Ever since our semi-regular segment “Ask the Man Who Doesn’t Understand the Economy” began, the economy has steadily worsened. We’d like to take some credit. Here is yet another installment. Expect more hardship around the corner!
What gave President Obama the right to essentially fire the CEO of General Motors, Rick Wagoner? — Nancy B., Berwyn
C’mon, it’s hard to get upset over Wagoner’s firing. This is the guy who cut costs by eliminating multiple seat belts in GM vehicles and replacing them with one “family-size” belt for all passengers to share. Then he instructed GM dealers to offer prospective customers two-year-long test drives. And he was the one who mandated a car be called the Pontiac Vibe.
My 401(k) is down. Huge companies are bankrupt. Banks are insolvent. What’s going on? — Jimmy G., Oak Park
There is a finite amount of money in the world. Economists calculate that amount by adding up the cash in everyone’s wallet while taking into account which wallets are old and in need of replacement and then subtracting the amount of money it will take to do so. Once you understand this, please write back with your question again.
President Obama is currently meeting in London with leaders of 19 countries to discuss the global economic crisis. Shouldn’t he first worry about the crisis in America? — Chrissie P., Pilsen
This is the first I’ve heard of any meeting, but I’ll take your word for it. Chrissie, we live in a “global economy.” That means the U.S. economy is now inextricably linked to economies of countries around the world, including the country your ancestors fled to America to escape.
I’d like to take advantage of others’ misfortunes and buy a house that’s been foreclosed on. How do I do that? — Bill J., Lake Forest
More Top Picks Krups Breakfast Set
Foreclosed houses (houses taken over by banks) can be great bargains — and are easy to purchase. You buy foreclosed homes from your local bank teller. But be careful which foreclosed house you choose. To prevent psychological scars, child welfare laws require that any child under 5 who lived in a house that underwent foreclosure must remain in that house for two years with the new owners.
Given China’s vast holdings of U.S. Treasury bonds, should we be worried? — Bruce F., River North
Too much is made of China’s “vast holdings of U.S. Treasury bonds.” The Chinese hold $739 billion in such bonds. China’s population is 1.3 billion. When I do the math, I see this means we owe every Chinese person about six bucks, or a sandwich. The problem is the Chinese have been slow to embrace the sandwich. That’s one of the items Obama hopes is on the agenda of the summit in London that Chrissie P. of Pilsen says is happening.
Can I download stocks for free like I download music? — Rachel S., Tinley Park
Unfortunately, that’s the one immoral thing not allowed in the financial industry.