Apparently, world leaders are discussing closing the world's financial markets for the amount of time it would take them to negotiate a new Bretton Woods agreement.
Depending on who you ask, Bretton Woods was either the agreement that rebuilt the global economy after WWII (until Nixon broke it in 1973), or the agreement with which the US rigged the global economy to intrinsically favor its own interests (see: the protesters outside every G7 meeting). I suppose the two needn't be mutually exclusive. Any agreement of that scope, re-examining the fundamentals of how money and trade operate, would be enormously complex, and presumably take more than an afternoon to sort out. How long can we go without the world's financial systems?
In short, if there is any truth to this, it's a very big deal.
More to come.
Friday, October 10, 2008
The Texas Tea
So, can someone please explain why oil prices have just hit a one-year low? For one thing, I'm still paying over $3/gal for the stuff in its highly refined state, but more importantly, oil is one of those "commodities" that are supposed to be where investors flee when the paper markets tank.
Are they thinking we won't be able to afford cars soon?
Are they thinking we won't be able to afford cars soon?
A Report
I know there’s been a lot of loose talk around here about how I stole a car and murdered a drifter – the most deadly game. Well, good news: I’ve conducted an intense investigation into my possible misdeeds, and it turns out, I’ve cleared myself of all wrongdoing. So, hopefully we can all leave all this petty divisiveness behind us and move forward with the important business of running this blog.
Thursday, October 9, 2008
more
So the madcap fun continues today, with the dow plunging 689 points. The NYT brings you all the grim details. I know in earlier posts I have suggested that the stock market reports were more distraction than main course with regard to this crisis- that was before they lost over a thousand points in one week. Were this rate of depreciation to continue, there would cease to be a stock market around mid-December, although probably people will all have pulled their money anyway if this goes on for another, say, three weeks?
It is tempting to leave this story alone for a few days. Following it over the course of a day that spans every time zone on Earth and trying to keep up with the increasingly arcane financial implications is becoming at least a part-time job. But the very speed of the thing compels attention- after the crash in 1929, it took the markets three years to bottom out. We don't have anything like that kind of time in 2008. If some sort of turnaround isn't found, the implications are becoming increasingly frightening.
And to the rescue- the Socialism pronounced so dead by Baroness Thatcher et al. The Western World, increasingly prepared to abandon any vestige of a free market at all, seems prepared to treat their economies as a matter of national security, and to pay any price, buy any asset, and insure any transaction, to restore market liquidity. W. even floated the idea of nationalizing the United States' banking system, if the British solution seems to work out. You should probably read that last sentence again.
Whatever we do, we had better do it fast. The rather odd news yesterday regarding the Russian financial bailout of the Icelandic state was, it turns out, due to a lack of reserve capital that had compelled investors to pull their investments for safer currencies. If you think about it, that could happen to an awful lot of places. Smaller economies around the world that peg their own money to reserves of dollars or euros could begin to fail - Iceland could be the canary in the coal mine. But a quasi-European canary. Who do you think is going to pony up to bail out Bangladesh? Sudan? Angola? How long would this list be if I typed the whole thing? And if you think this is mess now, wait until we have a hundred developing nations with Zimbabwean inflation losing the ability to buy food.
I heard a really interesting piece on the way home today, by Andrei Codrescu, pointing out that for $700b, we could probably have bought out every mortgage in America and installed a robust system of regionally dispersed wind power turbines. I wonder what we would have done with the $3-400b left over after everyone owned their own home powered by clean energy? Improved schools perhaps? Does it sound like communism? Yeah, a little. But when you start to think of the opportunity cost of the last two weeks...I mean, this thing is still pretty scary, as there's no end in sight, but it's also becoming so terribly sad, watching us sacrifice the resources that might have addressed so many of the dire problems of our generation on the altar of market liquidity.
* Update *
OK, upon examination of some numbers, it turns out that $700b would not even approach purchasing all of America's mortgages. I hope my larger point about opportunity cost still comes across.
