"You know, evil comes in many forms, be it a man-eating cow or Joseph Stalin. But you can't let the package hide the pudding. Evil is just plain bad. You don't cotton to it. You gotta smack it on the nose with the rolled up newspaper of goodness. Bad dog! Bad dog!"
-The Tick
He said, "In the past few years, we've seen too much greed and too little fear; too much spending and not enough saving; too much borrowing and not enough worrying...An abundance of greed and an absence of fear on Wall Street led some to make purchases - not based on the real value of assets, but on the faith that there would be another who would pay more for those assets. At the same time, the government turned a blind eye to these practices and their potential consequences for the economy as a whole. This is how a bubble is born. And in these moments, greed begets greed. The bubble grows. Eventually, however, this process stops - and reverses. Prices fall. People sell. Instead of an expectation of new buyers, there is an expectation of new sellers. Greed gives way to fear. And this fear begets fear, and that is the paradox at the heart of the financial crisis...What we need today is more optimism and more confidence...There are a very large number of things that are on sale today."
This statement has led me to believe THIS is President Obama's economic adviser.
"Surely too early to gauge the broader economic impact of the president's program, it is. Hmmmmmm?"
Despite all the rhetoric and blustering by Hollywood and groups like 24 Hours for Darfur, the one country actually doing something about it is one of the most hated countries on the planet:
Notice what they say. Despite the refugees being Muslims, no Muslim country would take them in. In fact, they had to travel through Egypt to get to Israel.
Sept 2008: "The truth is, our earmark system in Washington is fraught with abuse. It badly needs reform - which is why I didn't request a single earmark last year, why I've released all my previous requests for the public to see, and why I've pledged to slash earmarks by more than half when I am President...This change will not be easy. It will require reforming our politics by taking power away from the lobbyists who kill good ideas and good plans with secret meetings and campaign checks...But I am ready to reform our politics because I've done it before. I've spent my career taking on lobbyists and their money, and I've won...When I am President, I will start by closing the revolving door in the White House that has allowed people to use their Administration job as a stepping stone to further their lobbying careers...As President, I will make it impossible for Congressmen or lobbyists to slip pork-barrel projects or corporate welfare into laws when no one is looking because when I am president, meetings where laws are written will be more open to the public. No more secrecy...We can't afford four more years of that kind of politics. We need real change. It won't be easy. The kind of change we're looking for never is. What we are up against is a very powerful, entrenched status quo in Washington who will say anything and do anything and fight with everything they've got to keep things just the way are. So if you want the next four years in Washington to look just like the last eight, then I am not your candidate. But if you want real change - if you want to shine a bright light into the backrooms of Washington; if you want to replace the special interests with your interests, if you want a government that costs less and works better for everyday Americans, then I ask you to knock on some doors, and make some calls, and talk to your neighbors, and give me your vote on November 4th. And if you do, I promise you - we will change America together. Thank you." Senator Barack Obama, September 2008 (washingtonpost.com)
March, 2009: "I am signing an imperfect omnibus bill (over 9,200 earmarks amounting to an estimated 13 billion dollars) because it is necessary for the ongoing functions of government...But I also view this as a departure point for more far-reaching change. The future demands that we operate in a different way than we have in the past...So let there be no doubt: this piece of legislation must mark an end to the old way of doing business and the beginning of a new era of responsibility and accountability...Done right, earmarks give legislators the opportunity to direct federal money to worthy projects that benefit people in their district, and that's why I have opposed their outright elimination..."
Worthy projects? $200,000 for Tattoo removal program in Mission Hills, CA $75,000 for the Wayne Gomes Youth Baseball Diversity Foundation $300,000 for a World Trade Center in Montana $6,623,000 for Formosan Subterranean Termite Research $71,000 for Dance Theater "Etcetera," Brooklyn, NY $476,000 for the National Council of La Raza ("the Race") in Washington, DC (La Raza is a Mexican supremacist organization that opposes enforcement of immigration law)
President Obama said, "Leadership requires setting an example..." He signed the bill in a private "backroom" of the Whitehouse and refused to answer any questions about why, but promised this bill would be the last one with too much pork... See his press announcement here.
In 1893 there was a banking crisis. See if the events look familiar.
During the 1880's railroad speculation became rampant. Their values escalated far faster than they should have as people rushed to invest their money in the next "big thing."
"The total construction of new lines during the five years beginning with 1886 and ending with 1890 was over 39,000 miles or an increase of more than 30 per cent., and of this total, 19,044 miles, or almost one half, was built in the states and territories of the Northwest and Southwest." (Lauck, 3)
This led to a vast glut of railroads, flush with capital, but lacking anyone or anything to transport over these tens of thousands of miles of track. By 1893, the once cash flushed railroads were becoming insolvent.
