Economics

First off, I don't claim to know anything about economics. It's one thing that gives me a head ache. But everything in the news lately about AIG, Fannie Mae and Freddie Mac, and the Lehman brothers has gotten me thinking. I don't know how the government should solve the "financial crisis" I'm not even sure they should get involved. Maybe it's better to let the actual crisis hit, and then build on a new solid foundation than going into debt to buy bad debt (not sure aobut hte logic on that one. . .)

Anyway, this is the quote on the radio that really got me thinking. I forget who it was exactly, but some government official taking about why they bailed out some financial institution said that if they had not bailed out the financial institution it would have "lead to the reduction of American household wealth". Exactly. And would that really be so catastrophic?

What exactly would happen if the government left well enough alone? Would we really have a crisis? Or would it lead to a reduction of American wealth? Right now in Zimbabwe, they're experiencing a REAL economic crisis. Inflation was at 11 million percent (just as a comparison, our inflation rate is currently 5.37%) The bank of Zimbabwe had to print 100 billion dollar notes. As in the denomination is 100 billion, not that is how many 1 dollar notes they are printing. In July they redenominated their currency system- for all you world travelers out there, you can turn in your old Zimbabwe dollars for New Zimbabwe dollars. 10 billion old dollars will get you 1 new Zimbabwe dollar. And despite that immense currency change, one new dollar is currently exchanged for not quite 1 US penny. (1 ZWD = 0.00991326 USD)


In Zimbabwe at least 80% of the population is unemployed. I've heard 90-95% from people who are from/were recently in Zimbabwe. August unemployment in the US was 6.1%. In 2007 per capita GDP in Zimbabwe was $200. In the US it was $45,800. 80% of Zimbabweans live below the poverty line (for a Zimbabwean, below the poverty line means earning less than $41 a month). 12% of Americans live below the poverty line- and our poverty line is a LOT higher than theirs- $867/month for a person living alone.


So, as the media focuses on impending doom and financial collapse, I just don't find myself all that worried. I can't feel the doom and gloom. Perhaps it's because someone else is providing for my food and lodging. Maybe it's knowing that hopefully in not too long I'll be in a country where the economy isn't as good as it is here and surviving on less than I do now. Maybe it's because I know in the long run, the economy is bound to recover. And partly, I think it is knowing that our poverty is wealth to much of the world.


statistics were found at:
http://inflationdata.com
http://en.wikipedia.org/wiki/Zimbabwe#Economy
www.xe.com
http://en.wikipedia.org/wiki/Poverty_in_the_United_States
http://en.wikipedia.org/wiki/Economy_of_Zimbabwe
http://stats.bls.gov/eag/eag.us.htm