Eagle to NYC: Wall (Street) to Wall (Street)
Vail, CO Colorado
EAGLE, Colorado ” Questions being asked following this week’s bleak Dow Jones industrial average drops, from Eagle County to New York City, are daunting and endless.
How and why did this happen? Who should be responsible? What should be done?
And here in the Eagle Valley ” more than 1,900 miles away from Wall Street in New York City and about 1,800 miles away from Washington D.C. where legislators craft bail-out plans and place blame ” the main question is how will the current economy affect local residents?
Ben Bernanke, federal reserve chairman, spoke about the consequences the average Joe will face as a result of the stock market upheaval when discussing the first bail-out plan.
“If this is not done, it will be of significant adverse consequences for the average person in the United States,” Bernanke told a packed Senate banking committee, according to national news reports.
But what does “significant adverse consequences” mean to the average person?
Analysts say that the tight credit markets, due to banks not having the money to extend loans, or not giving loans to save the money they have, will in turn lead to less businesses being able to grow or even operate.
The Bank of America, for example, recently declined lending increases for some U.S. McDonald’s franchisees, despite the two companies’ long history, according to Bloomberg.com. On a smaller business note in August, 67 percent of small-business owners said they’d been affected by the credit crunch and 79 percent of small-business owners are anticipating a flat economy or recession, according to surveys by the National Small Business Association.
With loans being harder to come-by, businesses start laying-off employees and shutting down. Job loss is the consequence, decreased consumer spending ensues, and a vicious cycle begins on Wall Street ” both the one in New York and the one in Eagle.
This week, the Enterprise visited with several property owners on Eagle’s Wall Street, who discussed how they have been affected by the economy.
Bill Jones, a retired district court judge who has lived in Eagle for several decades, got out of the stock market several years ago when he built a vacation cabin in Fulford. He and his wife, Margaret, split their time between their modest home on Wall Street in Eagle and the mountain cabin.
“It’s not going to affect us much,” he says of the current national turmoil on Wall Street. However, like everybody else in Eagle, the Joneses are impacted by increasing prices.
“When gasoline goes up, everything goes up … being on a fixed income, it’s kicking my butt,” he says.
The 3 percent annual inflation increase figured into his retirement check doesn’t really keep up with the cost of living in Eagle, Jones notes.
“That’s not enough around this town. It is very expensive to live here,” he points out.
His son and daughter-in-law had a very difficult time locating a home they could afford in the valley.
The Jones have made some lifestyle adjustments. They used to drive to Glenwood frequently. That’s not the case any more.
“When we go to Rifle to get the snowmobiles fixed, we make a trip out of it,” says Jones, noting that they try to consolidate shopping and errands into a single trip.
On the other hand, Jones says that while sitting on the district court bench, he saw the economic mess coming for a long time. He recalls presiding over hearings where people were struggling to pay off loans at a 24 percent interest rate for properties they were building at Beaver Creek.
“This mess started clear back with the Carter administration … and it didn’t get changed by Carter, Clinton, or the Bushes,” he says, “This unsound situation the market got itself into is ridiculous.”
He’s not a fan of financial parachutes for the CEOs involved in the failing banks.
“There’s not a CEO worth a damn that earns $2 million a year. How do you justify that?” he asks.
Even with the recent spate uncertain financial news pouring out of Wall Street, N.Y., Joe Frasco believes the future is promising for business on Wall Street, Eagle.
Frasco, the owner of Lights on Broadway, is contemplating development on seven city lots he owns on the east side of Wall Street between Third and Fourth Streets. Frasco is looking at a three-story, 45,000-square-foot complex that would include retail on the street level, offices on the second level and residences on the third level.
As a 15-year resident of the valley, Frasco believes this area isn’t hit as hard by downturns in the national economy. He still has faith in his plan.
“There are very few safe places in our country like this one,” says Frasco. “I’m optimistic our valley will be among the first places in the country to see signs of a strengthening market.”
