It's hard to watch the current economic turmoil without feeling a certain kind of dread. Somewhat surprisingly, I'm not talking directly about the massive losses in share value or even the institutional instability that's driving daily takeovers. While these things most certainly are in and of themselves frightening, they are expected outcomes of regular, relatively predictable economic cycles. It's not like we've never seen these events before.
No, what really freaks me out is the total lack of leadership in government that first allows the lax behaviors that created this mess in the first place to fester, then the partisan, short-sighted sniping that seems to override our elected representatives' collective accountability to serve as stewards of a stable economy.
I feel like I'm sitting in a tumbling aircraft while the flight crew tumbles through the galley in a fight to the death over whose chocolate contaminated the other's peanut butter.
Something tells me the standards of government have fallen to historic and irreversible lows. Which bodes ill for whatever global crises lurk in our future. And scares me more than any one specific event.
Maybe I'll avoid planes, chocolate AND peanut butter from here on out. I'll walk wherever I need to go.
Your turn: Does the failed bailout, the sub-prime mortgage crisis, any of this touch you in any way?
Oh yes... it's effecting my family. My husband works for Wachovia...oh wait, I guess he MIGHT be working for Citibank now.
ReplyDeleteHey - you got chocolate in my peanut butter.
I find myself being suspect anytime a politician claims disaster is imminent for any reason. It seems to me, the only reason they do this is to frighten us into relinquishing more of our personal autonomy in favor of some sort of elusive security against ___________ [Fill in blank with your choice: Global Warming, Terrorism, Financial Crisis].
ReplyDeleteThe fact of the matter is, these booms and busts are in large measure irrational. At the moment, the pols are screaming bloody murder and people are believing them even though nothing is really different that it was six months ago. If they just calmed down and tried to calm everyone else down, a measure of sanity would return, methinks.
Cheers.
YES! It effects every one of us. I said about 10 months ago that a storm was on the horizon although I couldn't articulate exactly what it was. It is this lack of leadership that I was feeling. And I think this is only the breeze before the category 5 hurricane winds begin to blow. Let's hope we can keep our heads above the flooding.
ReplyDeleteAmen, the lack of leadership is appalling! What are the Canadian leaders saying about it?
ReplyDeleteBeing American, this touches me deeply. While I am not currently living there, my family still is. Its a crisis that no one seems to want to lead our way out of. From what I am hearing via media outlets, is that there is a lot of blaming, finger pointing, yet no one leading. Forget the party politics and how we got into the mess, if we don't fix it ASAP, we will have more of a mess on our hands.
ReplyDeleteMy retirement accounts lost about 10% yesterday.
ReplyDeleteGood thing I'm only 32.
Well, for what it's worth I think the "government" will always be the scape goat. If they'd tried to do anything before the problems people would have cried fowl, now that they didn't they cry fowl. I think people need to remember what "government" really means. The economy is taking the biggest hit because people are making decisions based on media attention. People still hold so much economic power, they just don't recognize it.
ReplyDeleteThat said, I totally agree that it's a big mess. Personally, I think it's more an economic correction but it's still painful.
Hugs,
Holly
Luckily (or pathetically) I don't make enough, or have enough for this to effect me.
ReplyDeleteOn the other hand, I have just paid off all debt except for my mortgage and crazy low car, just in case.
I think they had the votes yesterday to actually do something... but they were not happy about doing it. Those few extra "yes" votes were very fragile... other congressmen turning arms and coaxing the vote and at the same time the people from their districts sending e-mail after e-mail telling them to vote "no". Most of the speakers were calm, stressing their points but not getting into the political mess. Then Nancy Pelosi gets up and I knew with her first sentence that the vote was lost. Those congressmen who were reluctant and had pressure from all directions, yielded to the pressure from their constituents. And so it went.
ReplyDeleteIt is unfortunate that the US citizen cannot SEE what we have become. We used to save up to buy a special item, save up to buy a car, save up for a house down payment, save for college. Now we just want instant gratification and unfortunately we have taught our children that we are entitled to it and "by george our government better give it to us" (much sarcasm).
Yes, the guys offering the subprime, no down payment loans did so for their own profit. Yes, these sort of loans should not exist and do so because politicians didn't want to be politically incorrect and say the truth... there are some people who should not be given home loans. But it is also true that people lied about their financial states on applications, they knew they couldn't afford the payments, they accepted these loans. "We the people" are just as much to blame for the mess. So we can get behind the stabilization plan and hope it works to lessen the pain or circle the personal economic wagons and get ready for lay-offs, pay cuts, 401k dissolves etc.
At least one of the news analysts is right... these days "Wall Street IS Mainstreet".
