US: Economic crisis

Financial crisis – who suffers?

As millions of workers begin to feel the effects of the devastating economic crisis which is now unfolding in the US, and internationally, let’s pause a moment in concern for the effects of this crisis on the Chief Executives of the financial institutions involved.

Reports in the US media suggest senior executives of Bear Stearns have been incensed at the buy-out arranged with JP Morgan, which sold Bear Stearns shares at a mere US$2. The New York Times reported “hoarse and high-pitched” shouts could be heard from the Bear Stearns boardroom, as senior executives berated the Chief Executive, Alan Schwartz, for agreeing to the deal.

“My life has been flushed down the drain” one senior executive told the New York Times. Some reacted immediately, by putting their weekend homes on the market!

Particularly badly hit has been the 74-year old Chairman of Bear Stearns, Jimmy Cayne. Apart from being rumored as being unavailable on the day the crisis struck, last Friday, Cayne was apparently at a ‘Bridge Tournament’, with his mobile phone turned off. Cayne’s housing situation is not so secure. This month, Cayne spent US$28 million on buying a further home – two adjacent 14th floor apartments at the newly refurbished Plaza hotel complex over looking Central Park. It is unclear if Cayne can now keep these flats, which have a combined area of 560 sq metres (6,000 square feet)!

The vast majority of workers in the US only have one home, of course. Repossession orders were served on 223,651 houses in the US heartland – nearly one in every 557 households. And in Michigan State, over one million are now dependent on food handouts

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