The Depression in the 1930s didn’t just happen on Black Tuesday, when the stock market famously crashed. It rolled out over a period of years, as the United States endured an ongoing decline of the economy, with unemployment worsening, home foreclosures swirling along with the Dust Bowl and bread lines snaking along for blocks.
Among the worst periods of that cumulative disaster was the interregnum between Herbert Hoover’s defeat in November and Franklin Roosevelt’s inauguration in March. (In 1933, passage of the 20th Amendment moved the inauguration to the third Tuesday in January). As Hoover clung to his failed policies, rebuffing FDR’s attempts to work cooperatively to address the crisis, unemployment soared and inaction paralyzed the nation for four months. The bread lines grew longer.
History doesn’t repeat itself. At least, not exactly. But it offers lessons. Lessons that many in Congress clearly haven’t learned. Here’s a 12-step program for lawmakers to soberly address the nation’s financial crisis.
- Take action before the new Congress is sworn in. Inaction is not stability. In this instance, it could lead to more disaster.
- Admit that what has been tried so far has not worked, if not outright failed. (Hint: Working people have not benefited from legislation enacted to date.)
- Make amends for previous lawmaking errors by vowing to pass legislation that will assist working people.
- Create a list of all the most urgent needs of the nation’s working people and then enact an immediate recovery package that includes, but is not limited to: job creation (rebuilding our nation’s deteriorating infrastructure is a good start); a freeze on home foreclosures and unemployment benefits extension.
- Override Bush’s veto of the measure.
- Take inventory over the holiday break and realize a recovery package is just the beginning of a long process toward getting our nation’s economy out of ICU.
- When convening the 111th Congress, immediately begin to address long-term economic needs.
- Acknowledge that among the key legislative measures that need to be passed is the Employee Free Choice Act and health care reform.
- Recognize that passage of the Employee Free Choice Act is a big step toward shoring up the nation’s working and middle class. Working people are struggling to make ends meet and the Employee Free Choice Act will allow more people to bargain for better wages and working conditions—which in turn helps rebuild our middle class and create an economy that works for all.
- Save America’s working/middle class.
- Save America’s working/middle class.
- Save America’s working/middle class.
Get it?
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Aloha, Tula! Now do you think the law makers will take the first step and recognize there’s a problem…?
10. Save America’s working/middle class.
11. Save America’s working/middle class.
12. Save America’s working/middle class.
Nah. Never happen.
tula – sorry to pick on the one thing i disagree with you on, but it’s an important one. what the afl-cio is doing on health care reform via hcan is, i think, a big con. we don’t have the resources for an insurance industry based “solution” – and i really wish labor would think about pushing for single payer instead.
13. Never allow a Bush to hold a national office again.
13. End one or more wars that we are currently invovled in reducing gabillions of dollars added to the deficit every
single damn day.
You’re too kind. Shouldn’t that list be a Little longer?
I guess if we are plunged in to a depression nobody will have the money to loan us for wars. That’s one way to end the war/occupation in Iraq.
Tula, have you written about the potential destruction of UAW if the big 3 go into bankruptcy?
Another solution is the enactment of tax barriers against the dumping of goods made in economic slave conditions.
Take the profit out of the disparity in production costs.
Repeal those sections of “free trade” that allow “unfair trade”.
14. Enact laws to restore sensible regulation of our financial markets so this doesn’t happen again in our lifetimes
if obama puts michael greenberger in charge of the cftc i will jump for joy.
Bingo!
play chess do you?
if not, you would be great
What got us out of the Great Depression was, to quote Krugman, “a massive public-works program known at World War II.”
Stop a depression? The Bushie Crime Family needs a depression so they can loot the anything that has not been stolen already. This started with false flag operations by the Carlyle group and the Bin Laden family. A phony terrorist threat and a corrupt Republican Congress created a Department of Homeland Stasi to spy on everyone and their money. This allowed a couple of wars along with immense war profiteering.
An economic false falg operation was created by Paulson, Bernanke, Kashkari, and the new guy Karthik Ramathanablama, using the threat of economic meltdown, massive unemployment, stock market crashing and martial law. They are just writing bad checks to bankrupt America. A bankrupt America means no green technology. But we get perpetual war, perpetual pollution by corporations, perpetual cable teevee propaganda aproved by the Federalist Society, the Heritage Foundation and the Cato Institute.
Of course, dammed bloggers keep exposing their phony baloney.
and give them titles that make them harder to rescind, like;
“cleaning the cancer you dump in my kids air fee”
I think national, single-payer health care would be the biggest bailout to the big 3 at this point. It would also encourage entrepreneurial activity.
