Surely nowhere outside the United States are the current election primaries — now evidently down to Obama vs Clinton and McCain vs Romney — being watched more intently than here in Australia.
Having just gone through their own election season and brought to power fresh leadership, the Labor Party and Kevin Rudd as Prime Minister, Australians seem more attuned to politics than might otherwise be the case.
Neighbors and friends here have quizzed us about unique aspects of the American election system, just as we quizzed them about candidate selection, preference voting, and other matters here that seemed odd to us, last year.
At least as much attention in Australia, though, is being paid these days to the US economy. Is recession setting in or not? If it does, will the rest of the world economy slide downward with it? What effect will be felt here, half a world away but as near as each trader’s Internet connection?
The papers and TV news casts are full of speculation and commentary, especially now that some high-flying Australian companies have been brought low in recent days and weeks by bad loans and stock purchases made with borrowed money.
Yesterday’s “Australian” carried a story about a man who put $600,000 of his own money, most of his life savings, into a company called Gold Coast MFS. Shares in MFS were trading at around $5 in December, but trading in those shares has been suspended indefinitely after the company announced problems with financing $220 million in “previously undisclosed debt.” The last valuation quoted for MFS shares was just under $1.
I don’t claim to understand financial markets, here or in the US. I want to believe that some people do, but I saw an article this morning questioning whether US Federal Reserve Board Chief Ben Bernake understands what’s happening and what needs to be done.
His predecessor, Alan Greenspan, revered to the point of worship by many while he was in office, is now being blamed for failing to regulate the sub prime traders, thereby contributing directly to the current crisis, which some refer to as “the mess that Greenspan made.”
A lot of very smart people led, aided, or abetted the Enron debacle and, before that, the US saving and loan scandal. And the Australian man with most of his life savings in those locked-down shares that have fallen from $5 to $1 in a month or so? He makes his living as a financial advisor.
Kristi and I interviewed a financial advisor in Houston once with the idea of, possibly, paying for his advice, but when we asked for evidence of his track record as an advisor for others, he promised to get back to us on that and didn’t.
Of course, our few funds would have been small potatoes for him, anyway. Years ago, an “Esquire” magazine article on financial advisors concluded by saying, in effect, “If he’ll take you as a client, don’t hire him.” The argument was that any broker willing to serve the average investor can’t be any good or they’d be too busy with much larger portfolios.
So what should a person do? We could move a small (but for us, significant) amount of money from a US savings account that is earning about three per cent interest to our Australian savings account that earns seven per cent.
If we did that today, each US dollar would get us $1.17 Australian. If we’d transferred that money when we got here in 2005, we’d have got about $1.30 for each of our US dollars, but we didn’t because we knew the exchange rate had been much more favorable only a while earlier, around two for one.
Now, if we wait, maybe our US money will be worth more in a month or a year. Or maybe less. What should we do? Fortunately, it’s not a life-changing question for us, but if it were, I wouldn’t know who to ask for advice.
A few generations ago, during or just after the Great Depression, the wonderful folk comedian Will Rogers was talking about the situation of the US economy when he paused in his monologue and reflected, “I don’t know why I’m talking about this. I don’t know any more about the economy than an economist does.”
I am indebted to a blogger named P. L. Schwartz for one more Rogers quotation, one that may explain a lot about the situation of our world today: “Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.”
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