It’s about 3:00 p.m. as I’m writing this post, and the DJIA has lost a bit over 725 points, taking it below 10,000 for the first time since 2004. There’s an hour or so left in the regular-hours trading day, so it’s pretty safe to say at this point that it has been a pretty bleak day for the market specifically and for the economy in general.
Our most serious problems are waiting for us just around the bend as the meltdown of the banks and now the plunge of the stock market begin to make their presence felt in the “real” economy. But in some places, the proverbial shit has already hit the proverbial fan.
Despite borrowing from the Bush playbook in their recent scuffle with Georgia over South Ossetia, the Russians are mostly just a lot of hot air…at least according to this article by international relations scholar Murray Feshbach in yesterday’s Washington Post. Russia’s economy is almost completely reliant on selling oil, so they are just as badly impacted by the downturn in the world economy as everybody else (although they might be in a better position later on). Last week I had a link to a website from a Russian fellow who says that his country is better prepared to withstand the hardships of a global depression because Russians are more accustomed to doing without, but that’s a pretty back-assed way of looking at how bad things are going to be in a country that is only just emerging from two decades of internal turmoil. But it’s not just the economy, Feshbach says. The Russian military has completely fallen apart and won’t be rebuilt anytime soon given the suddne lack of funds. The most devastating thing, though, is the burgeoning health crisis in Russia. Russia is actually depopulating at a rate so high that it cannot recover from the loss of people. The average Russian male only lives to the age of 59, compared to 72 in most developed countries. Russians suffer from heart disease at three times the rate of Americans, they drink twice as much as the WHO considers safe, and tuberculosis is becoming a national epidemic, with crumbling medical infrastructure unable to handle the uptick in cases.
Iceland, on the other hand, is in deep doo-doo right NOW. Iceland’s economy has seen a huge boom in the last decade or so, mostly from playing the numbers game in the international credit markets. Oops. The third largest bank in the country failed last week, and the government doesn’t have enough money to bail them out. They seized the bank, but the seizure may take the government down with it. Contributing to the problem is that the national currency, the krona, has collapsed and is as worthless as the currency in Zimbabwe. Over the weekend, there were bank runs as people tried to salvage what they had, and there have been reports of people beginning to hoard food. Iceland has asked for emergency inclusion into the EU so that they can abandon their now-worthless currency and convert to the Euro, but with the EU looking at rough waters, too, they aren’t terribly inclined to bring in a country that’s already failing.
If you need a laugh after all that…go check out this very amusing “interview” by the Australian comedians Clarke & Dawe explaining why Australia is insulated from all this hullaballoo.
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