9-19-08 The day the Truth was spoken.

[Veritas]

The great depression was created by a perfect storm of events, credit was just one of the main culprits. Here is another event that prolonged it well beyond what it should have been:

http://future.state.gov/when/timeline/1921_timeline/smoot_tariff.html

“The Smoot-Hawley Tariff was more a consequence of the onset of the Great Depression than an initial cause. But while the tariff might not have caused the Depression, it certainly did not make it any better. It provoked a storm of foreign retaliatory measures and came to stand as a symbol of the ‘beggar-thy-neighbor’ policies (policies designed to improve one’s own lot at the expense of that of others) of the 1930s. Such policies contributed to a drastic decline in international trade. For example, U.S. imports from Europe declined from a 1929 high of $1,334 million to just $390 million in 1932, while U.S. exports to Europe fell from $2,341 million in 1929 to $784 million in 1932. Overall, world trade declined by some 66% between 1929 and 1934. More generally, Smoot-Hawley did nothing to foster trust and cooperation among nations in either the political or economic realm during a perilous era in international relations.”

[peterb]

I once read an article written by a guy that worked on the Golden Gate Bridge in 1935. This was one of many WPA projects the Fed govt had started to create jobs. He was quick to point out that there was a big camp of workers waiting for someone on the GG Bridge project to die so that one from the camp could take his place.

His point was that WPA was at best a band-aid and that there were still tons of people unemployed. Then he points out that by 1940 unemployment was almost zero due to war related industry for feeding the European theater. Then the US entered and that was that for the Depression.

[peterb]

I once read an article written by a guy that worked on the Golden Gate Bridge in 1935. This was one of many WPA projects the Fed govt had started to create jobs. He was quick to point out that there was a big camp of workers waiting for someone on the GG Bridge project to die so that one from the camp could take his place.

His point was that WPA was at best a band-aid and that there were still tons of people unemployed. Then he points out that by 1940 unemployment was almost zero due to war related industry for feeding the European theater. Then the US entered and that was that for the Depression.

[peterb]

I once read an article written by a guy that worked on the Golden Gate Bridge in 1935. This was one of many WPA projects the Fed govt had started to create jobs. He was quick to point out that there was a big camp of workers waiting for someone on the GG Bridge project to die so that one from the camp could take his place.

His point was that WPA was at best a band-aid and that there were still tons of people unemployed. Then he points out that by 1940 unemployment was almost zero due to war related industry for feeding the European theater. Then the US entered and that was that for the Depression.

[peterb]

I once read an article written by a guy that worked on the Golden Gate Bridge in 1935. This was one of many WPA projects the Fed govt had started to create jobs. He was quick to point out that there was a big camp of workers waiting for someone on the GG Bridge project to die so that one from the camp could take his place.

His point was that WPA was at best a band-aid and that there were still tons of people unemployed. Then he points out that by 1940 unemployment was almost zero due to war related industry for feeding the European theater. Then the US entered and that was that for the Depression.

[peterb]

I once read an article written by a guy that worked on the Golden Gate Bridge in 1935. This was one of many WPA projects the Fed govt had started to create jobs. He was quick to point out that there was a big camp of workers waiting for someone on the GG Bridge project to die so that one from the camp could take his place.

His point was that WPA was at best a band-aid and that there were still tons of people unemployed. Then he points out that by 1940 unemployment was almost zero due to war related industry for feeding the European theater. Then the US entered and that was that for the Depression.

[Arraya]

The devil is in the details. And as the details (or “lack of details” might be a more accurate description) of the Bush administration’s latest rescue plan begin to emerge, there are signs for great concern. The opening paragraph of this NY Times story pretty much says it all:

WASHINGTON — The Bush administration, moving to prevent an economic cataclysm, urged Congress on Friday to grant it far-reaching emergency powers to buy hundreds of billions of dollars in distressed mortgages despite many unknowns about how the plan would work.

(emphasis mine)

But haven’t we been here before? This all seems to be modus operandi for this administration.

