Wall Street Crisis? This Thing is GlobalIt's not just Wall Street that's in trouble: the whole world is having an economic crisis. Even if it isn't a crisis, as far as I'm concerned it will do until a 'real' crisis comes along.
Here in Sauk Centre, the collapse of credit institutions and other developments haven't had all that much effect: except for unusually (for these days) low gasoline prices. From what I've read, though, the car dealerships in town will be having a harder time soon. And people trying to buy or sell a house.
I don't think the sky is falling, but I can't say that I'm enjoying watching what could be a replay of 1929: from the inside.
Credit Institutions Collapsing, Economic Hurt All Around: Somebody's Gotta Be to Blame!Meanwhile, we've got our equivalent of Hoovervilles. There's been a lot of finger-pointing going on. I'm no "expert," but I think that Lehman Brothers tanking, AIG's distress, General Motor's insistence (the last I heard) that it wasn't going to file for bankruptcy, and the rest of this mess has quite a bit to do with a more-or-less well-intentioned effort by some to loan money to people who couldn't pay it back, and the usual crowd of get-rich-quick optimists.
Or, They could be behind it.
AIG's executive party, where about $440,000 of American citizens' tax dollars were blown on spa treatments, golf, and tips, doesn't make me sympathetic with "Big Money," but I don't think this meltdown is a case of Those People on Wall Street stealing my investments.
As the Associated Press pointed out, all that money tied up in stocks wasn't really there to begin with. The value of the stocks was an educated guess, on what they could be sold for: based on what a handful of people were actually paying for them at any particular time.
Wall Street, and everyone else, have gone through some major reality checks. Or, rather, we're going through them. This is, in my opinion, far from over.
What about Those Rich People who were making all that money? All that Monopoly money they were living on isn't there any more: and my guess is that some of them are in much worse shape, financially, than my family. We're relatively debt-free: I understand that quite a few high rollers were living on cash that they'd borrowed, with investments as collateral. Now, they've still got the loan payments, but the make-believe capital they were living on isn't there any more. My heart doesn't quite bleed for them, but some 'rich' people are really hurting right now.
There's Hurt All OverAfrica, for example. Many countries there aren't exactly in the G7. Putting it mildly.
That's why some countries that do have strong economies are pitching in to help. International organizations, too: like the World Bank. As the World Bank's president, Robert Zoellick, said, "...it's my job to try to help poor people."
That was in an interview of Al Jazeera, in English, with Ghida Fakhry. There's quite a bit of information here:
There's also the standard-issue 'isn't the Bush administration and deregulation to balme?' stuff, but Robert Zoellick claimed that the problem was bigger than that.
Conspiracy buffs would probably say that's what They wanted him to say. Or, maybe that he's one of Them.
And there's proof! George W. Bush nominated Mr. Zoellick as World Bank president, back in 2007! You see? Bush knew this was going to happen!!!!!!!!!
There. I think that's enough exclamation marks. Seriously, I don't think that today's economic snafu is some kinda plot. I'm not even at all convinced that deregulation was the only cause of this mess, or even a major reason. Time will tell.
Putting General Motors, the World Bank, the AIG Party, and All the Rest, in PerspectiveThere's a lot going on, and it's easy to think with the endocrine system, instead of the brain. Here are my thoughts. And a few feelings.
AIG Party's Personal ImpactI did a little math, and found out that my family contributed less than one penny to AIG's big party. I think that, even assuming that it was a planned event to reward deserving executives, putting it on right after getting more money than most of us will ever see was, to be polite, a stupid move.
Even these days, my family can afford to lose a penny to executive nitwittery. I'm not happy about it, but we weren't really hurt by the stunt.
The World Bank, Africa, and Emerging EconomiesI thought the Al Jazeera and Bloomberg videos (links below) were unusually informative, considering that they came from an executive. My impression is that Mr. Zoellick actually is trying to help poor countries get on their feet, financially. And, that he's not having a very good time right now. Between hackers and thousands of his employees not changing their passwords when they were supposed to, he's an example of why I don't mind managers and executives getting more money than I ever have.
That doesn't mean that I 'trust' the World Bank. There's a chance that some of it's deals have been shady: not surprising, with so much money being controlled by an organization that's run by people from quite a few national governments.
