Days after Hurricane Ike blew through southeastern Texas and drenched the midwest thereafter, a financial tsunami is swelling, one with dangers and costs that surpass that massive storm.
Over the weekend, financial services firm Lehman Brothers filed for bankruptcy and Merrill Lynch, the firm whose famed bull seemed synonymous with Wall Street, fled into the waiting arms of Bank of America. And the bad news keeps on coming.
The American auto industry is begging Congress for billions of dollars in loans to stay afloat, WaMu's value has been downgraded to junk status, and insurance giant AIG increasingly looks insolvent.
Yesterday, the stock market had its worst day since 9/11.
This is a scary time to be hooked into the financial grid, and the Wood Family is hooked in tight. We own rental properties in an era of real estate free fall. We have invested in stocks and mutual funds just as Wall Street teeters. Even our pension fund is heavily invested in heretofore solid markets that now face an abyss.
And I know just how comparatively fortunate we are. Many, many other people face far graver threats than Jenny and I.
Still, the question remains: How did we get here?
It will take years to unravel the mess that has overtaken the global economy. Risky financial "products," debt-feuled spending, and good old fashioned graft will likely provide short term explanations.
What of the long term? I think we face a fundamental transformation toward an entirely new and challenging world.
Yes, I'm writing this after a few days of bad headlines. Ideally, I merely suffer the same myopia that afflicts most writers when they feel they should write something. Perhaps the news isn't so bad. Today the Fed is likely to infuse some support to struggling banks, maybe even lowering a key lending rate [update: injection of cash, yes; lowering the rate, no]. The market seems less panicky this morning, heading into positive territory as I write this. Moreover, some economists offer assurances that we're simply shaking off an era of bad debts, taking strong medicine after a period of debauchery.
But the world seems to be tacking between an untenable present and an unknown future, a reckoning that we've long avoided but always known to be inevitable. Former Fed chair Alan Greenspan says that we face a once-in-a-century financial crisis, and he warns that we have a long way to go before our problems can be resolved.
In those better times ahead, I wonder: will we look back on our era -- a time when home-ownership seemed to be a right rather than a responsibility, when regulations were written by those most needing regulation, and when the highest qualification for president was whether he could share a beer with a Red State voter -- and laugh.
I hope for laughter in that happy day. I hope we'll wipe sweat from our collective brow and breathe a sigh of relief. Right now though, I'm worried. Jenny and I will continue to hold onto our properties, our stocks, our mutual funds, and our optimism. There's little more we can do but wait.
Storm clouds gather and we all feel the drops.