“Economic calamity” = “Mushroom Cloud”

When Paulson and Bernanke held an emergency meeting Thursday night to brief leaders of Congress, they painted a picture of “economic calamity,” “meltdown,” “cataclysm” if Congress didn’t act immediately to give the administration broad ranging powers and a blank check to address the nation’s economic woes…

http://money.cnn.com/2008/09/19/news/economy/what_lawmakers_heard/index….

This is all too reminiscent of the “mushroom cloud” rhetoric the administration used to stampede the congress into giving it permission to invade Iraq.

Many analysts are already saying the Bush plan will not achieve, that it is not even designed to achieve, any broad-based relief:

http://online.wsj.com/article/SB122186549098258645.html

http://www.cnn.com/video/?/video/business/2008/09/19/intv.markets.rescue…

So what is the Bush plan crafted to achieve? Again, quoting from the NY Times story linked above:

President Bush and Mr. Paulson made it clear that their primary, and perhaps only, goal was to stabilize the financial markets by removing hundreds of billions of dollars in “illiquid assets” from the balance sheets of banks and financial institutions….

So here’s my take on what’s going on. Remember in the final scenes of the movie Titanic where all the first-class passengers were evacuated onto lifeboats but second-class passengers were left to go down with the ship? Well that’s exactly what is happening here. The US debt ship is going down, being sucked under by $32 trillion in household, business and government debt, an unbearable load. And the people in charge of the ship know that. The only question now is deciding who is to have a place on a lifeboat and who is not.

Details are still sketchy, but apparently what the Bush administration is asking for is carte blanche power to decide which securities to buy, from which banks, and for what price. The price the government will pay will certainly be far in excess of what those securites would bring on the free market. So some select few will be given a place on a lifeboat. But this proposal does nothing to keep the ship afloat, to relieve the debt burden that is sucking it to the bottom of the ocean. So the vast majority of us will be left to go down with the ship.

None of this should come as a surprise to us. We’ve already seen in Iraq when, given the power, the discretion and the blank check, how this administration does things: no-bid contracts, rampant cronyism and outright corruption.

Have we learned nothing?

[Arraya]

The devil is in the details. And as the details (or “lack of details” might be a more accurate description) of the Bush administration’s latest rescue plan begin to emerge, there are signs for great concern. The opening paragraph of this NY Times story pretty much says it all:

WASHINGTON — The Bush administration, moving to prevent an economic cataclysm, urged Congress on Friday to grant it far-reaching emergency powers to buy hundreds of billions of dollars in distressed mortgages despite many unknowns about how the plan would work.

(emphasis mine)

But haven’t we been here before? This all seems to be modus operandi for this administration.

“Economic calamity” = “Mushroom Cloud”

When Paulson and Bernanke held an emergency meeting Thursday night to brief leaders of Congress, they painted a picture of “economic calamity,” “meltdown,” “cataclysm” if Congress didn’t act immediately to give the administration broad ranging powers and a blank check to address the nation’s economic woes…

http://money.cnn.com/2008/09/19/news/economy/what_lawmakers_heard/index….

This is all too reminiscent of the “mushroom cloud” rhetoric the administration used to stampede the congress into giving it permission to invade Iraq.

Many analysts are already saying the Bush plan will not achieve, that it is not even designed to achieve, any broad-based relief:

http://online.wsj.com/article/SB122186549098258645.html

http://www.cnn.com/video/?/video/business/2008/09/19/intv.markets.rescue…

So what is the Bush plan crafted to achieve? Again, quoting from the NY Times story linked above:

President Bush and Mr. Paulson made it clear that their primary, and perhaps only, goal was to stabilize the financial markets by removing hundreds of billions of dollars in “illiquid assets” from the balance sheets of banks and financial institutions….

So here’s my take on what’s going on. Remember in the final scenes of the movie Titanic where all the first-class passengers were evacuated onto lifeboats but second-class passengers were left to go down with the ship? Well that’s exactly what is happening here. The US debt ship is going down, being sucked under by $32 trillion in household, business and government debt, an unbearable load. And the people in charge of the ship know that. The only question now is deciding who is to have a place on a lifeboat and who is not.

