It is in Asia, elsewhere, that we are getting a glimpse of something new. Wait, let me take that back. The healthcare legislation that will surely pass soon, once cobbled together from the egos of the participants, will be something new. Like most change, it is bitterly fought. Lincoln is a saint today, but quite a shifty one in his own time, potentially wrecking the economic system to move the United States toward a better union. No doubt he would have been labeled a communist had that epithet been around to be tossed about with abandon. Yes, there is change here, but it is clocked and meanwhile we wait.
The Asian nations are talking more boldly, suffering the ills of a stalled economic world quite well. Considering that most economic meltdowns would normally take down countries in Asia or South America, or, even Russia, Asia's robustness is fascinating. South Korea's economy is growing at its fastest pace in seven years, so the N.Y. Times tells us.
South Korea has been recovering from its worst downturn since the 1997-98 Asian financial crisis as a weaker currency and government stimulus programs overseas boost exports. Record-low interest rates and government spending at home have also helped stimulate Asia's fourth-largest economy.
The unemployment rate fell in September to a nine-month low of 3.4 percent, consumer and business sentiment have risen and the current account -- South Korea's broadest measure of trade -- is firmly back in surplus after a deficit last year for the first time since 1997.(N.Y.Times)
But it's not just South Korea, but others, like China, that are growing at a fair clip, despite demand problems here in the United States. This is not the expected norm in the world as it was.
At their recent conference in Thailand (B.B.C), leaders of an Asian block of nations talked confident, arguing for an economic bloc similar to the European Union. The leader of our ally Japan suggested, "It would be meaningful for us to have the aspiration that East Asia is going to lead the world", by way of encouraging the heads of the Association of Southeast Asian Nations to form a free trade group.
While China, Japan, Australia and New Zealand were considered a part of such thoughts, there was considerable debate as to whether the United States should be included. (Which, when we think about it, seems like one of those debates about whether to include Russia in NATO: depending on who is allowed into a given group, the group runs the risk of subverting its reason for being).
Regardless, the clear indicator is that the world is moving forward, even if the United States struggles against change.
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If we are waiting here in the States for things to resolve, unwind, repair... then we have to wait through episodes and people like Andres Duque, a homeowner who has decided he would rather not pay his mortgage because it is under water. The banks are taking all the criticism, despite the fact that a healthy banking system is the foundation on which capitalism rests, and regardless of whatever bad business decisions were made. It is obvious that everyone from Wall Street to Main, from mortgage dealer to man on the street, miscalculated amidst the euphoria of rising home prices.
Now those caught in the error of their greed or foolishness are opting to abandon their obligations. These same people will also wonder why banks are failing, or why the rates on their credit cards are rising, or why the economy is not going to their liking.
Andres Duque thought he got a real steal when he paid $125,000 for his Little Haiti condo. But four years later, similar units are selling for $35,000 and even less.
And so, faced with the prospect of being underwater on his mortgage -- owing more than the unit is worth -- for the next 20 years, Duque, 33, made what seemed to him like a rational choice: to cut and run.
He stopped paying the mortgage, basically forcing the lender to take the condo off his hands through foreclosure.
"I was able to pay off all my credit cards," said Duque, who is biding his time in the condo, waiting until they come and evict him. "In a way, it was the best thing that happened to me because all my income is not being consumed by this freaking monster of a debt."(McClatchy)
The point could be made that the banks should take the hit for loaning money for overpriced assets and that if they take the home back, they still have something. But let's not forget that the money in that home loan went to someone... a previous owner, a builder. The main problem though is two fold. One, the more losses you pass on to the banks (out of owner necessity or whim in not paying mortgage), the longer you go when a given bank is not making loans to your business, your employer, your local entrepreneurs. Second, by walking away from the contract, the nature of contracts comes into question, and we become more like those banana places we don't wish to live in. (And an unintended third, your financial institutions will never trust you again, making it onerous to get the simplest credit terms).
Not sure, but with their savings habits, this seems a problem not cropping up in Asia, and one suspects most would be too ashamed to walk off an obligation when still able to pay.
