Economics
I've been reading the financial news, lately. I think I would have to hide under a rock or only look at the weather page to avoid the business side of current events but, who's counting. Subprime lending? Bundled securities? Double-priced commodity trading? Hel, I can't even figure out how 'futures' work, or what makes anyone think that
( Read more... )
http://money.cnn.com/galleries/2008/fortune/0803/gallery.bear_big_losers.fortune/
http://articles.moneycentral.msn.com/Investing/Extra/BearStearnsPlungeTakesAlongBillionaire.aspx
These two seem to cover the subject and I can't quarrel with the sources.
I feel a bit more sorry for the employees of the company, though, as 30% of the company stock was held by them and it totals up as more than any individual. Losing money in this way isn't like having your house burn down or having all your bank accounts cleaned out by an unscrupulous relative but if all of your 401K money is in your own company I can see where someone really got hurt by this. If I can put in one jab, though: didn't Enron teach anyone not to put all your investment eggs in one basket? I want to say that you can't be forced to place all your savings in your own company - a law might have been passed after Enron but I couldn't readily find a citation.
As to what was lost: yes, you need to put up something to buy stock in the first place, at least in theory. But the money 'lost' here is stock value; if you bought at $80 and now you can only get $5 for it the apparent loss is $75. Where the problem comes in, at least according to my recent reading, is when the stock wasn't originally bought with cash-in-hand. Traders have been taking out loans to buy stock, transferring the loss to a bank or other lending institution: this created the credit crunch we are seeing now, much more than all the individual home mortgages that you read about. People losing their homes have faces and stories we identify with; Wall Street traders are usually faceless (or were until that CNN.Money story I cited above) - I don't believe for one second that any of these latter people are going to be living at our level after this financial mess.
I avoid the mall. I hate crowds and I am sensitive enough to find most of the mental 'traffic' really distasteful. Having a 'paid-for' home....yes, I can dream, but circumstances dictate that I have a mortgage. I'll get there. I may not have the latest toys, either, but I'm happy with my homemade and home-grown while I help pay for my son to go to college. We just need to make our own 'style' and wear it with pride while other people go broke trying to keep up with a commercial measure of 'success' that they haven't realized is unattainable.
Reply
Leave a comment