Details are still sketchy, but apparently what the Bush administration is asking for is carte blanche power to decide which securities to buy, from which banks, and for what price. The price the government will pay will certainly be far in excess of what those securites would bring on the free market. So some select few will be given a place on a lifeboat. But this proposal does nothing to keep the ship afloat, to relieve the debt burden that is sucking it to the bottom of the ocean. So the vast majority of us will be left to go down with the ship.

None of this should come as a surprise to us. We’ve already seen in Iraq when, given the power, the discretion and the blank check, how this administration does things: no-bid contracts, rampant cronyism and outright corruption.

Have we learned nothing?

[Arraya]

The devil is in the details. And as the details (or “lack of details” might be a more accurate description) of the Bush administration’s latest rescue plan begin to emerge, there are signs for great concern. The opening paragraph of this NY Times story pretty much says it all:

WASHINGTON — The Bush administration, moving to prevent an economic cataclysm, urged Congress on Friday to grant it far-reaching emergency powers to buy hundreds of billions of dollars in distressed mortgages despite many unknowns about how the plan would work.

(emphasis mine)

But haven’t we been here before? This all seems to be modus operandi for this administration.

“Economic calamity” = “Mushroom Cloud”

When Paulson and Bernanke held an emergency meeting Thursday night to brief leaders of Congress, they painted a picture of “economic calamity,” “meltdown,” “cataclysm” if Congress didn’t act immediately to give the administration broad ranging powers and a blank check to address the nation’s economic woes…

http://money.cnn.com/2008/09/19/news/economy/what_lawmakers_heard/index….

This is all too reminiscent of the “mushroom cloud” rhetoric the administration used to stampede the congress into giving it permission to invade Iraq.

Many analysts are already saying the Bush plan will not achieve, that it is not even designed to achieve, any broad-based relief:

http://online.wsj.com/article/SB122186549098258645.html

http://www.cnn.com/video/?/video/business/2008/09/19/intv.markets.rescue…

So what is the Bush plan crafted to achieve? Again, quoting from the NY Times story linked above:

President Bush and Mr. Paulson made it clear that their primary, and perhaps only, goal was to stabilize the financial markets by removing hundreds of billions of dollars in “illiquid assets” from the balance sheets of banks and financial institutions….

So here’s my take on what’s going on. Remember in the final scenes of the movie Titanic where all the first-class passengers were evacuated onto lifeboats but second-class passengers were left to go down with the ship? Well that’s exactly what is happening here. The US debt ship is going down, being sucked under by $32 trillion in household, business and government debt, an unbearable load. And the people in charge of the ship know that. The only question now is deciding who is to have a place on a lifeboat and who is not.

Details are still sketchy, but apparently what the Bush administration is asking for is carte blanche power to decide which securities to buy, from which banks, and for what price. The price the government will pay will certainly be far in excess of what those securites would bring on the free market. So some select few will be given a place on a lifeboat. But this proposal does nothing to keep the ship afloat, to relieve the debt burden that is sucking it to the bottom of the ocean. So the vast majority of us will be left to go down with the ship.

None of this should come as a surprise to us. We’ve already seen in Iraq when, given the power, the discretion and the blank check, how this administration does things: no-bid contracts, rampant cronyism and outright corruption.

Have we learned nothing?

[Arraya]

The devil is in the details. And as the details (or “lack of details” might be a more accurate description) of the Bush administration’s latest rescue plan begin to emerge, there are signs for great concern. The opening paragraph of this NY Times story pretty much says it all:

WASHINGTON — The Bush administration, moving to prevent an economic cataclysm, urged Congress on Friday to grant it far-reaching emergency powers to buy hundreds of billions of dollars in distressed mortgages despite many unknowns about how the plan would work.

(emphasis mine)

But haven’t we been here before? This all seems to be modus operandi for this administration.