I find it interesting that Republicans were willing to dole out $700 billion to bank execs BEFORE the election, but they don’t want to bail anyone out now that Democrats will be left holding the bag.
We did it right back then: first depression, then war. This time we did it in the wrong order. /s
Tula!
I was just getting ready to email ya. I got a request a few weeks ago to participate in this project – Purple States, 50/50/50 – 50 bloggers, 50 days, 50 states. I thought it was a joke. It’s not. They’ve attempted to find a broad spectrum of state bloggers to talk about the economy. This is my deal today.
http://purplestates.tv/watch/88
What struck me as I watched the other videos, there’s about 12 so far, is the commonality of circumstances happening around folks. The guy from Hawaii talking about the price of milk! Geezus! It’s exactly as you say:
10. Save America’s working/middle class.
11. Save America’s working/middle class.
12. Save America’s working/middle class.
Yet another Bush fubar.
sorry o/t
Pat buchanan having a seizure of crazy on saving american auto industry…I’m sorry. I hear all arguments from the GOP robots as Big Oil Talking.
Hahahaha
one of the things people miss with those programs is the fact that we got product for our investment.
we got roads, tunnels, schools, water and electricity works
we can’t simply “make money available for loans”, this is giving profit to lenders who caused the problem when there should be no profit to them what so ever.
this is what all of these “bailouts” missed, that we do NOT need middlemen taking valuable assets for their profit when those assets should be going into jobs and infrastructure
16?. Don’t allow Paulson to spend the last half of the $700 billion. (He does need approval to do that, doesn’t he? They did put that in the contract, didn’t they?) Okay, it won’t really help prevent a depression, but it certainly can’t hurt!
It’s probably his dyslexia (or is that lesdyxia?).
am i allowed to be here?
More of those failed librul ideas.
I think it’s important for us not to blame this all on Bush. He was awful, but our current predicament is the result of a long-term assault of neo-conservative foreign policy mixed with neo-liberal economic policy. It really kicked in under Reagan, but just electing a Democrat to the White House and having majorities in congress isn’t going to automatically fix everything.
Much of philosophy of this dangerous world view still informs “conventional wisdom” and it will take a serious and protracted effort to begin to reverse that trend.
We’re off to a good start, but there’s a long way to go.
Either way, it’s Bush’s legacy.
Agree entirely. Not to mention that single payer could be an integral part of a new New Deal type public works program.
Here’s a good start for getting reved up.
http://antiwar.com/radio/2008/…..phsottile/
Bush completely destroyed a pretty good economy inherited from Clinton.
you want to end the race to the bottom? what fun is that? /s
no, this is mostly the present admins fault wit the foundation of the last 30 years. he gets the burden, imo.
I am shocked! Henry Paulson threatened Congress with Martial Law to get his $700 billion. What is next? Dana Perino will threaten us with economic collapse if Congress goes home?
We must go to our big creditors to fashion a kind of national Chapter 11. We ask for a moratorium on paying either principle or interest on our debt for five years. In that time we build water desalinization plants, throw bucks at cold fusion, create new battery technology etc to repay the debt in kind, not in dollars. Hitler did it in the thirties, simply defaulted on Germany’s debt. He put the proceeds into an army. We try something more civilized. Argentina got out of its problems when it ignored its foreign debt. Sounds like something we don’t want to do-it’s unAmerican, but it’s the only place we can get the cash (without printing it) to get things going. The burden falls mainly on the wealthy which doesn’t bother me. It’s time we realized we are engaged in class warfare and the wealthy are winning.
that is one terrific post.
reagan began the fall of the middle class, redistributing tax burden on to those who drive the economy rather then on those who have benefited from it, in essence, removing the debt they owed to the very economy that gave them their wealth.
under reagan’s “strategy” our infrastructure and education system would suffer a slow burn into distintigration.
and he did NOT “lower taxes”, in fact (and contrary to corporate propaganda), he raised taxes more then any other peacetime president in history before his “service”
all we really need to do is lower taxes back to the rates before reagan raised them and renew tariffs on products imported into this country which come from economies that don’t insist on fair wages and being socially responsible industry
He nailed the bleak situation here in Hawaii to a tee! Everything he described in it is dead on…! Our tourism-based economy is soaring like a lead balloon…! :-(
just another spanner in the works, fun to see the pseudo-economic engineers tearing their wigs trying to solve the insolvable. Popcorn time
Clinton was certainly more fiscally responsible than the Bushes at either end of his presidency, but part of the ‘prosperity’ was illusion created by the tech bubble (bubble and bust cycles are a trademark of neoliberalism) and the rest was the fact that he put the breaks on our rightward slide, without actually changing course. Remember he advocated for and signed NAFTA and the 1996 Telecommunications Act.
bingo
formally known as the “tariff” we will call these bariors;
the “forcing other countries to pay their own bills fee”
The story is believable in general but Inhofe is (to put it mildly) an unreliable witness. How would you evaluate it?
