest Sequoia in terms of total volume of wood, the standard measurement. Another variety of Sequoia are the coastal redwoods. The largest of these is the Mendocino Tree, located near Ukiah in Northern California. This tall, slender giant stands 367.5 feet in height, but contains nowhere near the total volume of either the Grant or Sherman trees. Standing at the base of either of these giants is a humbling experience.
Kings Canyon, however, is not only known for its Giant Sequoias. The park draws its name from the Canyon itself, which in turn is named for the river that runs through it, the
Kings River. A product of seductive uplift and glaciation, the Canyon is over 5,000 feet in depth, thus much deeper than Yosemite. The upper Canyon, like Yosemite, is a “U-shaped glaciated valley; the lower Canyon lied outside the limits of the glacier, and is thus “V-shaped.” In any case, the physical beauty of the Canyon is spectacular; perhaps not so much so as Yosemite, but nonetheless awe-inspiring. It is also far less travelled, making the experience all that more enjoyable.
The drive from Grant’s Village, at 7,500 feet in elevation, down to the Canyon floor, at 4,000 feet, is a spectacular one- hour trip. The well-maintained and upgraded road, California 180, is fairly straightforward at the higher elevations, then twists and turns as it descends more steeply towards the valley floor. From the 5,000-foot marker on, it narrows considerably and clings to the southern Canyon wall, before crossing the Kings River to the northern wall of the valley.
Two miles before the road terminates is the small village of Cedar Grove. Here is located a visitors center manned by two Park Rangers, numerous campgrounds, and a modest lodge offering rooms with communal showers nearby. Driving on to the northeast, the highway passes through the “valley gates,” entering the “U-shaped” canyon, with towering peaks on either side. A roadside vista ¾-mile from “Roads End” provides spectacular views further up the valley to the Sierra Crest and its 13,700-foot mountains. Hundreds of lakes dot the high country, headwaters of the North,
Middle and South Forks of the Kings River. That country is a good four day overnight pack hike, and from the looks of the photographs I have seen, well worth the effort. The final photograph at the end of this article is typical, and most beautiful. The peaks in the background are the spires of 14,500-foot Mt. Whitney, as seen from the west, a view only available to those intrepid backpackers who venture to this remote location.
There is one further natural feature of the High Sierra that is worth attention. Like any mountain range, water drainages play an important part in its environment. In the east, major rivers have their sources in “the high country” of the White and Green Mountains of Vermont and New Hampshire, and the Adirondacks of upstate New York. The rivers, the Connecticut, the Hudson, the Delaware and the Susquehanna, all flow from the mountains to the sea.
The Sierra also has major drainage systems, but they exist in a different environment. The rivers in the northern sections of the Sierra, like their eastern counterparts, end up in the Pacific Ocean, after a journey through San Francisco Bay. These rivers, moving from north to south, include the Sacramento, the Tuolumne, the Merced, and the San Joaquin. The two drainages to the south of the San Joaquin, namely the Kings River and the Kern, drain into California’s Central Valley, where they disappear into a system of “sloughs” that provide water to fertilize the crops in the Valley, and into viaducts that provide water to the Los Angeles Metropolitan area. These two main rivers, despite their tremendous volume, never reach the sea. Thus is the effect of human requirements out-trumping the natural environment.
SAN FRANCISCO AND THE FLIGHT HOME
It was no more than a four-hour drive back to San Francisco and a restful overnight stay near the airport before the flight home to New York. I had booked a room at The Radisson Hotel, just a few miles north of SFI on Sierra Pointe Road overlooking the Bay. It was a stunning contemporary hotel, striking in its interior design. The lobby, bar and restaurant presented modernism at its best; my third-floor room was large and extremely comfortable.
After dinner, I socialized with a couple from Beijing, China and their nine-year-old son, proudly wearing a Boston Red Sox baseball cap. The young man spoke perfect English, and the three of them had enjoyed a wonderful two-week visit to the American West. The mother was an administrator in the economics department of Tsinghua University; the father was an executive in the travel industry.
We talked at length about our different political and economic systems and the involvement of government in managing corporate enterprises. The Chinese economy is based upon an evolving system that has come to be known as State Capitalism, where many industries operate under a more or less free market regime while other more important ones are State-owned and State-controlled. However, even those are becoming more oriented toward capitalistic principles, including public ownership of shares that will be traded on exchanges. They were surprised to learn that here in the United Sates, there is no such thing as State ownership of corporations. They presumed, for example, that our airlines were State-owned. Our meeting was only a brief encounter, but I was greatly encouraged by their openness and eagerness to learn about our system, as I am also optimistic about the future of our national relationship. China is no doubt the emerging world power and will play the role that Britain did in the 19th century and America did in the 20th century and continues to play today, albeit to a lesser extent.
