businessweek.com- Many Greeks view the state with a combination of a sense of entitlement, mistrust, and dislike similar to that of teenagers vis-à-vis their parents. …
US Federal Reserve- “It is not the wolf at the door but the termites in the walls that require attention. The sooner the house’s structure is strengthened, the better.” …
FT- It is time to recognise that Greece is not just suffering from a liquidity crisis; it is facing an insolvency crisis too. …
blogs.ft.com- The eurozone’s most vulnerable economies are getting little benefit from the euro’s fall because they are too inflexible and uncompetitive. …
standpointmag.co.uk- The least bad option would be for the German bloc to leave EMU. Germany’s banks might still have to be recapitalised, but it would be less costly than trying to “rescue” Greece. …
The Economist- Rich countries with their greying populations should be saving whereas younger, fast-growing developing countries should be borrowing heavily. But in fact it is the other way round. …
NY Times- Austrian banks slowly recover from a sharp economic downturn and tries to pay down a pile of private-sector debt. …
marketwatch.com- We’re still living in a fantasyland. Most people have no idea what’s really going on in the economy. …
WSJ- Hayek understood that the opposite of top-down collectivism was not selfishness and egotism. A free modern society is all about cooperation. …
Newsweek- We may be reaching the limits of economics. The disconnect between theory and reality seems ominous. …
newyorker.com- Financial illiteracy isn’t new, but the consequences have become more severe, because people now have to take so much responsibility for their financial lives. …
cjr.org- Rolling Stone made a virtue of the fact that it is not wedded to the news cycle in order to produce journalism that helped drive it. …
seedmagazine.com- No animal spends more of its allotted time on earth fussing over sex than homo sapiens. …
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Like other pockets of Europe, Ireland experienced phenomenal growth in the 2000s.
Like Iceland for example, both relatively poor before major economic changes took place, soared to unimaginable heights during the boom, and now shot down to earth and licking their wounds.
But are the Irish more mentally equipped to deal with the recession, given their not-so-distant memories of poverty and hardship?
We have a long and proud history of poverty, I don’t know if that helps. When I was growing up, you never asked another Irish person what they did for a living, and you never turned a beggar from the door. These are lyrical and dangerous clichés, of course (though incidentally true): Ireland was by no means a classless society. Even so, I do see differences from other countries in the play of rage, entitlement and delight around money: who has it, who deserves it, who gets cross.
An insightful narrative of the recession months, as seen by the Irish.
This is the first real recession for many of us. Some are dealing with the uncertainties by crying foul and uploading blames to all the wrong sources, others are blithely unaware of the seismic shifts taking place right under our noses. Which ones of those trends are long-lasting, and which are merely temporary?
Flirting with frugality
For months, the media has been obsessive in its coverage of America’s new favourite past-time: extreme frugality. It’s one thing to have a subculture of cheapskates planning to save another ten bucks a week in some dark corner of the blogosphere (I know because I am one of those). But it’s entirely another matter to have the Wall Street Journal persuading me from buying a bottle of Evian, so I can save a buck.
With countless individuals and families dealing with foreclosure, many grappling with unemployment, and the millions suffering in silence from a vast amount of their wealth wiped out from a drop in housing prices and stock portfolios, some say that a focus on savings may not be an entirely terrible pursuit.
Certainly, if you are head over heels in debt, and threatened by lay-offs and a drastic change in income, then lifestyle changes must follow. Some consumers are so shell-shocked over the drastic drop in their perceived wealth that they may never recover to join the consumerist party again.
Indeed, America may move away from its previously rampantly materialistic culture of years past to become a more moderate consumerist group. On second thought, I’m not sure I can even believe that. The American Dream of rags to riches will not die. The passionate measures that some Americans have taken to protect and preserve their wealth (of which frugality is a tactic) can only accentuates, instead of diminishing the very American practice of linking success to material possessions. The pursuit of wealth and subsequent accumulation of wealth may be temporarily halted, but centuries of ideals and beliefs do not get erased from the collective psyche just like that. Read more...
What’s worse than getting caught in an economic crisis? How about, not? I know it’s wrong to laugh at poverty, even the first-world variety, because there are plenty of sad situations out there.
But when the tongue-in-cheek headline laments, “Can’t even afford a crisis: Berlin’s poverty protects it from downturn”, that’s practically baiting you to light up just a tad bit, no? In the article, the author contends that Berlin is just too “cool” (I’m guessing economically) for the recession.
Recession? What recession? From Berlin, it’s been hard to tell that there is a global economic downturn. A lack of industry and years of high unemployment mean that Germany’s capital can’t sink much further.
And listen to this.