It is tempting to leave this story alone for a few days. Following it over the course of a day that spans every time zone on Earth and trying to keep up with the increasingly arcane financial implications is becoming at least a part-time job. But the very speed of the thing compels attention- after the crash in 1929, it took the markets three years to bottom out. We don't have anything like that kind of time in 2008. If some sort of turnaround isn't found, the implications are becoming increasingly frightening.
And to the rescue- the Socialism pronounced so dead by Baroness Thatcher et al. The Western World, increasingly prepared to abandon any vestige of a free market at all, seems prepared to treat their economies as a matter of national security, and to pay any price, buy any asset, and insure any transaction, to restore market liquidity. W. even floated the idea of nationalizing the United States' banking system, if the British solution seems to work out. You should probably read that last sentence again.
Whatever we do, we had better do it fast. The rather odd news yesterday regarding the Russian financial bailout of the Icelandic state was, it turns out, due to a lack of reserve capital that had compelled investors to pull their investments for safer currencies. If you think about it, that could happen to an awful lot of places. Smaller economies around the world that peg their own money to reserves of dollars or euros could begin to fail - Iceland could be the canary in the coal mine. But a quasi-European canary. Who do you think is going to pony up to bail out Bangladesh? Sudan? Angola? How long would this list be if I typed the whole thing? And if you think this is mess now, wait until we have a hundred developing nations with Zimbabwean inflation losing the ability to buy food.
I heard a really interesting piece on the way home today, by Andrei Codrescu, pointing out that for $700b, we could probably have bought out every mortgage in America and installed a robust system of regionally dispersed wind power turbines. I wonder what we would have done with the $3-400b left over after everyone owned their own home powered by clean energy? Improved schools perhaps? Does it sound like communism? Yeah, a little. But when you start to think of the opportunity cost of the last two weeks...I mean, this thing is still pretty scary, as there's no end in sight, but it's also becoming so terribly sad, watching us sacrifice the resources that might have addressed so many of the dire problems of our generation on the altar of market liquidity.
* Update *
OK, upon examination of some numbers, it turns out that $700b would not even approach purchasing all of America's mortgages. I hope my larger point about opportunity cost still comes across.
The Poetry Corner
In what seems likely to become an irregular feature of this blog, TPM posts here John Cleese's poetic monument to Sean Hannity. Poetry is not Cleese's best medium, but how can you not esteem poetry from a Python?
Worth a thousand words
The BBC has put together this page which seeks to explain the financial crisis in graphics. The list of banks that no longer exist is pretty stunning, but the pie graphs that compare the size of the bailout packages to the annual budgets of the states that are paying for them may take the cake.
The Crisis Explained, in Brief
PW mentioned last week an episode of NPR’s This American Life that dealt with the mortgage backed securities crisis from earlier in the year. That episode was so successful, both in terms of how clearly and succinctly it explained the crisis and the number of people who listened to it that they have done another episode, laying out the reasons for and possible ways ahead from the current credit crisis.
I listened to it this afternoon during a break at work. It’s an hour well worth your time. If you are at all confused by what’s been going on, why the bailout is important and other issues of the day (and I don’t know anyone who’s not), check it out. And really, you should be listening to This American Life anyways. It’s pretty awesome. They have streaming versions of all their episodes on their website, as well as a free weekly podcast available through iTunes.
I listened to it this afternoon during a break at work. It’s an hour well worth your time. If you are at all confused by what’s been going on, why the bailout is important and other issues of the day (and I don’t know anyone who’s not), check it out. And really, you should be listening to This American Life anyways. It’s pretty awesome. They have streaming versions of all their episodes on their website, as well as a free weekly podcast available through iTunes.
Wednesday, October 8, 2008
Opus, Farewell
It is with great sadness that I note this piece from NPR, indicating that Berkeley Breathed has penned his last Opus cartoon.
Opus' run for President with Bill the Cat on the Radical Meadow Party Ticket back in the late 80's was for all practical purposes my introduction to electoral politics. Many of those characters have been gone for a while, but Opus was still knocking around providing fantastic political satire.
If you have kids, I bet the books Breathed is moving to next will prove wildly inappropriate for them.
Good luck, Berk, and thanks for all the squid and herring jokes.
