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The Human Costs of the Economic Crisis
Nick Turse, TomDispatch.com
The body count is still rising. For months on end, marked by bankruptcies, foreclosures, evictions, and layoffs, the economic meltdown has taken a heavy toll on Americans. In response, a range of extreme acts including suicide, self-inflicted injury, murder, and arson have hit the local news. By October 2008, an analysis of press reports nationwide indicated that an epidemic of tragedies spurred by the financial crisis had already spread from Pasadena, California, to Taunton, Massachusetts, from Roseville, Minnesota, to Ocala, Florida.
In the three months since, the pain has been migrating upwards. A growing number of the world’s rich have garnered headlines for high profile, financially-motivated suicides.
… Beverly Hills clinical psychologist Leslie Seppinni caught something of our moment when she told Forbes magazine that this was “the first time in her 18-year career that businessmen are calling her with suicidal impulses over their financial state.” In the last three months, alone, “she has intervened in at least 14 cases of men seriously considering taking their lives.” Seppinni offered this observation: “They feel guilt and shame because they think they should have known what was coming with the market or they should have pulled out faster.”
Still, it’s mostly on Main Street, not Wall Street, that people are being driven to once unthinkable extremes. And while it’s always impossible to know the myriad factors, including deeply personal ones, that contribute to drastic acts, violent or otherwise, many of those recently reported are undoubtedly tied, at least in part, to the way the bottom seems to be falling out of the economy.
As a result, reports of people driven to anything from armed robbery to financially-motivated suicide in response to new fiscal realities continue to bubble to the surface. And since only a certain percentage of such acts receive media coverage, the drumbeat of what is being reported definitely qualifies as startling.
(29 January 2009)
Also at Common Dreams.
Hundreds of thousands protest in France
David Jolly, International Herald Tribune
A nationwide protest against Nicolas Sarkozy’s economic policies drew more than one million demonstrators into the streets of France on Thursday, in the biggest popular challenge to the president since he took office in 2007.
Organizers hailed the demonstrations – meant to highlight unemployment and declining spending power in a time of crisis – as a great success.
François Chérèque, secretary general of the CFDT union, called the protest “the biggest nationwide demonstrations in 20 years.” He said in Paris that private sector workers had turned out in surprisingly large numbers, showing that workers from across the spectrum were “expressing their fears about the future.”
But participation in a nationwide strike called by eight big unions appeared to have fallen short of expectations, and came nowhere near the general strike they had called for.
(29 January 2009)
Economic woes at heart of French strike
Emma-Jane Kirby, BBC News
Last summer, President Nicolas Sarkozy boasted that these days when there is a strike in France, nobody notices.
But this time, with three-quarters of French people and all the main unions backing the walk-out, the strike will hit hard.
In Paris, train and underground services are disrupted and up to a third of Air France short-haul flights will be cancelled. Many schools and post offices are shut, with courts, hospitals and power companies also affected.
Demonstrators are taking a hotchpotch of grievances to the streets, from cut-backs in education to new judicial reforms they worry will threaten the independence of the French justice system.
But the strikers are united by one common fear – that France’s economic climate is worsening and that the government is responding inadequately to the crisis.
Many are angry that the banks were given a multi-billion euro bail-out while floundering industries and businesses were offered far less help.
(29 January 2009)
Efficient market hypothesis is dead – for now
David Wighton, Times (UK)
I have to report the sad passing of the efficient market hypothesis. The theory was officially declared dead yesterday at the World Economic Forum in Davos. There were no mourners.
The announcement was made at a brainstorming session that involved many of the world’s top economists, politicians and business leaders … together with a few bankers wearing dark glasses and false beards.
Asked which policy assumption had most contributed to the global financial crisis, the most popular answer by far was the belief that markets are self-correcting. (Nassim Nicholas Taleb, author of The Black Swan, said it was that markets “robustify” themselves, which amounts to the same thing … I think.)
In recent years, the belief in efficient markets has dominated economic policy and financial regulation in the Anglo-Saxon world and increasingly across the globe. Its death, if confirmed, is a momentous event.
(29 January 2009)
Depression Or Recovery — What’s In the Cards?
Dave Cohen, Peak Watch (blog)
This essay analyzes the past, current and future state of the economy. I wrote this analysis to try to get a handle on what’s going on and what we can expect. I hope others will find it useful. I am not an economist—some might consider that a virtue at this point—so any technical mistakes it contains are my own. Bear in mind that any mistakes I have made do not carry nearly the weight of the economic policy errors made by degreed professionals that got us into this mess to begin with.
… Final Thoughts
As a result of the 30-year credit bubble in the private sector (Figure 1), the U.S.economy is structurally unsound. If it were not, we would not be threatened with an extended period of deflation as the debt is wound down. The Housing Bubble and irresponsible risks taken by the banking system are merely the latest & greatest manifestations of modes of behavior that have been in effect, and encouraged, for decades. Now we face the threat of irresponsible debt creation in the public sector.
If the economy is a House of Cards because of the debt overhang, then how much sense does it make reflate it if there is no solid plan for putting it on a sound basis? Eggertsson uses the phrase “maximize social welfare”. No doubt the Federal Government and the Central Bank see this as their primary mission, but will it maximize the social welfare if we don’t (1) get rid of the debt and (2) start to make sound investments in things of real lasting value instead of John Mills’ “unproductive works”. Solar panels on your roof are a sound investment that nets real returns over time. Buying and selling asset-backed credit derivatives are not. Unfortunately, consumers spent most of the borrowed money on flat screen TVs, SUVs and energy-inefficient McMansions, not more productive investments. All this time the U.S. manufacturing base was disappearing and good jobs were shipped overseas.
Putting our economy on a sound basis entails an inevitable slowdown in economic activity and gradual rebuilding of the economy once the bottom is reached. This would take years to accomplish, but the Powers That Be are anxious to reflate the economy now in an attempt to avoid the pain of such a transformation.Thus Anatole Kaletsky, who fears the “paradox of thrift”, argues that it is appropriate to punish savers and make them spend money. How would that maximize the social welfare? It would not. Whose welfare are we talking about here?
Any attempt to avoid the pain will likely fail. All you are really accomplishing is a postponement unless productive investments (e.g. in energy infrastructure) are made once the economy is reflated. Our choices are thus clear—more bubbles and crashes or a slowdown, transformation and a commitment to productive works.
(27 January 2009)
Companion piece at ASPO-USA: Deflation, Reflation and Our Oil Future.
