More Signs of a Local Economy Going Belly-up

Standard-Examiner: Wasatch Front subcontractors going under

More evidence concerning the harsh impact of the percipient U.S. recession on the local economy this morning, with this Bryon Saxton story, reporting on the travails of Wasatch Front subcontractors who are squeezed out of their preferred creditor positions when unfinished or unsold residential construction projects are lost to lender foreclosure. Under Utah law, foreclosing senior lenders take foreclosed properties free and clear of junior liens. Even contractors holding valid mechanics' liens are wiped out when such properties are taken back by senior lenders.

In the instant case, the article puts the focus on one Pleasant View plumbing contractor, Dean Henefer, who expects to take a $150,000 write down for labor and materials furnished in projects running up and down the Wasatch Front. Except for the existence of Hennefer's "reserve fund," it's fair to speculate he'd possibly be out of business already. Even under his relatively fortunate circumstance however, (in having had the sense and prudence to save a little money for a rainy day,) Hennefer's been forced to lay off half his work force of six, which means there are now three fewer Utah households who've been propelled into survival mode... three fewer Utah families without discretionary cash to fritter away on restaurants meals, high-adventure recreation centers, ice towers, gondola rides to nowhere and other amusements.

Mr. Hennefer's knows his experience does not occur in a vacuum. Mr. Hennefer suggests "I'm feeling like I'm a good example of what's happening." Mr. Hennefer is of course quite correct. His circumstance is merely a microcosm of the general economy, a single example of what's happened in a single instance, as the destructive effects of reckless and greed-driven credit policies begin their inexorable ripple across the local economy.

Words to the wise from the bottom of today's story: "The party is over. We are back to the chicken coop as it really is."

Words to the wise also for Emerald City officials, as they craft their new grand plans and schemes, hoping to cash in on that mountain of credit-driven consumer spending which no longer exists.

In closing, we'll again note that Mr. Hennefer's survival was the result of the establishment of a "rainy day fund." Something for the Emerald City Council to think about, wethinks.