As of Tuesday, July 15, crowds outside branches of the failed California bank IndyMac were getting ugly. On the second business day after federal agents seized control of bank assets and promised orderly restitution of FDIC-insured funds to IndyMac customers, large numbers of shocked depositors still had not been reimbursed. Those who had more than the FDIC-guaranteed $100,000 in IndyMac accounts were still awaiting word as to what portion of their life savings they could expect to see again.
On Thursday, July 10, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke testified before the U.S. House of Representatives’ Committee on Financial Services. The backdrop for the committee meeting, of course, is the ongoing turmoil in U.S. and global financial markets, highlighted by the Federal Reserve’s unprecedented intervention to prevent the failure of giant investment bank Bear Stearns, and more recent worries that the two government-sponsored mortgage lending companies Fannie Mae and Freddie Mac are in danger of implosion.
The Consumer Price Index (CPI) measures the average price of consumer goods and services purchased by households. The government uses the CPI to “calculate inflation.” Changes over the past 40 years to the CPI “to better reflect the actual costs” of goods and services in this country have not only provided a poorer reflection of the true costs but have actually harmed our economy.
From Nouakchott in northwest Africa to Port-au-Prince in the Caribbean, the situation is becoming grimmer by the day. The specter of world hunger, unseen in generations, even in the world’s poorest nations, is once again raising its head as food prices spiral out of control, leaving hoarding, rioting, and shortages in their wake.