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AFTER THE FALL

Just as September 2001 shook our faith in national security, September 2008 dealt a body blow to our financial security. Ç The country was already mired in a housing bust and sluggish recession when the Great Collapse of '08 struck: the demise of Lehman Brothers; an $85 billion federal rescue of AIG; nascent steps toward federal bank and auto bailouts as huge chunks of Wall Street wealth evaporated. Ç A year later, we're still picking up the pieces as we battle rising, double-digit unemployment and the likelihood of more bankruptcies, more soured real estate loans, more bank failures. Ç But as we do rebuild Ñ slowly Ñ the new America emerging has a decidedly different face from the free-spending, easy-credit, devil-may-care one left behind. Ç We are a changed generation. Leaner. Tight-fisted. Less trusting of both government and business. Dining out a few times a week is out; staying in with pizza and a DVD is in. Ç Jim Parrish, assistant director of USF's Small Business Development Center in Tampa, describes the financial collapse as a watershed event in altering spending habits and lending patterns, perhaps for the next 20 years. Ç Parrish had been baptized by fire, starting out in the financial services industry by helping owners of troubled real estate during the 1972 recession. In contrast, he said, many in today's work force had the ill-conceived notion that "recessions weren't normal events. They assumed the world as they know it is the world as it's always going to be." Ç "If I'm a 45-year-old or 50-year-old running a financial institution, the last time there was a recession anything like this in the country, I was probably spending most of my time partying because I was 20," he said. Ç There's no consensus whether new attitudes are part of a short-term economic cycle or something deeper.

However, evidence is mounting that we're profoundly different:

We're saving more. The savings rate has jumped from 2.6 percent a year ago to 4.2 percent, and economists expect it to reach 6 percent.

Millions who have lost their jobs or had salaries frozen or slashed are hard-pressed to save, but others with more disposable income to spare aren't shopping or dining out as much. Based on tepid back-to-school sales, retailers are anticipating another lean Christmas.

- We're cutting back to the basics. Ron Russell, a machinist who lost his job with the closure of the Hav-A-Tampa cigar plant in Tampa, is eating chicken legs instead of chicken breasts. He and his wife don't eat out much. They've canceled their cable subscription, but are keeping tethered to the Internet at home, an indispensable tool in these times.

- Our employers are cutting back, too. The Conference Board last week predicted the lowest increase in company salary budgets since it began its salary survey 25 years ago. Translation: Don't look for much of a raise in 2010.

- We're less mobile. Worker movement between jobs is down, as is the flow of retirees to Florida. Housing prices are cheap enough for Northerners to start migrating to Florida again Ñ assuming they can sell their houses up North first, and assuming they can find a job once they arrive. The fact Florida is losing population for the first time post World War II indicates that hasn't happened yet.

- We're less trusting. Instead of advancing credit to customers, more vendors, suppliers and other small businesses are seeking cash-on-delivery. "We don't bill 30 days anymore; we can't afford to," said Doug Towne, a small-business consultant in Largo specializing in disability issues.

- We (we the people, not the government) are borrowing less. Some are more gun-shy about racking up credit; other consumers and small businesses that urgently want to borrow have found the credit gates that slammed shut last year haven't reopened.

"I think we're getting back to a period of people living within their means Ñ and that's a good thing," said Tom Mosley, Tampa Bay area president for Whitney Bank.

"People will probably walk away from this, I think, with a very healthy aversion to credit and not be so ready to pull the trigger to borrow money if they don't have to borrow money."

Not that they could borrow money easily if they wanted to.

There are no signs that access to easy credit is coming back any time soon. According to Equifax, credit card companies have issued 39 percent fewer cards this year. Banks insist they're open to lending to qualified businesses, but terms and qualifications remain tight.

Thanks to a federal government program to eliminate bank fees and raise government guarantees, the volume of Small Business Administration, or SBA, loans in the area is up 50 percent from February lows. But the fix is temporary and lenders remain incredibly selective.

Consider that during the boom years, Bank of America was approving up to 40 SBA loans a month in the bay area, said Parrish of the Small Business Development Center in Tampa. "Now, there is no lender in the Tampa Bay area that averaged one loan a month this year," he added. "Not one.

"Finding money is really, really difficult. It's definitely the worst time in 25 years."

The trickle-down effect on businesses is that cost-cutting has become more ingrained than ever. Mosely of Whitney Bank said he notices more companies renting equipment instead of buying. More are renegotiating leases with their landlords at better terms.

- - -

An old saw in business is there's no better time to retool than during a recession. The deeper the downturn, the greater the opportunity to discard the old way of doing things and rely on forced creativity to do things better.

