One year later
It has been exactly one year since Lehman Bros. vanished into a black hole and almost took the global financial system with it. The nightmare that followed is still hard to fathom.
On the first anniversary of the Big Collapse, there’s good news, bad news, and, hopefully, really good news.
First, some good news:
The combined market capitalization of the 29 largest U.S. financial institutions, which shrank from $1.86 trillion in Oct. 2007 to a paltry $284 billion in March of this year, now stands at $947 billion. The fiscal behemoths are beginning to pay back billions in bailout bucks to the U.S. Treasury.
Only 22 of the 29 financial giants are still in business, and overall more than 90 banks have been shut down in the U.S. Credit still is not flowing, and about $2 trillion in shaky commercial real estate loans may be nearing default.
The recapitalization of the large banks and the robust recovery in bank stocks have stabilized the financial system. The emerging recovery may permit banks to show forebearance on commercial real estate debt, rather than move to foreclosure, which would be another huge shock to the system.
At least 15 states are suffering from double-digit unemployment, and close to half the state budgets are facing huge deficits totaling nearly $300 billion (thanks in part to the failure of Congress to include state budget aid in the stimulus package). Unemployment in Vegas topped out at 18 percent, which disproves our theory that only the Apocalypse could prevent Americans from gambling.
The U.S. auto industry has been rescued and the two former basket cases have emerged from bankruptcy restructuring in record time. And yes, that new Camaro looks really snazzy.
Not a single bank fraud has been arrested, much less convicted (Madoff doesn’t count because he confessed). The bonus-grabbing vampires on Wall Street who nearly destroyed the global economy are up to their old high-risk tricks: their latest scheme is bundles of securitized life insurance. They want to buy Grandma’s policy and then bet on how long she will live! No, we are not making this up.
More bad news:
The bogus credit rating agencies are still being paid by financial hustlers to give pristine grades to worthless junk. Tough new financial regulations and reforms are stalled in Congress and lobbyists are cooing that these are no longer needed since we are entering a recovery.
Enough of that. Are we ready for some Really Good News?
Okay, here it is:
THE UNITED STATES HAS SLAPPED A 35-PERCENT TARIFF ON TIRES MADE IN CHINA.
No, we haven’t taken leave of our senses. And we are not endorsing protectionism.
Here’s the way we see it —
The U.S. sending a message to our friends in China and everywhere else:
We took a hard fall and we hit the canvas, but we were not counted out. We have picked ourselves up and not only are we still standing, but we are getting ready to rumble.
The recovery is real. The mighty engine of the world’s largest economy is sputtering back to life, and it is going to be leaner, faster, greener, smarter and stronger. We intend to do more than just survive. We’re going to defend the title.
We’re going to put a new set of wheels on this baby—and yes, comrades, we prefer to buy our tires where they were invented and are still made, in Akron, OH—and then we are going to burn rubber and leave you in our rear-view mirror.
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