I don’t think you can call that kind of extended growth a bubble, I think that the “bubble” would have maintained middle class growth had not the reagan redistribution model been enacted
you suggest a wto that works? that is ambitious.
Beg to differ. The examples you cite are evidence of Clinton’s moving the country farther to the right. And you didn’t even bring up black sites, extraordinary rendition, gratuitously starving & bombing civilians. The most you can argue about Clinton is that he moved the country to the right more slowly than W did. Shit. Even my wingnut son sez Clinton is the best D prez we’ll ever get.
and bush still has about 60 days to enact this marial law and reverse the election.
National Security and Homeland Security Presidential Directive.
1-3 are non-starters because the Congress is in denial about the extent of what is going on and how bad it is. As for the Bush Administration and most Republicans, they inhabit a different reality entirely. And Obama and Company seem to be on vacation.
I have written about this a lot here. A solution to the housing collapse and financial meltdown needs to do the following:
1. Direct help to homeowners, temporary moratorium on foreclosures, creation of a federal entity to renegotiate loans reducing the principal and converting them to fix rate long term. Some won’t qualify no matter what but some of these at least short term could rent what were their houses
2. Bank nationalization, direct them to recommence normal borrowing, force them to declare their liabilities based on a revaluation of their “illiquid” assets with a 40% markdown which in most markets would place housing values at pre-bubble levels. At this point, some banks will be too insolvent to save and would be liquidated. The others would be recapitalized on terms that would leave them viable and the government with a profit.
3. Re-regulate financial markets: Nullify naked swaps, force all holders of equity based swaps to declare them or have them nullified, settle them on default below the adjusted (-40%) valuation, re-introduce Glass-Steagall, limit the number of derivatives that can be created off each other (I would limit it to two generations, i.e. a derivative written on the basis of another derivative), increase reserves, decrease leveraging, increase margins in futures markets, restrict all derivatives to regulated exchanges, loosen rules on individual bankruptcy, limit credit card rates and fees, and transparency, transparency, transparency.
4. A new one. Economic stimulus: Rebuild the nation’s infrastructure, green it to address global warming and make it more efficient to face up to peak energy. Move to single payer universal healthcare.
re clinton era: and deregulation of the financial markets. would we have had a shadow banking system without that?
I would call the Internet Bubble a bubble. That’s what really drove the economy during the 90’s (with the housing bubble also starting up in there somewhere — though I’m not an economist, so I can’t cite exact details)
Clinton did enact some rational changes to tax policy that helped out, but all-in-all he just didn’t do enough IMO to reverse course on the neo-liberal trajectory.
Now W managed to tank the economy at breakneck speed, so I’m not defending him at all, I’m just saying a return to “Clintonism” isn’t going to solve our problems. If you fall of a building, opening an umbrella will slow your fall a bit, but not enough to save you.
That’s what I was trying to say, apparently not as well as I should have.
Yep. Didn’t mean my list to be complete, although it sounded like it was. Your additions & corrections always welcome. *g*
i don’t believe anything inhofe says.
When Dan Perino threatens Congress, our kritters should be very very scared.
By comparison, three weeks ago I bought milk – $3.28/gallon to #3.89/gallon (not including organic). Tuesday it was $2.39/gallon.
The guy from Delaware (Wilmington) talking about ‘upscale sellers’ noticing a SHARP decline matches here as well.
wow, that is one brazen threat, I wonder if she went off script, I am CERTAIN the president would LOVE congress to go on vacation.
we need to insure they don’t go on official vacation, that there is always business conducted so the president doesn’t raid the candy store when nobody is home
retailers are desperate to sell their stuff just to stay in business. they have no access to bridge loans.
that one was on my mind after listening to today’s hearing on credit derivatives. as i said before, if wise gov action is needed to keep us from going into a depression, i don’t see how we can stop it. this week’s hearings (two auto and today’s) were particularly bad. hope the economy can stand this much bad management.
In the anal interest of clarity: The 90s economic expansion started out OK and continued OK for many years. One problem was that Greenspan thought that it was not the job of the FRB to prick bubbles (only to mop up the aftermath; even Paulson now sees that folly, according to his speech today). So not only did he not raise rates to prevent the tech bubble from ballooning late in the 1990s, Greenspan actually exascerbated it in bailing out LTCM in 1998, in the face of a strong economy.
