Monday, March 17, 2008

Energy and the credit market are the keys, MV 27

By Jeffrey C. Turbitt

There are so many economic problems that go unmentioned with the endless and tiring immigration and minimum wage debate that perhaps we should focus on those that get scant attention in comparison.

High on the list of problems is our lack of a viable credit market. One of the factors that has sustained the U.S. economy post 9/11 is easily available credit. The fed is back lowering rates as the economy teeters again, and it lowered rates to the point of absurdity after that event. This cash infusion inflated home prices and weakened the dollar to a noticeable degree. The dollar is likely to get even weaker as rates lower and the supply of dollars continues to increase. People used that money through home equity lines of credit to go out and do what we Americans do best: Spend money like it’s on fire. It’s only now that the effects of a $9 trillion debt and all the easy credit are having a real economic impact, as many people have defaulted on mortgages they shouldn't have gotten in the first place. The situation in the mainland got out of control, but there is a use for a reasonable and judicious exercise of credit via home equity loans that would help things here.

The bizarre Article XII we have here pretty much destroys that credit option. One of the best sources of capital to start a business, buy a new car or take a vacation goes out the window with our ridiculous land ownership rules. Property values are severely depressed because we artificially destroy the demand pool for land and homes. If we only allowed people with blue eyes to purchase King Car Iced Tea, that market would be destroyed as well. Even credit cards are hard to get here, and the most common credit option is the loan sharks at Wells Fargo offering those obscene 29 percent loans. Without a working credit market, it is going to be very difficult to turn around this economy.

Our lack of priority is also an issue. We spent $6 million dollars on a corrupt, incarcerated lobbyist named Jack Abramoff to drag out a few years of our flawed economic model that has kept private sector wages depressed and necessitated our bloated, inefficient, unsustainable bureaucracy. Imagine if just five years ago, when the inflation adjusted oil price was $30, if we invested in alternative energy or at least maintained the power plant we have now. We’d be in far better condition. A few weeks ago oil was at $90 per barrel. Now it’s at $110. It has almost doubled since last year when it was in the $60 per barrel range. What is our energy plan other than the disastrous hope and pray model? There are a few debates about nuclear power in the newspaper, but is there one local official doing anything of substance to get us off a dilapidated, gas fueled power plant as we try to deal with runaway gas prices we can't control.

Every dollar spent on the fixed costs of power and gas takes away discretionary income normally spent in bars, restaurants, hair salons and everything else. These power costs kill businesses with the costs and with the consuming public having less money to spend. We fritter away our time on meaningless resolutions and legislative pet projects as this happens. It's almost hard to fathom that we have delegations going to the states fighting to keep its poorest citizens poor, and one useless bill after another introduced in the legislature, but nothing is being done to fix the biggest problem in our economy: the expensive and unreliable power plant. Fixing this problem should be the laser like focus, but nothing is being done other than talk of privatizing the plant to get that albatross off the necks of the politicians. Just last week another power outage destroyed my computer at school. We have digital projectors that will break quicker because of sudden outages. Every business has a similar issue with its capital, and this leads to capital flight. People don’t want to invest in unstable places. By unstable, I am referring to many facets: power, constantly changing laws, the constant worries about the government meeting payroll and increasing crime. Would you want to invest in a tourism business with the increasing crime against tourists? How about opening a restaurant where diners eat in the dark. I’ve had that happen twice in the last month.

We're fighting "the last war" as they say in military parlance with the minimum wage fight. If any of our leaders are serious about fixing this economy, they should work on something that helps everyone: Fix the power plant and put the policies in place to create a real credit market.

Jeffrey C. Turbitt is the language arts department chairman at Saipan Southern High School, as well as an avid scuba diver and traveler. He offers more thoughts in his blog Hypercritical Thoughts at: He welcomes feedback, tips and story ideas at His column appears regularly on Wednesdays.


saipanboonieman said...

if something is done to establish a viable credit market there, i think it is imperative that cultural considerations are also factored into any such polices, like the traditional "credit and forget it" mantra! .... :-p

Marianas Eye said...

Hi Jeff,

I missed something. What happened to you twice in the last month?

"Would you want to invest in a tourism business with the increasing crime against tourists? How about opening a restaurant where diners eat in the dark. I’ve had that happen twice in the last month."

Jeff said...

Eating in the pitch dark in restaurants.

Marianas Eye said...

Ahhhhh. Got it. For some reason, I took "eat in the dark" as "evening dining."