News You Can Use

Dr. Beeper loves to give me a hard time about my enthusiasm for the Wall Street Journal. He calls me a Murdoch-lover, or some such nonsense.

The insult is so far from the truth it doesn't even bother me. But what does bother me is that at a practical level I am, in fact, supporting the man who created Fox News. That's a tough pill to swallow.

Unfortunately, there really isn't a comparable source for the daily economic & financial news that the Journal provides, with the possible exception of the Financial Times. I need to check that out.

Regardless, my larger point is that the world of finance has gotten so absurdly complex that only dedicated newspapers like WSJ or FT can hope to cover it adequately. And that's bad for everyone.

People throughout the country can relate to the economy's problems in personal terms - foreclosures are at an all time high, gas is nearly $4.00/gallon, unemployment is rising, the dollar is falling, and it goes on from there.

But can they relate to the problems on Wall Street?

How many people truly understand the inner workings of the so-called "credit crisis" that has been unfolding for the past six months? Who knows the difference between a CDS and a CDO? How about an ABS and an SIV? And why did Bear Stearns collapse, anyway?

Normally when an industry falls on hard times, it only affects the people who work in that industry. There might some related inconveniences (e.g., when airlines go bust travelers have to find new carriers) but the fallout is limited.

But the financial industry is different. When it stumbles like it has been lately, the entire banking system comes under stress. That's why the federal government stepped in to rescue Bear Stearns -- they honestly didn't know what would have happened if it had gone under. The worst-case-scenario was too severe and too plausible: a complete collapse of the capital markets.

Should we all be losing sleep over the situation on Wall Street? Maybe. The recent measures put in place by the Federal Reserve are helpful, but there are still severe problems that need to be worked out.

I recommend you all start paying closer attention, and find yourself a good source for financial news.