Financial Crisis Continues to Worsen

by Dual Income No Kids on November 12, 2008 · 0 comments

Is our financial system really falling to pieces?

Ironically now that I’m back in the states and unemployed, I find myself listening to an endless stream of pieces from National Public Radio about the financial crisis. Aside from Obama having been elected, you’d think that nothing else was happening in the world.
In case you haven’t been up on the latest of the crisis, these seem to be the big issues happening at the moment:
  1. China Fiscal Stimulus Package. At a whopping 4 Trillion Yuan (586 Billion USD) to be invested in China’s infrastructure by 2010, this is pretty huge. At the same time, it seems that the reflection has been that the announcement didn’t do as much to prop up the US and Asian markets as much as one would have hoped for. In the long term we’ll see how much of this trickles to the US. Check out this piece from China View if you are interested in learning more.
  2. Bailout of American Auto Makers. Now it appears that the auto makers are lining up for their piece of the $700 Billion dollar bailout. The basic jest is that many people are saying that America can’t afford to see the auto makers go under, as it would tip off a downward spiral of more job losses and further decline of the financial situation. Now the question is whether or not Bush take any action during the next lame duck session, or if this will ride out until Obama is sworn in. The pundits are saying that while Bush is against a bailout, he also can’t afford to have the end of a major auto maker mark his last contribution as President. In addition to avoiding the financial implications of letting the auto makers fail, Obama is also interested in looking to the auto makers to play their role in decreasing our reliance on fossil fuels. Here is an interesting Wall Street interactive graph of what events have taken place against the background of GM’s falling stock price.
  3. Foreclosure Rent Backs. As rates of foreclosures continue to rise, real solutions seem hard to come by. Some are proposing rent back situations where the previous owners rent back from the bank for a period of time. While this keeps folks in their houses, there are plenty of pitfalls to this proposal. In my humble opinion, chances are that being faced with foreclosure is a signal that these families would be better off downsizing their lives to live within their means.
  4. Unemployment Hits 6.5% – a 14 Year High. With 1.2 Million jobs lost this year, it looks like folks like the L.A. Times are pointing to the likelihood of things getting worse before they get better. They point out that if you include discouraged workers who are no longer actively looking for work, this figure really goes up to 11.8% for October.
Overall it doesn’t look pretty.

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