Soon,
"A growing credit shortage created panic, resulting in a depression. Over the course of this depression 15,000 businesses, 600 banks, and 74 railroads failed. There was severe unemployment and wide-scale protesting, which in some cases became very violent. The economic collapse of the Philadelphia and Reading Railroads was the first step toward the Panic of 1893." "By May 15, stock prices reached an all-time low. Many major firms; such as the Union-Pacific, Northern-Pacific and Santa Fe railroads; were forced to declare bankruptcy. Unemployment steadily grew, rising from 1 million in August 1893 to 2 million by January 1894 By the middle of the year, the figure had reached 3 million.(12-18% unemployment)"
(http://www.historycentral.com/Industrialage/Panic1893.html)
The government largely did nothing, and the depression was over by 1897 - 4 years. That's how long it took the market to recover using the vilified Laissez-faire theory of economics.
Sound familiar? Many economists think we are in a similar situation today. Instead of railroads, this time it was houses. A building rush combined with questionable credit policies led to the "next big" investment scheme to fail. Real estate, like railroads are not a guarenteed investment.
Fast-forward to 1929.
A sell-off in October 1929 on Wall street and a panic run on banks plunge the U.S. into the worst economic crisis since 1893. Between 1930 and 1932 the stock market lost 86% of its value. FDR is elected in 1932 promising to fix the economy. From amatecon.com is a list of all the programs FDR enacted his first year:
March 6th, FDR declares a bank holiday
March 9th, Emergency Banking Relief Act passed, providing for federal bank inspections.
March 20th, FDR signs Economy Act.
March 20th, Credit Act passed, identifying those veterans and dependents of veterans who were
entitled to a pension
March 31st, Reforestation Relief Act passed, creating the Civilian Conservation Corps
April, New York becomes the first to pass a state law regulating minimum producer, wholesale, and retail milk prices (25 other states will take similar action by the end of the 1930s)
April 19th, America goes off the gold standard
May 12th, Agricultural Adjustment Act passed, authorizing paying farmers not to grow crops
May 12th, Federal Emergency Relief Adminstration created
May 12th, Farm Relief Act passed, creating the Farm Credit Administration and the Agricultural Adjustment Adminstiration (The AAA is ruled uncostitutional in 1936).
May 18th, Tennessee Valley Authority created
May 27th, Federal Securities Act passed
June 6th, National Cooperative Employment Service Act passed
June 13th, Home Owners' Loan Act passed
June 16th, Farm Credit Act passed
June 16th, Glass-Steagall Act passed
* Federal Deposit Insurance Corporation established
* Federal Reserve empowered to set maximum allowable interest rates on savings and time deposits
accounts
* Payment of interest on demand deposits (checking accounts) outlawed
* Commercial banks were no longer allowed to engage in investment banking (underwriting securities)
* Federal Open Market Committee established
June 16th, National Industrial Recovery Act passed
June 16th, Emergency Railroad Transportation Act passed
November 8th, Civil Works Administration (CWA ) created by executive order
Despite all these intervening measures, approximately 4,000 banks suspended operations in 1933. 13-14 million Americans are out of work - 25% Unemployment (it had been as low as 2.9% in 1929).
In 1934:
January 30th, Gold Reserve Act passed
o Establishes Exchange Stabilization Fund
o Allows the U. S. Treasury to seize all gold held by Federal Reserve banks
o Private possession of gold made illegal except for "legitimate" purposes (jewelry, artwork, and
industrial and scientific uses)
January 31st, FDR issues an executive decree, changing the price of gold from $20.67 an ounce to $35 an ounce
January 31st, Congress creates Federal Farm Mortgage Corporation.
February 2nd, Export-Import Bank of Washington created, established under DC charter by Executive
Order 6581, to assist in financing U.S. trade with the Soviet Union.
February 23rd, Crop Loan Act passed
February 15th, Civil Works Emergency Relief Act passed.
April 7th, Jones-Connally Farm Relief Act passed, bill effectively placing an expanded roster of farm
products under the control of the Agricultural Adjustment Administration (AAA).
June 6th, Securities Exchange Commission established
June 19th, Federal Communications Commission created
June 19th, Silver Purchase Act passed, empowering FDR to increase the Treasury's silver holdings to 1/3
the value of gold, nationalizing silver stocks and purchases (victory for Free Silverites)
June, Taylor Grazing Act passed (Made it illegal to use "public land" for grazing w/o a permit)
November 6th, Democrats gain 9 seats in the House of Representatives
Anti-Rackateering Act passed
Commodity Credit Corporation created
Federal Farm Bankruptcy Act passed
Federal Surplus Relief Corporation created
National Firearms Act passed (Placed special taxes on the manufacture and sale of firearms by manufacturers and dealers).
