copyright © 2008 Betsy L. Angert. BeThink.org
Never spend your money before you have it.
~ Thomas Jefferson
I, however, place economy among the first and most important republican virtues, and public debt as the greatest of the dangers to be feared.
~ Thomas Jefferson
Tis Sunday, September 28, 2008. The weather is warm and word on the streets is warmer. Fire from Hades, fervor, and fury heat the debate heard on the streets and in the halls of Congress. Businesses fail. Banks do too. Bailouts are planned and these too falter. Those in the White House are red hot with concern. People in Treasury Department and within Secretary Henry Paulson's office sense the burn. Many fear they too will be scorched. The flames are intense on the Hill. Yet, on American avenues many feel, while inflamed by the rhetoric, chilled at the prospect that this immediate need for a bailout is but a hoax or perchance, just hype.
Citizens in this country have been lied to too often; particularly, the public believes, the current Administration has been irresponsible with facts and finances. Candidates and Congress have delivered a fair share of untruths. Tycoons, most accept, fudge the numbers. Countless conclude, there is no one, in government, or in corporate offices, they can trust. Hence, when confronted with the claim, American taxpayers must bailout Wall Street, most say, and what of Main Street? What of me?
The electorate fumes. Even the apathetic are steamed. Big-businesses will receive bailouts while the poor wallow in economic waste. What is a person to do?
History might tell us we can do nothing. Rome burned and Nero fiddled. That is often the case when people are provided with fruits of folly in hopes they might forget financial woes. "The fundamentals of the economy are (still) strong," is uttered to appease Americans and perchance, those throughout the globe.
Today, and throughout this week we might recall the recession, the correction that preceded the perceived bump. The year was 1929, near four score ago. The month was October, and the date was the 27th. While America had realized many fiscal depressions in years prior, none was as the crash heard on that solemn Thursday afternoon. Few expected what amounted to a sonic boom. The smoke rose from the floor of the New York Stock Exchange. The fire on that day singed portfolios and people. The rumbles and rubble reminded many of the ruins of Pompeii. Some could not bear the high temperature of an explosive economy.
At first, economists and leaders thought this was a mild bump, perhaps merely a correction of the market, or in any case, no worse than the recession the nation suffered after World War I.
Numbers soon proved the optimists incorrect. The depression steadily worsened. By spring of 1933, when FDR took the oath of office, unemployment had risen from 8 to 15 million (roughly 1/3 of the non-farmer workforce) and the gross national product had decreased from $103.8 billion to $55.7 billion. Forty percent of the farms in Mississippi were on the auction block on FDR's inauguration day. Although the depression was world wide, no other country except Germany reached so high a percentage of unemployed.
The poor were hit the hardest. By 1932, Harlem had an unemployment rate of 50 percent and property owned or managed by blacks fell from 30 percent to 5 percent in 1935. Farmers in the Midwest were doubly hit by economic downturns and the Dust Bowl. Schools, with budgets shrinking, shortened both the school day and the school year.
The breadth and depth of the crisis made it the Great Depression.
No one knew how best to respond to the crisis.
Nor does anyone today. On boulevards and in banks, citizen question why do we need a bailout for big-businesses. What of the common folk? Who will or has ever assisted the little guys and gals. All these questions and more are apt. Where were the regulators, and what ever became of regulations?
No one wondered, not even those in the well-educated Middle Class when they could cash in on high home prices. Few fretted when it was easy to secure a loan. Brokers and borrowers could live in the lap of luxury when no one was watching the safe or our fiscal security.
It was fun, to burn billions, while it lasted. Now, as Americans sit on piles of ash, once called McMansions or glorious abodes, too many millions weep for what they were happy to have wrought. Credit card companies call and demand; they must collect on the debt. Americans whimper. "I cannot pay." My foundation, my funds were burned when all was set ablaze.
When life was good Americans bought the oratory from the Oval Office. People purchased businesses, stocks, bonds, clothing, and any capital that could boost a sense of wellness. Americans spent . . . it all, and on what. Inflated images. Irrational exuberance was contagious. It spread as a wild fire in a forest full of tinder dry trees. Yet, now the Bush's are bare. Everyone has his or her hand out. "Alms for the poor" is not the cry. "Alms for the rich is what citizens are told will help. People read.
Bailout failure 'will cause US crash’
The US stock market could suffer a devastating crash with shares losing a third of their value this week if Hank Paulson’s financial bailout plan fails, US Treasury officials have warned.
By Tim Shipman in Washington and Edmund Conway
28 September 2008, 10:14AM BST
The financial system could face a meltdown of 1929 proportions unless US politicians succeed in their efforts for a $700bn rescue scheme, experts added.
The warning came as Republicans and Democrats met in Washington for a rare weekend debating session to attempt to seal agreement on the contentious plan, aimed at preventing a long-lasting recession in the US.
Officials close to Paulson are privately painting a far bleaker portrait of the fragility of the global economy than that advanced by President George W Bush in his televised address last week.
One Republican said that the message from government officials is that “the economy is dropping into the john.” He added: “We could see falls of 3,000 or 4,000 points on the Dow [the New York market that currently trades at around 11,000]. That could happen in just a couple of days.
“What’s being put around behind the scenes is that we’re looking at 1930s stuff. We’re looking at catastrophe, huge, amazing catastrophe. Everybody is extraordinarily scared. It’s going to be really, really nasty.” . . .
Peter Spencer, economic adviser to the Ernst & Young Item Club, said: “This is the time you have to bail people out and ask questions later. It is very difficult to see how the US banking system would survive without that.
This has the potential to make 1929 look like a walk in the park.”
Senator Harry Reid of Nevada, the majority leader, said: “We hope sometime [Sunday] evening we can announce some kind of agreement in principle. We may not have another day.”
Rebel Republicans - who see Paulson’s proposals as socialism by the back door - were warned they will be responsible for causing an “amazing catastrophe” if they continue to oppose the plans, which would see taxpayers buy up the bad debts of failing banks. Instead they want an insurance scheme for banks, which would spread the cost to private enterprise.
Would it be that insurers could ensure, people will not do as they have done and ignore all cautions. In the past, professors preached, "Remember the Alamo," Today, teachers beckon, "Recall the demise of American International Group (AIG)," an insurance company who fell only a week ago.
A person considered a prominent and extremely prosperous investor attempted to teach the world of what no one wished to see. Early in May 2008, Entrepreneur, Berkshire Hathaway Chairman, Warren Buffett warned us the winds from the warm blaze would scorch all life on the planet today. He said in an interview with the German magazine Der Spiegel, we are in for a "long, deep recession," "Perhaps not in the sense that economists would define it. But the people are already feeling the effects. It will be deeper and last longer than many think."
Sadly, Few heard him. People were off shopping. Most paid for purchases with fire. Sales, while robust, were often transactions that led to greater debt. For decades now, people have preferred to buy now and pay later. Only now do Americans experience an economic pinch.
Awestruck by the economic wreckage, people ask why. Why me? Why now; and a few astute monetary masters say, "Why not?" Economists wonder why is it that humans do not learn from history. People look back after they are burned. The question might not be what caused the fire or the frenzy. That answer is easily found. Humans, flawed and filled with the foible of avarice wish to accumulate what they cannot afford. Perchance, the query could be, who or how often will people pursue a bailout? When will debt not be an option and when will humans guard against avariciousness?
References for Fiscal Resources . . .