The Hindu Business Line : When the economy stings

Winston Churchill used “aftermath” to describe the consequences of the Second World War, quite an appropriate term to describe the effects of the recent collapse of financial institutions in the US, affecting the whole world. The extent of the crisis has been extensive and painful, but there have also been some amusing ramifications.

The turmoil hit even Queen Elizabeth, who lost £25 million. After the recent happenings in the financial sector of her nation, she must have felt impelled to visit the celebrated London School of Economics to know what the current meltdown is all about. Her Highness might not have had good grounding in the tricks of the functioning of free market. Her innocence should have startled the people around when she asked the LSE dons “if things are so awful and large, how come every one missed them?” The dean answered “... everyone thought they were doing the right thing.” Of course, we learn that the Queen’s estimated private property, worth £320 million, includes a personal investment portfolio of about £100 million. Hence the distress.

Impact on people

Another glaring instance of woe was Iceland’s plight. In a helpless situation, the country was offered for sale on the Internet, making it clear in the notice that the financial condition of the country was “sketchy”. The way in which individuals were affected was also sad. In London, undertakers started demanding advance payments for service, forcing poor families to postpone funerals until they receive Government aid. The impact in Russia became evident in the fall in vodka drinking. Another consequence of the crisis was the increase in burglaries in Ukraine. In capital Kiev, such crimes touched 30 per day. Curiously, even as the banks were facing liquidity shortage, people were being advised by the authorities to keep their savings in banks for safety. One of those contradictions in economics.

There was something shocking in America. As mortgage banks went bankrupt, a two-bedroom apartment even in places such as Detroit was offered for sale for just $1,500.

Right looks at Left

As the Federal Government was struggling to save the economy from ruin by State intervention, virtually transforming USA into USSA (United States of Soviet America), there was a revival of Marxian ideology in the West. We hear that the sale of Das Kapital and works of Engels had trebled. French and German statesmen apart, even the Pope and the Archbishop of Canterbury are reported to be appreciating Marx’s theories. What twists in history.

There is another side to the economic crisis. Jet Republic, an airline firm, had recently placed orders worth $1.5 billion in the hope that the credit crunch would not affect high net worth individuals and their travel on private planes. As though to prove the validity of such hopes, some CEOs flew in on private jets for talks with the Federal authorities on the bailouts required for their companies.

The Recession-proof

In mid-November, some wine lovers almost defied recession by bidding $40,000 for a bottle of rare vintage in auctions in Hong Kong. There was also the bid for $2,74,718 for a collection of 144 bottles.

In India, several real-estate developers and builders are reported to be planning a visit to Macau for a convention. While commenting on the need for such a convention now, some cynically observed “should we go to Macau to hear that real estate markets in India are in doldrums?” To sum up, in New York, a clock that counts the national debt ran out of digits when it ticked over $10 trillion. As a temporary measure, the dollar sign had to be dropped to provide for an additional digit.

(The author is a Bangalore-based freelance writer.)