The trip to the airport the following morning was hassle-free, and the flight home to JFK was comfortable and thoroughly enjoyable, due in no small degree to the excellent company I enjoyed as a seat-mate, a fellow Jack Russell Terrier owner who brought thoughts of my old friend Noni Risley starkly to mind. Her first name was Evie, just like Noni’s daughter, and her terrier’s name was Pippa, as was Noni’s favorite. A very nice way to end a most eventful, enjoyable and educational vacation.
One final note. As most Americans know, the State of California is enduring a period of extreme economic turmoil. The State pension system verges on bankruptcy, State payrolls have not been met, with workers being furloughed for two days out of each workweek, and drastic cutbacks have had to be made in the State’s educational system, which includes higher educational institutions that were the envy of every municipality and state in the country. These are truly sad times, not just for those who reside in California, but for the millions of travelers who visit this wonderful country and enjoy all it has to offer. Elections will be held this coming
November for the governorship and one of California’s two Senate seats. I talked with many residents during my travels, and there seems to be an overwhelming consensus that major changes need to be made in the Statehouse, and that does not include the seating of an ex-governor from an era long past. Most voters seem willing to lean on the extensive business experience and financial independence of Meg Whitman. Only time will tell whether the new governor, be it Whitman or Jerry Brown, can pull the State out of the morass it finds itself in today.
INTRODUCTION
Since my youngest days, I have always been drawn to the mountains, whether they were in the northeast, the Rocky Mountains, or in Europe. There is just a magnificence in the high alpine surroundings that is incomparable for one, like myself, who grew up in an urban setting like Manhattan. As a young teenager, I shared a summer-long road trip with my family across America, with stays in several National Parks, including Yellowstone, the Grand Tetons, Yosemite, and the Grand Canyon. That was over half a century ago. Last summer, I added Glacier National Park in Montana to the list. This year, I planned a tour of the High Sierra, including a re-visit to Yosemite, and the other National Parks in Eastern California on the Sierra Crest.
This past winter, the PBS Network presented the newest film by Ken Burns, “The National Parks: America’s Best Idea.” It was a wonderful six-part series that traced the history of our National Park System, and how important it was, and is, in conserving our Nation’s environmental treasures, and making them available to the peoples of our country and the world. It was only fitting that on the long flight out to California, a portion of that documentary was available on the plane’s DVD system, and I chose to watch that two-hour segment. It was a perfect prelude to the tour I had planned.
This trip was a solo adventure. I’m sure there are some who would question why anyone would undertake a two-week excursion such as this without a travel mate to enjoy it with; and there were nights when a warm body beside me would have been more than welcome. On the other hand, being on one’s own allowed a freedom of choice that would have been compromised in the presence of a partner. There were no arguments on when to arise and start the day; how far to drive before taking a break for rest or lunch; or when to push on for the next view of that canyon or waterfall.
A tour such as I had in mind requires some detailed advanced planning. Lodging during the summer months in our National Parks is almost impossible to come by on short notice. Thus, at least a four-month lead-time is a minimum requirement. Our National Parks are administered by the U.S. Forest Service, a division of the U. S. Department of the Interior. Ranger Stations are located at each, and in towns along the way that serve those who wish to make use of the National Forests for camping or just plain sightseeing. They are a good place to visit before venturing further, and the personnel who staff them are always more than helpful in answering questions, issuing camping permits, or suggesting itineraries within the Parks and Forests.
YOSEMITE NATIONAL PARK
The Nation’s first National Park was Yosemite, and it is the closest and most convenient to the “San Francisco Gateway.” It is also within a three-hour drive from Los Angeles, which makes it the most accessible National Park to major population centers in California, and the international transportation hubs that serve the West Coast from Asian originations. It’s accessibility results in an enormous popularity, which in turn equates to overcrowding, that is hard to imagine given its awe-inspiring natural beauty. There are no restrictions for vehicle entry to the Valley, and mid-day traffic is similar to what one would expect in a major urban setting. There are just too many people in too small a geographic area.
The Yosemite Valley lies at an elevation of 4,000 feet above sea level, and the surrounding cliffs rise another 3,500 feet. The grandeur of the surroundings are awe-inspiring from the Valley floor, but an equally impressive perspective is available from the canyon’s rim, especially from the overlook at Glacier Point, at close to 8,000 feet of elevation. From there, one can look down at the Valley floor, but also up at the high peaks of the Sierra Crest some 50 miles to the east and at elevations of 13,00 feet and higher.
The combined natural forces of plate tectonics, volcanism, and glaciation created Yosemite. Millions of years ago, the Pacific Plate subducted under its Continental counterpart, releasing an uplifting that resulted in the Sierra rift. During the most recent ice age, glaciers then descended to a geographic location some 200 miles to the south of Yosemite, covering the alpine valleys from the high Sierra down to the valley floor. As the glaciers moved to lower elevations, they carved the cliff walls, and as they receded, they carved the sidewalls further and left what are called moraines in the valley, damming the river flows and creating a large lake that filled the Valley. Over time, the terminal moraine at the Valley gates was penetrated by both natural and man-made forces, draining the Valley of its lake and leaving the meadows that we see today at the base of the 3,000+ foot cliffs of El Capitan and its neighbors.
