By TED LUX
Los Angeles seems to be buzzing again.
The freeways appear more crowded than three months ago. Smiles seem to have returned on the faces of Angelenos as I pass them on our crowded streets. It seems to me we are returning to some degree of normalcy in our city as we try to recover from the depths of financial calamity. But I fear we’re being lulled into a false sense of security and that our complacency will return.
Gasoline prices are down from more than $4.50 a gallon to $2.50. That’s close to a 50 percent decline in costs for drivers. For so many struggling Angeleno families, the extra savings is a blessing. It can mean another dinner out on the town or a show shared with a loved one. It can mean a new dress or pair of shoes in the closet. Collectively, the increased consumer spending will help pull us out of this wicked recession.
The other great news is the stock market has regained some of its lost footing. The Dow Jones industrial average is up more than 25 percent and above 8,000 from a 12-year bottom touched in March. In short order, wealth has dramatically increased for many of us and our 401(k) plans are proving it. It seems to be calmer on city streets even euphoria and smiles reflect it.
I don’t see the fear in peoples’ eyes that I saw earlier this year when it seemed that a depression was lurking around the next corner.
Today, I don’t hear as much chatter on the radio about the record numbers of Angelenos traveling by light rail, bus or car pool as I did at the beginning of 2009. I don’t hear as much chatter as I did in January about our country’s and city’s drastic needs for new fuel alternatives and increased energy conservation programs. I’m hearing less talk about hybrid vehicles. I’m reading less about the huge need for mass transportation improvements. And that could spell trouble.
‘Avoid pain’
Recently, I had lunch with a leading L.A.-area social behaviorist. “It’s human nature that most of us tend to seek pleasure and avoid pain,” he said. “It’s a ‘here today and gone tomorrow’ concept and why so many of us get into financial trouble.”
Today, I’m scared that the whole process of financial boom and bust will be repeated in Los Angeles and across America.
Over the last decade, the real estate market in our country has certainly been just that: a roller-coaster ride for many boom and bust. It’s been like a giant pyramid scheme where those last in line lose.
I remember the spring of 1980 in Los Angeles well; it seemed that just about everyone was leaving school or work early rushing to a local “pyramid party.” Parties were held all over town in hotel rooms, office buildings, mansions and even airport hangars (I was at one). It was so crazy here you couldn’t get a $100 bill from a local bank because the bills were being hoarded by partygoers. Those who bought into the pyramid early on made out like bandits, but those who joined much later lost everything as the scheme quickly fizzled out.
Likewise, quick money was made by thousands in Los Angeles and nationwide in real estate. But now all we hear about are foreclosures and the misery for millions.
I sincerely hope we’ve turned the corner on our economic troubles. Recent news seems to report that we have. But more importantly, I hope collectively our multiethnic, diverse and aspiring community has learned something from these challenging times. Maybe we’ve learned that some practical behavior with money is not such a bad idea? Maybe we’ve learned in Los Angeles that the “American Dream” of home ownership is just not for everyone? Maybe we’ve learned we should try as best we can to live within our means and not get into debt we simply can’t afford or have no inclination or intention of paying back?
However, I’m wary that the average Angeleno has thought much about it.
Today, I’m seeing more red Corvettes, black Maseratis and white SUVs on our freeways. The gas-guzzlers have come out of our garages once again. And I wonder how quickly we’ll forget any lessons learned from our nation’s worst economic crisis since the Great Depression. And, there’s no doubt, the credit card companies are “licking their chops” and waiting anxiously for our next spending spree we simply can’t afford.
Ted Lux formerly worked at a major investment firm and has been involved in real estate lending in the L.A. area for more than 20 years. He is author of the investment book “Exposing the Wheel Spin on Wall Street.”