Reciprocal Trade Agreements Act passed
Bankhead Cotton Control Act passed (Set quota on how much cotton could be grown)
By now you can see just how far-ranging FDR and the Democrat controlled Congress attempted to reach on the pretext of "fixing" the economy. Federal control was extended to everything from fixing precious metal prices to how much and what types of food American farmers could grow. By the way, the USSR did the exact same thing in the 1920's, and Mao would do 10-15 years later (leading to the starvation of millions). Despite dozens of new government entities designed to "put Americans back to work," unemployment is still at 23%.
In 1935:
April 8th, Emergency Appropriations Relief Act passed, creating the Works Progress Administration
May 27th, Supreme Court unanimously declares Section 3 of the National Recovery Act to beunconstitutional, in Schecter Poultry Corporation v.United States.Section 3 empowered the President to implement industrial codes to regulate weekly employment hours, wages, and minimumages of employees. (Despite this, FDR continues the program without consequence.)
June, National Youth Adminstration created by executive order
June 3, Farm Credit Act passed
July 5th, National Labor Relations Act (Wagner Act) passed
August 14th, Social Security Act passed
August 23rd, Banking Act passed
August 28th, Public Utility Holding Company Act passed
August 30th, Bituminous Coal Conservation Act passed (Later found partially unconstitutional)
August 30th, Revenue Act (Wealth Tax Act ) passed.
* Increased the surtax rate on individual incomes over $50,000, the estate tax on individual estates
over $40,000 and graduated steeply taxes on individual incomes over $1 million until the rate was
75% in excess of $5 million.
* Decreased the small corporation tax rate to 12% while increasing the corporate tax, on incomes
above $15,000 to 15%.
* Some excess profits over 10% were taxed at a 6% rate and in excess of 15% at a 12% rate.
Notice what happened here - during the one of the worst economic crises in American history, FDR raised taxes on "the weathiest Americans." It was said to be thier duty during the economic crisis. Sound familiar?
August, Neutrality Act passed and signed (Broken by FDR less than 4 years later)
Davis-Bacon Act (artificial inflation above market rate of wages paid to employees of private companies working on government contracts - still in effect today) amended, lowering contract threshold to $2,000
Federal Power Act passed
Motor Carrier Act passed, extending federal regulatory authority to motor carriers engaged in interstate
commerce
Rural Electrification Administration established
Soil Conservation Act passed
In 1936:
January 23rd, Adjusted Compensation Act passes, over Roosevelt's veto. The Act provides for the
immediate payment of veterans' bonuses. (FDR apparently didn't want veterans to get what was promised to them).
February 17th Supreme Court upholds constitutionality of TVA inAshwander v. Tennessee Valley
Authority
February 29th, Soil Conservation and Allotment Act is passed
May 18th, Supreme Court declares (6 to 3) the Bituminous Coal Conservation Act (1935) to be
unconstitutional in Carter vs. Carter Coal Co. The act had attempted to set produciton quotas, wages,
maximum work hours, and other areas of the coal industry - effectively attempting state takover of the coal industry. The Supreme Court decided it was an unconstitutional infringement on private property and
enterprise.
General Theory of Employment, Interest, and Money, by John Maynard Keynes, published (becoming the Bible
of socialist economic theory - argued that it is government's responsibility to create economic demand).
Rural Electrification Act passed, authorizing loans to qualified borrowers, with preference given to
nonprofit and cooperative associations and public bodies, to construct and operate electric systems
and generating plants
Domestic Allotment Act passed (made farmer relief payments contingent on the farmer agreeing to certian
measures - repealed in 1994.)
November 3rd, FDR defeats Alfred M. Landon, Governor of Kansas, to win second term as President
(electoral count 523 to 8-the largest landslide in history)
As in the previous year, despite all of the federal employment schemes and even further expanding programs, unemployment in 1936 remains at 17%. Some economists now believe the Great Depression could have been ending by now, had the Federal Government done what it did in 1893.
In 1937:
February 5th, FDR introduces the Judiciary Reorganization Bill (FDR's infamous court packing scheme):
* It proposed to add judges at all levels of the federal courts, assign judges to the more congested
courts and adopt procedures to expedite the appeals process by sending lower court cases on
constitutional matters directly to the Supreme Court
* Justices of the Supreme Court who reached age 70 could retire
* When a Supreme Court justice, age 70, did not retire, FDR could add an additional judge up to 6,
potentially increasing the court to 15 members.
March 1st, Supreme Court Retirement Act passed, permitting Supreme Court Justices to retire at age 70
with full pay, after 10 years of service. (FDR, frustrated by what he saw as the Supreme Court interfering in his recovery plans, attempted to "load the court" with friendly judges.)
March, Commenting on the government's confiscation of all privately owned gold currency, FDR says "Today's [economic]recovery proves how right that policy was."