The resultant landscape almost defies human comprehension. The dimensions are just too extreme. But as much as those are unimaginable, the size of the forces that created them is even more so. The plate movement that created the uplift consisted of a combination of rock and molten lava that was in the neighborhood of five miles in depth, or over 25,000 feet, some six times as great as the difference between the elevations of the present valley floor and the valley rim. That is truly hard for mortals like us to comprehend.
In addition to the immensity of the valley landscape, another natural feature that adds to the impression are the numerous waterfalls that dot both the lower and upper valleys of Yosemite. Three are visible from the Valley floor: upper and lower Yosemite Falls, and Bridal Veil Falls. From Glacier Point, three others are visible: Illilouette Falls, that drains its namesake creek down into the Merced River, and Nevada and Vernal Falls, on the Merced proper.
Lodging in Yosemite is unconscionably expensive. The Forest Service manages the natural environment, but subcontracts the lodging, food and touring concessions to a private corporate entity, in this case the Delaware North Corporation. This for-profit organization charges what the traffic will bear, and since the traffic is so great, the lodging fees are commensurate with that great volume. My stay the first night was in an annex to a hotel that dated back to the early 1920s. It was no Ritz Carlton! There was no bathroom; showers were in a communal bath that served the dozen or so rooms in the annex. The cost of that room was over $200.00 per night. I was forced to spend my second night in a tent with a wooden floor, one light bulb, and two blankets for the single bed cot, and it was darned cold that night; I ended up sleeping in my clothes, and had to walk some 300 yards to the communal showers in the morning. That night cost me $130.00! Without doubt, the greatest lodging rip-off I had ever experienced.
An alternative would have been the magnificent Ahwahnee Lodge, one of the most beautiful hotels I have ever seen. I enjoyed a wonderful dinner there, and a most civilized breakfast the following morning. The overnight fee at Ahwahnee ran $575.00, making The Ritz Carlton in San Francisco pale by comparison.
Yosemite also includes the first of the Giant Sequoia groves located in the Sierra, the Mariposa Grove. These magnificent behemoths rise to over 250 feet in height, 25+ feet in diameter, and are close to 3,000 years old. Standing at their base, it is really hard to imagine how nature created such beauty.
If one is travelling to the eastern side of the Sierra from the Yosemite Valley, the only route of choice is Tioga Pass Road, which runs up and along the north rim of the Valley, eventually reaching an elevation of 9,500 feet before descending to Mono Lake and the Owens River Valley to the east. Before the descent, one drives through the beautiful Toulumne Meadows at the headwaters of the Toulumne River, which parallels the Merced River as both head down water to California’s Central Valley.
Before describing my next destination, a word would be appropriate concerning the alternatives facing the Forest Service in its future management of the Yosemite Valley. As any viewer of Ken Burns’ documentary will appreciate, our National Parks serve a dual purpose. They were created to preserve natural beauty, conserving our Nation’s natural and irreplaceable physical assets on the one hand; on the other, they are there for the enjoyment and appreciation of our citizens, who as Burns says are their actual owners. Thus the issue is accessibility.
However, even the most ardent conservationists over the past 100+ years since the founding of our Park System have acknowledged that there are limits to the degree of that accessibility. Is it in keeping with the nature of these natural wonders to have their beauty despoiled by crowds that turn them into miniature “Times Squares” of traffic congestion? Or should limits be placed upon usage? I spoke with several Park Rangers about this dilemma, and all agreed that something needs to be done. But none looked forward to making that final determination.
The answer lies in limiting the number of vehicles that have access to Yosemite. If private vehicles and tour busses would have to park off-site and transfer passengers onto shuttle buses for access to the Park, congestion would be greatly reduced. But such a solution would be fought tooth and nail by the Park’s concessionaire, whose profit would be detrimentally affected. These are hard choices, but sooner or later, the issue will have to be addressed.
THE EASTERN SIERRA—AN OVERVIEW
As one drives from the San Francisco Bay area to the Central Valley, the physical environment changes dramatically. Before entering the San Joaquin watershed, one passes over an arid, almost burned out foothill area. Then the traveler enters the lush growing area of what many call the Nation’s breadbasket—a long and wide valley that produces much of our produce that ships throughout America and supplies our supermarkets with fresh produce. The gradual ascent into the western Sierra passes through increasing stands of conifers into a high, relatively dry, but still non-arid landscape.
The descent to the eastern Sierra and the Long and Owens River Valleys brings the traveler into another climate entirely. These valley floors are semi-arid, almost desert like in summer. What water exists, and there was plenty of it with the immense amount of winter snows, has been diverted through canals and aqueducts over the past 80 years to the Los Angeles Metropolitan area, leaving much of the valleys high and dry. At the northern extremity lies Mono Lake, which until three years ago sat half empty; at the southern end is Lake Owens, which as of last week is nothing more than a dry lakebed.
