Sunday, July 20, 2008

Should I be worried?

The S.F. Chronicle published the analysis of a banking industry expert on what banks are at risk now that the government has taken over the IndyMac bank. The guy had two methods of measuring risk, and my bank Washington Mutual was at the bottom of the "troubled" category by one measurement and just inside the "at risk" threshold by the other measurement.

Speaking selfishly, my money should be fine, since I don't have anywhere near $10,000 in assets at the bank and the feds insure up to that point. The expert said that things aren't nearly as bad as the S&L disaster of the late 80s. You know, that's when John McCain took a campaign bribe and tried to stop regulators from looking into the criminal acts of Charles Keating.

What the bank expert said is true, we have seen things worse than this. That's true with many parts of the economy. There are very few numbers at record highs or lows. The main one is the price of crude oil and with it the price of gas. Crude fell this week to back under $130 a barrel, off from the highs of over $145 earlier this month. That's encouraging, though it is still up 30% since New Year's. Watching the U.S. dollar index USD, the markets have decided for the last four months that the dollar has finally found its level, trading in a range from 71.5 to 73.5. The level is lower than at any time this decade before 2008, but stability at a previously bad number is better than a new low record every month or every week.

No one thing on its own, no one measurement of our economy spells disaster. What we have is a lot of little leaks. In 2006, the most recent year for which I could find data, U.S. median income finally rose after sinking for most of Bush's term, climbing to 4% over the highest previous value seen in 1999. The combined inflation rate for the intervening years was about 18.8%, and this is using the gamed numbers the government presents on statistics. In other words, working people are falling behind, sometimes quickly, sometimes slowly, but rarely are we really playing catch up.

I have said this before but it bears repeating. The Republican Party in its current configuration is all about thievery, Robin Hoods in reverse, taking from people who have less and giving generously to people who have more. The Democrats are little better. The laws on campaign financing and rules restricting lobbyists are like changes in the tax code. Before the ink is dry that signs the bill into law, someone has found the new loophole and the system continues on as before. People not wealthy enough to afford lobbyists of their own are screwed. That's almost everybody. The few watchdogs the government employs are overwhelmed, and the Republicans treat regulatory agencies like leper colonies, blights to be eradicated for the good of all concerned.

As citizens, we need to vote for change and to keep our representatives' feet to the fire. As consumers, we need to change our spending habits and driving habits and a thousand little things we have done forever because they won't make sense financially anymore. This latest fallback of crude oil may be like the fallback shown by gold and silver and several foreign currencies that happen in mid March, a discovery of a new level price for a time. But that new level is very different from the previous levels, and we will feel the pinch for some time to come.

Act accordingly.


FranIAm said...

Robin Hood In Reverse - RHIR, a new acronym for our times.

Quite some time back I heard two things that really left an impression upon me.

One of them was in 1986 and from of all people, Cher. She remarked that dignity had been stripped from our society when no one was looking. It may seem an odd comment coming from her, but it made sense then and now.

She was saying that the lower rungs of society were already discarded.

The other thing was in an article, a long time ago. The person being interviewed was some kind of economic/political person.

They said that the reason that so many "ordinary" Americans voted for big tax cuts and other things, while also supporting the Republicans and the RHIR crew was because people dreamed themselves rich.

Even if they did not have it now, and might never - dammit, they were voting as if they did. As of protecting the rights of the rich were the most important thing in the world.

Remarkable. Sad. True.

Matty Boy said...

I wish I could find the numbers easily, because there have been many polls where people are asked to estimate their own financial situation, and between 25% to 30% consider themselves to be in the top 10%. Not only do they dream of being rich in the future, they think of themselves as being very well off when they are only doing okay. I guess someone who is doing better than all or most of their neighbors might be unaware that there are much nicer neighborhoods around.

Zoey & Me said...

Did you and Franiam ever wonder about this Republican administration being the old Republican Party's worst nightmare, as they look like what they accuse Democrats of being?? And now you see the Dems enabling Republican legislation?? Is Pelosi nuts? Has she gone over the edge? I have a very bad feeling about the upcoming election. Obama is looking more and more like Joe Lieberman daily. Zoey * Me