“Economic calamity” = “Mushroom Cloud”

When Paulson and Bernanke held an emergency meeting Thursday night to brief leaders of Congress, they painted a picture of “economic calamity,” “meltdown,” “cataclysm” if Congress didn’t act immediately to give the administration broad ranging powers and a blank check to address the nation’s economic woes…

http://money.cnn.com/2008/09/19/news/economy/what_lawmakers_heard/index….

This is all too reminiscent of the “mushroom cloud” rhetoric the administration used to stampede the congress into giving it permission to invade Iraq.

Many analysts are already saying the Bush plan will not achieve, that it is not even designed to achieve, any broad-based relief:

http://online.wsj.com/article/SB122186549098258645.html

http://www.cnn.com/video/?/video/business/2008/09/19/intv.markets.rescue…

So what is the Bush plan crafted to achieve? Again, quoting from the NY Times story linked above:

President Bush and Mr. Paulson made it clear that their primary, and perhaps only, goal was to stabilize the financial markets by removing hundreds of billions of dollars in “illiquid assets” from the balance sheets of banks and financial institutions….

So here’s my take on what’s going on. Remember in the final scenes of the movie Titanic where all the first-class passengers were evacuated onto lifeboats but second-class passengers were left to go down with the ship? Well that’s exactly what is happening here. The US debt ship is going down, being sucked under by $32 trillion in household, business and government debt, an unbearable load. And the people in charge of the ship know that. The only question now is deciding who is to have a place on a lifeboat and who is not.

Details are still sketchy, but apparently what the Bush administration is asking for is carte blanche power to decide which securities to buy, from which banks, and for what price. The price the government will pay will certainly be far in excess of what those securites would bring on the free market. So some select few will be given a place on a lifeboat. But this proposal does nothing to keep the ship afloat, to relieve the debt burden that is sucking it to the bottom of the ocean. So the vast majority of us will be left to go down with the ship.

None of this should come as a surprise to us. We’ve already seen in Iraq when, given the power, the discretion and the blank check, how this administration does things: no-bid contracts, rampant cronyism and outright corruption.

Have we learned nothing?

[Arraya]

The devil is in the details. And as the details (or “lack of details” might be a more accurate description) of the Bush administration’s latest rescue plan begin to emerge, there are signs for great concern. The opening paragraph of this NY Times story pretty much says it all:

WASHINGTON — The Bush administration, moving to prevent an economic cataclysm, urged Congress on Friday to grant it far-reaching emergency powers to buy hundreds of billions of dollars in distressed mortgages despite many unknowns about how the plan would work.

(emphasis mine)

But haven’t we been here before? This all seems to be modus operandi for this administration.

“Economic calamity” = “Mushroom Cloud”

When Paulson and Bernanke held an emergency meeting Thursday night to brief leaders of Congress, they painted a picture of “economic calamity,” “meltdown,” “cataclysm” if Congress didn’t act immediately to give the administration broad ranging powers and a blank check to address the nation’s economic woes…

http://money.cnn.com/2008/09/19/news/economy/what_lawmakers_heard/index….

This is all too reminiscent of the “mushroom cloud” rhetoric the administration used to stampede the congress into giving it permission to invade Iraq.

Many analysts are already saying the Bush plan will not achieve, that it is not even designed to achieve, any broad-based relief:

http://online.wsj.com/article/SB122186549098258645.html

http://www.cnn.com/video/?/video/business/2008/09/19/intv.markets.rescue…

So what is the Bush plan crafted to achieve? Again, quoting from the NY Times story linked above:

President Bush and Mr. Paulson made it clear that their primary, and perhaps only, goal was to stabilize the financial markets by removing hundreds of billions of dollars in “illiquid assets” from the balance sheets of banks and financial institutions….

So here’s my take on what’s going on. Remember in the final scenes of the movie Titanic where all the first-class passengers were evacuated onto lifeboats but second-class passengers were left to go down with the ship? Well that’s exactly what is happening here. The US debt ship is going down, being sucked under by $32 trillion in household, business and government debt, an unbearable load. And the people in charge of the ship know that. The only question now is deciding who is to have a place on a lifeboat and who is not.

