Lemme explain this crisis mumbo jumbo
09/24/2008 12:00 AM
09/24/2008 6:48 AM
Even though Charlotte is a bustling financial center, some people are absolutely flummoxed at the unfolding financial crisis. It's like NASCAR. Just because you live here doesn't mean you necessarily get it.
Fear not. I can explain all.
Q. There had been talk last week of a rapid recovery, but by the end of the weekend, things seemed worse. What happened?
Simple. Speculators' hopes for a comeback were dashed when a series of unforeseen events caused Kyle Busch's engine to fail at Dover, putting Joe Gibbs Racing all but out of title contention.
Q. No, not NASCAR – the unfolding financial crisis.
Oh. Simple. Last week, the government indicated it would dispatch tanker trucks full of money to fill the vaults of teetering financial institutions. In the technical argot of Wall Street, this is called “liquidity.” When investors caught the sweet aroma of free liquidity lapping into their nests (technical term: “splash of cash”), they bid up stocks.
Then, on Saturday, someone pointed out that Congress would probably have to approve the whole thing. This made investors wary (technical term: “Panic”).
And on Sunday, they learned Congress was wondering whether it was an appropriate time to be bailing out reckless lenders (technical term: “Election year”).
This just ka-whomped the markets.
Q. Who is eligible for the bailout?
Only firms that have conducted themselves in strict accordance with the best fiscal practices of a free-market economy. Namely, ones that would loan money to any drooling moron on the theory that if they didn't, someone else would.
Q. Will executives of these firms still be eligible for gazillions in bonuses?
Such bonuses are usually tied to performance. When you succeed in sticking someone else with billions of losses accumulated under your watch, it's a pretty good performance. Takes real focus. Ask anybody.
Q. Who really pays?
Underwriting the bailout will be a group of financiers: honest, hard-working taxpayers who struggle perpetually to live within their means. Fortunately, the supply seems endless.
Q. What if I don't want my tax money going to this nonsense?
After shoveling billions to belly-upping firms, Congress may enact for taxpayers an “opt-out” provision (technical term: “Debtor's prison”).
Q. People keep making references to this being the worst period since the Great Depression. How will historians remember 2008?
As an extraordinary year when improbable, unexpected and unforeseeable events glommed together to enable the incredible – Tampa Bay Rays and Chicago Cubs in the playoffs and Kyle Busch out of the running.
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