In 2007, the eastern Sierra counties sued the State of California, demanding that a good portion of the water being diverted to Los Angeles be restored to the originating valleys. The courts ruled in favor of these local municipalities, and the water levels in that part of California are slowly being restored.
MAMMOTH LAKES
Mammoth is a destination ski resort in winter, and a recreational play land in the summer months. This past ski season lasted until July 5th, as the area received a record amount of snow and colder than normal temperatures. It is unheard of for a season to last that long. My home mountain out west is Aspen, where the season ends on or about April 10th.
The town of Mammoth Lakes is located but 5 miles from the base of the mountain, and it has undergone a modernization over the past decade which has brought it up to speed with the Nation’s best resorts, albeit on a somewhat smaller scale than Aspen or Vail. The base altitude is at 7,500 feet, and several medium-sized lakes are within a few minutes drive from the town.
The ski gondola operates during the summer months, and the ride up to the top, at 11,200 feet, is breathtaking, providing views to the north up to Mono Lake, and to the Sierra Crest to the west with peaks up to 13,600 feet. Just west of the mountain is the Upper San Joaquin River Valley, and the Devil’s Postpile National Monument. A stranger geologic site is hard to imagine. It was created by a lava eruption, followed by cooling and cracking, thus forming hexagonal columns which were exposed some 15,000 years ago when a glacier flowed down the Middle Fork of the San Joaquin River and overrode the fractured mass of lava. The moving ice carved away one side of the postpile, exposing a sheer wall of columns 60 feet high.
A two mile hike downstream leads to Rainbow Falls, a 100-foot waterfall on the San Joaquin River. The hike was a bit
too strenuous for this adventurer at the 7,600-foot elevation; thus I reluctantly passed.
The restaurants in Mammoth were varied, delicious, affordable, and a great place to meet and mingle with locals. The two where I had dinners offered Happy Hours from 5 to 6:30 PM, when the food and drink were 50% off. I met a lovely couple at Whiskey Creek, proprietors of a local Austrian-style lodge, with whom I enjoyed a convivial 90-minutes. The next evening was spent at Roberto’s, another local hangout featuring Tex-Mex cuisine; best enchiladas I ever had.
BISHOP
A half hour drive to the south of Mammoth lies the town of Bishop, largest of those that are located on US 395 to the east of the Sierra Crest in the Owens River Valley. On the drive down, I made a quick stop at Hot Creek Mineral Springs, some 3 miles east of US 395 into the Valley. Hot Creek lies at the bottom of an ancient caldera, the scene millions of years ago of a titanic volcanic eruption. The underlying molten core of the volcano is still active, some 5 miles below the surface, and here a vent exists that brings the super-heated steam to the surface turning the otherwise cool waters of Hot Creek into liquid too dangerous for humans or animals to enter.
All but one of the 14,000+ peaks in this part of California are located along the Sierra Crest, just to the west of US 395. The exception is White Mountain Peak, at 14,246 feet the third highest in elevation of the region, and the monarch of the White Mountains. It is located some 12 miles to the north of Bishop and about 15 miles to the east of the Sierra Crest at the eastern end of the Owens River Valley. Its slopes are more or less devoid of vegetation, as the climate is high desert compared to the coniferous forests of the Sierra Foothills.
Some 10 miles to the south of White Mountain Peak, also in the White Mountains, is the Ancient Bristlecone Pine Forest, yet another National Monument, this one located at an elevation of 10,000 feet. The drive up to this Forest is an adventure unto itself, as the roads are narrow, winding, and perched at the precipice of a 5,000-foot drop to the Owens Valley floor, with NO guardrails as protection.
These conifers are far different from the giant sequoias. They thrive in the high desert environment, on soil that is highly alkaline in nature, and in an area that receives very little participation during the spring and summer months. They are also the oldest living things in existence on the planet, some over 5,500 years of age. Whereas the sequoias grow to between 270 feet to 350 feet in height, these ancients are no more than 35 feet. The Park Rangers at the Forest give guided walking tours amongst these trees; the one I was with took a core sample of a tree that was relatively young—
only 500 years old. When examining the sample, one could see the age lines within the core and smell the extremely tannic nature of the wood.
Immediately to the west of Bishop is California Highway 168, a recently upgraded two-lane highway that leads 12 miles up the Bishop Creek Valley to Sabrina Lake at an elevation of 9,500 feet. Surrounded by 13,500-foot peaks, this rather large water body is as picturesque as any found in the high alpine settings of Switzerland. The Lake itself is man-made.
A dam at the southern end funnels the torrents to a hydroelectric plant that supplies electricity to Bishop and its environs.
At roads end is found a modest restaurant and marina where one can enjoy a lunch on the deck overlooking the Lake (as I did), or rent a powerboat for a half day excursion on these beautiful waters.
