Uno Sguardo

Last week was a very long and complicated week for the global economy. It began with a mini-crisis regarding the Fiat and Chrysler deal which was swiftly resolved and concluded. Expectations are high that the quick Chrysler bankruptcy will be repeated by GM despite some evidence of a culture class between new management and GM staff. This is to be expected with any merger, especially when one side is clearly the stronger and deciding party. It will be noteworthy to see how the two cultures work together.

In the financial sector, BlackRock, one of the biggest publicly traded investment management firms has agreed to acquire Barclays Global Investors (“BGI”) from Barclays PLC. The new firm will act as one fully-integrated and independent asset management firm. It will be called BlackRock Global Investors. The deal includes purchasing BGI’s iShares business. Comments about the deal have been almost universally positive.

On the global political front, the Iran elections were a disappointment to those who wanted the opposition leader, Mir Hosan Mousavi, to rise to power. Protests have been forming all over the country and some serious violence has been reporter. Ahmadeinejad prevailed with more than 60% of the population voting for him. Voter turnout was very high. The protests that it has engendered, while alarming in some ways, do leave room for hope that democracy is actually alive and well in Iran.

Elsewhere, the G8 Finance Ministers met in Lecce, the principal city in the Salento area of the Southern region of Apulia. Lecce is a beautiful baroque city with fabulous churches. The G8 Finance Ministers, who met for two days, discussed the urgent need for common principles and standards. According to a press release, the ministers agreed to a document called “the Lecce Framework” which will create a comprehensive framework, building on existing initiatives, to identify and fill regulatory gaps and foster the broad international consensus needed for rapid implementation.” Certainly consensus is needed not just within Europe but internationally.

Despite timid signs that the economy is picking up, it is clear that we are not near the end of the road in terms of the financial crisis. In reflecting on the crisis, it seems that there will be further surprises down the road at every angle. It is also unclear if the Obama administration has the political will and power to push through a reform on health care which is more urgent than ever before as many lose jobs and therefore health insurance.

In terms of the press, news media have begun talking about the deficit again which is somewhat surprising. Just three months ago, most economists were saying we needed to concentrate on the short term and the medium term. Now, consensus seems to be that we must do something to reduce the deficit as well as to stimulate the economy. A tall order. What is always striking is how an idea takes root and then all the media outlets begin to discuss it at the same time.

One aside that has come out of this whole mess is not just the need to be vigilant in terms of where we invest our money, how we invest our money and with whom we invest our money but how much we need to increase our savings as a portion of our income while cutting down on spending on credit cards.

Another issue that has come out as a result of the crisis, is that the United States educational system lacks basic financial education courses for people of all ages and social stratum. An economist I spoke with recently said that before we learn all about derivative products, the country is in need of meat and potatoes financial courses. I couldn’t agree more.

My hope is that the curriculum will change to include economic and financial concepts which are age appropriate throughout schooling. While I loathe talking about money with children, it is necessary for them to understand the significance of money and how the economy works. Perhaps they will then be better stewards of our national welfare than we have been. One hopes so.

Photo of the day – Church in Zagarolo, Italy