The Big Money: Banking Your Money Hurts the Economy | Newsweek Business

BUSINESS
More Grapes, Less Wrath
Zachary Karabell 4/18/2009 12:00:00 AM
It has now been firmly established—and endlessly repeated—that the world is mired in the worst financial crisis since the Great Depression. In the past weeks alone, there have been headlines announcing the "worst industrial production numbers since World War II" and the greatest contraction of prices since the middle of last century. And throughout the world the data continues to roll in, with economic growth in the United States likely contracting at nearly a 6 percent rate for the first quarter of 2009 and countries from Japan to Brazil linked by the common phenomenon of shrinking economies and lost jobs. While U.S. and global stock markets have made up some ground, they remain down as much as 50 percent from their highs just over a year ago.
MONEY CULTURE
Bankers vs. Economists
Daniel Gross 4/14/2009 12:00:00 AM
Which profession bears more blame for the global credit meltdown and its ensuing gazillion-dollar bailouts: bankers or economists?
INSIDE BUSINESS
Yes, It’s A Wreck, But We Can Fix It
10/11/2008 12:00:00 AM
Where are our investments for the 21st century? Why can't we get a permanent research-and-development tax credit or fund the America Competes Act, which increases the basic research funding of the National Science Foundation and top universities? I'm afraid the bailout is typical of the current attitude of Washington—prop up old industries and forget about tomorrow. Sure we get great promises in campaigns, but in practice we starve the new ideas. Joseph Schumpeter and Adam Smith, our great free-market theorists, must be rolling over in their graves. Instead of allowing creative destruction we are propping up failures. We need to invest in smart new ideas. I think it goes without saying that the $700 billion bailout is doing exactly the opposite.
Hiccup? Or Global Meltdown?

PERHAPS YOU HAD TO BE AT THE epicenter to understand the force of the earthquake. In Bangkok last August, a young American, the manager of the Thailand office of a major U.S. bank, sat in his high-rise office in the city's center. Lining its walls was a row of clocks displaying the time around the globe: Tokyo, London, New York. He eyed the two that read KO SAMUI and PHUKET--tempting beach resorts an easy flight away from the urban horror Bangkok had become. Outside it was about 100 degrees, and Thailand's financial markets were melting down.
THE ASIAN CONTAGION
Hiccup? Or Global Meltdown?

There was an unmistakably shellshocked quality about him, suggesting that, years from now, he might hear the name of a failed Thai bank and scramble under his desk for cover. Sure, he had been in Tokyo in the early 1990s, when Japan's bubble economy began to collapse. But he'd ridden through that and had come to Thailand young, confident and competent. Southeast Asia was a place to make both your money and your name. No one, the young man said, had seen the debacle coming--certainly not in Thailand, with its growth rates and go-go attitude, nor anyone living anywhere else.
Peace And Prosperity?

The prospect of peace alone won't be enough to keep the current bull market going. Nor will it restart the U.S. economy, which continues to decline at a rapid clip. Retail sales in January were 1.4 percent lower than the same month a year ago, while industrial production fell for the fourth consecutive month. Some economists see light at the end of the tunnel, but the recession's end is several months away at best. Says Paul Boltz, economist for the T. Rowe Price mutual funds, "Saddam Hussein may have started it, but rising unemployment and declining personal income are keeping it going."