Opus' run for President with Bill the Cat on the Radical Meadow Party Ticket back in the late 80's was for all practical purposes my introduction to electoral politics. Many of those characters have been gone for a while, but Opus was still knocking around providing fantastic political satire.
If you have kids, I bet the books Breathed is moving to next will prove wildly inappropriate for them.
Good luck, Berk, and thanks for all the squid and herring jokes.
Unchecked
So for anyone who spent today under a rock or at work, it seems clear that the $700b we threw into our recent bailout package has been, to use John Maynard Keynes expression, "...chicken feed to the dragons..." The global crisis unfolding itself is now simply frightening in its scope and scale, and is promoting what I believe are unprecedented steps by the world's major governments to save us all from another depression.
A brief summary of things that have gone terribly wrong today would have to include: The British government nationalizing its banking system, purchasing shares of the eight largest banks in Britain and guaranteeing inter-bank loans in The Times. A globally coordinated reduction in interest rates between American, British, Chinese, and European banks designed to boost market performance in HuffPo. Another $38.7m loan to AIG in addition to the earlier $80m+ bailout in the NYT. Russia has stepped in to prevent the financial collapse of Iceland in Newsvine. Stocks across nearly every market in Asia continued to lose value on Drudge.
The Dow has just closed, down 189.
It is impressive to see the world's leaders actually working to coordinate their response to a problem that is now, clearly, an international one, and just as clearly really not under anyone's control.
There is little to no way to know what comes next, but here is the story in which Nancy Pelosi makes the first call for Bailout Plan II.
A brief summary of things that have gone terribly wrong today would have to include: The British government nationalizing its banking system, purchasing shares of the eight largest banks in Britain and guaranteeing inter-bank loans in The Times. A globally coordinated reduction in interest rates between American, British, Chinese, and European banks designed to boost market performance in HuffPo. Another $38.7m loan to AIG in addition to the earlier $80m+ bailout in the NYT. Russia has stepped in to prevent the financial collapse of Iceland in Newsvine. Stocks across nearly every market in Asia continued to lose value on Drudge.
The Dow has just closed, down 189.
It is impressive to see the world's leaders actually working to coordinate their response to a problem that is now, clearly, an international one, and just as clearly really not under anyone's control.
There is little to no way to know what comes next, but here is the story in which Nancy Pelosi makes the first call for Bailout Plan II.
Southeast Ohio Hits the Big Time
George Packer has an interesting piece discussing the white working class in Ohio. It was an interesting piece, made more so because it spends a great deal of time in the area surrounding where I went to college, Ohio University in Athens, Ohio. Packer doesn’t dwell at all on the fact that there is a solidly Democratic county in the middle of the area Packer discusses heavily in his piece, extremely conservative Southeastern Ohio. I would have liked for him to discuss the dichotomy a little more, but I guess that’s getting away from his focus on the working class and the working poor.
It’d definitely (in part) an image of Ohio I recognize. One of the things that it really brought home for me was the degree to which people simply parrot back things they hear on television. “Not ready to lead” is this year’s “flip flopper.” It’s not that these people are dumb or can’t think for themselves. They simply don’t consider it. Thinking for yourself is difficult, and if you’re struggling to put food on the table, I can see why coming home and browsing a candidate’s position papers on his website doesn’t seem like an attractive option – assuming, of course, that you even have access to the internet.
It’d definitely (in part) an image of Ohio I recognize. One of the things that it really brought home for me was the degree to which people simply parrot back things they hear on television. “Not ready to lead” is this year’s “flip flopper.” It’s not that these people are dumb or can’t think for themselves. They simply don’t consider it. Thinking for yourself is difficult, and if you’re struggling to put food on the table, I can see why coming home and browsing a candidate’s position papers on his website doesn’t seem like an attractive option – assuming, of course, that you even have access to the internet.
A Certain Irony
If there was a respectable trick left in the McPalin campaign, the NYT pretty effectively steals it with this brief piece, detailing the numerous liberal political achievements of...the Mavericks.
Sound like interesting folks, actually.
Sound like interesting folks, actually.
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