Monday, November 17, 2008

What Economic Crisis?

Well, it has been a few months since I last wrote, proving my own inability to contribute regularly to this blog. Yet the thoughts remain here to return to when I am ready. In the past few months a lot has changed. Gas prices are back down to below what they were last year at this time, though everyone still complains about the price at the pump (last year prices). Yet now we have a full scale financial meltdown (there I said it too, in case we haven't heard it enough) and have a brand new president. So its good news all around. I doubt I am the only person who is getting tired of hearing about the various companies that are failing due to a misplaced confidence in their own blind calculations in the pyramid scheme of the American housing market. I saw this coming two and a half years ago and I am no economist or financial analyst. I was wondering if I was crazy then for not understanding how these new unregulated derivatives were such a great thing. I am still wondering if I live in my own simple world of madness as I lay in bed in the morning listening to the radio, each day announcing a new way to give money to the people who made the bad judgements to get us into this situation. They can't be serious, can they? And if they are, we can't seriously be considering giving them money, can we? Oh, we are.

Well, I am very excited. This is the time I have been waiting for, for years. The unsustainable, intensive care capitalism that has been the corporate status quo for decades has finally revealed itself for what it truly is, a charade. A facade of material wealth inflated by bad loans and an enormous throughput of fossil fuel energy. When both of those fragile props are shaken, the whole system shudders, wobbles and falls. As we wobble, it is laughable that we are actually considering trying to prop up the edifice with more bad loans (2 Trillion from the future taxpayers of the U.S.) or with the throughput of more energy (Clean Coal, Syngas, Drill, Baby, Drill!) It reminds me of a story about the Alewife fish in lake Erie. Alewives were introduced to the lake by game managers to provide food for the sport fish (salmonids) of the lake. The problem is that the baby alewives didn't provide the food for the salmonids as hoped. Instead the alewives ate the same food as the baby salmonids, and even ate the baby salmonids themselves, and so reduced the total sport fish population. The alewives were so good at eating the food in the lake that eventually their populations got really big. As part of this equation, Lake Erie was quite polluted with excessive algae growth from nutrient runoff and phosphate detergents. As the Clean Water Act began to be enforced the algae growth was reduced, causing a cascade up the food web, leading to a major die off in the alewife population. Dead alewives by the truckloads were washing up on the beach. The alewife population in the lake became so reduced that it was nearly extirpated entirely. Which would have been good, since they were artificially introduced and caused a lot of problems in the lake. Yet, groups formed to call for actions to Save the Alewives. Not everything that goes away is bad.

I feel like the financial bailout, the talk of keeping property values high or growing, the bailout of auto manufacturers, trying to keep the price of oil and gas low, trying to keep food cheap and low quality, trying to keep retail sales high for the holidays is all trying to Save the Alewives. We have heard about the problems caused by all these behaviors, in our culture, in our communities, in our families, in our environment, in our foreign relations, in our own health, and yet now when they are on the verge of a natural death, we are putting these failing systems on life support. Perhaps it is time to let them go and move on. That is when the excitement starts.


mara said...

Excellent, insightful commentary! I, too, am excited! Please write more!

Phil & Sari said...

Having seen the economic crisis from what felt like a bird's eye view I went back and forth on bailouts, rescue plans and the lack of either. At first I trusted the majority opinion that we need this "bailout" and then was swayed in the direction that everybody will want some and the only people that need the bailout would be the same people that didn't get it. I'll get back to this...

Just had a quick tangent come to mind about the gas price frustration that you mentioned. it's not so much that I'm pissed about the gas prices. I'm bitching about the formula. I'm going to raise the gas prices by a dollar until people are in an uproar or at least frustrated about it. Then I'm going to lower it by fifty cents and everybody is happy and flying and driving again. I just made an extra dime and you just bent over, thanks!
It's a twisted game of wits, which the public will never win, even morally driven media can't help.

So back to the general economy.
The bailout was bullshit. Just as much lack of regulation as the derivatives had. Right? Well now we're all getting screwed. Even if you're working for a financial firm who took the cautious long term approach. That's right, assume the position. Another game to play. Markets fall and that is something we as the people have no control over. The executives making at least my own salary x15 can't control that. Perhaps when the markets fell so should've all the jobs and the executives. is it possible that this has been over dramatized to the point that we'll believe anything that we're told and playing the same game the gas price game hasn't taught us.

So, i am "tired of hearing about the various companies that are failing due to a misplaced confidence in their own blind calculations in the pyramid scheme of the American housing market," as well. The problem is that I'm now with a company that didn't miscalculate and wasn't risky. Sure they're in the investment business and this is to be expected to a point. However, the same people that were trying our company a better more humanistic place are now out of a job (I'm not talking about the execs). The non-greedy individuals are getting it again.

I agree, it's just more bad loans.


Phil & Sari said...

Oh yeah! By the way, love the blog please do write more!


spencer said...

Thanks for your thoughts, Phil. I appreciate the view from "inside." Those investment firms who are taking the long view should be pissed. The market niche they carve by being the smarter operators is being reduced by the intervention of outside forces. You see exactly what the effects of government interference are in the supposedly free market place.

Nick Garcia said...

"Well, I am very excited. This is the time I have been waiting for, for years... the whole system shudders, wobbles and falls."

How are you feeling a year later? Placative statements from Geithner, Tea Parties, and 25-year-high unemployment unemployment are all the changes we've seen. Certainly it doesn't seem like anyone's willing to admit that there is a structural problem with "the unsustainable, intensive care capitalism that has been the corporate status quo for decades." For how long do you think we can run from this? While the administration and the country wait for the bailout to spur palpable economic recovery, are you anticipating the opposite?

When does the excitement start?