Central Pennsylvania in general, and Lancaster in particular, will be rife with problems. But, there will also be surprising stability that many other areas of the country lacks. Part of that stability is the result of having valued our various assets conservatively—sometimes flat-out undervaluing them.

To the victor goes the spoils: Figure out how to turn these pairs of problems and assets into opportunities in 2009, and prepare for a very prosperous new year.

This is the first post in a series of eleven. Here’s the first pair; the other ten will follow soon.

No. 1: Construction

Problem: Construction is expected to grind to a halt.
Assets: Lots of skilled workers and lots of tools and equipment.

Financing for new construction projects has dried up, and few people are ready to take the risk of initiating those projects. Unfortunately, that is going to lead to a lot of skilled workers without work. There will also be a lot of tools and equipment sitting unused.

One obvious opportunity involves investments in public infrastructure.   To get a slice of the money President-elect Obama is promising, we’ll need to show that we have shovel-ready projects where the plans and approvals are in place and people can be quickly put to work doing the actual building. Locally, the Lancaster Chamber of Commerce & Industry [disclosure: yes, that's my employer] is already working to coordinate the efforts of state and federal legislators and other officials and back them with broad local support.

Aside from getting ahold of federal money to put construction workers and equipment to work, what opportunities do you see in this convergence of problem with assets?

Read Part II – Journalism

Well, you say, “I don’t own any stocks — let those greedy monsters on Wall Street suffer.” You may not own any stocks, but your pension fund owned some Lehman Brothers commercial paper and your regional bank held subprime mortgage bonds, which is why you were able refinance your house two years ago. And your local airport was insured by A.I.G., and your local municipality sold municipal bonds on Wall Street to finance your street’s new sewer system, and your local car company depended on the credit markets to finance your auto loan — and now that the credit market has dried up, Wachovia bank went bust and your neighbor lost her secretarial job there.

Let’s take a look:

• Pension fund? Ha! Yeah, right. We have about $450 in a 401(k) at this point.
• Refinance our house? Nope. We’ve been smart, and have consciously chosen to rent for the past four years. It continues to be a good decision.
• Local airport? Our local airport stopped offering public flights more than a year ago. Also, I haven’t flown since the summer of 1999—it’s too cumbersome and expensive, and rail and carpooling has worked beautifully for me.
• New sewer system? I wish. This town’s infrastructure is crumbling. Besides, why can’t a municipality save up for a major expense, like we private citizens do for our own purchases?
• Auto loan? Nope. I’m still driving my trusty 1994 Geo Prizm. Until I can pay cash for a newer used car, I’m not intending to buy one.
• Neighbor lost her job? Again, my neighbors are doing OK. Not great, but they have never been doing great. We do alright for ourselves, but the whole disparity of wealth thing has been biting us in the butt for a long time.

I don’t have much of a vendetta against Wall Street. I do, however, think our entire economic system has gotten off-kilter and is ultimately unsustainable. I have never benefited from our current economic situation, compared to how others have benefited. Where I am today, I have basically nothing to lose. In fact, with our student debt far outweighing our assets, I have less than nothing to lose.

So from where I stand, with none of Mr. Friedman’s arguments applying to me, I have to ask, Why prop up an unsound and unsafe structure? Why shouldn’t we allow it to implode and rebuild itself? I have full confidence that our economy will rebuild itself. I believe that the free market works, as long as basic protections for stockholders, consumers, and workers are in place, and as long as antitrust is actively weeded out.

Is it not possible that what is happening is the market saying that the financial sector has grown too bloated and that we have collectively taken on too much debt? If that is the case, we don’t need a bailout, we need the financial sector to shrink along with our collective debt. That will be painful. I’m sure I will be affected by that economic pain, but it is not as if everything is currently fine and dandy for me economically. But isn’t it possible that such pain is an unfortunate fact of life that is necessary for a more sustainable economic future?