Details are still sketchy, but apparently what the Bush administration is asking for is carte blanche power to decide which securities to buy, from which banks, and for what price. The price the government will pay will certainly be far in excess of what those securites would bring on the free market. So some select few will be given a place on a lifeboat. But this proposal does nothing to keep the ship afloat, to relieve the debt burden that is sucking it to the bottom of the ocean. So the vast majority of us will be left to go down with the ship.

None of this should come as a surprise to us. We’ve already seen in Iraq when, given the power, the discretion and the blank check, how this administration does things: no-bid contracts, rampant cronyism and outright corruption.

Have we learned nothing?

[EconProf]

The Great Depression was deeper and longer than it should have been for a variety of reasons, some already mentioned here. Trade dried up, thanks to our congress foolishly raising tariffs via the infamous Smoot-Hawley bill. The 1929 stock market crash was more symbol than cause of the economic contraction that followed it. A factor not yet mentioned is contraction of the money supply, stressed by no less a conservative than Milton Friedman. The Fed at that time did not know of its own power to stimulate the economy, and failed to use monetary policy properly. As a result, prices and wages fell precipitously; confidence was so low that even people and businesses with money hoarded what thay had and investment and consumer spending just dried up. This crowd psychology is what I worry about today, as people could panic and create runs on banks, food stores, etc. Bernanke is a student of the Great Depression, and seems determined to avoid “paralysis by analysis” by acting preemptively and forcefully.

[EconProf]

The Great Depression was deeper and longer than it should have been for a variety of reasons, some already mentioned here. Trade dried up, thanks to our congress foolishly raising tariffs via the infamous Smoot-Hawley bill. The 1929 stock market crash was more symbol than cause of the economic contraction that followed it. A factor not yet mentioned is contraction of the money supply, stressed by no less a conservative than Milton Friedman. The Fed at that time did not know of its own power to stimulate the economy, and failed to use monetary policy properly. As a result, prices and wages fell precipitously; confidence was so low that even people and businesses with money hoarded what thay had and investment and consumer spending just dried up. This crowd psychology is what I worry about today, as people could panic and create runs on banks, food stores, etc. Bernanke is a student of the Great Depression, and seems determined to avoid “paralysis by analysis” by acting preemptively and forcefully.

[EconProf]

The Great Depression was deeper and longer than it should have been for a variety of reasons, some already mentioned here. Trade dried up, thanks to our congress foolishly raising tariffs via the infamous Smoot-Hawley bill. The 1929 stock market crash was more symbol than cause of the economic contraction that followed it. A factor not yet mentioned is contraction of the money supply, stressed by no less a conservative than Milton Friedman. The Fed at that time did not know of its own power to stimulate the economy, and failed to use monetary policy properly. As a result, prices and wages fell precipitously; confidence was so low that even people and businesses with money hoarded what thay had and investment and consumer spending just dried up. This crowd psychology is what I worry about today, as people could panic and create runs on banks, food stores, etc. Bernanke is a student of the Great Depression, and seems determined to avoid “paralysis by analysis” by acting preemptively and forcefully.

[EconProf]

The Great Depression was deeper and longer than it should have been for a variety of reasons, some already mentioned here. Trade dried up, thanks to our congress foolishly raising tariffs via the infamous Smoot-Hawley bill. The 1929 stock market crash was more symbol than cause of the economic contraction that followed it. A factor not yet mentioned is contraction of the money supply, stressed by no less a conservative than Milton Friedman. The Fed at that time did not know of its own power to stimulate the economy, and failed to use monetary policy properly. As a result, prices and wages fell precipitously; confidence was so low that even people and businesses with money hoarded what thay had and investment and consumer spending just dried up. This crowd psychology is what I worry about today, as people could panic and create runs on banks, food stores, etc. Bernanke is a student of the Great Depression, and seems determined to avoid “paralysis by analysis” by acting preemptively and forcefully.

[Author]

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