Wed, Oct 08, 2008 - Page 9 News List

Declining US economy has political fallout

People in the small town of Roanoke are worried about plummeting retirement accounts, jobs and health care, and as the Dow takes a dive, Barack Obama’s stock rises



Driving into Roanoke you see the 21-storey Wachovia building imposing itself on the skyline like a gigantic illusion of economic stability. It is the town’s only skyscraper so the bank’s name can be seen for kilometers in any direction. But Wachovia, the area’s fourth-largest employer, is effectively no more. On the day I arrived it was the subject of an emergency rescue, crippled by bad debts.

Just across the street the head of Roanoke’s regional chamber of commerce, Joyce Waugh, was wearing a badge, courtesy of a local charity, saying “I feel good.”

Even as global capitalism comes crashing down all around, you get the feeling that Waugh, like Roanoke itself, is taking it all in her stride.

Ironically for a valley town wedged between the Blue Ridge mountains and the Appalachians, the local economy encounters few peaks or troughs.

“We feel it but we don’t go to the extremes,” Waugh said. “During the savings and loans [the failures of financial associations in the 1980s and 1990s] we felt it a little.”

Once a railroad town, Roanoke now has no large-scale industry. The hospital, Carillion, is the biggest employer, but small businesses dominate.

“If this is prolonged it will be a real problem,” said William Figaro, head of Grow Inc, who arranges capital investment for small businesses. “But for now the problem’s more psychological. They tend to be growing well enough to sustain the position they are in, but are worried about the future.”

For most people in the town, said Waugh, the financial crisis seems oblique.

“Freddie and Fannie Mae were everyday people’s loans,” she said, referring to the two mortgage companies effectively nationalized last month. “But these other ... [investment firms that are collapsing] ... people don’t really have a connection with that. They don’t quite understand it.”

The local Republican member of Congress Representative Bob Goodlatte, voted against both of last week’s bail-out bills, claiming that most of the constituents who had contacted him were against it.

Figaro said he accepted the bail-out but didn’t back it.

Waugh sounded lukewarm to Congress’ response.

“It seems oxymoronic for this to be the fix. People have a hard time figuring out why the heads of organizations that are making big bucks are walking away with big bucks,” she said.

While Roanoke may not plumb the depths, some residents nonetheless are struggling to stay afloat. Figaro has found he can no longer raise money through banks and is instead finding capital via individual investors, who demand higher interest rates.

“It’s tough getting capital. Some of our members are having cash flow issues. Maybe they were going to get another piece of equipment and now they won’t. They’re putting off travel. It’s off all over,” Waugh said.

But for the time being, only slightly off. At Pop’s Ice Cream and Soda Bar, Anna Robertson has seen more and more people paying with credit cards for ice-cream. Waugh has noticed the restaurants are emptier than normal.

At the small business awards ceremony last Tuesday the mood was neither one of being in denial nor desperate. Home sales this year are down 18 percent; house prices have fallen just 2.5 percent. But the number of houses on the market is also falling, meaning people are buying.

“It’s much better than other places,” said Laura Benjamin, of the Roanoke Valley realtors’ association.

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