He also sees parallels between the two Wall Streets. Specifically, he cited 20th century infrastructure trying to meet 21st century needs.
One of the challenges Frasco faces with his proposed building project is old water and sewer lines that need to be upgraded. That’s a pricey proposition; and these days both investors and town officials are being extra cautious about where they allocate dollars.
“Over the years the infrastructure has deteriorated to the point that it can no longer support the growth needed to meet our community’s needs and goals,” Frasco says.
In the long term, Frasco thinks his development on Wall Street will be a financial boom to the town, not only for the increased sales tax opportunities it presents. He believes the expansion downtown Eagle to Wall Street will bring down real estate prices on Broadway and make redevelopment more financially feasible.
Wall Street residents Nicole Magistro and Zach Locke, a young married couple, each run their own businesses. She’s the owner of the Bookworm bookstore in Edwards; he imports and sells wine. Neither is certain where the economy is going to take them.
“We’ve never experienced anything like this as adults. It’s kind of a scary thing,” says Magistro, “We sort of feel like we just have to sit back and wait, and see what is happening.
Magistro says it’s hard to tell how the economy is affecting the bookstore. October is the off season in any ski resort community.
“I don’t think we will be able to tell until Christmas,” she says.
“The resort economy is so different ” it is just hard to gauge how we’ll be impacted. That’s why I feel my only choice is to sit back and wait,” she says.
Her friends and customers are talking about the economy. “Everybody around is definitely concerned. Nobody is an expert,” she observes.
Locke’s business has already felt some economic impacts, given the devaluation of the dollar over in Europe.
“I import a range of wines. It seems like the higher end is already slowing down for a bit, but not entirely,” he says.
Like many people, the young couple has money in stocks, and 401k accounts.
“It’s not fun to see those fall in value,” Locke says. He says the couple’s primary investment, like most residents of the valley, is in their house. They are the owners of a stately, historic structure on the corner of Third and Wall streets.
“We certainly don’t like to see the market stop, or potentially slow,” he says.
The rising cost of gas has prompted the couple to reconsider their mode of transportation. Locke’s job requires extensive travel. They just purchased a Volkswagen Jetta turbo diesel.
“It’s great ” 40 miles to the gallon,” he reports.
Magistro has been lobbying the staff at ECO Transit to add more frequent buses to Edwards to the schedule. “I could ride the bus to work if there were the right stops,” she says.
Magistro says the couple is more likely to stay in Eagle when they get home from work, rather than constantly heading upvalley. Noting that they are a long way away from retirement, the couple says they don’t fear that their finances are going to vaporize.
“We have to just still live our lives, and enjoy the time that we do have. We can’t be panicked,” says Magistro.
Many years ago, Bruce and Sue Hasbrouck starting putting away money for their kids’ college education.
Today, daughter Anna is a sophomore at Montana State and the couple is hoping recent Wall Street woes won’t sap their hard-earned savings.
“Hopefully, the college fund won’t be too affected. We did have plenty in there, when she started,” says Bruce Hasbrouck.
The Hasbrouck family has made their home at the corner of Fourth and Wall streets for the past 23 years. Bruce and Sue figure they will have their home paid off and their youngest child through college in the coming decade. Their plan was to retire once those benchmarks are met. With today’s alarming financial headlines, the couple hopes that plan will hold.
Bruce Hasbrouck says he and his wife emphasize keeping their money invested in secure areas. They don’t play market trends and they hope to weather the current financial storm without taking too hard a beating. That also holds true for their professional goals.
Hasbrouck, a former member of the Eagle Town Board, is a contractor. These days he’s primarily doing remodeling work. He is hearing from his suppliers that construction business is way down.
“But my business has been busy,” says Hasbrouck. “There’s not a whole lot of new housing going up right now, so I hope the remodeling keeps up,” he says.
Hasbrouck says he isn’t keeping a daily watch on his investments, knowing that the short-term news may be bleak.
“The stock market is going to do what it’s going to do,” he says. “The stock market is going to fluctuate. We all just hope it will go in a better direction.”
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