“In The Communist Manifesto, Karl Marx marveled that, such is capitalism's dynamism, ‘all that is solid melts into air.’ Bear Stearns, Lehman Brothers and Merrill Lynch should not be the last to learn the truth of that.”
- - Washington Post, 20 September 2008
That was written in the context of disapproval of $25 billion in government subsidies to the auto industry, but the reference to the broader financial crisis by conservative columnist and author, George Will, hits where it hurts.
“All that is solid melts into air.”
Like many of elders – retired and near retirement - I have been nervous for several years about the economy in general and, personally, about the safety of my retirement savings. Now that the latter has been reduced (most of it in just one week) by a total of 30 percent, anxiety is a better description of my mood, and I have found it difficult over the past seven days to think about anything else.
My usual reaction to fear is to calm myself through study: search out the facts, read the experts, get the big picture and the small, consider the opinions of people who are supposed to know, try to understand the moves of the people who are in charge.
Such has consumed most of my waking hours for the past week. None of what I have read nor the intervention by the federal government on Friday in the form of $700 billion in taxpayer money to buy up failed properties reassures me, and I’m not the only one:
“In other words, for all the toxic securities that Wall Street has acknowledged holding, there will be yet more mortgage-backed paper that will go bad as the housing market continues to fall. As much as we all hope the worst is over, it's probably not.
“And as much as we might hope that the government finally has the answer, it probably doesn't.” [emphasis added]
- - International Herald Tribune, 20 September 2008
That’s my conclusion too.
Amid everything else, I am concerned that the public is not following the crisis, that too few people read newspapers. Yes, I malign the press for their piss-poor reporting on the campaign, failure to point out candidate lies and near total lack of background on issues, but the better papers, if you filter carefully, are still the best source of day-to-day analysis and thinking.
However, it is necessary to read those better newspapers and not just your small-town rag which, if it is as bad as mine, tells you nothing or gets it wrong.
The only locally-produced story on the financial crisis in my town’s Sunday paper gave a breathtakingly light-hearted review of the Black Monday crash in October 1987, and concluded with this piece of idiocy:
“The good news is that, so far, this is mostly Wall Street's problem, not Main Street's. Hopefully, the people in charge are smart enough to keep it that way.”
- - Maine Sunday Telegram, 20 September 2008
And NancyB of Ericksonsblogs who said, “Now with this loss, I will have to work longer than age 70.”
And Tropigal of Fashion After 50 who wrote, “I am trying to pull my money out, but I was told that tens of thousands of people are trying to do so, and it will ‘take time.’ I don't know if I will ever see a penny of my savings.”
Even Cop Car, who often butts heads with me over my political posts, left this mordant note on Friday’s post: “Good luck to us all - all of us owners of AIG, Freddie, and Fannie. Never thought I'd live long enough to be turned into a socialist.”
That's six out of the 12 different people, counting me, who commented on that post - fifty percent who are unlikely to ever recoup their massive losses.
Only a few of the major papers reported Sunday on the effect of the crisis on the retired and near retirees – all similar to that of TGB readers. One noted:
“After last week, psychologists took to the airwaves to tell people not to become sick over losing money, advising that pausing was better than panicking. But by then, enough people had sufficiently panicked to make a run on the $3.5 trillion in money market funds, similar to the bank runs that led to the Great Depression.
"’It's just amazing in the last four or five days how many times I've heard the words 'The Depression' brought up,’ said Kevin Flannery, general manager of the Leisure World retirement community. ‘It's all people are talking about here.’" [emphasis added]
- - Washington Post, 20 September 2008
Yes. Old people know how bad it might become. If we didn’t live through the Depression ourselves, our parents did. We heard the stories all through our childhood.
As much as I owe to the major papers (along with some good online writing) for helping me understand how this crisis happened and what the federal government is proposing to do, the fatuousness of other writers at the same newspapers in the face of what may be calamity for everyone is astounding.
One New York Times writer is concerned about the effect of the crisis on pending sales of multi-million-dollar, Manhattan penthouses. Another of the paper’s writers, who purports to offer advice for ordinary investors and old people, asked this jaw-droppingly unhelpful question:
“Before you do anything with your portfolio, ask yourself this: Do you still believe in capitalism?
What the...? He goes on to offer this meaningless drivel:
“…spending just a bit less money in retirement may make a huge difference,” he writes as though elders haven’t already cut budgets to the bone due to the astronomical rise in gas and food prices. “‘Small changes in retirees’ burn rate will affect them far greater (sic) than what the market will do today,’ said Bill Schultheis, of Sagemark Wealth Management in Kirkland, Wash., and the author of The Coffeehouse Investor. That’s because overspending is a risk you can actually control, even if you can’t predict how the markets perform. ‘I’ve found that many clients really like that, because they like to be in charge.’
“He noted that spending on grandchildren was often a huge item for retirees. If you can’t bring yourself to cut back there, consider the cost of eating out. He says he is often surprised by the amount people spend on that.”
- - The New York Times, 20 September 2008
Does that advice help you any? The last time I spent money in a restaurant was two months ago, and before that, four months.
Back at the Washington Post, former deputy assistant Treasury secretary for economic policy from 1988 to 1993, who was also a senior policy analyst in the White House, Bruce Bartlett, in offering advice to Senators McCain and Obama, says fixing the economy “will require belt-tightening from everyone.”
“If [a candidate] thinks we can get $1 trillion out of the income tax without burdening middle- and lower-income workers, let's hear how,” writes Bartlett. “If he thinks we can cut spending by that much, he should explain how. If he thinks it can be done without significantly cutting popular programs such as Medicare, I for one would like to know how.” [emphasis added]
Now there’s an idea: let’s solve this financial crisis on the backs of poor people and the old without even a nod to the rich with their tax-free money shelters overseas.
There is so little wiggle room in my austere budget that I’m worried about how much the premiums for Medicare Parts B and D and my supplemental coverage will increase next year, and I’m already paying double last year’s price for heating fuel. I know it is no different for most of you and for tens of millions of others.
Again, Main Street is being forced to bail out millionaires and their companies while our few dollars shrink further every week at the grocery store and gas station. Personally, I don't believe in the Paulson plan, the people who devised it or the $700 billion price. They told us the Iraq War would cost $50 billion and it's currently at more than $580 billion. Why should I believe them about even bigger numbers?
Economics writer, William Greider calls this latest bailout a "swindle" and says,
"Financial-market wise guys, who had been seized with fear, are suddenly drunk with hope. They are rallying explosively because they think they have successfully stampeded Washington into accepting the Wall Street Journal solution to the crisis: dump it all on the taxpayers. That is the meaning of the massive bailout...
"We have a brain-dead lame duck in the White House. The two presidential candidates are trapped by events, trying to say something relevant without getting blamed for the disaster. The people should make themselves heard in Washington, even if only to share their outrage."
- - The Nation, 19 September 2008
I feel that I’m not expressing my own outrage forcefully enough today, so I’ll let one John Cole (whom I don’t know from Adam) of Balloon Juice say it for me. I discovered him via Wood s Lot and he is as furiously angry as I am:
“I do not ever want to hear another damned word about the free market. I don’t want to hear another thing about letting the market regulate itself. I don’t want to hear about the free flow of capital. I don’t want to hear about government getting out of our lives.
“None of it. From superfunds to super-bailouts, I am tired of other people getting rich being irresponsible and then being told I have to pay to clean it up. I didn’t read one punitive aspect of this new plan. Not one punishment for the people who did this.”
[At The Elder Storytelling Placed today, Pat Temiz recounts a hair-raising journey in Afghanistan 1977.]