When you are grasping for straws to discredit the data that jobs have been created, typos are as valid as facts to critics. I call witness the current criticism of the job stimulus data. What we really have is a basic attempt by Republicans to shift the economic collapse of 2008 (The Bush Recession) to Democrats efforts to preserve our way of life for us and our grand children. This has prior historical parallels, as evidenced in Republicans fighting everything to shore up spending to avoid a major depression after Republican laissez faire economics that caused the collapse in the 1920s. I will take Obama economics over Hoover economics every time, even with typos. And I am a grand child of FDR's economic policy and I certainly thank him for saving America!
Read, The Great Crash, 1929 about The influence of the Wall St Crash on the Great Depression by John Kenneth Galbraith. Contrary to what had been Wall Street's perceived tendency in playing down its influence, Galbraith asserted the important contribution of the 1929 crash on the Great Depression which followed: causing a contraction of demand for goods, destroying for a time the normal means of investment and lending, arresting economic growth and causing financial hardship which alienated many from the economic system. Galbraith further argues that the Great Depression was caused by a mixture of five main weaknesses: First, an imbalance in the income distribution. Galbraith asserts "that the 5 per cent of the population with the highest incomes in that year [1929] received approximately one third of all personal income" Personal income in the form of rents, dividends and interest of the well-to-do was approximately twice as much as the period following the Second World War, leaving the economy dependent on a high level of investment and, or, luxury consumer spending with its potential exposure to the Crash of 1929.
Second, problems in the structure of corporations. Most specifically, he cites newly formed investment entities of the era (such as holding companies and investment trusts) as contributing to a deflationary spiral due in no small part to their high reliance on leverage. Dividends paid the interest on the bonds in the holding companies and when these were interrupted the structure collapsed. “It would be hard to imagine a corporate system better designed to continue and accentuate a deflationary cycle." Also “The fact was that American enterprise in the twenties had opened its hospitable arms to an exceptional number of promoters, grafters, swindlers, impostors, and frauds. This, in the long history of such activities, was a kind of flood tide of corporate larceny.”
Third, the bad banking structure. The weakness was manifest in the large number of units working independently. As one failed pressure was applied to another leading to a domino effect accelerated by increasing unemployment and lower incomes.
Fourth, foreign trade imbalances. During World War I, the US became a creditor nation, exporting more than it imported. High tariffs on imports contributed to this imbalance. Subsequent defaults by foreign governments led to a decline in exports, which was especially hard on farmers.
And finally, "the poor state of economics intelligence". Galbraith says that the "economists and those who offered economic counsel in the late twenties and early thirties were almost uniquely perverse" and that reputable economic advice was invariably on the sides steps that made things worse".
Prospects for recurrence:Galbraith was of the opinion that the Great Crash had burned itself so deeply into the national consciousness that America had been spared another bubble up to the present time (1954); however, he thought the chances of another speculative orgy which characterized the 1929 crash as rather good as he felt the American people remained susceptible to the conviction that unlimited rewards were to be had and that they individually were meant to share in it. He considered the sense of responsibility in the financial community for the wider community as whole as not being small but "nearly nil". Even though government powers were available to prevent a recurrence of a bubble their use was not attractive or politically expedient since an election is in the offing even on the day after an election.
Sound all too familiar to the Bush Recession of 2008?
http://en.wikipedia.org/wiki/The_Great_Crash,_1929
Tom Love
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