By Steve Kelman

Blog archive

Yes Virginia, there is an economic crisis

I am writing this post from the Singapore airport, on my way for a week in Taiwan to write a teaching case for use at Harvard on the Taiwan high-speed rail project. On my plane trip over, I have gotten a real feel for how the economic crisis is a worldwide phenomenon, even hitting (up to now) very successful places such as Singapore.

In the business class lounge at JFK, waiting for my plane, I read in the Straits Times (Singapore's leading newspaper, available at the lounge) that Singapore exports are down an amazing 35 percent. The president of Singapore had the day before decided to tap into the government's rainy day fund (national reserves) for the first time, to pump money into the economy.

On the first leg of my flight, to Frankfurt, the first class section of the plane (Singapore Airlines is considered by many the best in the world) seemed totally empty. Business class was about a quarter full. On the second leg of the flight, from Frankfurt to Singapore, two people (it looked like) straggled into first class, and business class got a few more passengers as well, but the high-price seats on the plane were still mostly unoccupied.

One nice thing about stopping in Frankfurt in transit is the wide range of European papers available in the lounge. So I read a Swedish newspaper, which was filled with news about the imminent demise of Saab, owned by GM, under GM's new restructuring plan. The Swedish government has decided neither to nationalize the company nor to pour money into it. The government is afraid what GM mostly wants is money to help them meet contractual commitments to dealerships that will be closed down. GM hadn't succeeded in making Saab profitable, the Swedish Minister of Industry was quoted as saying, so it seemed unlikely the Swedish government could succeed. Cheaper to pay unemployment compensation and invest in retraining -- the government's hopes seemed pinned on the wind power industry -- the government has concluded.

Oh and by the way, the German papers were filled with speculation about possible sovereign debt defaults of European nations that are members of the European Union, and even in the euro currency zone.

Enough to want to make one hunker down into a hole!

Flickers of light out there, anyone?

Posted by Steve Kelman on Feb 23, 2009 at 12:08 PM


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