Financial columnist talks about financial crisis in US
LORETTO – Speaking to a group of more than 200 in St. Francis University’s JFK Student Center auditorium, New York Times financial columnist and co-host of CNBC’s “Squawk Box” Andrew Ross Sorkin said he would try to put current economic concerns in perspective.
Painting a rosy picture of the future is difficult, with unemployment averaging 7.3 percent, and that number doubling once underemployment is factored in. There are some real challenges, he said.
But in noting that Sunday will mark the five year anniversary of the financial crisis’ beginnings – when Lehman Brothers filed for bankruptcy, Bank of America announced its acquisition of Merrill Lynch and AIG received an unprecedented $85 billion federal bailout – Sorkin said it’s sometimes hard for people to appreciate how much worse it could have been.
Without government intervention, Lehman, AIG, Morgan Stanley and Goldman Sachs all would have fallen, he said.
The business that would have toppled next, however, would have created ripples felt across the globe.
“It’s not even a Wall Street firm,” he said, but General Electric.
With more than 300,000 employees in 69 countries, the effects of the financial crisis would have been multiplied by 10.
“You can just see the dominoes fall after that,” he said.
And because the United States’ economy is based on confidence, many consumers were never made aware of how close the country came to financial ruin. For instance, few knew that one of the country’s largest McDonald’s franchisees doubted whether it could make payroll in the days following Sept. 15, 2008.
“For me, the McDonald’s example is the scariest,” Sorkin said, because most of its employees need their checks for food, rent and daily expenses. They wouldn’t have had months or even weeks of reserves saved up to get them by.
Going forward, Sorkin said, one of the new and bigger challenges facing everyone is trying to find a new normal.
Some look backward at how the country was faring before the crisis. In March 2006, Sorkin said, the unemployment rate was 4.6 percent.
“Should that be our target?” he asked, adding “That was ‘Alice in Wonderland’ time.”
As people around the country strive to determine their own new normal, Sorkin said he gained insight from having talked earlier to students and local business leaders, who are dealing with different economies on a different scale.
“It’s always a great learning experience,” he said. “I learn a lot from the questions.”
Mirror Staff Writer Kelly Cernetich is at 946-7520.