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Developers Care About Financial Market

Posted by Charles | September 21, 2008 .

The financial market melting down is on news all of the world. Can we developers on main streets or code streets hide behind duel LCDs and IDEs? We shouldn’t and we can’t.

Here is a blog posting on NYT could give you a full view of what’s going on. Forget about the news and those after-fact-wise-ass experts on Wall street who screwing more than helping. Just take 10 minutes of the weekend for a reading and pondering, then prey. Oh, here is the article, Diamand and Kashyap on the Recent Financial Upheavals.

Here are some points for thought:

I do not work at Lehman or A.I.G. and do not own much stock; why should I care?

The concern for the man on Main Street is not the bankruptcy of Lehman, per se. Rather, it is the collective inability of major financial institutions to find funding.

As their own funding dries up, the remaining financial firms will be much more cautious in extending credit to normal firms and individuals. So even for people whose own circumstances have not much changed, the cost of the credit is going to rise. For an individual or business that falls behind on payments or needs an increase in short-term credit because of the slowing economy, credit will be much harder to obtain than in recent years.

This is going to slow growth. We have not seen this much stress in the financial system since the Great Depression, so we do not have any recent history to rely upon in quantifying the magnitude of the slowdown. A recent educated guess by Jan Hatzius of Goldman Sachs suggests that G.D.P. growth will be just about 2 percentage points lower in 2008 and 2009. But as he explains, extrapolations of this sort are highly uncertain.

Hard time is ahead.

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1 Comment so far
  1. Tony Hsieh  September 26, 2008 12:58 pm

    It is really historic (in a bad way).

    Here’s another resource a crudely drawn comic that will help explain how we got into this mess…

    http://www.businesspundit.com/sub-prime/

    Doesn’t explain how so many folks turned a blind eye to this, though.

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