So, When Do We Become a Third World Nation?
I knew the recession had hit when the hot dog vendors starting shouting at me.
It’s official. As of 4:28 p.m., Monday, December 1, 2008, the United States is in a recession. In case you’re not persuaded by the day’s performance on Wall Street—the Dow was down 680 points, a nearly 9 percent drop in value—we have this information from the National Bureau of Economic Research, “charged with making the call for the history books,” according to The New York Times; and its Business Cycle Dating Committee (sounds like a category on Match.com), “made up of seven prominent economists, most from the academic sector.” The committee dates the inception of the recession to December ’07—a year ago. Now you tell us.
Will some of us be—what a thrilling word— ruined?
It’s not as if I hadn’t figured it out on my own. My canary-in-the-mine moment came on a rainswept night last month when, having maxed out my MetroCard (the next day I switched to unlimited ride), I hailed a black Town Car whose surly driver was on the prowl for an off-the-books fare between clients. Not too long ago (about the time the BCDC has now decided to pre-date the beginning of the recession), there would have ensued a bitter negotiation with one of two results: Either I would have agreed to pay $25 no matter how close my destination, or the driver would have sped off in a rage. On this night he muttered: "$10." Cue ominous theme music from Dragnet.
There had been other signs: I’m dawdling past a hot dog stand in Central Park, sweat-drenched after a run, when the vendor calls out: “A cold drink for you, sir?” Instantly there flashes to mind the image of a carpet salesman in the Istanbul bazaar trying to wheedle me into his stall. A glass of tea for you, sir? And what about the bicycle jitneys you see everywhere? At a dollar a block, they’re strictly for tourists, but wait: There will come a day when you’re paying—and they’re accepting—a dollar a ride.
Am I making too much of this? The question everyone wants answered, of course, is how low will it go. When do we become a Third World nation? Say your portfolio is worth a third less than before this recession or crash or perturbation or whatever you want to call it. Will a time come when it’s worth half? Worth nothing? Will guys selling apples for $5 apiece (today’s equivalent of 5 cents in the Depression; or that’s what it feels like, anyway) materialize on the corner? Will investment bankers be plummeting from the windows down on Wall Street? Will some of us be—what a thrilling word— ruined?
Don’t ask the National Bureau of Economic Research or its Business Cycle Dating Committee. We always think there’s some “authority” out there who can give us the answer. Take my word for it, there are no authorities. I don’t mean to sound arrogant, and I’m as scared as anyone else, but I actually feel that I know as much as Jim Cramer (even if for me the word "derivative" refers to one poet copying too extensively from another poet). Don't sell. It will go back up. This is a buying opportunity. “I think in terms of valuations there are some good deals starting to appear,” the Times quotes Robert Talbut, a fund manager at Royal London Asset Management, as saying. (This is the same Talbut who says, later in the article, “We’re giving back some of the appreciation in equities that we gained in the last few weeks”—in other words, we just lost more money. Thanks for the heads up, Bob.)
I moved to New York in mid-July '77, the night after the blackout and the riots: “Ladies and gentlemen, the Bronx is burning.” So was Harlem: Tear gas hung in the air as I came out of the subway on West 96th Street. I couldn’t find anything to rent and sank my last dime into a two-bedroom apartment facing a brick wall on the Upper West Side. (Everyone over 50 who lives in Manhattan has a story like this: Either they bought or they didn't.) Did I picture then the Gilded Age to come? Can I picture now, from the pristine vantage of the Castle in Central Park that I glimpsed yesterday morning (when the recession began), the dust bowl that was the Great Meadow a quarter of a century ago—and to which it could easily revert after a few more bad months? "This is nothing I haven't seen before," a master of the universe said to me. And nothing we won't see again. You know what I would do now if I were really smart? Go into real estate.
(An earlier version of this article incorrectly described the National Bureau of Economic Research and the Business Cycle Dating Committee as two separate entities. The committee is part of the National Bureau of Economic Research.)
James Atlas is the president of Atlas & Co. and founder of the Penguin Lives series. His numerous books include Bellow: A Biography and the memoir My Life in the Middle Ages, and his biography of Delmore Schwartz was nominated for the National Book Award. A former staff writer for The New Yorker, The Atlantic, and Vanity Fair, he was also an editor at The New York Times Magazine for many years. His work has appeared in The New York Times Book Review, The New York Review of Books, and the London Review of Books.