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Each day, several sixty-foot moving vans double park on the streets of San Francisco's most exclusive neighborhoods. In most cases, the crew is loading the van. Young professionals are leaving the city where an internet gold rush ran unabated for several years. Forty thousand young workers lost their jobs in the last two years. Almost half have left San Francisco. Had they remained, this city's unemployment rate would be near 10 percent, rather than the current 6.5 percent. Thirteen million feet of office space lies empty -- a ten year supply. This city, like the country, has sobered up.
In the hip South of Market area, where internet companies flourished, half of all office space is now empty. During the boom, office landlords demanded several hundred thousand stock options, in addition to absurdly high annual rent. Apartment owners who had a dozen applicants for every rare vacancy are now experiencing 15-25% vacancy rates.
The internet-bust, the destruction of New York's World Trade Center, and the recent revelations of corporate gross misrepresentations have shaken for the moment the America's economic confidence. The economic earthquake is not over. America's consumers are $1.6 trillion in debt. Only the housing market has been resilient. And home equity loans have in turn helped maintain solid retail sales. But that could change. A weaker dollar will eventually require higher interest rates to attract foreign capital. When the housing bubble pops, then even the retail sector will weaken.
So is this a economic doomsday scenario?
Far from it. We are in store for a difficult time. But it will strengthen this powerful country. The terrorist attack has already helped to firm-up our security priorities. The criminal enforcement of white collar crime will become a priority. Swindling investors and selling drugs will become equivalent crimes -- with commensurate punishment. As it should be, as it should have been. To become profitable, a business will have to show a true profit.
All these measure should have been obvious, but they weren't.
For ten years, following the end of the 45-year cold war, we lived as if we had defeated our last enemy. At about the same time, the personal computer was introduced. Futurists heralded the beginning of a new era. We in fact became infatuated with the future. Giant companies were built that would have future profits. Investors invested in future earnings. Workers were paid with options that would pay off at a future date. Then by the end of the nineties corporate executives where under pressure to start turning profits. Too many manipulated corporate earnings to show just that.
But, to borrow a cry from the sixties, "the garden party is over." First, the war is not over. America has enemies, brutal and pathological, that target intentionally American citizens. Second, America industry must now be effective, efficient, and truly profitable. As for the new technologies, the promise of future profitability will no longer command investor excitement.
The symbol of San Francisco is the phoenix. It is now a suitable symbol for the country. We shall rise above the current turmoil, stronger, morally, economically and militarily. But we can only hope that we will experience our new strength, sober. As with any great intoxicating experience, the hangover is as painful as the pleasure from the night before. And, a few days later, both the binge and the hangover are bittersweet memories. You vow never to go through it again. Let's hope we don't.
Award-winning TV producer, talk show host, and Republican leader Arthur Bruzzone has written over 150 political articles for national and regional media, and has commented on political issues for American and European television and radio networks. His articles and columns have appeared in the Wall Street Journal, San Francisco Chronicle, San Francisco Examiner, Campaign & Elections Magazine, among other publications.
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