A one-block walk from my hotel in downtown Bishop is a branch of one of the restaurants where I dined in Mammoth, namely, Whiskey Creek. Much less crowded, it was a pleasant spot for liquid refreshments, after which I made a beeline to KFC for some delicious fried chicken.
ROCK CREEK PACK STATION
Ten miles north of Bishop is Rock Creek Canyon. A 12-mile drive up the Canyon, to the east of US 395, leads to Rock Creek Lake and the Rock Creek Pack Station. After a quick breakfast, I made the 40-minute drive to the Pack Station for my long-planned day on horseback in the High Sierra. The Station sits at 9,500 ft. in elevation, and the trails are mostly uphill from there.
I was assigned my companion cowboy, “Red,” an out-of-work Missouri native earning some spare change running pack trips to high-country overnight camping sites in the adjacent valleys and high alpine meadows. We had two pack mules in tow, loaded with supplies for overnighters on nearby Hilton Lakes, at the head of a beautiful alpine valley approximately five miles to the northeast at 10,500 feet in elevation.
Although it had been many years since I sat in a saddle, I had many, many years of equestrian experience, almost all on thoroughbreds or mixed breeds experienced in foxhunting, cross-country trail riding, three-day eventing and equitation competition. I was as comfortable on horseback as driving a car or riding on a bicycle. Riding in a western saddle is quite different, but I did have some experience there, and the differences of managing a “western trained” horse was certainly not an impediment.
Before mounting my stead, a 15-3/4 hand handsome pinto named “Shamoo,” I asked Red if anyone had a spare pair of chaps. None were to be found, so off we went, me in my dungarees and boots. The trail up and over the ridgelines was narrow, extremely rocky, and very dusty. I was at the tail end of our four animal caravan, and the ride proved more of an uncomfortable endurance test than a scenic high-alpine sightseeing excursion. It was four hours out, and three-and-a-half hours back to the Pack Station.
As I write this piece, a week has elapsed since the ride, and I am still feeling the results. I now know what saddle sores are all about! Those chaps would have come in real handy, and prevented the discomfort that I will no doubt continue to experience for another two weeks or so. It was nice to be back in the saddle again, but I think I can pass on future pack rides in high alpine settings in the future.
LONE PINE AND THE WHITNEY PORTAL
Mt. Whitney is the highest peak in the continental United States, at an elevation of 14,495 feet. It is located near the southern end of the Sierra Crest, just 9 miles to the west of U.S. 395 and the small town of Lone Pine. I stayed overnight at a relatively new Comfort Inn that was very comfortable and attended by excellent and courteous staff. They recommended two restaurants for dinner, and I chose “The Seasons,” as its menu looked quite appealing. Now, Lone Pine is no bustling resort location. Most visitors to the Mt. Whitney area are back packers who will spend several days hiking the trails up to its summit. No fancy folk there.
It thus came as an unexpected surprise to find a most sophisticated clientele at “The Seasons.” These were no local hicks, but a grouping of well-off businessmen and businesswomen and their families, obviously from urban environments. I enjoyed a cocktail at the bar, then a rather wonderful dinner in the dining room. It being fairly early, I retreated back to the bar for a nightcap and some stimulating conversation with my fellow bar mates, including an economics professor from USC, who had unfortunately just been diagnosed with cancer and was justifiably quite concerned about his future prospects. They were regulars at this restaurant, stopping off frequently on their drive to and from the Reno area far to the north; and they absolutely loved the area. To my right sat a lovely lady doctor from Germany, a lone traveler like myself, who was enjoying a three-week visit to the western states. All of us enjoyed a good 90 minutes of enlivened conversation before calling it a night.
The most demanding drive of the 12-day trip awaited me the following morning. It would be six hours on the road, first south on U.S. 395 and CA 14 to the southern terminus of the Sierra Crest, then west over the Sierra foothills to Lake Isabella and then Bakersfield in the Central Valley, subsequently north on CA 99 up to Fresno, then east back into the Sierra and Kings Canyon National Park. But first the mountains called and I drove from Lone Pine up to Whitney Portal at the foot of the 14,5000 foot peak. The two-lane highway gained some 3,ooo feet in elevation from the 4,000-foot valley floor, with Mt. Whitney’s towering peaks just to the west. A lone coyote, rather sickly looking, was resting on the road as I drove by. The campgrounds at the Portal were crowded with hikers about to set out on their climbs to the summit. There was not much to do at the Portal except browse through the general store and stop and admire the waterfall nearby. Then it was off on the long cross-country drive.
On the way south on 395, Lake Owens was immediately to the left (east). As mentioned above, the many years of water diversion had left its mark here, the Lake being basically a large, dry bed. The climb to the west to Lake Isabella was an easy drive through some lovely and lush farming valleys. The Kern River flows from the northern Sierra into Isabella, then down through Kern Canyon to Bakersfield. The road through the Canyon is narrow and winding, with the River and its gushing torrents to the right. That stretch of water would be a challenge to the most expert white water kayakers. However, with a hydroelectric station at the top of the canyon and another one at its base, I would not imagine any such experts would try their hand at it.
