“YOU CAN GET ANYTHING THAT YOU WANT AT ALICE’S RESTAURANT”

1/27/09

This morning, the hosts of a WGN-AM 720 talk show chose as a topic an article in today’s Wall Street Journal concerning waiters’ and waitresses’ now being required, at certain restaurants, to bus their own tables as store managers seek to cut costs. The program, generally one of the lightest of WGN’s typically light fare, featured an assortment of waiters and waitresses calling expressing their opinions concerning this latest development and relating some of their experiences. Light and anecdotal, but nonetheless entertaining and informative.

One of the callers was a waitress at what she described as an upscale Oak Brook restaurant (For those of you who don’t know the Chicago area, Oak Brook is a VERY upscale suburb.), and she spent most of her time comparing and contrasting her experience there with her prior experience at the Maggiano’s Little Italy location in Oak Brook. As many of you know, Maggiano’s is a nice place (“good food, everyone minds his business”…okay, maybe not as nice as Bruno’s in the Bronx, but a nice place nonetheless), and isn’t cheap, but only the Quinns would consider it an upscale establishment. The waitress’s main point was not nearly as interesting to me as her response to one of the host’s questions regarding how she was doing, given the economic situation. She responded that she hasn’t felt much of the economic downturn because Oak Brook, being a wealthy community, hadn’t felt much of the recession and because much of her business was corporate.

Two major observations are in order here. This woman’s job puts her in a good position to detect economic trends, a far better position than those of about 99.5% of people on Wall Street. If she is right, and Oak Brook has not slowed down, it means to me that we are in at least as bad an economic situation as I had thought. Why? Let’s use Oak Brook as a surrogate for any, or all, “wealthy” communities throughout the country. If indeed they haven’t been hit, it’s just a matter of time; they merely haven’t been hit YET. Why do I say that? There are two reasons. First, many, if not most, of the people who are considered “rich,” by themselves and by casual and not so casual observers, are not rich at all. Today, when we consider someone wealthy, usually because of appearances or self-delusion, we don’t mean that s/he is wealthy but, rather, that s/he has access to liability creation. That ability to create liabilities is gone or soon will be. Second, even those who are, or were, truly wealthy have been hit hard in their real estate and stock portfolios. Don’t believe the commonly held, yet ludicrous, proposition that the “wealthy” somehow know a great deal about investing money; witness the Madoff fiasco. His “victims” weren’t working stiffs. Not only have those who had some legitimate claim to being wealthy been hit in their portfolios but, in many cases, their jobs are in jeopardy. Don’t believe in the myth that those who are wealthy are necessarily smart, hard working, or immensely talented. Given the structure of our post-free market economy, many are none of those. They are simply well connected, lucky, or were audacious in an economic set of circumstances in which audacity was well rewarded. Their true economic value, under normal economic circumstances, is a tiny fraction of what they managed to accumulate under the Alice-in-Wonderland economy that we had experienced, until recently, for the last twenty years.

If Oak Brook and towns like it do remain largely unscathed, it is only a matter of time before they are, for lack of a better term, scathed. That shoe, then, is yet to drop.

My second major observation: If our waitress friend is wrong about the health of the economy of Oak Brook and it has indeed already slowed down, her mere perceptions say something. As I said above, given her position at the one of the fulcra of the economy, her perceptions are, if they are right (and not just in this case), far more valid than those of the average seven or eight figure Wall Streeter. If her perceptions are wrong, however, they are not nearly as valuable as the equally mistaken perceptions of the typical Wall Street culprit because she is not in as good a position to act upon those incorrect perceptions, largely due to her having to work like a slave for a merely decent (or, in better restaurants, slightly better than decent) livelihood while our Wall Street Wonder Kids make large multiples of what she makes for pretending to be important, telling each other how brilliant they are, and decimating venerable institutions of American finance with their latest bright, or outright criminal, trading and investment schemes. But I digress. However, even if she is wrong, and her perceptions do not have nearly as much value as they would if they were right, they are still valuable because they are not hers alone; they are doubtless reflective of other people’s perceptions and, given that she is at least as perceptive as most of the people on whom she waits, reflective of the opinions of at least some people with a degree of influence.

So if the economies of our “wealthy” enclaves are largely undamaged, it merely means that another shoe, and a big one, is about to drop. If, on the other hand, if such economies are, as I believe, hurting, enough people are laboring under the perception that “the ‘rich’ simply do not suffer in these things” to give the markets and, to a lesser extent, the economy, something of a prop. Neither bodes well for the economy or the equity markets and tells me that, if anything, I am being far too optimistic about the economy and the market. Loyal readers know that if I am being far too optimistic, we are in such a state of economic dyspepsia that even my occasionally skillful verbosity cannot begin to describe its wretched depths.

Perhaps a third observation, but a minor and rather obvious one: Much of one’s business being “corporate” should be, in this economy, grounds for trepidation rather than optimism or complacency.

The experts will scoff at these observations. Why, they are purely anecdotal and are based on the perceptions of a mere waitress. But these are the same experts who told us that the “housing problem” was a mere blip that would have a negligible impact on the economy, after they told us that the worst that could possibly happen in the housing market was that prices would stop going up; a decline in housing prices? Ha! The rantings of a misinformed fear monger! And a misinformed fear monger who values the opinions of mere waitresses and other such riff-raff.