"The stock market?"
"Yes. The market's crashing. Should I be worried?"
Worried? I was cramming for some test in some class I'd never attended. I had never taken economics and usually would puke at the thought of touching a business-section page of the newspaper. I had no clue that Wall Street was at the edge of colossal disaster. Black Monday. All those horrific little numbers and boring businessmen in suits from a decade distant were scared for their collective lives. Still, the stock market stood in some dark crevice of my brain, receiving as much attention as obscure Dutch fiction.
"Ah, haven't heard much about it. I'm sure everything'll be fine."
"Oh, okay. Thanks."
A dozen years later, as the editor of TheStreet.com, I'm at the epicenter of something still wackier than the 1987 crash. Today stocks are scorching higher in ways never imagined, and the 1987 spill is seen as merely a blip, a great buying opportunity. The conservative, thoughtful investors of that era have dwindled to almost nothing, and a great debate rages about what the hell is actually happening down in the canyons of Wall Street.
I have to confess I was ill-prepared for this roaring bull market. I had cut my teeth on Columbia sports, football primarily. When I took up my post at The Wall Street Journal to cover the market I had all the bad words down pat: Crushed, Stricken, Bloody. But it soon became clear (this was spring of 1994, the start of all of the recent fun) that I would have to come up with more ways to say Up, Gained, Soared. And little has changed in the three years since I joined TheStreet.com. Boom, Zowie, Rockin'.
The question I get more than any other is: How long can this go on? Candidly, I've gotten this question with about equal frequency each year for the past three years. Most of the "smart" people started freaking out long ago. And what the heck, they're rich already. They're really freaked now because all the regular types are also getting rich.
Early on I had little trouble defending the bull-market concept. The U.S. had won the Cold War, U.S. companies were leading the way in terms of booming technology, U.S. service companies were dominating Europe and inflation had become as familiar as a three-martini lunch. (That's coming back, isn't it? Danger.) As the months rolled ahead I would point out that we had not approached the insane real-estate craze that gripped Japan in the late 1980s, or the wacked stock-market valuations of the Japan bubble market.
Now, in the waning days of the millennium, the bull-market thread is getting harder to find. Valuations of hot stocks make the Japanese bubble market look like a Little League match. The stupendous gains of the last five years outstrip any period in recorded financial market history. Companies with few fundamental strengths lord over manufacturers of real products and profits. About the only thing not approaching the Japanese bubble is real estate. You can't believe it if you live in Manhattan or Silicon Valley, but the fact is that we are still well shy of the insanity that gripped Tokyo real estate in the late 1980s.
So is this some spectacular fireburst before we all say goodbye to the riches and find ourselves picking through remarkably inexpensive lofts on offer in Tribeca? Many things would point that way, especially the lofty valuations, the giddy mood in Manhattan and the fat salaries being doled out on Wall Street. But I think that the stock market is not so insane as many gray-haired pundits would have us believe.
The fact is that we've experienced amazing structural changes in the past five years. Take a gander at the following combination of events and realities and suddenly you'll start to better grasp what is happening. The Cold War ending mattered, big time. Tons of markets suddenly opened to capitalism?no small deal. This happened just as American companies were moving to the forefront of the hottest industries?a big change from the 1970s. Information technology and telecom exploded as regulatory oversight diminished. And this little thing called the Internet became the most important driver of life-change the Western world had seen since the radio.
On top of all these structural changes the profligate baby boomers suddenly realized they hadn't saved a damn thing for retirement. Shocker, eh? So they start plowing money into the stock market.
Great fundamentals, more money than anyone can imagine and suddenly the stock market is roaring. Toss in a technology revolution and suddenly everyone is reaching for the right way to scream FIRE FIRE FIRE FIRE.
But be careful about that. Most of those people are working off a worldview that believes the manufacturing economy of Baltimore circa 1958 still exists. It doesn't. We've crammed about 100 years of structural and political change into the last half decade, and the stock market reflects that. So the next time someone starts to scare the bejeebers out of you about the market, ask them about all these things happening at once. They won't have an effective answer, and it's likely that the suit they're wearing is a bit more frayed than it ought to be.
Recently I returned to Columbia to see if the woolly ways of Wall Street had penetrated the walls of Morningside Heights. A student wearing headphones approached.
"The stock market? Is it still doing well?"
Dave Kansas is editor-in-chief of TheStreet.com.
The Big Apple State? by Sam Smith What does New York City have more of than New Hampshire, Rhode Island, Montana, South Dakota, Delaware, North Dakota, Alaska, Vermont and Wyoming, all put together?