The drive up the 99 to Fresno took another intense two hours. The truck traffic on 99 is incredibly heavy, and combined with a speed limit of 70 MPH, the trip requires the utmost in concentration. There is no way that such a high speed limit is justified given the volume of traffic.
KINGS CANYON AND SEQUOIA NATIONAL PARKS
It’s another 90-minute drive from Fresno up to Kings Canyon and Grant Village at 7,500 feet in elevation. Sequoia and Kings Canyon are immediately adjacent National Parks and are administered by the National Park Service as one entity. Both parks are home to the Giant Sequoia trees, with two standouts. Kings hosts the General Grant Tree, 267 feet in height, 107 feet in circumference, with a diameter of 29 feet, and approximately 1,650 years old. A short distance
away in Sequoia is the world’s largest tree, the General Sherman, which stands 275 feet in height, 103 feet in
circumference, and 2,200 years in age. This is the largest Sequoia in terms of total volume of wood, the standard measurement. Another variety of Sequoia are the coastal redwoods. The largest of these is the Mendocino Tree, located near Ukiah in Northern California. This tall, slender giant stands 367.5 feet in height, but contains nowhere near the total volume of either the Grant or Sherman trees. Standing at the base of either of these giants is a humbling experience.
Kings Canyon, however, is not only known for its Giant Sequoias. The park draws its name from the Canyon itself, which in turn is named for the river that runs through it, the
Kings River. A product of seductive uplift and glaciation, the Canyon is over 5,000 feet in depth, thus much deeper than Yosemite. The upper Canyon, like Yosemite, is a “U-shaped glaciated valley; the lower Canyon lied outside the limits of the glacier, and is thus “V-shaped.” In any case, the physical beauty of the Canyon is spectacular; perhaps not so much so as Yosemite, but nonetheless awe-inspiring. It is also far less travelled, making the experience all that more enjoyable.
The drive from Grant’s Village, at 7,500 feet in elevation, down to the Canyon floor, at 4,000 feet, is a spectacular one- hour trip. The well-maintained and upgraded road, California 180, is fairly straightforward at the higher elevations, then twists and turns as it descends more steeply towards the valley floor. From the 5,000-foot marker on, it narrows considerably and clings to the southern Canyon wall, before crossing the Kings River to the northern wall of the valley.
Two miles before the road terminates is the small village of Cedar Grove. Here is located a visitors center manned by two Park Rangers, numerous campgrounds, and a modest lodge offering rooms with communal showers nearby. Driving on to the northeast, the highway passes through the “valley gates,” entering the “U-shaped” canyon, with towering peaks on either side. A roadside vista ¾-mile from “Roads End” provides spectacular views further up the valley to the Sierra Crest and its 13,700-foot mountains. Hundreds of lakes dot the high country, headwaters of the North,
Middle and South Forks of the Kings River. That country is a good four day overnight pack hike, and from the looks of the photographs I have seen, well worth the effort. The final photograph at the end of this article is typical, and most beautiful. The peaks in the background are the spires of 14,500-foot Mt. Whitney, as seen from the west, a view only available to those intrepid backpackers who venture to this remote location.
There is one further natural feature of the High Sierra that is worth attention. Like any mountain range, water drainages play an important part in its environment. In the east, major rivers have their sources in “the high country” of the White and Green Mountains of Vermont and New Hampshire, and the Adirondacks of upstate New York. The rivers, the Connecticut, the Hudson, the Delaware and the Susquehanna, all flow from the mountains to the sea.
The Sierra also has major drainage systems, but they exist in a different environment. The rivers in the northern sections of the Sierra, like their eastern counterparts, end up in the Pacific Ocean, after a journey through San Francisco Bay. These rivers, moving from north to south, include the Sacramento, the Tuolumne, the Merced, and the San Joaquin. The two drainages to the south of the San Joaquin, namely the Kings River and the Kern, drain into California’s Central Valley, where they disappear into a system of “sloughs” that provide water to fertilize the crops in the Valley, and into viaducts that provide water to the Los Angeles Metropolitan area. These two main rivers, despite their tremendous volume, never reach the sea. Thus is the effect of human requirements out-trumping the natural environment.
SAN FRANCISCO AND THE FLIGHT HOME
It was no more than a four-hour drive back to San Francisco and a restful overnight stay near the airport before the flight home to New York. I had booked a room at The Radisson Hotel, just a few miles north of SFI on Sierra Pointe Road overlooking the Bay. It was a stunning contemporary hotel, striking in its interior design. The lobby, bar and restaurant presented modernism at its best; my third-floor room was large and extremely comfortable.
After dinner, I socialized with a couple from Beijing, China and their nine-year-old son, proudly wearing a Boston Red Sox baseball cap. The young man spoke perfect English, and the three of them had enjoyed a wonderful two-week visit to the American West. The mother was an administrator in the economics department of Tsinghua University; the father was an executive in the travel industry.
