Two self-effacing and humorous journalists, a sold out Broad Stage, one major industry on the verge of collapse and two ex-Mormon boys makes for an entertaining evening for me.
This past Sunday, Planet Money broadcast live from the Broad Stage. The event was sponsored by KCRW, NPR and Entrepreneurs Organization and hosted by Adam Davidson and Alex Blumberg, who report for NPR and This American Life, respectively.
Last year, they did a show called “The Giant Pool of Money,” for This American Life. It was hugely successful and became a top rated podcast. It was a special program about the housing crisis. The original show focused on “What does the housing crisis have to do with the turmoil on Wall Street? Why did banks make half-million dollar loans to people without jobs or income? And why is everyone talking so much about the 1930s? It all comes back to the Giant Pool of Money” — as the show is described on the TAL Web site.
It was the genesis for this event, which was humorous at times and a highly informative exploration of our economic troubles and how narrowly we avoided total global economic meltdown. With great humor these two men explained the basics of banking, and then how bankers, by ignoring their own self interests, created a situation where literally the entire economic structure of the globe was put at risk.
The hosts started out by describing the extent of the banking system. By setting the stage for some perspective, they were able to bring light where there has been much heat and confusion. I did not realize for example that there are approximately 8,000 banks in the U.S. of which 20 are responsible for 90 percent of the business in the country, and of that 90 percent there are four that make up two-thirds of our banking system. That means that four banks are essentially running 60 percent of the business through their coffers. Now it gets really scary, because of the four banks, just two of them equal 40 percent of the entire banking system. Bank of America and CITI control 40 percent of the banking business in our country.
That’s a big piece of market share.
Now I understand what it means when the president says something is “too big to fail.” If either of those two were to falter, it could set off a worldwide economic bonfire that was described as being so big, “it would make the Great Depression look like a good time.”
Cue the ex-Mormon boy. His name is John Bates, and he is as much a poster boy for all American good looks, hard work and the value of a winning smile and a firm handshake as you’ll find. I was just standing there, and he bounds up to me with the gregariousness of a Labrador and introduces himself and his brother. John lives here, but he was in Salt Lake City, where he and his brother had been taking a course to allow them to carry concealed weapons. Really, I can’t make this stuff up.
Anyways, turns out that John is a local representative for Entropia, which is a massive multi-player online role playing game, and his company is the only one that backs their “virtual money” with real U.S. dollars. So his was going to be an interesting perspective for me.
He asked a very great question about the future prospects of the U.S. dollar continuing to be the reserve currency, in essence that means it’s the “global money.” By asking this question what he’s really asking is, “what’s our future and do I need to start learning Chinese?”
The hosts gave a detailed answer, but summed it up like this; if China wants to shoot down America financially, they probably can, but they have to shoot themselves in the chest to do it, because we are so intertwined. So, it’s not very likely that we need to start learning Chinese.
I asked John what he was going do now with his greater understanding of the banking system, the causes which lead to our current problems, and the good news that we’ll most likely just work ourselves out of this crisis, like we’ve done before. He said he was probably going to sell off some stock and pay down what little debt he had, for a guaranteed return.
So with a good dose of humor, two journalists were able with the assistance of NPR, KRCW and Entrepreneurs Organization to make a few of us feel a bit less paranoid and anxious about the state of our economy and the future, which John was glad to hear, and so was I. Maybe now he wont need to carry that concealed weapon after all.
David Pisarra is a family law attorney focusing on father’s rights and men’s Issues in the Santa Monica firm of Pisarra & Grist. He can be reached at dpisarra@pisarra.com or (310) 664-9969.
