Oregon Public Broadcasting

Dow Jones dropped more than 500 points  Monday, losing 4.5 percent of its value.

Here in the Pacific Northwest, many companies are weathering the storm just fine -- trade with Asia is doing well and house prices haven’t been hit as hard as in other places.  So Kristian Foden-Vencil asks:  Should we worry?

Picture a high wire artist.

Put him in a pinstriped suit; fill him full of coffee; then hand him his credit card bills and the statements for his first and second mortgage on his home.

What you end up with is a suitable image of U.S. financial markets.

Randall Edwards: “We’re in uncharted waters.”

Oregon’s state treasurer, Randall Edwards.

Randall Edwards: “Well I am concerned with what I’m seeing on Wall Street, these major financial titans falling. Merrill being bought by Bank of America, Lehman Bros. going bankrupt, Bear Stearns out of business. AIG, the list goes on.”

Massive financial institutions like ‘Fannie Mae,’ ‘Freddie Mac,’ and Washington Mutual are struggling to stay alive. 

The Public Employees Retirement Fund Edwards oversees is down 6 percent this year -- not bad considering such losses on Wall Street.

But what about the rest of the Pacific Northwest?

John Mitchell, of M&H Economics Consultants in Portland, thinks we’re okay. 

John Mitchell: “The trade sector has been very strong. Exports have been very rapid. We’ve seen big increases in farm income. We have not had the same degree of problems in real estate, but we’ve not been immune by any means. You’ve seen over a 40 percent decline in building permits in Oregon this year. Washington’s down a little bit less than that.”

Indeed, one of biggest local companies, Washington Mutual, is struggling because of housing problems.
Oregon state’s economist, Tom Potiowsky, says if WaMu goes bust, locals will suffer – especially if they bank there.

Tom Potiowsky: “There can be a disruption: To what extent are these customers able to go to other banks, and other financial institutions to do their banking at, to get their regular business loans to operate their businesses? And will credit standards be raised, so that it’ll be a little tougher for businesses to get those kinds of loans? And that’s what can slow down activity, and that’s what we mean by a credit crunch. That would be problematic for us.”

Potiowsky thinks a rescue package is more likely for Washington Mutual. But if it fails, he says, most customers can rest easy. Deposits of up to $100,000 are protected by the Federal Deposit Insurance Corporation, or the FDIC.

Quite separate from all the  market turmoil, Oregon is reporting poor unemployment numbers for August. State economist David Cooke says the jobless rate jumped to 6.5 percent.

David Cooke: “There is cause for concern because the manufacturing sector has declined substantially, and some of the industries have had a substantial downturn like transportation equipment manufacturing, like the motor coaches and the lumber and wood products.”

It’s the biggest jobless rate increase in five years. And Cooke says it bears a nasty resemblance to the start of the 2001 recession.