We talked at length about our different political and economic systems and the involvement of government in managing corporate enterprises. The Chinese economy is based upon an evolving system that has come to be known as State Capitalism, where many industries operate under a more or less free market regime while other more important ones are State-owned and State-controlled. However, even those are becoming more oriented toward capitalistic principles, including public ownership of shares that will be traded on exchanges. They were surprised to learn that here in the United Sates, there is no such thing as State ownership of corporations. They presumed, for example, that our airlines were State-owned. Our meeting was only a brief encounter, but I was greatly encouraged by their openness and eagerness to learn about our system, as I am also optimistic about the future of our national relationship. China is no doubt the emerging world power and will play the role that Britain did in the 19th century and America did in the 20th century and continues to play today, albeit to a lesser extent.
The trip to the airport the following morning was hassle-free, and the flight home to JFK was comfortable and thoroughly enjoyable, due in no small degree to the excellent company I enjoyed as a seat-mate, a fellow Jack Russell Terrier owner who brought thoughts of my old friend Noni Risley starkly to mind. Her first name was Evie, just like Noni’s daughter, and her terrier’s name was Pippa, as was Noni’s favorite. A very nice way to end a most eventful, enjoyable and educational vacation.
One final note. As most Americans know, the State of California is enduring a period of extreme economic turmoil. The State pension system verges on bankruptcy, State payrolls have not been met, with workers being furloughed for two days out of each workweek, and drastic cutbacks have had to be made in the State’s educational system, which includes higher educational institutions that were the envy of every municipality and state in the country. These are truly sad times, not just for those who reside in California, but for the millions of travelers who visit this wonderful country and enjoy all it has to offer. Elections will be held this coming
November for the governorship and one of California’s two Senate seats. I talked with many residents during my travels, and there seems to be an overwhelming consensus that major changes need to be made in the Statehouse, and that does not include the seating of an ex-governor from an era long past. Most voters seem willing to lean on the extensive business experience and financial independence of Meg Whitman. Only time will tell whether the new governor, be it Whitman or Jerry Brown, can pull the State out of the morass it finds itself in today.
Monday, August 2, 2010
ECONOMIC UPDATE--SLOWER GDP GROWTH & DEFLATION
by Bill Breakstone, Somers, NY, August 2, 2010
The other afternoon, I ran into two old friends in front of the local CVS store. The wife is an old colleague of mine in real estate; since I make it a point not to discuss anything controversial with office friends, I had no idea of her stances on either politics or economics. Her husband is a retired IBM executive, whom I had met socially on several occasions over the years, but with whom I had never discussed anything of real substance; in any case, he had always been cordial, if not down right pleasant.
They had just returned from a trip to China, and had found it extremely interesting and educational. We got to talking about the differences between the Chinese and American economies, and this quickly led into a discussion of how China was “on the rise” while America was in relative economic decline. That’s when the conversation started going downhill quickly. My friend’s opinion was that the U.S. economy would do just fine, if “government” just got completely out of the picture. To say that I found his statement to be incredulous would be an understatement.
In my opinion, if the recent financial crisis proved anything, it was that the deregulation of the American economy over the past three decades was responsible for bringing the world to the brink of economic catastrophe and a second Great Depression. But my friend is not alone in believing that what we need is more of the same.
The news over the weekend was dominated by economic discussion. Friday’s Bureau of Economic Analysis Report on Second Quarter GDP growth was disappointing to most economists and economic commentators, and this coming Friday’s Labor Department Report of July unemployment is expected to be no less so. Sunday’s media was filled with some very interesting, if not depressing, views from a number of notables concerning where our economy stands and future short- to mid-term prospects.
Fareed Zacharia led off his “GPS” program on CNN with a brief analysis of the debate between so-called budget hawks and stimulus advocates. His advice was that of most “experts”—continue fiscal stimulus in the short-term to spur economic activity and bring down joblessness while advocating budget reduction in the medium term through revenue raising measures and decreased discretionary spending.
On NBC’s “Meet the Press,” David Gregory hosted a distinguished panel of Alan Greenspan, Governor Ed Rendell of Pennsylvania, and New York Mayor Michael Bloomberg for another roundtable concerning our stagnating economy. Greenspan had some interesting and unexpectedly surprising observations. He advocated completely doing away with the Bush tax cuts, across the board! He also said he had never, in his 51 years of experience in the financial world and government service, seen such a disconnect than what now exists between government on the one hand and business interests on the other, and sees it as extremely harmful to the economic well-being of America. Bloomberg and Rendell hedged on the complete elimination of the tax cuts, advocating maintaining them for middle- and lower-income earners, while eliminating those for the upper brackets, as those savings don’t get spent while at the lower level those savings go directly back into the economy via consumer expenditures.
