European Economies

While perusing a stack of somewhat dated newspapers, I noticed a few bits that might help you understand the economies of some of our neighbors across the pond.

Did I really see a blurb that said that organized crime was the largest segment of the Italian economy? Yep. Didn't dream that. Dutifully reported in The New York Times.

I also saw a couple of stories about Germany. One was reporting on the way the Germans like to save money. So much so that perfectly affluent people furnish their apartments from stuff from the street or dump. Dampens retail sales does this tendency to save for a rainy day. Give those Germans some U.S.-style consumers to buy a bunch 'o bedroom suites, flat screen TVs and kiddy toys from China with dubious paint. Fact is the Germans make some quality toys with no lead paint and high enough prices. Playmobil. Fact is I've seen Germans doing lots of upscale shopping. But maybe judiciously. Said in the article that German ebay is second largest after U.S. They love a bargain, I guess. Saw another article about German booksellers. In German, book prices can't be discounted so all the little stores co-exist with the giants. This has actually resulted in lower suggested retail prices. Somehow. Whole system is now threatened by the Swiss allowing discounting of German language books.

And finally, the French. I love France by the way. (And Italy. And Germany.) But the French are being told that their lack of trust of one another is so extreme that it is affecting their economy adversely and adding much unemployment.

It all sort of makes me go 'hmmm' in a Journal of Unintended Consequences kind of way. Especially the worry about consumers in Germany because it always seems that the U.S. economy is dependent on all of us spending like fools.

Low Hanging Fruit

Having a Journal of Unintended Consequences when the subprime loans crisis comes due is sort of embarrassing. Yep, if you take out a loan with the certainty that prices will go up and interest rates stay down, you will get burned. If you call 'losing' a house you never even made much of a down payment on losing something you owned, I guess these people are victims. (Ask an elderly couple about paying the exorbitant taxes in Austin on a home they own outright. That, my friends, is criminal.) And if you make these loans or buy packages of them? Well, shame on you, too. Because getting these houses back in foreclosure won't be fun.

Nope. This journal's topic is just too easy. I was thinking maybe of starting the Digest of Unremarkable Headlines. (DUH) for things like "Happy People Found to Live Longer" but then who needs another journal. I'm not keeping up as it is with The Visible Woman and Austin, Texas Daily Photo. And I'm threatening to start a WEB page for all the Baby Boomers and elderly people moving to downtown Austin. (How does The DOWNTOWN AUSTIN BOOMer sound?)

Anyway, two other headlines have caught my eye while I was wearing my Journal of Unintended Consequences hat. In one (The New York Times, Saturday October 6, 2007) entitled "Save the Gnostics" it is brought to our attention that a group called the Mandeans are being wiped out by the war in Iraq. The group is small and pacifist and in spite of surviving in a delicate balance with the conquerers and dictators of the past, the situation now is scattering the group and they are landing in places in small numbers where continuing their culture is not encouraged.

In other news, there is a polio outbreak in Nigeria. Due to cost and training requirements, they use a live oral vaccine. But not enough people get it (some think it is a Western plot to sterilize Muslims). People who do excrete the weak virus and people who aren't inoculated can actually get the disease.

Yeah, life is teeming with UCs (unintended consequences) but I'm clearly not paying enough attention. Being caught up in the vortex of downsizing will do that to a person.

The Rich Get...Poorer

Last week's stock market decline (correction? free fall?) had the pundits chattering as usual. Much is known in retrospect.

I noticed a couple of articles in The Wall Street Journal late in the week that were amusing in a 'Journal of Unintended Consequences' kind of way.

One article talked about how all the effort (and commissions?) that financial advisors have put into 'balancing' portfolios may have resulted in all kinds of assets moving up and down together. This is a great quote from a Thursday piece:

Many investors who thought they had avoided putting all of their eggs in one basket just got egg on their face instead.

Another article talks about how the rich are heavily invested in stocks (and hedge funds) and borrowing for luxury goods (presumably against future outrageous earnings as CEOs or investment bankers). And if the market really corrects...they will hurt worse than you or I. Maybe not so much, of course. I read another article about how little (percentage-wise) the really rich give away.

In this house, we find ourselves heavily invested in cash, real estate and bonds at the moment. We have noted that our positions have a reverse effect on the financial markets and call this the P-B effect. You may watch for rising prices in the stock market, a real estate crash, etc. I'm just saying. Meanwhile, take a moment when the Dow plummets (my favorite word) to feel sorry for the rich. We will let you know when we jump back into stock and you can sell then.