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Midnight Madness was another great time this year -- it's an annual run in Ames, partly supported by our sister stations KASI and KCCQ. It's nice to see Iowa communities supporting annual events that get people outside and doing something athletic.
Would you get up at 2:00 in the morning for a million dollars a year? Chicago's top-rated morning radio host is retiring from that kind of deal because the mornings are just too much for him. We have a lot more choices about how and when to work in America today than either our forebears of 50 or 100 years ago -- or our fellow Earthlings in places like China, where the company town isn't a thing of the past. That's because of a number of factors, led by free markets and technology, both of which allow us to find ways to make ourselves more valuable in the marketplace. Perhaps the biggest determinant of how much a person can earn is how free they are to walk away from the job they have.
Troubles at Fannie Mae and Freddie Mac are going to be at the top of the news headlines over the next couple of days. Both companies have dropped by about half in the stock markets over the last week, due to worries about their ability to handle their 50% share of the American home mortgage market. The bosses at both companies are talking about how confident they are in their financial stability. But here's the problem: The US government is on the hook in case either company runs aground, and they together hold about $5 trillion in mortgage debt. Considering that the total of Federal debt in the US is over $9.5 trillion, that would be a huge amount of new debt to add if the government is forced to step in. That much new Federal debt would mean higher interest rates on that debt, which in turn means higher taxes for all of us. Once again, too much debt and too little saving has gotten America into trouble.
On a very important (and related) note, the Shanghai stock exchange is down by 50% in the last six months. That's a huge drop -- but not an unforeseen one: We talked about the bubble there a year ago. But the Chinese government is promising what sounds like a bailout, and that could have a huge impact on us. China holds an estimated $700 billion in US investments, and if they're going to go into bailout mode, they may start pulling some of that money away from American investments to re-inflate their own economy. That, of course, could be bad news for investors here.
More importantly, though, China's Communist leadership has been holding the people down by encouraging rapid economic growth while oppressing them politically. But if that trade-off suddenly encounters a stumbling block, then people may decide that it's time for a little more freedom. Don't be surprised if you see sizeable political protests around the time of the Olympics.
Prediction: There's at least a 50% chance that we'll see a significant movement for a breakaway province in China -- other than Tibet -- in the next ten years.