"Forget everything you think you know about the direction of the American economy, about our growing need for foreign oil, about the rise of the service economy and the decline of American manufacturing. The story of the next 30 years will not be a repeat of the last 30."
One of the most respected voices on Wall Street, Meredith Whitney shot to global prominence in 2007 when her warnings of a looming crisis in the financial sector proved all too prescient. Now, in her first book, she expands upon her biggest call since the financial crisis.
Whitney points out that it wasn't just consumers who binged on debt for the past 20 years but state and local governments, too. She explains how the fiscal sins of the past are beginning to transform the U.S. economy along regional lines. And she shows how we are moving into a new era in which wealth, power, and opportunity flow away from the coasts and toward the central corridor.
The housing boom was initially great for states such as California, Nevada, and Florida. State and municipal coffers overflowed, unemployment shrank, and local governments spent their tax revenue windfalls on pay hikes and pension increases for their public employees. But when the boom dried up in those parts of the country, so too did the tax revenues, forcing tax rate hikes and cuts to essential public services - especially education and infrastructure.
In contrast to those doom-and-gloom headlines, a much different trend was developing in interior states such as North Dakota, Indiana, and Texas. They survived the housing crisis relatively unscathed, avoiding mass foreclosures and budgetary chaos. As a result they've had the money to retrain workers and offer tax incentives to companies willing to relocate. Coupled with the recent booms in natural gas and oil extraction and a resurgence in manufacturing, these states are poised to become the new powerhouses of the American economy.
Whitney offers a sobering vision of the next few decades, with the coastal states continuing to struggle while the central corridor continues to thrive. She explores the consequences of roughly half the country stuck in a vicious cycle of decline while the other half enjoys a virtuous circle of growth. Whitney also offers practical ideas to help the struggling parts of the country - before the fate of the states becomes irreversible.
©2013 Meredith Whitney (P)2013 Tantor
I should have listened to the reviewers, but at least it is a decent rehash about what ails the USA. What the author proposes to solve the problems are warmed over, better yet, tepid discussions of Reagan era, totally progressive mainstream Republican solutions: Good budgeting, privatization and taking on the unions.
In her analysis, the reason the coming prosperity stems from her growth corridor not doing the stupid things (debt: present and future) that happened in the housing boom states. She seems to be oblivious to the reality that the housing bubble really did happen in an easy money bubble caused by the Federal Reserve and people in her line of work, lined their pocket with this lucre.
Booms and busts happen, and just because politicians and investors in search of yields do stupid things in good times, doesn't address the structural problem that lingering consumer debt is a more serious drag on present growth (260% of GDP) than wishing and hoping those slothful politicians can or will do a better job next time.
The author self congratulates on regular basis her calls on doom and gloom and has a very simplistic argument for states like California that are too much in debt and less tax base. She totally discounts the role innovation plays in economic growth and development. Housing as well has started to recover in California. I would bet on California any day instead of central corridor states like Colorado, Indiana or Montana or north Dakota.
I read the reviews and hoped for better from Whitney. I guess she's just too much a Republican but instead of sticking to reality, she puts in a lot of loaded words like government "handouts" and "outrageous" pension payments. She pays lip service to the fact that these are simply competing interests, legitimate on all sides, but can't seem to help herself from creating good guy taxpayers versus greedy pensioners. (I don't even have a pension and I found her ragging on teachers, firefighters and police retirees pretty distasteful. God forbid a teacher or a firefighter or a policeman might retire anything but lower middle-class, apparently. Hearing this from a Wall Street person is just...ugh...Yeah, distasteful.)
Also, apart from her point that the states which were dogs during the housing boom are now doing great because of the oil and gas boom, there's really not much here beyond the painful and difficult pension problem. She seems to have forgotten her early days as an oil and gas analyst (according to Wikipedia) because she really appears to think that an oil and gas economy will transform places like Texas and Nebraska in some fundamental way.
On top of her loaded and politicized terminology, which makes it hard to trust her, this idea that O/G is ever anything but another boom-bust cycle is just weirdly naive. Nebraska will do great as long as the price of oil stays high enough to go for the expensive technology--this is a price per barrel calculation every company makes, something she knows perfectly well. All that has to happen to Nebraska is for the price to fall, with some big new producer or technology or political shift, and that has happened over and over. So let's hope for Nebraska's sake they ARE being frugal now.
Yeah, you can't get a hotel room in Midland TX right now, but I've seen it a ghost town, then a boom town, then a ghost town, then a boom town again. I guess it takes seeing that happen on the ground a few times before you truly comprehend the boom bust cycle of O/G. There is nothing else driving the economies of these middle states she loves so much, so good luck to them when it busts.
I actually tried to read the hardcover version of this book first and decided to try the audiobook to see if it improved my perspective. I didn't finish reading the actual hardcover because there are so many statistics that I began to feel I was reading a scientific journal. I was happiest with the audio book. The book is a compendium of dry facts and figures which might have made my head explode if not for the expertise of the narrator. Ms. Whitney's book is part topical and part historical which makes reading it in book form a little jarring and slow. It seems she can't decide if she should be the statistician she is, or rope us in by colloquial banter. It often times feels as if it is 2 books. All that being said, when Ms. Whitney is less formal, she presents an interesting look at how the corridor states, the fly-over states, have survived the economic downturn since 2008 in much better condition than the rest of the country. Is she right? Thought provoking, I felt. Time will tell.
I would have had Ms. Whitney drop some of the statistical double-speak.
Clarity! She did an excellent job of keeping the dry material going, and switching in and out of the statistics with ease.One paragraph alone, had at least 6 sets of trillion dollar figures.
No, way too much to digest.
Information is excellent
It stopped, eventually.
No, just cringe
For those really interested in the subject, I recommend the paper version. You'll want the numbers, anyway, and will spare yourself hours of painful narration. It's really too bad more authors don't narrate their own books; especially those with a good deal of experience in the media.
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