In his column this morning, Princeton economist and New York Times columnist Paul Krugman made some blistering comments on the position of deficit hawks in urging budget cuts and the Federal Reserve for its inaction in taking needed monetary actions to spur spending. He said the result was a developing structuralization of unacceptable levels of unemployment. “I worry that those in power, rather than taking responsibility for job creation, will soon declare that high unemployment is “structural,” a permanent part of the economic landscape—and that by condemning large numbers of Americans to long-term joblessness, they’ll turn that excuse into dismal reality.” The Times’ Bob Herbert had similar comments in his op-ed piece on Saturday.
The other issue being argued is the threat that with sluggish economic growth and high unemployment, the economy is coming dangerously close to repeating the disastrous “Lost Decade” that Japan experienced from 1991 to 2001. Joe Kiernan, on this morning’s CNBC “Squawk Box,” had an extended debate with Jason Rooney, who was maintaining that there was no expectation on the part of the American consumer that prices would decline and thus cause postponement of purchasing decisions. If anything, he said, consumers believe that prices will rise. To which Kiernan was obviously disbelieving, in that almost every economist holds the opposite opinion. As the host said, since when do we trust the American public to make policy decisions for as complex an issue as this?
This brings me back to my friend’s comments mentioned at the start of this piece. How can seemingly intelligent business people be so oblivious of economic reality?
The other afternoon, I ran into two old friends in front of the local CVS store. The wife is an old colleague of mine in real estate; since I make it a point not to discuss anything controversial with office friends, I had no idea of her stances on either politics or economics. Her husband is a retired IBM executive, whom I had met socially on several occasions over the years, but with whom I had never discussed anything of real substance; in any case, he had always been cordial, if not down right pleasant.
They had just returned from a trip to China, and had found it extremely interesting and educational. We got to talking about the differences between the Chinese and American economies, and this quickly led into a discussion of how China was “on the rise” while America was in relative economic decline. That’s when the conversation started going downhill quickly. My friend’s opinion was that the U.S. economy would do just fine, if “government” just got completely out of the picture. To say that I found his statement to be incredulous would be an understatement.
In my opinion, if the recent financial crisis proved anything, it was that the deregulation of the American economy over the past three decades was responsible for bringing the world to the brink of economic catastrophe and a second Great Depression. But my friend is not alone in believing that what we need is more of the same.
The news over the weekend was dominated by economic discussion. Friday’s Bureau of Economic Analysis Report on Second Quarter GDP growth was disappointing to most economists and economic commentators, and this coming Friday’s Labor Department Report of July unemployment is expected to be no less so. Sunday’s media was filled with some very interesting, if not depressing, views from a number of notables concerning where our economy stands and future short- to mid-term prospects.
Fareed Zacharia led off his “GPS” program on CNN with a brief analysis of the debate between so-called budget hawks and stimulus advocates. His advice was that of most “experts”—continue fiscal stimulus in the short-term to spur economic activity and bring down joblessness while advocating budget reduction in the medium term through revenue raising measures and decreased discretionary spending.
On NBC’s “Meet the Press,” David Gregory hosted a distinguished panel of Alan Greenspan, Governor Ed Rendell of Pennsylvania, and New York Mayor Michael Bloomberg for another roundtable concerning our stagnating economy. Greenspan had some interesting and unexpectedly surprising observations. He advocated completely doing away with the Bush tax cuts, across the board! He also said he had never, in his 51 years of experience in the financial world and government service, seen such a disconnect than what now exists between government on the one hand and business interests on the other, and sees it as extremely harmful to the economic well-being of America. Bloomberg and Rendell hedged on the complete elimination of the tax cuts, advocating maintaining them for middle- and lower-income earners, while eliminating those for the upper brackets, as those savings don’t get spent while at the lower level those savings go directly back into the economy via consumer expenditures.
In his column this morning, Princeton economist and New York Times columnist Paul Krugman made some blistering comments on the position of deficit hawks in urging budget cuts and the Federal Reserve for its inaction in taking needed monetary actions to spur spending. He said the result was a developing structuralization of unacceptable levels of unemployment. “I worry that those in power, rather than taking responsibility for job creation, will soon declare that high unemployment is “structural,” a permanent part of the economic landscape—and that by condemning large numbers of Americans to long-term joblessness, they’ll turn that excuse into dismal reality.” The Times’ Bob Herbert had similar comments in his op-ed piece on Saturday.
The other issue being argued is the threat that with sluggish economic growth and high unemployment, the economy is coming dangerously close to repeating the disastrous “Lost Decade” that Japan experienced from 1991 to 2001. Joe Kiernan, on this morning’s CNBC “Squawk Box,” had an extended debate with Jason Rooney, who was maintaining that there was no expectation on the part of the American consumer that prices would decline and thus cause postponement of purchasing decisions. If anything, he said, consumers believe that prices will rise. To which Kiernan was obviously disbelieving, in that almost every economist holds the opposite opinion. As the host said, since when do we trust the American public to make policy decisions for as complex an issue as this?
This brings me back to my friend’s comments mentioned at the start of this piece. How can seemingly intelligent business people be so oblivious of economic reality?
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