by Max Marbut
Staff Writer
The Cornerstone Regional Development Partnership of the Jacksonville Regional Chamber of Commerce held its quarterly luncheon Tuesday and despite the depressed state of the national and global economies, heard some less-than-dire observations from keynote speaker Mag Black-Scott.
The former managing director and vice chairman of Morgan Stanley’s Wealth Management Group first explained how the current conditions came to be, particularly in terms of the related issues of the real estate market, credit and banking.
“The banks had loose lending standards and irresponsible people pushing mortgages home buyers couldn’t afford,” said Black-Scott. “That led to people buying houses they couldn’t afford. People also used their home like ATMs to pull money out to buy things they wanted.
“The credit bubble burst because of low interest rates and a high savings rate in Asia. Then the banking system became over-leveraged and there was a lot of greed.”
She also said America’s failure to find and develop sources of alternative energy has contributed to the economic situation and offered hope for the future. Ironically, the military conflicts in the Middle East may eventually lead to one energy solution.
“The current wars have created a lot of new technology,” Black-Scott said, then described a “space-based electrical generation system” that could deliver energy to the earth’s surface with microwaves.
“We also need to revive nuclear energy. There are 436 nuclear power plants currently operating in Europe and the Middle East. We need to be drilling for oil offshore and onshore. The reality is we have to explore all the opportunities available,” she said.
Black-Scott is asked by many people if the economy is headed for another Great Depression and she tells them the current situation is more like 1982 than 1932. Even compared to the events of 27 years ago, the banking industry looks strong.
“In the late ‘80s, 3,000 savings and loans failed. In the past 15 months, we’ve had only 42 bank failures,” said Black-Scott.
She also offered some suggestions on how the country can get out of the economic plight including prohibiting the short selling of stocks and reducing taxes, which drew applause from the audience of about 600 people at the luncheon.
“We’ve got to put money in the hands of consumers and business owners,” she said. “They know how to use that capital – the government does not.”
Black-Scott predicted that by the time it’s done, the economic stimulus package will carry a $10 trillion price tag and then gave a demonstration of the magnitude of a trillion currency notes. Placing a stack of bills on the podium, she explained that a thousand $1,000 bills makes $1 million and the stack is about five inches high. She then pointed out that $1 trillion worth of $1,000 bills would form a stack 67 miles high – and $10 trillion would stretch upwards more than 900 miles.
North Florida’s economic outlook isn’t as gloomy as might be perceived, according to Black-Scott. She said Jacksonville and the entire seven-county region have several economic advantages that can soften the impact of the national economy and eventually lead to a faster than average recovery.
“Historically, Jacksonville has embraced public-private partnerships,” she said. “And there are 50,000 military employees in the area. Most cities don’t have that and it’s a treasure. Consider the highways, the port and the railroads. The world truly comes to Jacksonville’s doorstep.
“Jacksonville has always been a can-do city that has proven it can reinvent itself. There was a time when Jacksonville was known for the way it smelled. There is great opportunity in this nation. We will prevail and we will succeed. But it will take strong leaders in government and in business to take the country back to where it should be.”
356-2466