Well, yesterday I received my TIAA-Creff quarterly report. I haven't opened it yet. I am not so sure I want to. Granted, I have twenty-five or thirty years before I need to retire, but still its really disappointing to see my retirement savings take such a merciless shellacking. Worse still I am not sure what this means for my parents and their financial future. How are they supposed to get along?
What is more disappointing, and even downright alarming is that the response by the Bush Administration and even the states of the European Union, has been so disjointed. Check out the Paul Krugman editorial for thursday if you can stomach it. I suspect that this is one of those moments in History when the events make the men.
For months now the mainstream media has told us two things. One, that Ben Bernanke and Henry Paulson are really smart. They have the technical knowledge and professional expertise to fend off financial catastrophe. (Recall the countless stories about Bernanke's academic credentials and expertise on the History of the Great Depression). If there is a problem, we were told, these men will know what to do and when to do it.
The second trope was that the next intervention will solve the problem. Think back to the fed sponsored buyout of Bear Sterns, the nationalization of Freddy Mac and Salley Mae, or the Bush plan to help home owners refinance their subprime mortgages. These interventions were supposed to stop the slide into a global financial crisis. The interventions may have slowed or deflected the slide, but it looks like we are in a global financial crisis and probably a deep recession.
The failure of these earlier interventions suggests that expertise of Bernanke and Paulson are proving irrelevant to the course of events. Whatever is decided by 'the wise men' from North America and Europe this weekend in Washington DC, it might all be too little too late.