“We don’t feel it at all,” he said. “It’s a lot of theory, this crisis. These financial types, they make crises and they make stimulus packages — it’s all very hypothetical. Everything can’t always keep growing; you can’t have 4 percent growth every year. It just doesn’t have that much to do with real life.”
That’s right, in the eastern frontier named Berlin, the city has long accepted the concept of a no-growth economy. Its lengthy money problems have bizarrely insulated the city from a crisis rippling through from rest of the continent. Its mayor proudly proclaimed the city “poor but sexy” in 2003, when the rest of the world was growing at breakneck pace. With unemployment hovering between fifteen and twenty percent, and a debt of €60 billion, Berlin is no stranger to financial crisis. It’s been in one for twenty years. Or any crisis for that matter, it’s been at those for the past century.
Berlin, from the onset, looks like that grubby teenager with badly dyed hair that’s greasy and streaky, bitten nails, jeans that are too long and hangs too low, with a T-shirt that begs for attention, and when you stare at it for too long, he looks up and glares at your with pure venom and then gives you the finger. And then you hear about his abusive father and alcoholic mother, and learn about him having to look after his grandfather with Alzheimer, has a job in the grocery store and occasionally turn tricks to bail his drug-addicted sister out of trouble. Something like that. That’s how Berlin feels to me: wounded and indignant, angry but indifferent, stalled but trying to push through. Read more...
Growing up, whenever I screwed up in a test or assignment in school and had to face my mom, I would always preface my failure by citing more spectacular blow-ups by my classmates. The habit never escaped me. Now instead of placating my parents, I use it as a self-administered sedative whenever things get bad. By reminding myself that it could be worse.
It’s easy to fall into a depressing spiral these days. There’s little voyeuristic pleasure in watching your economy on a high speed race heading for the cliff, especially when your savings and investments are wrapped in the vehicle.
But maybe you can take solace in the fact that we are all in this together. And whichever corner in the world you might be, there’s some level of financial uncertainty, maybe even serious suffering going on. But let’s take a break from self-pity today, and indulge ourselves in the guilty knowledge that out there in the big world somewhere, exist those that screwed up (or got screwed) way worse.
1. Iceland. With a population of 300,000, this northern tundra is the size of Kentucky. Inheriting this insular landscape with your large extended family, gifted with little other than thermal geezers and short days, the setting is already rather glum.
Add reckless Icelandic fishermen, stir in some explosive banking capital epitomized by a stock market that multiplied nine times from 2003 to 2007, and we get the tragic climax: a bankrupt country with debt 850% of its GDP. To put that into perspective, an average of $330,000 is owed by every Icelandic man, woman, and child to its numerous and very angry foreign debtors.
What’s worse, to get out of this mess, the Icelandic has abandoned their currency, and now needs to claw its way up Brussels’ ass to save its economy. To be allowed entrance in the EU, it will most likely have no other choice than accepting reduced fishing grounds in exchange for debt forgiveness. The monumental humiliation of it all will shatter the Icelandic collective confidence for decades to come.
Read more...
Thanks to the Skilled Investor for including us in its Carnival of Financial Planning for Mar 7.
Really? Yes. And I’m not talking about the less stress, better health, more me and my family-time kind of perks.
Let’s rewind.
For months, we have been pounded in the head over and over again on the evils brought on by the recession. Let’s recount the havoc wreaked.
- Retirees have seen their savings significantly reduced or wiped out, some even going back to work to alleviate the cash problem.
- Baby boomers see their expected retirement date stretched indefinitely into the horizon, investments portfolio reduced, housing worth shattered.
- Gen X are getting squeezed in the workplace in more ways than one, and feels more insecure in the job market.
- Gen Y, having just gotten their feet wet in the workplace, feels betrayed by the many promises dangled in front of them. Demographers have predicted speedy career advancements as a result of baby boomer exits. So much for that.
There has been considerable faults placed on the baby boomers, in their relative easy paths to success in America since the 1950s. There were no major war nor catastrophic financial turmoil, jobs were easy to come by, properties were cheap, and the infrastructures were there to service their every need. Many Gen Y and Gen X blame the “selfish” generation for their over-the-top consumption, excessive debts, degradation of the environment, mis-management of the social security and health care systems that will be defunct as soon as they have benefited from it, and falling asleep at the helm when it comes to financial regulation that plunged the nation, and perhaps the world, into the perilous position that we are in now.
Simplistic and over-dramatic? Indeed it is. But there is no denying that for the younger generations, the foreseeable future is an uphill battle. The workplace will only become more competitive, property prices are still steep in many parts of the country, health care and social security is broken, and country is bankrupt. Ouch.
Read more...
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