We've all heard the figure $700-billion bandied about. If you're like me, however, I'm not sure that means much beyond giganenormous. The truth is no one is sure just how far and how deep this is going to go and, besides, how do you put something that big into a meaningful context.
According to Britain's Telegraph, corporate America has "lost a chunk of its value the size of the Indian economy."
"It means millions more Americans, and hundreds of thousands more Britons, will lose their jobs; it means the recession will be deeper and more protracted than previously feared; it means borrowing costs will increase on both sides of the Atlantic. Companies will cut back on investment. Pension funds will be depleted.
The Western world, in short, will become significantly less wealthy.
There is still time for US policymakers to rescue the deal, but not much. Financial markets are no longer just chaotic, but are close to complete collapse. A number of banks, already on the edge, will be pushed that bit closer to the precipice as a result.
As the past few weeks have shown, companies can go bust very, very quickly. When they collapse they are very difficult, if not impossible, to put back together again.
The free market can be very creative but it can also be immensely destructive. This is one of those points where the scale of destruction is potentially so great that it could set the economy back years."
http://www.telegraph.co.uk/finance/comment/edmundconway/3105965/Financial-crisis-Western-world-will-become-significantly-less-wealthy.html
And Stephen Harper thinks this is no time to be discussing what's coming and what we ought to be doing about that?
According to Britain's Telegraph, corporate America has "lost a chunk of its value the size of the Indian economy."
"It means millions more Americans, and hundreds of thousands more Britons, will lose their jobs; it means the recession will be deeper and more protracted than previously feared; it means borrowing costs will increase on both sides of the Atlantic. Companies will cut back on investment. Pension funds will be depleted.
The Western world, in short, will become significantly less wealthy.
There is still time for US policymakers to rescue the deal, but not much. Financial markets are no longer just chaotic, but are close to complete collapse. A number of banks, already on the edge, will be pushed that bit closer to the precipice as a result.
As the past few weeks have shown, companies can go bust very, very quickly. When they collapse they are very difficult, if not impossible, to put back together again.
The free market can be very creative but it can also be immensely destructive. This is one of those points where the scale of destruction is potentially so great that it could set the economy back years."
http://www.telegraph.co.uk/finance/comment/edmundconway/3105965/Financial-crisis-Western-world-will-become-significantly-less-wealthy.html
And Stephen Harper thinks this is no time to be discussing what's coming and what we ought to be doing about that?
postscript - the idea that corporate America has lost in value the equivalent of the Indian economy stuck with me. I couldn't shake it. How could it have lost this value? Where did it go? Who has it now? Then I realized that corporate America hasn't lost much in value at all. A little bit, sure. But what it's lost is a misperception of value, an empty assertion of value on some ledger books. They might have lost value when they began trading in gonzo securitized mortgages but that value was lost a long time before the meltdown. People they sold this junk to - their investors - they certainly lost value in the cash they ponied up for garbage securities.
Wealth? Hell, yeah, plenty of that has been wiped out. Value? Not a chance. There never was any to lose.
What means "western world"? The world without Cuba, North-Korea, Iran and Syria? Russia and China are capitalist now !
ReplyDeleteMy take on what he meant was North America and Western Europe - the traditional notion of the Western World. I certainly see your point thought.
ReplyDeleteDon't you think all this is about another money grab? During the Great Depression, there was a grab of companies. People in the States had to turn in any gold they owned. Money that was gold tender now became just paper. The drop in the oil price several weeks ago enabled the owner of Exxon Mobile to acquire more property. As soon as it was completed, up went the price of oil again. Obscenely wealthy Americans have wanted to control the world without any thought toward sustainability. They have done this by creating economic problems that affect the middle class whom they do not care about. It has been nothing but a huge steal and continues to be so. American politicans have made huge profits to boost their standing monitarily. Now please tell me I'm out to lunch and don't know what I am talking about. Harper is one of those people who would love to be right in the middle of the money fist. Korea with its allegiance to the US, is in huge trouble with its economy as is Singapore and Japan. WE are nothing but educated slaves who live within a fudal system...nothing more, nothing less. Hence the periodic money and property grabs. A. Morris
ReplyDeleteDo I think there's money to be made by gaming this economic upheaval? Of course. It was the allure of fast money that caused Wall Street to game the housing bubble just as it had gamed the Dot.Com bubble a decade earlier. The US government played its role by dismissing the problem as "froth" in the marketplace and then looking the other way. Interesting how Greenspan has gone from hero to zero, rien?
ReplyDeleteLack of regulation is the equivalent to allowing Mafia bosses to go about their businesses without the interference of the laws that control them. The argument would be that the increased income would support their neighborhoods and stimulate the economy. In reality, the profits, for the most part, would remain in the hands of a few corrupt individuals (unconcerned with national security, trade deficit or taxable incomes of the middle class) and not be distributed among the people. When money is not distributed throughout a population of a democracy the economy of the country suffers. The tax base is destroyed. If a stimulus package of a few hundred dollars to each individual can be toted as effective, then how much more effective would an increase of several thousand per year added to working families' incomes? The unions, with all their faults, created the biggest stimulus packages this country had ever received. Problems incorporated into Nafta, right to work laws, low minimum wage, and lack of regulations of the banks, businesses and Wall Street, all of which take money from the incomes of the population, each played their part to depress our economy.
ReplyDeleteCapitalism without the governing balance of an effective democracy will eventually slip into fascism --a government controlled by the capitalists. Democracy, or the voice of the people, tames capitalism from a wild animal to a domestic one. The result is a greater distribution of wealth, better education and a more powerful adaptable workforce.
The stimulus package was, in reality, based on a theory of trickle up not trickle down economics. The theory was correct, but you can't give a man with gangrene one dose of antibiotics and think it's going to help much. We need to cut off the infection.
Wow,edr, excellent insights, thank you. I'm still waiting for the other shoe to drop. I find the 60-trillion dollar Credit Default Swap scandal, engineered by Phil Gramm, astonishing. Encouraging the sale of dubious, securitized mortgage bundles with the lure of insurance contracts that were totally unfunded. To my mind, that's fraud, sixty trillion dollars worth. Why are these Wall Street CEO's and their executives who participated in these schemes not under arrest? They lined their pockets while carving out the path to America's economic meltdown and suffering for main street America.
ReplyDelete