Tuesday, March 31, 2009
Then I said, ‘How long, O Lord?’
And he said:‘Until cities lie waste
without inhabitant,and houses without people,
and the land is utterly desolate;
We hope the current economic slump won’t last "until cities lie waste without inhabitant." But it has already lasted long enough. And for those who have lost jobs or homes, it must seem that the land is already “utterly desolate.”
I received a letter today from M.W. Sewall & Co., addressed, “Dear Valued Customer,” announcing that they are filing for bankruptcy. They deliver propane and home heating oil, and they run a small chain of convenience stores and gas stations. Altogether they employ about 150 people in Mid-Coast Maine.
Not a big deal in terms of financial news. They are not AIG, and they are not General Motors. They were caught in a double bind. The collapse of the credit markets made it difficult for them to get money, and the credit collapse reduced the demand for fuel, sending prices plummeting and creating (as I understand it) a gap between what they had paid in advance and what they could charge consumers.
There is deep irony in our three-tiered approach to the Financial Crisis.
At the top are the financial companies that were (and are) too big to fail. Many of these folks actually caused the problems through the sale of highly leveraged credit swaps, which multiplied the effects of the housing slump. But we had to bail them out. And many of their workers continued to collect enormous salaries and bonuses.
At the second level there are the automakers. Regardless of what we might think of how these companies have been managed over the years, their immediate problems were not of their own making. They have been crushed under the weight of collapsing markets. They still get a bailout, but they also get a stern talking-to and they get told exactly how they will have to change their ways. And it’s not just the executives. Their workers have endured more abuse than a Middle School teacher on a very bad day. We’re not sure how much money they make but we know that it is way too much!
And then at the bottom is M.W. Sewall & Co., a family owned business for 122 years. They could have sold out numerous times to much bigger oil companies, but they stayed on out of loyalty to their customers and the 150 people who work for them.