Rescue Me: Fed Bailouts and Local Biz Closures Signal Trouble

Financial times are getting tough and the bubble that seemingly protects Johns Creek may have been pierced. Though instead of a giant kaboom, the sound we hear is more like the soft sound of air being let out of a balloon.

But beware. Sometimes a gentle breeze can be the very thing that ushers in a larger storm.

Last week, the Village Market restaurant in Johns Creek Walk went dark. Much loved owners Tim and Chris Young have struggled against poor signage and unfulfilled promises from their landlord on a host of issues, including a never-realized local playhouse that was supposed to drive in customers. Add to those woes poor health and a recession and you have a recipe for disaster.

The Macaroni Grill at Medlock Corners also shuttered their doors this week. They served lunch for the last time on Monday, March 24. Kevin Mullin, a favorite waiter who was always ready to trade barbs, had been at the Johns Creek location for eight years. The newly married Mullin is now searching for work.

Macaroni Grill always seemed like it was doing a good business, but Mullins said not good enough to satisfy the corporate bottom line. He said the restaurant’s Perimeter location would remain open because it’s doing a hefty catering business, in addition to its core dining room revenue.
It’s hard to hear news like this. Job losses reduce the spending power in a community. We are after all either in – or headed for - a recession, or we have recession-like conditions, depending on which Talking Head you listen to.

I’d be more amused that financial experts and politicians refuse to use the word recession, if I wasn’t also an interested participant in the economy. I want things to be okay. I want to have a job and I want everyone else to have one, too. But phrases like “recession-like” and “market corrections” seem ridiculously PC.

All of the indicators of a recession are in place – job loss, housing market problems, purchasing power concerns, collapse of the dollar overseas, gas and oil prices …hello… tap, tap, tap, is this thing on?

“It is what it is”, as my mother is fond of saying. The sooner we admit we have a recession problem, the sooner we can start on the path to recovery.

The Post’s financial writers, Tim Jennette and Mike Kennedy, have been explaining market conditions to our readers for several months and offering tips for financial health and recovery.

They tell us that help in these financial times must come from within. You have to suck it up and pull yourself up by your bootstraps, as the saying goes. You have to make tough choices on spending priorities, contact your lenders when you see the storm clouds gathering, put away your credit cards and so on.

Unless of course you are a Wall Street financial institution with some decent connections, and in that case your boots can be hoisted with the help of the federal government.

Sorry, but I think that’s wrong -- about as wrong as the idea for the state bailing out Delta Airlines was two years ago.

The Federal Reserve Bank, via JPMorgan Chase, agreed to a 28-day credit line to Bear Stearns . This is the same Bear Stearns that lost billions for its clients last summer when two hedge funds that were heavily invested in mortgage-backed securities collapsed. The same Bear Stearns who heavily invested in subprime mortgage lenders, like the now-defunct New Century and EMC Mortgage Servicing.

I “get” the concept that we need to help our major industries, because if they fail, the consequences could be much worse. But whose livelihood is more important? The guys over at Bear Stearns in New York or the local folks at Macaroni Grill, Village Market or the single mom who can’t make her mortgage payment? Who gets to make that decision? And isn’t that MY money bailing out those private corporations?

When did it become okay to reward reckless greed and poor financial decision-making with more money? My money. If I have to suck it up, so do Bear Stearns and Countrywide and all the others out there whose loose lending decisions got us into this fine mess.

Way back in the 1990s, Bear Stearns, an outfit with a dog-eat-dog business strategy, refused to participate in the bailout of floundering hedge fund needed help.

Bear Stearns issued a press statement last week that all was well and its liquidity problems were only rumors. Three days later the bail out scheme was announced.

Part of a free market economy is allowing the market to make its own corrections. Part of business ownership means incurring the risks of financial decisions – at least for the rest of us, it does.

We’re on dangerous ground. The response from the Feds to our current economic woes feels like a game at a carnival – with a rubber mallet, bat down the goonies when they pop up. Do it fast before another emerges and you win. But that seems reactionary, not strategic. And it certainly doesn’t build market confidence.

I’m not willing to bail out Bear Stearns, unless we offer a similar bailout package for local business owners or the family who can’t figure out how to make their mortgage payments.

I know a few Johns Creek businesses that might be interested in a 28-day credit line from the government.

Flowers is Editor-in-Chief of The Post