I’ve been a lay reader of the business pages for many years, enough to detect certain amusing patterns without pretending to grasp the intricacies of markets or finance. One thing I’ve learned is not to trust the expert boilerplate either from government or industry any more than the weather report or the official typhoon coverage on Burmese TV.
Treasury Secretary Paulson is already crowing that ‘the worst is past’ in the financial sector, which is reassuring until you consider that he never thought there was a problem in the first place. But here’s a little item way off the main radar screens that suggests he’s rather premature in his judgment: a bank failure in Arkansas. ANB Financial, headquartered in Bentonville, ran aground on construction loans and commercial real estate development.
I note that ANB didn’t croak over the subprime mess that’s walloped Wall Street over the last nine months since ANB is, er, was one of the tiny banks that shipped their decomposing home-loan portfolios off to the big guys. That freed them up to get into even worse trouble by betting on commercial builders who then hit the brick wall of the recession when they brought their projects to completion.
I further note that Bentonville houses the worldwide headquarters of Wal-Mart and idly ask myself if that means the metastasizing monopsony retailer isn’t doing much for the local economy. Or could it mean something even better, like a limit to the endless growth of that cancerous entity?
Essay question: If housing remains in the tank, office buildings follow close behind and construction projects in Wal-Mart’s back yard are collapsing, is the recession winding to a close as suggested by Secretary Paulson? Discuss.