"Incomprehensible"
"Forty percent of the world's wealth was destroyed in the last five quarters. It is an almost incomprehensible number," said Stephen Schwarzman, chairman of the leading private equity company Blackstone Group.
For some people, 40% is a lot.
Labels: economy
Since 1949, Durhamites have slept soundly, secure in the knowledge that, in our town, erection can be depended upon. Now, thanks to the power of the internets, we can spread that security all over the world.
16 Comments:
I heard something on WUNC (This American Life, I think) where it was pointed out that for all the discussion of where all this wealth has disappeared to, no one has really bothered asking where it all came from in the first place.
Maybe it was never really there.
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Brian, at 12:45 PM
Yeah, mine was all play money (401 K) anyway.
but thinking it was there, and now thinking it's not there, certainly changes my behavior.
If i were 8 years older and contemplating retiring in the immediate future, it would change it a whole lot more.
And that's just me. A lot of people, say, bought houses over the past two years (and let's not speculate as to how innocent they might have been regarding mortgage applications, etc.) thinking they had a particular market value, and now that they've entered into long-term contracts to pay for them, they discover that the value is 40% less than what they paid.
On a larger scale, BofA paid what, $30 billion for Merril Lynch. And when they found that ML was only worth $5 billion, who had to come up with the balance?
You and me. And what we're paying out on that deal is, in fact, real money.
By
Barry, at 1:29 PM
maybe your perceived lack of value for the money you give to the politicians (and they in turn to banks) will change your mind about big government being the solution to our problems.
Nah.
By
KeepDurhamDifferent!, at 2:38 PM
Don't know how i've ever claimed that "big government (is) the solution to our problems.
On the contrary, though, i think it's obvious that lack of good government has certainly caused many of our current macro-economic problems.
(or is that the obverse? i get my logic terms mixed up these days)
and if the choice is rule by a corporate state vs rule by a government state, i'll take the latter any day.
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Barry, at 2:47 PM
Ah, the "smarter politician" fallacy. If only we could get the right people in charge, surely their dictatorship would be a benevolent one.
The difference between being ruled by a corporation and ruled by a state is that in the former case you can simply cease being a customer. No one besides AT&T and Duke Power could possibly afford to provide service, so you have so choice but to submit to their monopoly, right? Then along comes MCI, Verizon, PSNC, and biofuel/solar.
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KeepDurhamDifferent!, at 8:47 PM
I'm much more scared of big business than big government. I think our recent ills have a lot to do with big business convincing people that less government is better...when it was really just letting the foxes loose in the hen house. Government regulation, with the funds to enforce those regulations, could have helped prevent this mess.
As far as giving money to politicians, I'm of the opinion that political contributions should be taxed at 90%.
By
Anonymous, at 10:07 PM
Oh, come on, David. surely you don't believe that by simply not being a customer of, say, Exxon, my life is not impacted by their policies, practices, and fuckups.
Or that, even if i don't eat at McDonalds, their policies and market power has no impact on the type and quantity of meat that's available for me to purchase?
About the only comparable state example i can think of is the influence that Texas wields when it comes to dumbed down science textbooks that are available to the rest of the country.
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Barry, at 10:12 PM
Josh Marshall asks some pertinent questions:
The core problem is that many, perhaps most of our major financial institutions are insolvent. They have more liabilities than assets. A functioning financial system requires solvent banks. And only the government has the resources to manage the massive recapitalization to get the key institutions back on their feet. At that level of generality, the issue assumes a degree of clarity.
All the different fix permutations are just different ways of accounting for the transfer of cash. You can take the banks over and assume their debts. Or just give them tons of money to make them whole. Or you can buy their bad investments at the price the banks wish they were worth and thus get the banks out of under the consequences of the financial collapse they helped create.
It's not clear to me why the dollar amounts spent would really be different in the various permutations. It's all a question of who owns what when it's all said and done and who runs the institutions. According to a brief aside in yesterday's article in the Post, both Geithner and Summers are against having the government run the banks for a transitional period and against wiping out the shareholders of the banks that are in fact insolvent.
What that sounds like is that we'll nationalize most of the banks because we have no choice. But we'll allow the current management to run the nationalized banks and the current shareholders to own the nationalized banks.
What am I missing?
By
Barry, at 8:51 AM
Of course Exxon affects your life is you're not a customer, just like the USA affects your life if you're an Aussie. The difference is that Exxon can't put you in jail. "Customers" of a country don't have the same ability to refuse to pay for service.
As to the bank bailout, you can't fault the evil corporations for robbing the taxpayer blind. I thought government was supposed to level the playing field and look out for the little guy.
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KeepDurhamDifferent!, at 10:21 AM
After 8 years of a government explicitly dedicated to not doing that, i think the american people rather decisively decided that yes, we do want a government which will at least attempt to make a defense of the rights of working people.
Of course, it's going to be up to us to make sure that actually happens.
Given the concentration of wealth and power in the hands of the corporate elite, and the amount of time, money, and energy available to the rest of us who have to spend most of it just getting by day-to-day, that's a pretty hard job.
By
Barry, at 10:39 AM
Wait, are you saying the Obama administration is going to help working people? How exactly is the banking bailout going to do this?
Don't get me wrong, as someone who gets a wall street bonus I am thrilled that some of it is coming from the government and all the rest of you suckers that voted them into office. I'll take what I can get.
And as a shareholder, I'm also overjoyed that GE can keep paying that fat 8% dividend. Thanks, Geithner! But these joys are hardly shared by the working class.
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KeepDurhamDifferent!, at 12:21 PM
I'm not sure that obama can yet take the credit for the banking bailout. I think most of that happened more than two weeks ago.
I fully expect to do better over the next 4 years (as do most of us who work for a living) than over the past 8.
but time will tell.
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Barry, at 2:37 PM
Speaking for the working investor class, it is nearly mathematically impossible for me to do better over the next four years than over the past eight.
Unless I convert my dollars to dinars.
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KeepDurhamDifferent!, at 3:44 PM
(Yes, I know I'm catching up. It was a hard week at work.)
David, while I generally ascribe Libertarians to various categories of loony bins, I had generally put you in the "only 60% ridicul ous nonsense" category, which for Libs is about as good as it gets. But your comments here might demote you to the 80 or 90% realms. I mean really. You think the "smarter politician" fallacy is some kind of riposte? Come on. Try harder here. You're not just making the usual libertarian logical bloopers, you're actually failing at coherency.
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Unknown, at 10:45 PM
@Bacon: just doing my part to point out that the Obama honeymoon is over early. Try to remember your enthusiasm for his election when the dollar is only worth 75 yen, and comparisons with Japan's economic stagnation are commonplace.
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KeepDurhamDifferent!, at 11:04 AM
David,
As I'm getting out of breath from repeating to people who keep misunderstanding the Democratic excitement on election day, speaking personally, I'm happy about Obama's election, happier than I've been about any President elected in my lifetime. However, given that this is only over Carter, Reagan, Bush 41, Clinton, and Bush 43, that's really not saying much, but it's really sufficient. I don't have any great expectations that Obama's going to solve every problem.
My enthusiasm on election day and on inauguration day was simply that at long last, the previous 8 years had been met with a full repudiation. The most toxic administration in American history was fully rejected by the voters, and their sorry asses were retreating into the sunset. The fact that Obama is the guy taking over is pretty great, and the first black president thing is pretty cool too, but that's gravy at this point. The biggest thing to celebrate is that the Goldwater/Nixon/Reagan impulse in the GOP, ascendant for 30+ years and reaching its peak of power in 2002, is now crippled, discredited, and dying.
By
Unknown, at 10:16 AM
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