Wall Street’s pain trickles down to the beach

This story in Bloomberg today about Montauk, Long Island’s sport fishing industry should surprise no one:

One reason why boat operators are suffering is that regular customers aren’t booking appointments. Taylor Herman, 28, an avid angler who works with structured credit markets at HSBC Investments USA Inc. in New York City, usually makes five or six charter trips every year.

Now he is fishing off the beach at Montauk Point. The cost of a fishing trip and uncertainty in an industry that has bled New York of thousands of jobs in the past year are keeping him ashore.

“What’s at the forefront of my mind is that even if there is a bonus in this industry, in this market I probably wouldn’t let it go,” Herman said. “It is almost the most luxurious thing you can do, to drop $500 on a fishing trip that is a complete gamble.”

There you have it. Frugality is in. This guy has the cash, but knows he should hold onto it.

Herman said he knows a dozen people who have lost jobs at financial companies, and only one has found work. Employment in the securities industry in New York City dropped by 10,600 jobs, or about 5.5 percent, from mid-August 2007 through mid-July, said Jim Brown, an analyst with the New York State Labor Department.

This summer the tourists have cut discretionary spending, reflecting a regional economy down 18 percent in the last year, according to the Bloomberg New York City Metro Index….

18 percent? Jeez… if that is what an honest accounting of economic activity looks like, can you blame the BEA for cooking the books to inflate GDP?

Ripple Effect

“It’s a chain reaction,” said DeFina, 47, the owner of On The Dock. “The boats are empty, the docks are empty, the parking lot is empty. When people see that, they keep going.”

Fuel sales at Montauk Marine Basin this year may total 700,000 gallons, down from about 1 million in 2007, said Darenberg, the owner. That has cost him at least $200,000 so far this year, he said. The decline comes as he faces a $1 million bill in 2009 to install new fuel tanks to meet environmental rules.

“If boats don’t move, they don’t break,” said Darenberg, who also repairs fishing vessels and has a bait and tackle shop. “We’re trying to keep the prices down so people will go fishing.”

They’re trying to keep prices down – - that’s just what they should do, and is exactly how deflation works. Fishing tackle is actually a huge industry in the US, and as a fisherman, I have noticed soaring prices in the last 20 years. A decent light rod used to cost $15, with $50 being upscale, but now the respective figures are more like $50 and $200, and the number of highly discretionary gizmos for sale has exploded. Tackle manufacturers are going to have to retool for lower budgets: think Wal-Mart’s fishing aisle, not Montauk yacht clubs.

Remember the sub-plot in Jaws about the fragile tourism-based economy on fictional Amity Island? These towns are in for the toughest of times, since they rely on an overflow of cash and the confidence to spend it. In a depression, people will still come to the beach, but businesses like marinas and upscale restaurants, caterers and boutiques will find it hard to stay afloat.

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4 thoughts on “Wall Street’s pain trickles down to the beach

  1. people can’t buy $200 fishing poles, because halibut is $19 A POUND, a loaf of bread is $3.00+, and a gallon of milk is over $5.

    I’ll be a convert to the deflation argument when milk is on sale for $3 a gallon, and bread is back to $1.49 where it was two years ago. Until then, count me among the undecideds in the deflation/inflation argument.

  2. Fair enough. I think we’ll get there (after all, bread prices in the US are all labor, and the Chinese are lactose intolerant). But I’m sticking to my guns in that food and energy prices alone do not inflation make.

  3. I agree, but I think inflation will continue longer before deflation starts. I think consumer prices will remain depressed compared to input costs until excess competition are eliminated. Only then are consumer prices will really rise, jacked up by survivors. But that is also when prices will peak. I don’t think excess has been eliminated yet (airlines, tech, etc)

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