Tale of two Ben's, or, I'm back from London and here's what I've learned

By Dian Vujovich

America’s Big Ben Bernanke spoke for about as long as it takes London’s Big Ben to chime 12 in his much anticipated Jackson Hole presentation earlier today. Well, not really.

That said, the hopeful news in the Federal Reserve Chairman’s speech focused not on the economy’s growth during the first half of 2011 (earlier numbers proved incorrect) but that the year’s second half would be more productive. Sure hope he’s right. Time, after all, isn’t on his—or our nation’s— side when it comes to mounting unemployment numbers, personal and government debts, the high rise in the cost of living and the falling value of investor—especially retiree—investment portfolios.

How’s that for almost too many important things to think about. But wait, there’s more.

Yesterday I returned from five days in London. I stayed at The Langham Hotel, a great spot for the business traveler who prefers luxury accommodations situated a block or so away from some of the city’s busiest streets. And who enjoys a really terrific bar—the Artesian.

Forgetting that bar for a moment, if possible, after an exchange rate that nearly floored me, ($100 US dollars translated to anywhere from 54 to about 62 pound sterling depending upon where the transaction was made), I realized how Britain’s residents aren’t all that different than those of us in the United States.

For openers, many there are struggling financially in a sagging economy too. Two news bits showing our similarities that caught my eye in Thursday’s (/25/11) The Independent newspaper include the following:

• “Gloomy consumers have become even more pessimistic about the outlook for Britain’s economy…amid fears that the recovery is continuing to falter….

“The closely watched Nationwide Consumer Confidence Index fell to 49 during July…” That’s 10 points lower than a year ago and 30 points below the index’s long-term average.

“Low wage increases and a tough jobs market have left many households unable to keep up with the cost of living.”

•And this piece titled, “Derivatives timebomb is still ticking”.

“Three years after the collapse of Lehman Brothers and AIG, regulators still have not found a way to keep track of the opaque derivatives market that paralyzed the world’s financial system in the wake of those corporate disasters….

“…Working out what was owed to whom was nearly impossible because there was no centralized on transactions undertaken…. The International Organization of Securities Commissions warned yesterday that the system (created by the G20 group to oversee the derivatives markets) remains riddled with data shortfalls….. “The timebomb has yet to be diffused.”

That derivative timebomb part is something we need to take seriously. When things aren’t fixed they remain broken. And that can prove to be particularly hazardous when what’s broken are things within the financial arena.