Think of our news as a dartboard game and opinion as a dart. As long as your dart hits and sticks in the target, your dart scores, you earn points and you can espouse an opinion. Since the dart board is the size of an empty store building, it’s hard to miss. Without a toss we can start with the news that the store building is empty and have an opinion on its emptiness. But, could we have seen it coming? Shouldn’t we have?
I spent some time as a television reporter. A shopping mall had burned to the ground and was still smoking when I arrived with another hundred reporters from regional newspapers, radio and television stations. I shot video above the scene from the skids of a sheriff’s helicopter — a panoramic view that included all those other reporters standing behind the yellow police tape. The next day, only reporter on the scene, I shot video from inside the smouldering ruins of the mall. Wet and smoky, the eerie scene got personal when my camera caught a man and a woman hunkered down just inside the door of what, just days before, had been their store and their life savings. Except for the arsonist, no one saw that devastation coming.
No one saw California based department store chain Mervyn’s closing. At least the employees and customers did not until the company filed for Chapter 11 bankruptcy protection last July. Cerberus Capital Management, the company that owns Target, saw it coming. Target owned Mervyn’s. The problem is that Mervyn’s was not financially big enough to be saved from failing. GM and Chrysler, by comparison, are too big to let fail, at least for now. Cerberus, the financial company not the mythical guardian of Hades’ gates, also owns GMAC and Chrysler.
Hurricanes are huge. We can personally run from one, but property damage is still going to happen. If we cannot run, the risk of not surviving increases. If we cannot see it coming, we do not know to run. A hurricane is a huge depression, the effects of which are only mitigated by our meteorological forecasting technology. Do we really lack economic forecasting technology? Could we not see this recession coming?
Article comments
1 - Georgio
I think this is a very good article and I like the dart game..so let me throw a dart and see what you think...before I do I want you to know that I am no expert in this field but what the hell everyone else is throwing darts..so here goes...the first part of the stimulus plan was to give money to the banks so they could recover from their bad loans and loosen up their ability to provide credit to ppl who need it..instead they seem to have used the money to cover their losses.Now they want the second half but congress is balking unless they can be assured that the money would help foreclosures and credit..however I understand that the banks say they need more money just to cover their losses ..it seems there is no end to it..it also seems to me that the bottom line lies with all the bad sub prime loans the banks made .(I will not talk about the predatory loans they made at this time)..so it seems to me that foreclosures are at the heart of the financial meltdown that we have ..so unless we can stop the foreclosures which I understand to be about 11 million at this time we can't help the economy to improve .
This gets complicated but as I understand it a house that was worth let's say 400000 is now worth 200000..now the home owner lost his equity and owes more than the house is worth and to make matters worst he has bigger payments to make because the banks screwed them in the first place (I will not talk about how could they be so stupid to sign such an agreement at this time)..but now we have an arbitrary number of about 200000 that someone is stuck with..so wouldn't it be better to force the banks to renegotiate every loan to make it realistically possible for ppl to pay the mortgage ...I know there are some really smart ppl here on BC so I welcome some dialog on this matter..
2 - Ruvy
Plenty of folks foresaw this disaster coming. It was warned of over two years ago on this site for example.
But some folks had to see only the rose and refuse to acknowledge the thorn at all. The rose is gone altogether and now everyone has a thorn up his butt.
You have more than a depression in housing; you have a credit crunch that your government (owned by the folks who are now withholding the credit) cannot fix. And you are stuck funding over 100,000 soldiers in Iraq.
Then there is always the money that Bernie Madoff with.
3 - Georgio
Plenty of folks foresaw this disaster coming. It was warned of over two years ago on this site for example.
Ruvy ...could you direct me to an article about who saw this coming...I have many well to do friends who did not see it coming but I always believed that homes where over priced and ppl where using credit cards like fools so I agree with you on all points ..but do you have any ideas for a solution..hope you are well in Israel.
4 - Ruvy
I apologize, Georgio. Articles are not arranged here in such a way as to find them with ease. But in 2006, a young lady warned of the debt strangling your country - and was dismissed by the likes of our very own economics "expert" Dave Nalle. I commented there warning of the many crises facing you then. I do not remember the woman's name, but her article was not the only one. An Indian writing here also warned that America would no longer be the economic hegemon it has been. There are lots of comments there, including a whole pack of mine. If memory serves, my persistent comments really pissed off Clavos.
But he seems to have come around to a lot of my thinking, whether he realizes it or not. Go through the archives. I do not have time. I have to prepare for the Sabbath....
Shabbat Shalom
Ruvy