It's the End of the World as We Know It...Maybe
If you're singing the old REM song in your head now, we're sorry, but the noise
of Michael Stipe blurting out semi-random words might just help drown out that
crashing sound coming from Wall Street.
Before we even get into this (again),
here's our obligatory caveat: By the time you read this, the Dow Jones Industrial
Average might be back up 500 points, or 700, or 1500, or whatever, and Congress
might have passed a package that will save our very mortal souls -- or at
least drag the country out of a mess the likes of which we haven't seen in decades.
So there you go.
Still, we're writing this about an hour and a half after the Dow lost
777 points in another day that had people freaking out all over the globe.
Closer to home for partners and Microsoft, the NASDAQ chopped off almost 200
points, or almost 10 percent of its overall value. Wow, that sounds bad.
And, of course, it is. And the worst part is that nobody seems to know what
to do about it. It's way beyond our purpose here to get into why we're in the
mess we're in, and there's plenty of blame to go around. We blame the Cowboys'
secondary...wait, that's something else altogether. No, really, there's
plenty of blame for this financial mess but not much consensus on a solution,
which pretty much sums up everything that's happened in Washington for as long
as we'd care to remember.
We thought -- and, apparently, investors thought -- that Congress would have
passed a bailout plan by now (see caveat -- there's a time lag here) that would
have, if nothing else, stabilized the financial markets at least for a little
while. Microsoft, which is trying to patch
the leaks in its financial battleship, was on
board with it. And so were a lot of people who are now worried about the
end of the world as we know it -- more specifically, the end of credit, the
end of any semblance of a housing market, the end of a pretty long era of relative
prosperity and the beginning of another Great Depression. The end of the investment
bank is already upon us -- in fact, it's old news.
Many have the times been that we've advocated the free market here at RCPU.
We've used -- in our own limited way, as nobody here claims to be an economist
(although your editor does read The Economist) -- the free-market argument
to defend Microsoft in European antitrust matters and to rail against some of
Communist elements in the open source movement.
But, in our defense, we said all that stuff in the specific context of Microsoft
and the technology industry -- and we stand by it. The crisis we're facing
now is bigger than that, brought on by years of bad decisions and, well, unchecked
greed from pretty much all corners. It's bigger than all of us -- although
it's going to affect all of us in a serious way if it hasn't already. So, we're
not here to preach free-market economics and oppose a bailout plan, nor are
we here to support a bailout plan -- because, frankly, we don't fully understand
what's going on here, and we have no idea what to do.
Unfortunately, that seems to put us in a category with pretty much everybody
else in the country, including lawmakers and quite possibly the Treasury secretary
and Fed chairman. And that's the scary part. Normally in times like these we
turn to people smarter and more experienced than we are, but those folks mostly
seem to be either throwing Hail Mary passes or staring at their hands about
It's kind of like going to the emergency room in extreme pain and having a
doctor say, "Well, we can't figure out what's wrong with him, so let's
just give him some aspirin and hope he gets better," right as another physician
darts in to say that there's nothing wrong with the patient that won't heal
over time. Meanwhile, we're hurting over here.
We'll grant that most of the colossal freak-outs -- the dire predictions
of a depression and the prophecies that nobody will ever be able to buy a house
again if somebody doesn't do something -- have mostly taken place in the
freak-out-fertile fields of Internet message boards and blog commentaries. But,
then again, even supposedly level-headed experts don't seem to have any idea
of what's going to happen from here.
We don't like that type of insecurity -- and markets hate it (again, see
caveat). We're all subject to the market's moves now, to the state of credit,
to the action or inaction of Congress. And the road ahead is foggy at best.
It turns out that Michael Stipe might not have written such a prophetic chorus
after all. If this is the end of the world as we know it, we certainly do not
How would you fix the current economic crisis? All ideas, from the ridiculous
to the chin-scratchingly interesting, will be considered. Send them to email@example.com.
Posted by Lee Pender on 09/30/2008 at 1:22 PM