Beddoes to share wisdom

Beddoes

During the past few years, Zanny Minton Beddoes of The Economist magazine has given speeches that questioned extravagant consumer spending and the country's growing debt to foreign investors — often to the distaste of her bullish audiences.

But today, when she speaks in front of several hundred Charleston business leaders, Beddoes expects a little more empathy.

The financial crisis has since spread from the trading floors of Wall Street to the local economies "at a speed that has surprised everybody," Beddoes said.

Her presentation at the Charleston Regional Development Alliance's annual luncheon, titled "When Fortune Frowned," will focus on how the global economy descended into its volatile state.

She'll also explain what lessons can be learned for the future.

Beddoes has watched the financial crisis evolve from her perch as The Economist's economics editor in Washington, D.C., where she covers the American economy, globalization issues and economic policy. She joined the publication in 1994.

The global economic crisis, Beddoes said, stems partly from the borrowing and spending habits of the average U.S. consumer, which was encouraged by rising home values and innovative, yet risky financial products.

She faulted economic ideology claimed by both political parties, blaming financial market deregulation and the willingness of government-sponsored agencies like Fannie Mae to insure mortgages taken out by unqualified home buyers.

"The U.S. consumer partied here for way too long and too hard," she said.

As a result of the ensuing hangover, consumer spending, which makes up nearly two-thirds of the U.S. economy, has slowed dramatically.

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Top industry leaders are now relying on the federal government to prevent a downward spiral where no one's lending and no one's buying. Beddoes expects Congress to pass a modest economic stimulus package shortly and an even bigger one once President-elect Barack Obama takes office.

Policy makers will have to couple those stimulus efforts with a pledge to reform U.S. financial systems in the long run, and Beddoes said they should also exercise prudence. She said she worries about a bailout of Detroit automakers because it could open the door for other industry rescue plans.

Beddoes has not studied Charleston's economy in depth but she noted that the region has managed to reinvent itself before. That makes it well-positioned to rebound this time, though a look back at past financial crises shows that such turnarounds take time.

"It's not obvious to me exactly how or when we'll get out of it," she said.