Thursday, August 21, 2008
a hard landing
Crow here. I just waved goodbye to my comely niece Aspidistra who's been visiting from her home in New York.
She told me about a man she overheard being interviewed for a magazine article that's more likely to be found on the bottom of a cage somewhere than read by many people. So I thought to give you a brief summary while susan mutters away in her corner drawing something or other.
One of the best quotes I've heard recently regarding the FDIC bailout of the Indy Mac Bank and more portentously the potential bailout of Fannie Mae and Freddie Mac is this - 'Profits are privatized and losses are socialized'.
Nouriel Roubini is Professor of Economics at the Stern School of Business at NYU and is also known as Dr. Doom. His prognostication for the American economy is a decidedly gloomy one after a close study of upheavals in worldwide emerging economies throughout the 1990's led him to the conclusion that the US would be the next to fail.
"Throughout the 90's, one emerging economy after another was beset by crisis, beginning with Mexico’s in 1994. Panics swept Asia, including Thailand, Indonesia and Korea, in 1997 and 1998. The economies of Brazil and Russia imploded in 1998. Argentina’s followed in 2000. On the eve of the crises that befell them, he noticed, most had huge current-account deficits (meaning, basically, that they spent far more than they made), and they typically financed these deficits by borrowing from abroad in ways that exposed them to the national equivalent of bank runs. Most of these countries also had poorly regulated banking systems plagued by excessive borrowing and reckless lending. Corporate governance was often weak, with cronyism in abundance".
Does that remind you of anything? Over the long haul he's not quite so pessimistic but he does see the writing on the wall for the collapse of the hegemony of the American empire. Maybe that long hoped for time will come when the Pentagon has to hold a bake sale to finance a new weapons system.
I'm probably dreaming but it would be a fine thing for the animal kingdom (which has no borders) if the most heavily armed, most paranoid country the world has ever known just kept a military for border protection and UN mandated peace keeping missions.
(artwork by Rudi Herzlmeier)