Is the economic crisis scaring you yet?

Stencilled on an ATM in San Francisco. Image by "Quandaries" on Flickr.

We asked our Observers, from Cotonou to Melbourne, if they were starting to feel worried by the financial crisis that's wreaking havoc on the world's stock markets. You, too: send us your comments.

Contribute to this post with your own country's outlook on the crisis.

"This is not our crisis!"

Bertrand Kpogo is a Beninese blogger and a Web-site administrator.

At the last UN General Assembly, Beninese President Yayi Boni made it known to President Bush that he didn't think it normal to release so many billions of dollars in aid for this crisis. Many Beninese think that this money could be used to help us get out of the food crisis instead.

The financial crisis is not our crisis! The subprime crisis neither; it didn't have anything to do with us. We're just getting out of the food crisis. It's been very hard and it's still haunting us. Here in West Africa, we don't have a stocks-and-shares culture. Few Beninese or Togolese buy shares or get involved in financial affairs, which explains why the stock markets in Ghana and Abidjan for example - where there are lots of foreigners - were thrown into panic. That hasn't been the case here in Cotonou, however. We haven't noticed a rise in prices either.

In Africa, we're actually much more sensitive to the petrol crisis, because a lot of our goods are imported, and each time the price of a barrel increases, the sectors that import become paralysed." 

"We're not even allowed to negotiate these deals"

Daudi Were, from Nairobi, runs a company that helps Kenyan and East African NGOs set up and use online networks.

We're really bracing ourselves now. Although it hasn't affected us yet, we know the next couple of months are going to be really hard. People have certainly become a lot more sceptical about lending money. It's hard enough to get a loan in Kenya at the best of times! People will start getting angry soon, when they realise it's affecting them directly.

If anything this highlights the need for more global cooperation. As Africans, we feel like decisions are being made that will affect us directly, and yet there's nothing we can do about it. We're not even allowed to negotiate these deals. We feel hopeless."

"Clients (…) don't buy the high-end products anymore"

Awab Alvi is a private dentist from Karachi, Pakistan

This is certainly having an affect on my business - I've noticed the difference and tightened my belt accordingly. You see that when clients come they don't buy the high-end products anymore, which is what makes the big difference in profit. While people used to get their teeth whitened, it's not a necessity, so they cut it out. There are a lot less people having braces too. These are essentially cosmetic products, and for that side of the industry, things are going to get much worse soon."

"People will still have 10 dollars to spend on a waffle"

Marc Laucher owns a waffle and sandwich store, Waffle On, in Melbourne, Australia.

My business hasn't been affected by the crisis yet. The stock market might have felt the difference, but Australia is so involved with China, that as long as the Chinese continue consuming, we're protected.

The big restaurants will surely be the first to be affected, but people will still have 10 [Australian] dollars [5 euros] to spend on a waffle. It's a little treat that doesn't break the bank!

What's happened in the US makes me laugh - it's the biggest free market in the world, but this proves that a bit of state intervention now and again wouldn't go amiss.

In 1986 I was living in the USA, in Dallas, and the French restaurant that I worked in went bankrupt. So I really feel for the people that find themselves in that situation now." 

"They're all rushing to buy dollars"

Cristina Civale is a writer and journalist in Buenos Aires.

The crisis is on the cover of all the papers - even Critica de la Argentina, [a newspaper known for its harsh critiques of economic management in the country] used the headline "Black Monday" today [Tuesday]. The government, a bit late, has started to take some measures now. They're thinking about 'dolarising' all bank deposits, as people are worried about the value of the Argentinean peso. It's quite incredible; they're all rushing to buy dollars to protect their savings.
   

However, our economic problems are so deep here that our crisis is permanent anyway. What can a few more problems do to us? We suffer from crazy inflation rates and the constant devaluation of our wages. Argentina is and always has been a model for this type of crisis; we've been living it since I can remember.

Despite this, people are still worried about how it might affect our already-fragile country. As we don't seem to get any reassurance or explanation, we do what we've learnt to do - take our money out of the bank, buy dollars, and wait for things to get better."

"I heard about the crisis two days ago"

Yasmin Zata Ligouw is a language teacher and former journalist from Jakarta. She considers herself part of the Indonesian middle-class.

I heard about the crisis two days ago through the press. Last week, the Jakarta stock exchange was closed because of the end of Ramadan celebrations, so this crisis is kind of 'newer' here. Of course it's a bit scary, especially because I have a family to look after and my husband and I have mortgage with the bank. But I'm confident in the Indonesian economy. Our president keeps saying that we won't live the nightmare of the Asian financial crisis of 1998 again, and most people believe that it's actually true."

Comments

Credit Default Swaps (CDFs) - Why is the media silent?

Nobody in the media is talking about the real tsunami about to overwhelm the financial markets - the $62 trillion fiasco of Credit Default Swaps! This will make the sub-prime problems look like a mere ripple on a pond. CDS are totally unregulated & opaque instruments which Warren Buffet has described as the WMD's of the finance world. Google CDF's and find out what the media isnt telling you

Greenspan & one aspect of the financial crisis - US

The naivety of Greenspan believing that financial institutions somehow would police themselves in an effort to protect their self-interest is staggering considering the heft and the scope of influence he has been granted for many years.