What do New Hampshire, Rhode Island, Montana, South Dakota, Delaware, North Dakota, Alaska, Vermont and Wyoming have that New York City doesn't have?
Eighteen U.S. senators.
New York City shares two senators with the residue of New York state, which, without the city, is also larger than all these other states put together. In fact, there are 16 states with a combined population less than New York's.
This discrimination is not unique to New York. The larger states of California and Texas have it worse. And Washington, DC, lacks even partial representation in the Senate.
The results of this constitutional, but crazy, apportionment of America's upper house means, among other things, that ethnic minorities are underrepresented in a manner officially permitted hardly anywhere else in American culture. If the Senate had been a school district it would have been under court-ordered busing for the past few decades. If it were a private club, you'd want to resign from it before running for public office.
In fact, the malapportionment of the Senate is perhaps the most important undiscussed issue in the country today, for there's hardly a matter of political importance that would not be affected if that body were to reflect 21st century, rather than 19th century, demographics. Curiously, however, leaders of constituencies that would benefit?with cities at the top of the list?show little interest.
One reason for this is misunderstanding. It's widely believed that admitting new states requires a constitutional amendment and that a state, once created, can't be split. In truth, it's easier to spawn a new state than it was to give women the right to vote or to create an income tax: a simple majority in Congress and the president's signature?plus approval of an affected state's legislature?and the job is done.
Another reason is inertia. Politicians like the status quo because it put them in office. That's why any reform of the political process has to come from outside the traditional system.
Then there's the argument that creating new states is a political impossibility. But it has happened 37 times since the creation of the republic, and in a number of cases?Kentucky, Vermont, West Virginia and Maine?new states were formed out of existing ones.
If you don't care about history, think of the future. In not too many years, white Americans will cease to be in the majority. Even leaving moral questions aside, how much longer will it be politically practical to tell blacks and Latinos that the rules can't be changed to let them into the Senate in some reasonable number?
There has been some talk of dividing California into three states, and even some secession murmurs from Michigan's Upper Peninsula. But the modern idea of urban statehood really got its start 30 years ago in the remarkable campaign for the New York mayoralty and City Council presidency of Norman Mailer and Jimmy Breslin. This was no Warren Beatty flirtation or Donald Trump fantasy, but great political campaigning: colorful, uplifting, funny and?most importantly?full of good ideas. When Mailer and Breslin proposed a Manhattan monorail and jitney buses, they accompanied their arguments with maps and stats, as well as with top, side and interior views of the vehicles in question. They proposed monthly "Sweet Sundays" when the city would come to a halt "so human beings can rest and talk to each other and the air can purify itself." Among their other planks: restoration of Muhammad Ali's world championship, vest-pocket neighborhood colleges and zoos, free bicycles in the parks, a U.S. Grand Prix in Central Park and weekend jousting matches for teenagers. Mailer and Breslin understood that real politics isn't just a matter of management but an expression of a community's soul.
Their two most important ideas, however, were that New York City should become the 51st state and that, as a consequence, neighborhoods would become the self-governing equivalents of towns and villages.
One of the spinoffs of the campaign, Peter Manso's book, Running Against the Machine, inspired this then-young journalist to write an article arguing that DC should become a state, which in turn led several months later to the formation of the DC statehood movement. Despite our city's small size, the fall of Marion Barry, ethnic prejudice and all the other problems faced by weak and debilitated colonies, the movement got far enough to win editorial encouragement from The New York Times and The Washington Post, hold a constitutional convention, attract the transitory enthusiasm of presidential candidate Bill Clinton, win a respectable number of votes in its one House test and even elect Jesse Jackson to the only electoral office he ever held, albeit briefly?the position of surrogate or "statehood senator," a popularly elected lobbyist for prospective states. The DC Statehood Party, which recently merged with the DC Greens, held a City Council seat for more than 25 years and currently has one of its members on the school board.
If citizens with such little clout those of DC can get this far, imagine what the powerful folk of New York City could do about their lack of equitable representation in the U.S. Senate. Imagine a Million Mensch March?led perhaps by Ed Koch and Al Sharpton?descending on Washington to press the cause, a cause that's not just that of New York but of every American city and every group frustrated by the undemocratic hereditary power of the landed states that got there first. Urban statehood is the sine qua non of a better America. Let a dozen new states bloom.
Sam Smith is editor of the Progressive Review and author of Sam Smith's Great American Political Repair Manual (W.W. Norton, 1997).