As I write, the stock market has fallen more than 400 points again and as Bill McSherry points out, the federal government is handing out money to Too-Big-To-Fail (TBTF) businesses like they’re Tom Hanks’ friend in Bachelor Party. Meanwhile, in Russia the stock market has collapsed so fast that the goverment has shut it down. In fact, markets all over the world are getting sore throats from our cold. The rest of the world holds lots of U.S. debt which is one of the reasons TBTFs sprout like dandelions in my lawn. I’m told, for example, that Russia holds lots of Fannie May and Freddie Mac debt. In fact, foreign governments and sovereign wealth funds hold huge amounts of Freddie and Fannie. Our federal overseers were concerned foreign governments would stop buying our debt if Fannie and Freddie were allowed to fail (this complicated financial crisis is not just a market error, there are many government hands in the cookie jar as well).
The big concern locally is Washington Mutual but I’m also worried about what is happening overseas. For the last year our economy has been somewhat shielded by U.S. economic difficulties because of our international ties. What happens in Shanghai and Tokyo is often as important to Greater Seattle as what happens in New York. But, Japan and parts of Europe are now in recession. Even China’s economy is slowing down. That might be more damaging to our local economy than the bonfire of vanities that our Wall Street Lords and government overseers have cooked up. Of course, their flames are part of the reason for the brush fires overseas so we do need to keep an eye on New York. Let’s hope when we look there aren’t too many people on the ledge.