More fundamentally, though, you are right. Consumer spending, the economy’s engine, was bolstered during Clinton by (starting around 1994) strong employment growth, but only for a very brief period (97-99?) by rising real wages. Only the latter is the truly healthy way to keep an economy growing. And if you blinked you missed it.
During Clinton, credit was easy, borrowing was high. So although much of the Clinton economic expansion was fundamentally OK, the seeds of the bubble, bubble-burst were very apparent.
I have a dilemma on this one. What Imhofe reports sounds soooo much like what a W drone would say, but …
Harking back to the days of LBJ, at that time there were two massive funds sloshing through the financial system, one was petrol-dollars, the other was Euro-dollars, both the result of economic trade with the U.S. The problem with these funds was their “liquidity”, they could be deposited in a bank overnight, drawing interest, and be gone the next day, which accommodated the bankers need for reserve deposits at the end of the day to meet their obligations. That interest was paid by the working economy to the banks, a banker’s tax upon the working economy.
These liquid funds have multiplied since then, their liquidity has been assured by IMF, World Bank policy, commonly referred to as globalization. These funds and their protection have acquired almost all sources of economic production available to them, little has escaped their grasp – N. Klein’s Shock Doctrine, illuminates the policy and the results quite well. It is time to leash these funds and harness them to economic production or tax their existence for the economic disutility they represent.
People should not be ignorant of these funds, their history, their activities, and their costs to the productive economic community. Sorry, from memory, no links.
there was an interesting bit in today’s hearing where dinallo (i think?) described how prior to the commodity futures modernization act of 2000, naked swaps were actually prosecutable as illegal gambling (if i heard and understood correctly). am going to have to give it another listen.
Not sure what you’re talking about during LBJ. Dollar was unpinned from gold, and petrodollars both happened in 1973 under Nixon.
fwiw – brad sherman said it too. (youtube)
Sorry. Didn’t mean $ unpinned from gold; meant it was unpinned from Bretton Woods fixed exchange rates.
Thanks for that. I actually now remember that from the time.
PW upstairs with Coleman-Franken recount goodies.
http://campaignsilo.firedoglak…..t-i-smell/
Yeah, I don’t have much use for naked swaps. My view is that when the police raid a floating crap game they grab the pot. They don’t try to figure out who owes what to whom.
Thanks for bringing this up, yellowsnapdragon. The FDL folks–Jane, Marcy, Ian, et al., have done such a great job covering the issue this week, there’s not more to add. Jane hit it on the head when she said Rs in Congress are denying the bridge loan because the auto industry is unionized. Bush and his congressional cronies aren’t going to lose a day before Jan. 20 to try to further ram their failed ideology down the throats of America’s workers.
I hear Bushie is now making noise about working with Congress on some kind of aid to the auto industry. Maybe someone told him there might not be a stock market left before he leaves if he doesn’t do something.
IIRC it was Nixon who disbanded the gold standard in favour of floating rates. During the LBJ administration there was a strong effort to stop “the gold drain”, “Buy American” was pushed strongly. Your petrodollars are from the ‘72 oil snafu and the 4 fold increase in oil costs. America was buying huge quantities long before then and those dollars were accumulating in the fund mentioned.
some one asked the panel the question – could we just declare the naked swaps illegal? there did seem to be some reluctance to answer the question directly, but still interesting…
the most frustrating thing about the hearing was that the idiot from the sec used it to try to make the case for why the sec should be in charge of regulating credit derivatives, even though the argument was weak and they were not ready to do it. petty empire building. like we have time for that shit.
gotta agree with ya there. this whole fam damily and its relates are taking everything that isn’t nailed down. I think americans sense this but are unwilling to admit it’s that blatant. kinda sad, also infuriating that they’re getting away with it. My hope is that this whole fiasco gets americans to stop and think about their identity as consumers in the eyes of corporate america, and will decide they’d rather value themselves as human beings first, demand single payer, free higher education, limits on credit card interest rates, etc etc
here’s the link to rep sherman ohio railing against that very threat from paulson in the well of the house
http://www.youtube.com/watch?v=HaG9d_4zij8
More than just ‘banks vs. car makers’ there is ‘Wall Street bankers vs. other banks, car makers or anybody else’. That’s what makes it crystal clear they’re not just incompetent, but are executing a focused plan to hurt everybody but their ‘have and have-mores base’.
THAT is why Pelosi, Reid and Obama were correct to push for the bailout! What does it say about the Republicans who voted against it?