China will now foreclose on its loans to the US ,and take possesion of the country by default!!

Rice: “Nobody could have predicted it.”

Corn: “Rice is cooked.”

LOL

The Republicans get back into power and start trashing everything again.

Cirle of life, you know?

Midwestern unionized industrial workers know about that — dust to dust, rust to rust.

I spent years teaching the Great Depression at the University in the 70’s through the 90’s, and while most of my students came to the class with the family lore that Franklin D. Roosevelt had saved the family home, or the family farm — they had little clarity as to how this was accomplished. What policies and programs did he put in place that saved these thing? Because they had limited understanding of the causes (emphasis plural) and the multiple programatic approaches to restoring the economy, they also had little notion of the idea that human decisions created the economic mess, and that indeed a series of human decisions were of consequence in fixing it.

I would agree that the lack of correspondance between increased productivity of value on the part of workers, with the wages paid for that, thus increasing the purchasing power of the working class, was critical. We’ve known a similar pattern has existed since the 70’s — but no one seems to have focused on the danger it presents. But it was more than just working class income. The 20’s were a revolutionary period in American Agriculture. It shifted from home grown fuel (the field that was used to grow feed for horses) to a capital intensive form — the horse was replaced by a tractor that ate diesel fuel — all of which you had to purchased with cash. The US and the World markets could not absorb the increased volume of commodities sufficient to balance the capital investment. In 1920 about 50% of our US population lived on farms or in small farm dependent towns, but by 1930 a great migration to industry had transpired, and less than 30% of the population derived income from agriculture. (Today it is less than 3%). The Agricultural Depression predated the crash of the stock market by about seven years.

In the early 30’s the normal form for a home mortgage was a five year note, with monthly payments, and with a balloon payment at the end. If one could not pay the balloon, one renegotiated the note for another five years — at a new rate of interest of course. What happened in the early 30’s was that the banks, which had speculated in the market on their own account, lost their shirt after the crash, and were unwilling to rewrite outstanding notes, thus taking back residential real estate as the notes came due, preferring to own the asset than extend the loan. In many ways it is similar to the current mortgage problem — what makes an ARM mortgage different from a 25-30 year fixed rate mortgate, is precisely the difference between mortgage practice in the 20’s and after New Deal programs emerged that regulated the mortgage market. In effect, the Adjustable Rate Mortgage is little different (except in name) from the mortgage contracts common before the great crash.

So what did FDR Do to fix the problems? With regard to Mortgages, he first created HOLC — the Home Owner’s Loan Corporation, built on the back of the Reconstruction Finance Corporation of the Hoover period, which allowed Home Owners to convert short term notes into longer term mortgages that were then distributed among local Savings and Loans, and Commercial Banks that had been re-organized under the Emergency Banking Act. Then, a few years later — FHA was created, insured loans for working and middle class purchasers, fixed rate over 20 years, clear credit requirements, and a cap on the size of the loan, and strict requirements as to the home meeting code requirements. You can actually see the physical implications of this in virtually any American City — Housing built in the 1920’s tends to be larger, more architectual special features — housing built in the post FHA period is small cape cods and ranch style housing, tends to not have porches, frequently had no garages, had small kitchens, frequently eliminated the dining room for a dining area in the kitchen, but was quality construction, small but tight. You can see where one era ended, and another began. That was the impact of the Cap on the size of insured mortgages — and one of the so called “reforms” of McCain’s efforts in Congress back during the S&L crisis, was raising the Cap, and allowing S&L’s and Banks to do insured mortgages with so called “Jumbo” loans. You can see this physically too — the line at the edges of the suburbs where fairly nice homes built in the 60’s and 70’s are surrounded by the McMansions of more recent years. That is the visable aspect of raising the cap and deregulating credit requirements.

But in the end — the most important thing to realize about all this is that while FDR tried a bit of this, and a bit of that to get to sustainable financial institutions — the underlying lesson is that he did things that prevented the business cycles from driving middle and working class people into poverty that lasted over 50 years. The layers of the New Deal mattered, and in fact political leaders made decisions creating these institutions. Government Mattered. FDR reorganized the banks and finance regulation at the same time as he provided home owners, through HOLC, with a way to stablize an existing home mortgage. He cut farm overproduction of commondities so as to re-inflate prices, at the same time he provided Farmers with a special home and land mortgage window, so they could continue to produce at a regulated pace, linking supply to demand. And as the depression wore on, he proved to be adept at favoring Labor Organization which in turn raised working and middle class wages and share in overall productivity. All these were human interventions in a crisis — Government practice and policy mattered.

How rich.

This from a man whose chief economic adviser– Phil (turtle head) Gramm got this whole mess rolling 7-8 years ago by opening the Enron loophole and allowing billions of dollars to flood into oil futures contracts, and has worked at UBS which has lost billions in the sub-prime mortgage meltdown.

Putting these two in charge of our economic system would be like putting Col. Sanders in charge of the chickens.

The chickens would have a better chance.

I also had the distinct impression that some of the problem was that credit was also being used to buy stocks on margin. When the margin was called and the person couldn’t pay, they lost all of their investments. Sometimes things get so bad it hits the rich where it hurts, also. They can engineer a lot, but not everything.

Loaded down – thanks to Bush and his sidekick McCain – by the Iraq War with $10,000 each, just for starters.

That’s $10,000 that could have gone to your retirement, health care, social security, or government services.

Gone to the Immoral War Profiteers, instead – but we’re burdened with the Loan.

Citizen Phoenix Woman and the Firepup Freedom Fighters:

Great post…the families of the oligarchy who planned,staged and profited from the last great crash have been studyin’ what went wrong with their calculations after 1933…basically, the fact that the federal government had no debt and the great cashes of capital were accessible to taxation allowed for the “New Deal” to work over time. This crisis finds the country owing over a trillion dollars to foreign countries, the tax base destroyed, the assets of the old economy sold off and the equity from the working population stolen or mortgaged. In addition all the institutions and safety nets for support of the population at large in a time of crisis have been hollowed out or dismantled and the military has been shrunk and the state militias destroyed so that the nation as a whole can not protest itself and the people are left at the mercy of local police and corporate mercenary armies.

The crisis today has been set up jest like the last one but now there are no resources at the disposal of the federal state to re-engineer the economy, support the general population AND protect the people’s government from the power of the corporate oligarchy because the wealth of the country has been stolen and is firewalled against bein’ taxed because the debt of the country is too large to pay for all the work that must be done. This has happened in large part do to the purchasing of the Democratic Party after WWII by the military industrial complex. The anti-communist and anti-union attacks on the population destroyed the popular base of the Democratic Party and left ownership in the hands of the corporate oligarchy that it had ridden to power against in 1932-33. I’m convinced that irony and the Democratic Party are a couple of God’s little jokes on us!

KEEP THE FAITH AND PASS THE AMMUNITION, THIS IS THE LAST BATTLE FOR DEMOCRACY IN THE USA!!

The difference in today and then….. we have generations of Americans who are so divorced from the land and have no clue where their food source comes from except a box or plastic wrap. During the depression most Americans had the knowledge on how to grow food and make things from scratch….. now we don’t.

Up until the 80’s there continued to be a “fear” to put money in the stock market which I think was left over from the 1929 crash. The 401K did away with that along with the mutual fund investing…..