Boston There is a perverse and maddening fascination in being a stranger in a strange land, which I rediscovered sitting in the last row and listening to some very articulate and smart people grope for clues to explain the current, world financial crises at the opening session of the Tufts EPIIC International Symposium. The panel included bankers, students, professors, and economists, some of whom carried several of these titles in their resumes. Listening intently for almost 4 hours was a mixed experienced. When the experts limited themselves to sharing the facts, there were some startling and disconcerting pieces of information on offer. When the experts tried to draw a line from the facts to find conclusions, much less prescriptions, on the crises, it was frustratingly clear that they are all still totally clueless. Refreshingly, several over the period even said as much. Disturbingly, some of the others did not, though it was abundantly clear from their remarks that this was the case.
Some of the facts that hit home:
- China’s resource purchases are down 43% compared to last year, indicating a widening decline in output.
- Measured by electricity usage, since other indicators are seen as unreliable, China’s economic output seems to have decreased by 13%.
- Unemployment statistics in the USA are so distorted that the current 7.56% nationally reported unemployment rate masks a real rate when all other factors are added in (# of discouraged jobseekers, immigrants who are not counted, prison and military population, underemployed on short hours, and so forth) that is closer to 20% and 33,000,000 workers. A rise to 10% unemployment would mean in the same calculations 42,000,000 out of work.
- The current crises is pushing 52,000,000 into poverty worldwide, 40,000,000 into malnourishment, and leading to the death of between 450,000 and 500,000 children worldwide.
The continued sense of “blaming the victim” around individual homeowners and the housing crises, including simply ignorant comments about the Community Reinvestment Act, had some shocking adherence even among this group that should know better. It was refreshing to hear an off-handed point expressed by one surprising panelist Robert Glassman, the co-founder and co-chairman of Wainwright Bank and Trust in Boston, that we needed another policy to address asset building that was not so over concentrated in housing. Right on, Bob! Note to self: send him a copy of Citizen Wealth.
Dr. Junaid Ahmad the urban and water unit manager for South Asia for the World Bank was also amazingly candid in describing the current conversations with officials from major cities in that region, like Delhi, Dhaka, Mumbai and others who had listened to the World Bank advice that they needed to be able to seek funds as independent entities in the financial markets rather than simply from their own central governments, turning to them now in this crises and asking Ahmad and other World Bank officials, “Can you prove to me that this will work?” Ahmad told the 200 odds students and others, that today they honestly did not know and could not assure these city officials that such a strategy would work.
I hope he is telling them that as clearly as he told us.