Since October, most of the financial news has been about Europe and the potential for a global meltdown. The credit squeeze resulting from this crisis has become painful enough to demand serious action, which in global terms means our own Federal Reserve taking the lead. Very little has changed since this crisis began upwards of two years ago, except the brick wall is approaching rapidly.
But what about the other big economic problem, unemployment? Very little has been written about jobs in the US since it appeared in September that something like a turnaround has occurred. Unemployment Initial Claims were 390k-400k each week, seasonally adjusted, through October and November with little change. That’s a net loss of 1.7M jobs per month before we add in the total creation to arrive at the total employment picture.
Back in 2009, there was a lot of talk about the “moral hazard” of bailing out big financial institutions. The concern was that, once bailed out, the banks would learn that no matter what happened the Federal Reserve and government would be there to cover all of their bad loans – and thus make more. In short, providing insurance for default makes it more likely that it will occur.
The term is something like a pop psychology term for the system of socialized risk that defines our entire financial system.
With the benefit of hindsight we can now ask whether or not the bad loans stopped after the big bailouts of 2008. Did large financial institutions change their behavior and start to behave? The answer, increasingly, appears to be no, there has been no substantial change in lending behavior since the bailout. The “moral hazard” appears to be very real – big bets on big risks have continued without much change. And that’s not only why there is a new crisis but also why serious policy changes must take place.
‘Twas a long time ago, longer now than it seems,
That the holiday season was crafted from dreams.
There were visions of friendship and light through the land
As if darkness itself had been thoroughly banned.
But the times closed around as the blackness enveloped
And the victory of dark very slowly developed.
The Thanksgiving table groans under heaps of food, more elbows resting on it than it ever before, and the weight of heavy conversation catching up on the last year. The holiday scene painted in the minds of every American plays out differently for each family. Some open with the Baruch, some the Lord’s Prayer, and others with a call away from the Lions game. The expression is the same but the words and actions are different.
This is not only Thanksgiving, it is what the USofA is all about. The story of how we came to be such a people cannot be told often enough. It is a story of deliverance away from terror to a tough land that, in the end, always provides.
The first snow of the season fell around us in Saint Paul, a wet gloppy snow that froze into a slick shield of ice. The city pulled in tight around itself as driving became an ordeal, knuckles tight and eyes wide and everything as white as the world itself. A week and a season defined by rush-rush and shopping started with a moment apart from the world made for hot cocoa.
Perhaps nature was telling us something.
This is the week that starts with a great American holiday but ends with an orgy of spending and crowds for many people. But it can instead be one long holiday, one celebration of what really counts in our lives – family and community. After Thanksgiving there is Buy Nothing Day, followed closely by a little light shopping on Small Business Saturday. Together they make a holiday which is more meaningful and bright.