It has touched us directly. We experienced a lay-off last summer, put our house on the market for ten months and couldn't sell it (go figure), took it off, went to work for the same company that laid us off, and here we are back at square one.
ReplyDelete:sigh:
Great government, eh, Carmi? :-)
oh, and we lost 7% of our retirement funds yesterday. I know it'll rebound, though. Panic never pays off.
I have faith that we'll have better leadership soon, Carmi. McCain is NOT GWB, regardless of what the mainstream media say. If he were, believe me, I WOULDN"T vote for him. :0)
It's hard to know how we're being affected. Bailout will be bailed out, but I suspect the global economy won't. We need a little air taken out of this puffery we call our markets and our economies. I think it's deeply ironic that the hot air of American politics is what seems to be deflating the economy. I'd like to fire them all!
ReplyDeleteWe took money out of our retirement accounts to pay off everything but the mortgage. I don't know how ugly it's going to get, but we're going to travel light financially.
ReplyDeleteAs far as leadership, bring it on. Even the polititians are making decisions based on fear (of not being re-elected). I don't see decisiveness or "follow me boys" anywhere.
I think the market bailout touches us all in some way regardless of where you live and what you do. We're all financially tied together these days. Scary, huh?
ReplyDeleteMost of my personal portfolio consists of penny stocks which tend to not move with the indexes so I've not seen a whole lot of volatility so far. Small stocks like mine are volatile enough anyway.
Love the anaology!
ReplyDeleteOnly indirectly, like you said it... It hurts my heart and my brain ... that we have this HUGE mess of a thing and noone can decide on a proper solution, if there is even a solution. Maybe the solution is to do nothing ... I don't know, all I know is that even if you don't have a political brain or care about politics much, this hurts and will continue to hurt for some time. It's a really bad BOO-BOO!
ReplyDeleteIt touches everywhere, it certainly touches New Zealand where strangely, our dollar lost strength against the US (I think because investors are getting edgy). Even though interest rates are falling here, it is likely that mortgage interest rates will stay high (8% or so) because of the increased cost of borrowing overseas. It is scary how many of our companies here are largely owned by big overseas investors.
ReplyDeletehow did we get in this mess - whose bright idea was it lend people money that cannot afford to ever pay it - oh, not one person but several and how are living while the rest of us are suffering.
ReplyDeleteI feel like I'm sitting in a tumbling aircraft while the flight crew tumbles through the galley in a fight to the death over whose chocolate contaminated the other's peanut butter.
ReplyDeleteAbsolutely brilliant analogy. Problem is none of the pilots knew how to fly the plane to begin with and now they're asking the passengers to fix the problem.
I don't know if you've been by our place this week - I know you've been preoccupied. But I'm pretty steamed.
To directly answer your question my wife and I have refused to look at her 401K or pension since this started.
The Lehman disaster and other share devaluations has cost my retired, widowed living on a fixed income mother well over $100K (US) in the last year. She may actually recover some of the Lehman loss since that money was in a bond -- making her a creditor rather than a shareholder. But that presupposes that there's anything left by the time they get down to her link in the food chain.
ReplyDeleteThe Wachovia takeover hit my brother's business -- mostly indirectly, but still hit it. It had a bigger impact on his mother in law who had a lot of money tied up in Wachovia stocks.
But if you're as old as I am, this is hardly the first time you've seen this phenomenon. Anybody remember those institutions we used to call "Savings & Loans"? Yeah. What happened to those? That was when? Oh yeah, during the reign of Bush the Elder... Ironic coincidence there wouldn't you say?
I know the S&L that I had my money in became a "Savings Bank" then was bought up by Centura Bank, which then became RBC Centura, and now is simply RBC Bank (which, yes, I know is redundant).
The point is, the economic world has survived similar seismic shifts. And it has always come back to equilibrium. The problem is -- and has always been -- that economic policy has always been driven by the Golden Rule: "He who has the gold, makes the rules." And a quick fix a la Reaganomics done with smoke and mirrors doesn't pay the bill... it simply defers it and redistributes the available wealth in a way that's heavily weighted towards the richest of the public. The rule of thumb was -- at one time -- that 20% of the people own 80% of the wealth. But that was 20 years ago. I'd be surprised if that curve hasn't become more steep since then.
Ultimately nobody holds the policy makers accountable because the richest keep getting richer and have no complaints and the poor don't have the time or the education to complain effectively. And the middle class? It's vanishing as fast as the polar ice caps.
The "trickle down theory" that what's good for Wall Street is good for Main Street just doesn't play. Because those controlling the trickle do everything possible to plug all the leaks.
Try bailing out the small investor won't ya George? You and your "base" made this bed, now you can sleep in it.