It's not that I don't trust 'them foreigners.' I do, though, recognize that people anywhere are subject to the same temptations: and different cultures have different ethical systems. My understanding is that, in some parts of the world, you're expected to give large sums of (other people's) money to friends and relatives, if you can write it off as a business expense.
General Motors Isn't Going Bankrupt: Says General MotorsGeneral Motors is a sort of American icon. When I was growing up, the automobile was a key part of America's identity. It represented mobility, wealth, and quite a bit else. And, General Motors could be seen as a symbol of the American automotive industry.
That was then, this is now. Cars and trucks are still important, as are screwdrivers and telephones. But kids today aren't tinkering with jalopies: they're building computers and moderating online communities.
General Motors is a major employer, and symbolically important as an emblem of established American industry. But it isn't the Liberty's Torch it used to be.
How Do I Feel About AIG Execs Partying With Bailout Money?!I don't feel like running down blood-soaked streets with a pitchfork, looking for idle rich parasites to shishkabob, but I'm definitely not a happy camper.
Actually, I'm rather disgusted. It's not just AIG. Considering the scale of this mess, it's a bit like someone pilfering from petty cash.
What really bothers me is the lack of sense that's been shown. Even if I was in a position to make loans to people who weren't qualified, I don't think I would.
Not because I'm hard-hearted, and not because I wouldn't like to make lots of money.
- Giving someone money is one thing
- Tying someone up in a contract, where they're obligated to pay back - and probably won't be able to - is something quite different
- Buying property and borrowing money, based on the assumption that market value always goes up - fast - is daft
- Don't these people remember 1929?
- Oh, right: they're younger than that, and history is considered boring - it's not 'now and wow'
- Not 'now' anyway
- I think Boadicea, Hammurabi, and Qin Shi Huang (or Ch'in Shih-huang, or Qín Shǐ Huáng, or whatever) are exciting - but that's another topic
News, Views, and Bush is to BlameEveryone, including news editors, has their own opinions and assumptions. It's not too surprising to see quite a few different ways of looking at events. My hat's off to the Associated Press, for doing what I consider to be a sort of public service, discussing "All that money you've lost - where did it go?" I think that's more productive than opining about how greedy and guilty those rich people are.
Al Jazeera did a pretty good job with that World Bank president interviews. Sure, there was the usual 'isn't Bush to blame' line, but the interviewer and editors let Mr. Zoellick tell quite a bit about his views of the crisis and what was happening with the World Bank.
The Bloomberg video on YouTube of part of Mr. Zoellick's press conference, released the same day, has been viewed by about 1/100 as many people as the Al Jazeera YouTube interview video. I suppose that's because the Al Jazeera video is longer, represents a more - sophisticated? - point of view, and is from a much higher-profile source than Bloomberg's.
One reason I prefer today's America to the one I grew up in is that the traditional information gatekeepers don't have a lock on what we're allowed to see any more. The ABC-CBS-NBC triumvirate of broadcast news, with PBS making it a quartet, is still around. But now I can get information from quite a selection of cable news channels, Al Jazeera, and a number of English-language newspapers around the world - whose editors don't necessarily get their ques from The New York Times and a handful of other prestigious east coast outfits.
I'm starting to ramble, and there's another major project due tonight. Time to quit.
- "Robert Zoellick on the financial crisis - 09 Oct 08"
(Al Jazeera YouTube video (October 9, 2008))
- "World Bank News Conference"
(Bloomberg YouTube video (October 9, 2008))
In the news:
- "World Bank to protect vulnerable countries"
Associated Press (October 12, 2008)
- "USAID Partners with the World Bank to Promote Diaspora Entrepreneurship in Africa"
Market Watch/The Wall Street Journal (October 12, 2008)
- "World leaders vow to battle economic crisis"
CNN (October 12, 2008)
- "World Bank Group President Robert B. Zoellick Remarks at the Development Committee Press Conference"
World Bank (October 12, 2008)
- "DIARY: G7, IMF and World Bank meetings in Washington"
Reuters (October 11, 2008)
- "All that money you've lost - where did it go?"
Associated Press (October 11, 2008)