The result is what some are calling the "reset economy" or, if you prefer, "the new normal."

Bill Gross, who runs the world's biggest bond fund at Pacific Investment Management Co., or PIMCO, offered his vision on how our economy has radically changed in his September investment outlook.

The "new normal," Gross writes, is one in which global economies grow very slowly "as opposed to growing like weeds"; in which profits are relatively static; in which the government plays a significant role in terms of deficits, regulation and economic control; in which homeownership dips and rentals rise; in which "the consumer stops shopping until he drops and É starts saving to the grave."

A report last week from Financial Finesse, a financial education firm based in Manhattan Beach, Calif., echoes that theme.

The firm, in an analysis of users of its online financial planning program, found levels of financial stress rising from last year, with a record 82 percent of calls to its help line focused on short-term concerns over debt and money management problems.

But the report ends on a bright note, the dawning of what it calls "a new era of financial responsibility."

"We're seeing more callers willing to make long-term changes on how they manage their money, so that they can become more financially secure and avoid financial problems in the future," the report concluded.

"We have reason to believe that this financial crisis is going to create a whole new attitude toward money that will prevail for many years to come."

In other words, it sounds a lot like how America used to be.

"Everything always resets," said Russell, the former Hav-A-Tampa machinist. "I don't think we have the memories like our grandparents did from the Depression, because if we did, this never would have happened.

"They would never would have run up $50,000 in credit card debts; Depression-era kids paid cash."

Jeff Harrington can be reached at jharrington@sptimes.com or (727) 893-8242.

* * *

How the bay area landscape has changed

In some ways, September 2008 seems like ancient history. After all, Tampa Bay has hosted a Super Bowl and a World Series since then.

But the fallout from last fall remains:

- About 1 million out-of-work Floridians are in the job hunt. That doesn't include those with frozen wages, part-timers who can't get more hours and "discouraged" workers who are no longer actively looking.

- Twelve percent of Florida mortgages were in foreclosure during the second quarter of this year, the highest rate in the country.

- We have 79,000 fewer construction jobs than a year ago, 99,000 fewer jobs in trade/transportation/utilities (a category that includes auto dealers and auto parts stores). Every state in the country shed manufacturing jobs over the past year. Florida, a state that was never a mecca for manufacturing, lost more than 42,000 manufacturing jobs.

- Walter Industries closed Tampa Bay touchstone Jim Walter Homes, joining a long line of home builders to go out of business. Entrants into bankruptcy court over the year included formal wear chain Sacino & Sons, Kearney Construction, Masonite, Creative Loafing, Taylor Bean & Whitaker and Ernie Haire Ford.

- Some of the biggest financial institutions operating in Florida have failed and/or been absorbed by others: Wachovia, BankUnited, Colonial, Washington Mutual. Florida's biggest bank now is Wells Fargo, which bought Wachovia when it was on the brink of collapse.

Jeff Harrington, Times Staff Writer

* * *

DIAGNOSING THE ECONOMY

1 million Number of jobless Floridians

$7.5 trillion U.S. public debt

2.1 million Floridians receiving SNAP benefits (food stamps)

40% Area home sales involving foreclosure or pre-foreclosure

50.6% Percent of Tampa Bay homeowners whose mortgage is greater than the value of their home

4.2% U.S. savings rate

416 Troubled banks on the FDIC's watch list

50,000 Estimated loss in Florida's population year over year

Sources: U.S. Treasury; FDIC; U.S. Bureau of

Labor Statistics; Commerce Department;

First American CoreLogic

* * *

Sept. 30, 2008

"A deal that was done last week doesn't exist today. Things are

just frozen up."

Ken Thomas, Miami-based bank analyst, on the credit markets seizing up

Dec. 3, 2008

"It will be 2011 when the

credit channels are completely unblocked and the U.S. economy beats powerfully once again."

Sean Snaith, University of Central Florida economist

Jan. 30, 2009

"It's like a vacation if you're a soldier in the war zone."

Tom James, CEO of Raymond James Financial, on hosting the Super Bowl at Raymond James Stadium in the midst of the financial crisis

April 10, 2009

"What we're starting to see is glimmers of hope across the economy."

President Barack Obama

June 15, 2009

"This crisis was born in part because households around the world took on too much debt. Demand for credit is falling as people live within their means."

U.S. Treasury Secretary Timothy Geithner

Sept. 3, 2009

"The recovery act has played a significant role in changing the trajectory of our economy. ... Instead of talking about the beginning of a depression, we are talking about the end of a recession."

Vice President Joseph Biden

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