Crunch Time —Polischuk

These are dynamic economic times, to say the least. News is coming through at a frantic pace. The situation with Wachovia Bank is just one -example. On Sept. 29, Citigroup announced that it had acquired Wachovia’s banking operations. On Friday Oct. 3, Wells Fargo and Wachovia -announced an agreement to merge. Needless to say, later that day Citigroup put out a statement declaring that Wachovia’s agreement with Wells Fargo was in breach of an exclusivity agreement made on Sept. 29. The issue is now in the courts and most likely, by the time you read this, any resolution will be old news.

One of the striking things about this situation was that it took a back seat to other economic news. The big news in the U.S. was the $700 billion bailout approved by Congress on Oct. 3. In many countries, this bailout was a secondary item to their own financial crises. Countries around the world—from Russia to Iceland—are pledging huge sums of money to shore up ailing financial systems.

I have long felt that economic and weather systems are two of the most complex systems known to man—the kind that can cause super computers to overheat. With what has occurred recently, I’d have to tip the scales in favor of economics. At least with weather, you are dealing with essentially technical complexities. With economics, you have technical interrelationships entwined with human emotions and psychology. What could be more complex than that?

Alan Greenspan touched on the human element when he coined the term “irrational exuberance” in a speech in December 1996. “But, how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? … We as central bankers need not be concerned if a collapsing financial asset bubble does not threaten to impair the real economy, its production, jobs, and price stability,” he said.

Well, a collapsing financial asset bubble is impairing the real economies of the world, and central bankers are working 24/7 to maintain control. I don’t profess, in the least, to understand economics and monetary policy to any great extent, but I do know that the current economic crisis is affecting both individuals (can a 401(k) go negative?) and businesses (small businesses in particular).

Many package-printing companies are small businesses and I’m sure many of your companies are caught in the middle of this credit crunch. The $700 billion bailout was enacted particularly to address your needs. I’d be interested to hear your comments on what you expect the bailout to do for your business.

Tom Polischuk, Editor-in-Chief