The past few days have been so depressing for me. Every time I opened a browser to peruse the news, my heart sank deeper and deeper. Article after article has been written about the current financial turmoil and a very, very small minority have shown the author to have any understanding of basic economics and the interaction between markets and government regulations. I haven't been over to the Wall Street Journal for some time. No reason in particular... I sometimes lose interest in writing in the WSJ because it has slowly degraded in quality over the past two decades. (I started reading the WSJ and Economist when I was twelve. Soon after, I added a number of university review magazines that I found at Barnes and Noble and other financial mags that I was able to get my hands on. I have continued to read many of these over the years and the only publication that seems to have kept up the quality of writing and reporting - i.e. how good the writing itself is and how thorough the reporting is - is the Economist. I guess I should add that I started reading Reason Magazine 10 years ago and [thankfully] haven't seen a decline there, either.)
I digress. The news has been thoroughly depressing; not because of the market ruckus - that is to be expected after 10 years of real estate sales insanity - but because the reporting has been so sensational and poorly researched. So, as I said above, I happened to find myself looking through the WSJ and came upon this gem: Bad Accounting Rules Helped Sink AIG by Zachary Karabell. At the end of the article, he writes:
"There is one final irony: AIG was founded in Shanghai in 1919, when China was emerging from millennia of imperial rule. Over the next century, China turned away from capitalism. Almost 90 years later, AIG is now being taken over by the U.S. government just as the Chinese government is moving as quickly as possible to divest itself of control of major companies. One of those countries is growing fast; one isn't. Perhaps that is a coincidence; perhaps not."
Please, please read the article. This is not a government sucks the blood out of every free market article and this is not a business is nothing but a stick it to the man enterprise article either. Mr. Karabell does a fantastic job at explaining the complex reasons why what we are seeing with financial institutions is occurring so rapidly. He also deserves praise for thoughtfully cautioning the way we are dealing with the current problem. The underlying message: watch out for all those unintended consequences.
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