The day Ronald Reagan was inaugurated I was slumping in my desk chair trying to remain at least half-interested in the news of Tehran hostages coming home. The teacher droned on about the importance of the occasion. I was in the 5th grade and far more interested in the Suns or -- and this was relatively new -- girls.
If the teacher had any salacious details of an international conspiracy of a pre-election arms-for-hostages deal, perhaps he could have made the news more interesting. But we didn't know who Col. Ollie North was back then. We only had one famous colonel back then, and he made chicken.
We had no TVs in our classroom, no slickly produced news show for kids. We had newspapers, and I read them all. The sports pages, anyway. They were stacked higher than eye level in the back of the room. They were my Internet.
For reasons I'll never understand I stumbled onto a story about the U.S. banking system being on the verge of collapse due to Latin American countries defaulting on their debt. Apparently all the U.S. banks had thrown considerable money to developing countries to the south and were now feeling the heat. Interest rates were through the roof. American consumers had become staggered by stagflation and incomes that could not keep up.
Living on the edge of the Great Suburban Experiment called the Dobson Ranch, now quaintly referred to as "far west Mesa," none of us could really comprehend these struggles. We would go home to our newly minted tract homes on our freshly paved streets. We were impervious to these kinds of problems and I think we grew up thinking that's how it would always be. We lived in the East Valley, royal subjects of the new Highway 360 (complete through Dobson Road!). We walked to to the mall and drowned out the bummer white noise with Orange Juliuses and video games.
Of course, we had no clue that our grand experiment was being foolishly funded by easily assumable fixed mortgages and savings and loans, which keyed exponential U.S. home lending from $680 million in 1975 to more than $1 trillion by 1988. That was the year we first heard the kind of price we would pay for expanding on an economy based solely growth: A $160 billion real estate bubble bursting hangover.
In Nov. 1988 Barron's Magazine ran a cover with the expansive Phoenix landscape on display: "Phoenix: Boomtown gone bust?" The locals decided to disparage the magazine when it should have been a call to reality to slow expansion and promote economic diversity.
We survived that mess by ignoring problems. We killed light rail, but for all the wrong reasons; instead of seeing a need for public transportation to deal with sprawl, we built more freeways. Instead of building on a little-known history in downtown Phoenix, we tore our history down and constructed sports stadia.
And we expanded. And expanded. And expanded. And expanded. We chewed up farm land -- agrobusiness uses up all our water, we argued -- to churn out paved roads and red-tile roofs. We actually made this place hotter by creating one of the world's massive heat islands. In more endearing times it would be considered a global marvel.
We still thought we were impervious because Phoenix is a metropolis of perpetual growth. Economic downturns are tempered by the fact that people are constantly moving here. We replace bodies at about a 3:2 ratio each year.
Then Nov. 2005 arrived and the housing bubble showed clear signs of bursting. The Valley's greatest economic and population growth -- circa 2001 to 2006 -- was about to blow up in our faces. It was just a cycle, we were assured by Realtors, many of whom can now be found lining the halls of the large job fairs taking place at a convention hall near you.
What we are seeing is a total collapse of a faulty system, and none of us who grew up here are prepared for anything else. We still have this lifestyle of red-tile roofs to call our own ingrained in our deepest fiber. We haven't figured out who will pay for them and if there will be any skilled construction workers left to build them (perhaps we can re-import them from Mexico), but so many of the millions in Greater Phoenix are just waiting for the next economic uptick so they can fulfill their Costco-inspired dreams of a bigger living room and a bigger hi-def TV.
That's how we think around here. No one rides the economy cycles like Phoenix. We're always waiting for the next uptick. We're not rural Ohio. We're not tied to the financial whims of auto manufacturers or industry in general. As soon as the Fed lowers interes rates and taxes are cut, we're back to reaping in the financial windfall by building more homes on cheap dirt and offering promises of reinventing your life. There may not be a job for you here, unless you want to sell real estate or can throw down a hammer on a nail, but we don't put that in the brochure.
We ride the porpoise. We are the porpoise. I am the porpoise.I don't remember a time when I wasn't optomistic about my future here in Phoenix, but I can't see the sky anymore.
The problem is that next uptick may miss us this time. Housing is no where near the bottom and we have nothing else, no other financial engine to sustain us, to give us new life. The Fed will have to start raising interest rates to stave off inflation.
For the first time in the short history of this city we are looking at a mass exodus, a reduction of people. Where they will go I have no idea. Maybe Texas. But they won't stay here because without some kind of quick infusion of capital to fuel real estate, our sails are dead.
You know. Creeks. No paddles.
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