Aside from this painfully obvious fact my hope is that because of this financial crisis and the unstable US job market unemployment benefits be lengthened for people currently receiving these compensations. If this is not part of any financial bailout being considered right now more people will be at risk, and more foreclosures adding to the present disaster that is on our table right now.

I'm afraid that the worse is

I'm afraid that the worse is coming earlier than expected.

crisis?

over the past year,petrol prices went up from about £1 per litre to £1.20 per litre;accordingly food,e.g bread,potatoes,fruit,and meat rose by 20%.Now the petrol price has dropped back 20%,can someone tell the shops to drop the food prices back by the same?

stocks & shares

its about time that the smart alecs in the stock exchanges of the world stopped putting every ones lives on edge my suggestion is that if you buy shares you must keep hold of them for at least a week or maybe a fortnight before you are allowed to sell them on thereby stopping the get rich quick merchants from ripping everyone off

the current financial crisis

the current financial crisis is everybodys crisis, there is no way that it does not affect everyone on the planet . Unfortunately we have to bale out the greedy fat cats , or our problems just get bigger . In these situations the rich will get less rich , but everyone else could lose the lot .mind you there are going to be a lot of people falling on 24 carat swords , and now we own the bank this should always be public knowledge , I bet the number of peeredges from the banking world shrinks for 5 minutes until we find a banker to reward for digging us out of his mess with our shovel .Politicians should take note too , accountability should start at the top, but in a world where once again the accountants will not sign off on the EU`s fairy- tales, sorry accounts this is not likely, still this is as close to a slap wrist to the politicians and their bedfellows as we are ever likely to see .This might be the equivalent to Lady Thatchers Falklands war for Gordon ,but it wont be enough, it is the difference between winning and surviving.

Bankers are responsible for the financial crisis due to greed

Basically the bankers are responsible for the financial crisis and credit crunch due to the serious impact of deregulation by the policies of Reagan and Thatcher in the mid 1980s.It started with the culture of greed and irresponsible by the bankers, speculators and hedge fund managers that they do not give a damn to the ordinary hard working families in Britain. The fatcats in the City of London earning huge bonuses are also bank robbers and assets strippers are very selfish based on the culture of greed and do not care about the need of ordinary people.

Credit Markets

I was very surprised to find out our entire economy is run on credit! Normal, average people don't live like that; I told my representatives to introduce the wall street people to bankrupcy court & return to a market where money is worth what it represents. Replace credit with assets. With 90% against the wall street bailout - they ignored us.

The World Needs Leaders and not Managers

The World Needs Leaders not Managers

By Victor Macklenin

THE WORLD NEED LEADERS NOT MANAGERS

It seems that the world's accounting system is at sunset and everyone in the department has gone home abandoning the businesses. There is a terrific chronic disease moving from one country to another and from one company to the other. I am really disturbed by the results and billions of losses that closing down companies are reporting when we have qualified company secretaries, backed by qualified chief executive officers who receive monthly reports and sit in the boardrooms with the so called company executives and at times board of directors. My questions is what exactly will they be discussing and what strategy are we talking about when you cannot tell that a company is getting into a billion dollar recession and at times point of no return? Is it that we have managers in the place of leaders and that leaders are now operations instead of being strategists? Let's see, I will picked a few examples and we will check together.

I am a very young upcoming business executive but have several questions I would like to ask the so-claimed business gurus who preach that they have seen it all. If you tell me that the company position is in arrears by a few million over a year's trading, I may listen, but if you come to the table with billions I am afraid as the owner of the company I may have to fire the whole executive board and start to recruit people with a vision, business understanding, strategist, pro-active, leaders and not managers.

Looking at Alitalia, what went wrong? The fact that it has a government share holding is not an answer for a close down or making loses. It is an airline with a proper management team and leaders. But what cause the failure to monitor and see that the ticketing system is not in order and to correct it in time? As well what cause the airline to run in the expensive maintenance schedules which are not matched with revenues, what cause them to run with less productive workforce with cumulative loses that not explained till the shut down stage them someone starts firing executives and cutting jobs of suffering civilians? I don't have any answer management is overruling leadership, lets change the world.

