the American economy, explained by a Brit
posted by bitchphd
So its the house Republicans of all people who have finally vented our anger. Next comes the reality check.
In the US and UK at the least, we (individuals, companies and countries) are hooked on credit. We buy our cars, houses and food on borrowed money. The companies we work for borrow money to pay us. Our hospitals, schools and buses are all bought with … yep, you guessed it …. more borrowed money.
With that in mind, our current dose of credit cold turkey is a pretty sickening wrench for all of us -- our banks have lost a stack of money on risky mortgages and have, as a consequence lost their appetite to lend to anyone but the very safest of creditors. I guess their pain has secretly entertained us. We've all raised a smile at the news of unloved banks going under and laughed more openly at the sight of individual bankers and traders carrying their stuff home in boxes (I used to be one and even I struggled to shed too many tears)
If the pain went no further than the banks (so far this week, there have been interventions and rescues in 9 different countries ... and its only Tuesday), or the individual bankers that work for them, we would be nothing more than mean and our sniggers nothing worse than petty.
If, as seems increasingly possible, however, its not just individuals but rather the entire banking system that's in trouble, the fact that some former traders are cashing large pay-checks is the least of our troubles. If a sufficient number of banks go bust or the remainder get so nervous that they refuse to lend to anyone other than their own governments, then none of us will be able to either get new debt or, worse, renew the debt we have. In that situation, small towns and companies with middle and lower income employees will lose their ability to pay for just about anything. They wont be able to buy inventory, pay creditors or, worst of all, pay salaries.
In other words, organizations that we really do care about will be sacking people that truly can't afford to be sacked.
That's why we have to live through the bizarre spectacle of hearing Republicans claim to represent working America whilst our man tells them to stop being stupid. That's also why we have to suck in our breath and prop up the flawed, panicking banking system that got us into this mess whilst we find a longer-term solution to our debt dependency. Finally, its why we have to stop venting on Henry Paulson and let him get on with buying time for a systematic review of our financial companies, systems and regulations.
And to the angry idiots in Congress: pass the damned rescue deal already.
posted by bitchphd for BritFriend
In the US and UK at the least, we (individuals, companies and countries) are hooked on credit. We buy our cars, houses and food on borrowed money. The companies we work for borrow money to pay us. Our hospitals, schools and buses are all bought with … yep, you guessed it …. more borrowed money.
With that in mind, our current dose of credit cold turkey is a pretty sickening wrench for all of us -- our banks have lost a stack of money on risky mortgages and have, as a consequence lost their appetite to lend to anyone but the very safest of creditors. I guess their pain has secretly entertained us. We've all raised a smile at the news of unloved banks going under and laughed more openly at the sight of individual bankers and traders carrying their stuff home in boxes (I used to be one and even I struggled to shed too many tears)
If the pain went no further than the banks (so far this week, there have been interventions and rescues in 9 different countries ... and its only Tuesday), or the individual bankers that work for them, we would be nothing more than mean and our sniggers nothing worse than petty.
If, as seems increasingly possible, however, its not just individuals but rather the entire banking system that's in trouble, the fact that some former traders are cashing large pay-checks is the least of our troubles. If a sufficient number of banks go bust or the remainder get so nervous that they refuse to lend to anyone other than their own governments, then none of us will be able to either get new debt or, worse, renew the debt we have. In that situation, small towns and companies with middle and lower income employees will lose their ability to pay for just about anything. They wont be able to buy inventory, pay creditors or, worst of all, pay salaries.
In other words, organizations that we really do care about will be sacking people that truly can't afford to be sacked.
That's why we have to live through the bizarre spectacle of hearing Republicans claim to represent working America whilst our man tells them to stop being stupid. That's also why we have to suck in our breath and prop up the flawed, panicking banking system that got us into this mess whilst we find a longer-term solution to our debt dependency. Finally, its why we have to stop venting on Henry Paulson and let him get on with buying time for a systematic review of our financial companies, systems and regulations.
And to the angry idiots in Congress: pass the damned rescue deal already.
posted by bitchphd for BritFriend
Labels: the economy
Posted at 7:10 PM
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