Zooming In

October 25, 2008

Global Shocks

Gelf highlights overlooked coverage from local media around the world. In this special financial-crisis edition: Nigeria gets hit from both sides, parsing bank statements in Taiwan, and wine as a leading economic indicator in Chile.

Michael Gluckstadt

Some of the most insightful writing from outside the US comes from local media. In this occasional feature, Gelf identifies noteworthy stories that haven't gotten much attention outside local borders. In this edition, Gelf examines the impact of the financial crisis around the globe.



Two Indian-Americans were affected deeply, and very differently, by the financial crisis, and the Indian papers explored local angles on both. Neel Kashkari, Hank Paulson's Goldman Sachs buddy, was appointed to head the bailout. "The 35-year-old Indian who has been tasked with bailing out the US economy from the credit crunch has his roots in Srinagar's Safriyar locality," the Indian Express reports. "But nobody in this rundown neighborhood knows Neel Kashkari. His identity here is through his grandfather Sudarshan Kashkari, a former head clerk in the Electric Department, the well known Kashkari clan, a brick house on the banks of the Jhelum and a Kashkari neighbourhood which no longer exists."

Karthik Rajaram's bailout story is considerably sadder. The Indian-American in the Porter Ranch neighborhood of Los Angeles killed his wife, mother-in-law and three sons, and then himself, when he saw his stock-market holdings wiped out in the market meltdown. A classmate told the Times of India, "He had a very jovial, fun loving and cheerful personality. He also had very good interpersonal skills and got along with people well. He was a very happy-go-lucky person. I am at a loss for words now." In a separate Times of India article, a relative of Rajaram's father "said that the family did not expect Rajaram to resort to this kind of mayhem and termed him a self-obsessed man who loved wealth."



London's bankers have some time on their hands these days. The city has long been home to some of the world’s busiest and most powerful bankers, who take advantage of Greenwich Mean Time to complete time-sensitive deals in both Asian and American markets. Facing a significant slowdown after years of excesses that accompanied a near-mythical work ethic in Britain’s longest sustained period of growth since the Industrial Revolution, city bankers are now desperate for a free meal.

According to London’s Daily Mail, hundreds of movers-and-shakers spent up to a half-hour in line, queuing all the way down London’s famed Fleet Street for the opening of Chilango—the British take on Chipotle-styled Mexican cuisine—and its promise of "burritos 100 per cent off." For the upper crust of the investment community, it was a sign of the severity of the crisis that a free lunch outweighed their once-precious, once-highly-billed time in the office.

Daily Mail reporter Caroline Grant, who covered the Gordon Gekko-turned-Oliver-Twist breadline, found one observer who noted, "It was telling to see how many time-poor office workers were prepared to wait for a free meal." Grant avoided the use of the term "recession" in her article, however, just as the BBC faces mounting accusations that it was censoring its staff from using the "R-word" to describe the current economic "downturn" and "global financial crisis." That’s the stiff upper lip for you.



As the financial markets have gone into free fall in the last few weeks, US consumers have found one ray of light poking through the cloud of lost nest eggs: At least gas is getting cheaper! Since last year, the price of crude oil has dropped over 50 percent to under $79. As one anonymous businessman in oil-rich Nigeria tells the Daily Independent, though, the drop in gas prices isn't good for his country, which relies on oil revenue for much of its economic health. "Investors alike have grown more pessimistic about resolving this escalating global economic crisis," he said. Then he continued, somewhat bafflingly, to say, "Adrenaline, hormone responsible for apprehension has been secreting in no small measure into our veins and I will not lie to you, this issue may lead to hypertension for many people."

Nigeria has been hammered by both sides of the financial crisis, as not only has oil lost value, but also much of the country's money is invested overseas in the declining British and American markets. "The price of crude oil in the market is not stable," Professor Ango Abdullahi of the Ahmadu Bello University told the Daily Independent, suggesting that the country focus on developing its agricultural sector. "Nigeria cannot control the price of oil but it can control its productive resources," he added.


The worldwide credit crunch (alliterations are a useful way to remember that you can't borrow any money anymore) could end 15 years of uninterrupted growth in the Greek economy. According to the Athens News, cheap money and ample bank lending were driving forces behind the country's longest period of economic expansion since the 1960s. Though the Greek banking systems are fundamentally sound, changes in the global market are driving up lending prices, and Greeks are feeling the squeeze in everything from hair salons to Land Rover purchases. But it's not all bad. The Bank of Greece is cautiously optimistic about its economic forecasts, and a recession in Greece is unlikely. In an editorial, John Psaropoulos sees the crisis as "an opportunity in disguise." Greece's high inflation rate will cool, and while this may just be grasping at eco-friendly straws, Psaropoulos claims that the decrease in production will have environmental benefits. But more poignantly, he sees the financial shake-up as an excuse to reintroduce Greek businesses and politicians to the "Goddesses of Transparency, Accountability, and Meritocracy."


Financial regulators know that they every word they utter will be scrutinized, but in Taiwan even subtle semantic nuances can carry enormous weight. Lee Jih-chu, deputy chief of Taiwan's Financial Supervisory Commission, told reporters that the government is "keeping a close eye" on five banks with liquidity problems. She was met with harsh criticism from lawmakers who feared that such comments would precipitate a bank run. One member of the opposing party bristled, "How did she dare make such a remark?" Lee toned down her remarks, saying that the banks were "under observation," and then a few hours later revising her statement again to say that her ministry was merely "watch[ing] with concern." Finally, she simply told lawmakers that no banks have liquidity issues. Though she might not have reassured the skeptics, Taiwan avoided the bank run—not because of financial soundness, but because of the three-day "Double Ten" national holiday during which banks were closed.



Grapes aren't the only things being squeezed in Chilean wineries these days. Wine distributors are feeling the pressure as shipments have been canceled or scaled back anywhere from Korea to Russia in the wake of the current financial situation. While the use of wine as an economic indicator is debatable, the belt-tightening of the world's wealthiest cannot be good for any luxury-goods industry. According to the Santiago Times, Chilean wine exports to the US have dropped six percent since the beginning of the year. One company experienced a three-week standstill in sales to the northern hemisphere after the collapse of Lehman Bros—which happened to be right in the middle of their busiest season for exporting up north. There have been some bright sports—or at least, not entirely bleak ones. Sales in Japan have actually increased, which either says something about the stability of Japanese markets, or how the Japanese people react to bad news.

David Goldenberg, Joe Horton, and Vincent Valk contributed reporting for this article.

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Article by Michael Gluckstadt

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