Plane facts ( http://query.nytimes.com/gst/fullpage.html?res=9D0DE0DA163CF934A35756C0A9629C8B63&sec=&spon=&pagewanted=all) source viewed 15/09/08 By ERIC SYLVERS
Published: May 7, 2004
Alitalia at a glance
Age +57 +
+ Ownership Italian state 62% +
+ Fleet 182 aircraft +
+ Workforce 22,000 +
+ Passengers 22.5m pa +
+ Revenues €4.32bn (£2.9bn) +
+ Performance Cumulative operating loss of €1.2bn over the past 5 years +
+ Market cap €810m +
Previous bail-outs 1997 and 2002
Looking at Northern Rock in UK an few months ago we saw massive queues of customers trying to get their deposits out of this troubled financial institute. May question is till the institute had to decide a closure what was going on all this time with the business monitors, the arm- chair executives the financial advisers? I guess if the stewardship fails then we don't need managers we need bank tellers and their supervisors, just doing transactions in the dark than to have managers above the business leaders. Special questions, if the Bank of England had not chipped-in what was going to be the result and who was going to suffer? 10 billion injected to save the struggling financial institutes to-date. Is this where the world is heading to?
http://news.bbc.co.uk/2/hi/business/6994328.stm viewed 15/09/08
* NORTHERN ROCK FACTS *
Founded in 1965 after merger of Northern Counties Permanent Building Society and Rock Building Society
Headquarters in Newcastle
Became a public company in 1997
Has 6,400 staff
Has 18.9% share of new UK lending
Loans and assets of £113bn
Deposits from customers of £24bn

Now we look at the USA, Lehman Institute. If you are telling me of a Bank closing just like that and reporting that they are in billions of dollars deficit I will arrest the whole executive team till they return the money and open the institute. The central bank at the same time is to blame as it is supposed to ensure that the financial institutes are supervised and monitored continuously. Tell me, do we have a company secretary and a chief executive officer, a board of active directors who used to sit and discuss the financial results and trading level of this institute? NO there wasn't. Convince me if there was. Hundreds of billions are down the drain and 25000 people on the street without jobs.
http://news.bbc.co.uk/2/hi/business/7615931.stm* * source viewed 15/09/08
Tumbling bank stocks
Lehman's demise is being felt around the world:
Stock markets and the US dollar have tumbled in reaction to Lehman's collapse, with banking shares hardest hit. UK bank HBOS closed 17.6% lower.
Central banks have moved to reassure markets. The US Federal Reserve has broadened its emergency lending scheme and the UK and European central banks have injected a total of about $50bn (£28bn; 35bn euros) into the financial system.
There are fears AIG, once the world's largest insurer, could also face collapse. It is taking steps to raise money after reportedly seeking a $40bn emergency loan from the Fed.
Bank of America's move to buy Merrill in a $50bn deal means that three of the top five US investment banks have fallen prey to the sub-prime crisis within six months.
In the UK, accountants PricewaterhouseCoopers (PWC) have been appointed as administrators for Lehman.

Finally my heart bleeds to learn that we still have a lot more companies speculated to be on the verge of collapse like the AIG mentioned above. The world has become this much inhuman to the business world or the business has become a monster untouchable to the business executives? I don't get the answer and seriously call on my fellow CHARTERED ACCOUNTANTS, CEO, BUSINESS MANAGERS, and BOARD OF DIRECTORS to open their eyes and do business competitively. It wearies me to see that billions of dollars go towards covering annual mismanagement with people claiming to be professional, transparent, stewards, committed, experts with excellent business knowledge and required skills. Is it so bureaucratic that a strategic idea can not make its way to make changes before the worst happens, are the watchdogs asleep, is it so easy to just fold and close business doors? The central banks should not just rush to rescue and fail to monitor the situation before it goes worse. Now the USA markets will follow suit and who suffers, everyone when management is in the hands of a few who don't care. If you give a billion to Africa for either HIV or other projects you will save millions.

Ladies and Gentlemen the world needs leaders not managers let's fight this stumbling block and avoid promoting ineffective people from running our lives this way.

The reasons behind this mess

The overall problem is that over recent years Capitalism has become greed capitalism. Investors and companies have put profits above all consideration for other citizens. Greed of profits from supplying essentials such as water, fuel oils, gas, electricity. Greed from exploiting cheap labour in external countries to produce goods more cheaply than the by the native workers, thus putting millions of native workers out of work and the taxpayers picking up the bill to pay the social and un-employment monies (that is a case of investors robbing the state for their own money greed!). Company executives taking extreme high salaries and paying out extreme high bonuses to fellow executives and shareholders, this money should have been re-invested in the businesses! When a company goes into business it is understood that the company will always have enough financial assets to support it, otherwise it is to be declared bankrupt, many banks, maybe due to their excessive influence over people in high places, were able to ignore this important condition and so carry on trading with hidden debts! Too many people in authority turned a blind eye to falsifications and curruptions by those in the rich dealers circles! After Thatcher, even normal people became house traders , buying and selling houses for profit (the greed syndrome installed by thatcher into so many minds, "never mind you Jack, I,m alright" was the catchphraseof the day). In this day and age when the world is becomming over populated, houses should be for living in , not for commercial profiteering! Ive probably missed many other causal factors but these are probaly the most likely for the current colapse.
By the way, I am a capitalist and have run and managed my own businesses but for the sack of making a personal living and employing others.
It is about time that our politicians, took charge of excess payments to themselves and over paid executives, footballers and similar (these are the people who take more than their share of the worlds pleasures and essentials)!

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