May, economic recovery stops; economy enters a second depression (2nd worst stock market crash ever begins)
May 24th, Supreme Court declares (5 to 4) that the unemployment compensation provision of the SSA is
constitutional in Steward Machine Co vs Davis
May 24th, Supreme Court declares (7 to 2) that the old age benefits provisions of the SSA are
constitutional in Helvering vs Davis
July 22nd, Bankhead-Jones Farm Tenant Act passed, creating the Farm Security Agency (FSA). The FSA
established camps for migrant farm workers, provided medical care for those workers and their
families, and helped in finding jobs.
September 1st, United States Housing (Wagner-Steagall) Act passed, creating the US Housing Authority
(USHA) to administer low-interest 60-year loans to small communities for slum clearance and
construction projects and to grant subsidies for setting rent geared to low-income levels in areas
where local agencies provided 25% of the federal grant. (Paving the way for inner-city government constructed ghettos)
Unemployment in 1937 remained at 15%. The stock market, having begun to recover from its 1929 crash looses 50% of its value in the next year - the second worst crash ever. Economists of the time coin a new term for this event, calling it a "recession." Unemployment jumps again in 1938 to 19%.
Although FDR and Congress's creation of programs and schemes slows in 1938-41, government continues to exert more and more control over the economy. Unemployment rates do not drop below 10% until 1942.
By 19401, Republican resistance to the New Deal, combined with its abject failure to "fix the economy" had the Republicans (along with many Democrats) poised to seriously challenge FDR. Unfortunately for them, Dec. 7th, 1941 assured FDR would remain in power until his death in 1945 (Americans generally rally around Presidents in times of war). With the nation organized solely on winning the war, unemployment dropped to what economists considered full employment (less than 5%). During World War 2, New Deal programs were drastically cut back and, after the Republican resurgence to power, were not re-expanded until Johnson's "Great Society" programs of the 1960's.
To say historians have generally been very friendly to FDR would be a vast understatement. School children are regularly taught that FDR saved America. PBS said of him,
During twelve years in office, Roosevelt shepherded his nation through the two greatest American crises of the twentieth century -- the Great Depression and World War II -- and left a legacy of political freedom and domestic security to the American people."2 Michael Hirsch, in Newsweek argued,
"In Roosevelt's first 100 days, he not only saved the American economy but probably capitalism itself. How? By restoring it to health with a large dose of socialism. It was a supreme irony, considering how FDR was demonized by the right later on, that the president Republicans angrily called "That Man in the White House"proved to be capitalism's greatest savior."
However, in recent years economists, rather than historians, have begun to question FDR's legacy.
In 2004, two economists at UCLA came to some startling and unpopular conclusions, conclusions that have until now been largely ignored. They said,
"Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump," said Ohanian, vice chair of UCLA's Department of Economics. "We found that a relapse isn't likely unless lawmakers gum up a recovery with ill-conceived stimulus policies."
Uh oh. They went on to say,
"President Roosevelt believed that excessive competition was responsible for the Depression by reducing prices and wages, and by extension reducing employment and demand for goods and services," said Cole, also a UCLA professor of economics. "So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies."
This is certainly not the propaganda we've been spoon-fed for decades. The article concludes, "Cole and Ohanian calculate that NIRA and its aftermath account for 60 percent of the weak recovery. Without the policies, they contend that the Depression would have ended in 1936 instead of the year when they believe the slump actually ended: 1943...Roosevelt's role in lifting the nation out of the Great Depression has been so revered that Time magazine readers cited it in 1999 when naming him the 20th century's second-most influential figure."This is exciting and valuable research," said Robert E. Lucas Jr., the 1995 Nobel Laureate in economics, and the John Dewey Distinguished Service Professor of Economics at the University of Chicago. "The prevention and cure of depressions is a central mission of macroeconomics, and if we can't understand what happened in the 1930s, how can we be sure it won't happen again?""The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes," Cole said. "Ironically, our work shows that the recovery would have been very rapid had the government not intervened."
Tragically, it seems another Democrat President with the full backing of another Democrat Congress is repeating the very mistakes that led to the 7 year extension of the horrible misery that was the Great Depression. It seems the famous expression needs to be updated: Those who invent history are doomed to repeat real history. Get ready to suffer until possibly 2023 - if another dictatorship of an industrial giant decides to attempt to take over a continent or two. Otherwise, who knows? At least today we have the 22nd Amendment (although there has already been a move to repeal it), so Obama cannot reign for 12 (or more) years like FDR. We are all being called on to "give Obama a chance." If he is simply repeating the failures of the past, indeed taking those failed philosophies to the most extreme limits imagineable, why should we?
1. Time, Dec. 1939. It is interesting to not that the article says Princeton freshmen voted Adolph Hitler the "Greatest Living Person" in a landslide, though they did think FDR was the "Greatest American Living."
