The dead of winter is traditionally the time to look ahead to the promise of spring—an ancient impulse couched now in the media’s “new year” traditions of encapsulating the year that was, and prognosticating the 12-month span ahead.There are enough interesting tea leaves during the intra-holiday week we write this, that UR can’t resist trying its hand—àla Frank Morgan in The Wizard of Oz—at peering into one of those crystal balls, too.And like Mr. Morgan’s Carny clairvoyant, the act of deciphering requires us to make sense of the found tidbits in front of us now. Initially, the auguries say that big economic structural changes are coming to Hollywood and its workers; that, or a lot of career changes, early retirements, and belt tightening.To wit: Hollywood’s two “sides”—producers and “creatives” (let’s put aside the routine overlap, for a minute, of this dividing line in episodic television)—are, as the military boys say, “hoping for peace but preparing for war.”As written about previously in the pages of Below the Line and all over town, the WGA won’t negotiate its expiring contract until much closer to deadline time, creating conditions for the kind of “de facto strike” Hollywood has seen before—in fact, like the kind this town saw at the outset of this very 21st century, as studios stockpile scripts and shut down production “just in case” writers (or a few months later, in this case, actors) decide to stage a walkout after all.This is all timed to happen—however it plays out—in the last half of 2007. That would be the same half of the year that many economic forecasters see a recession settling over the US—the main quibbles only seem to be about the degree of severity.”‘We don’t think there’ll be a recession, but the risks have risen,’ said David Berson, chief economist of mortgage financing firm Fannie Mae,” in an article by Chris Isidore, titled “Recession Clouds Darken 2007 Outlook,” that recently ran on CNNMoney.com. I don’t know where Berson gets his numbers, but “he now estimates the chance of recession at 35 percent for 2007, up from a 25 to 30 percent chance a few months ago.”As evidence, he cites familiar indicators: slower-than-expected holiday sales, a decline in manufacturing and the usual consumer lust for “big ticket” items, and an overall decrease in home values and housing starts.That last may be key. What we wonder out loud here at UR is what will happen if the combination of producer/writer and actor intransigence leads to a major Hollywood work stoppage—during a full-blown recession.Well, you’ll optimistically counter, that last de facto strike happened at the outset of our current Bush-sparked economic malaise, in the beginning of the appointed President’s first term, and that’s true enough. But housing prices were taking off then, and the constant refinancing of said houses—and speculating in same, for those who could afford it—were two factors generally credited from keeping this most recent recession from being far more awful than it was.There won’t be any real estate boom as a hedge, this time around. And if some other factor, not mentioned by Mr. Berson, comes into play, the situation could be worse. What kind of factor?Well, also in the ‘twixt-holiday news come more and more stories about countries bailing out of dollars and getting into euros. China is “reassessing” the degree to which its portfolio is counted in American bucks, and Iran announced they were going to start using euros for their oil transactions.That was followed by this tidbit, reported, among other places, by Bloomberg news, in an article bylined by Min Zeng and Annie Pinkert: “the United Arab Emirates central bank said it will convert some of its reserves of US assets into the European currency. The UAE is among oil exporters including Iran, Venezuela and Indonesia that are looking to shift their reserves into euros or price the commodity in the 12-nation currency. The dollar also declined the most this month versus the yen.”To be fair, the article also cites a brief spike in dollar values, when home sales for December turned out to be better than expected—but against an overall downward trend.”‘The problem for the dollar is that the UAE central bank is not alone in making that switch,’ said Adam Cole, senior currency strategist at RBC Capital Markets in London,” later in the same article. “‘This itself may be a relatively small transaction, but it’s part of a big picture, which is one of the factors that’s dragging the dollar down recently.’”And while a lower dollar does make American goods more attractive—heck, maybe more territories will be able to afford longer runs of US-made flicks—a dollar that suddenly loses its psychological edge as the world’s de facto currency—speaking of things “de facto”—could drag a whole lot of the domestic economy down with it.Whether a Hollywood shutdown of any magnitude will this time play itself out as the world dances on an economic knife edge remains to be seen. And we haven’t even talked about how global warming, peak oil, or a spiraling-out-of-control US foreign policy might affect things (but John Muir was right, dear readers, in noting that everything is, in the end, connected to everything else).A sneak preview of the US film labor woes is already unfolding in Canada, as ACRTA (their AFTRA/SAG combo thrown in) considers a strike in early 2007, as talks with producers have broken down there.”Negotiations between ACTRA and producers broke down tonight after producers tabled an outrageous pay offer and demanded free internet rights,” said an angry press release from the actors’ camp. “No new negotiations are scheduled. ACTRA is in a strike position in most of Canada starting in January 2007.”As for the intractable issues cited by the release: “ACTRA presented a comprehensive offer to settle the current contract dispute, including:• Flexibility in the use of performances on the internet• Wage concessions for low-budget independent producers• New flexible rules for reality televisionIf those particular sticking points seem familiar, well, they’re echoes of what their American counterparts will be sorting out soon enough.Hollywood’s always loved thrillers, and big twists late in a third act: 2007’s labor disputes won’t disappoint. The more prudent among them, however, may want to think about buying some euros of their own. Or at least, scouting out “second career” possibilities catering to the overseas tourists coming to Hollywood whose pockets will be full of them.But Happy New Year anyway.Write Union Roundup: [email protected]
Written by Mark London Williams
