O.K. So I’m one of those whiners Phil Gramm mentioned. I am going to whine loud and clear not because of high gas prices, not because of the obscene grocery tab I paid yesterday, but because I can see the shadow of another Great Depression through the corner of my eye. The comparisons between then and now are frightening.
In the Great Depression:
– The stock market fell rapidly, as it has done on several recent occasions. (Stock Market report, July 4, 2008: “All three majors lost value on the four-day trading week, with the Dow Jones Industrial Average closing in bear market territory. Crude oil for future delivery closed at $145.29 per barrel earlier today. For the week, the DJIA lost 57.97 points, the NASDAQ Composite Index lost 70.25 points, and the S&P 500 Index fell by 15.48 points. Since closing with record highs on October 9, 2007, the Dow Jones Industrial Average has now lost 2,875.99 points, while the broader S&P 500 Index has given up 302.25 points.)
– Financial institutions failed, as they are failing now. Only government safeguards put in place to stave off another Great Depression are protecting depositors. (AP news story, July 12, 2008: “IndyMac Bank’s assets were seized by federal regulators on Friday after the mortgage lender succumbed to the pressures of tighter credit, tumbling home prices and rising foreclosures. The bank is the largest regulated thrift to fail and the second largest financial institution to close in U.S. history, regulators said…. The lender’s failure came the same day that financial markets plunged when investors tried to gauge whether the government would have to save mortgage giants Fannie Mae and Freddie Mac.”)
– Thousands of people lost their jobs. (Government press release: “Non-farm payroll employment continued to trend down in June – down 62,000 – while the unemployment rate held at 5.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported.“)
– The disparity between rich and poor was escalating. (Recent article by Republican politicians Jack Kemp and George Mitchell: “The gap between rich and poor has grown worrisome to many of us, including those charged with national economic policy. Federal Reserve Board Chairman Ben Bernanke has warned that the unchecked growth in income inequality could threaten the nation’s economic vitality.”)
– The First World War had dealt a staggering blow to the U.S. economy, causing inflation and a loss of international faith in the dollar. (Article in Mother Jones Magazine, February 29, 2008: “Nobel Prize-winning economist Joseph Stiglitz has blamed the Iraq war for sending the United States into a recession. On Wednesday, he told a London think tank that the war caused the credit crunch and the housing crisis that are propelling the current economic downturn.”)
Perhaps the most frightening similarity is the sanguine attitude of the people in charge of the U.S. economy. In 1929, Yale University economist Irving Fisher stated confidently: “The nation is marching along a permanently high plateau of prosperity.”
Earlier this week, Phil Gramm, a former Republican senator who now is the No. 2 at the Swiss bank UBS and co-chair of John McCain’s presidential campaign, told The Washington Times that Americans have benefited from globalization but are misguided by constant reports that the economy is at its worst in 30 years. “You’ve heard of mental depression; this is a mental recession,” Gramm told the newspaper, adding that McCain will face an uphill battle fighting those perceptions. “We have sort of become a nation of whiners,” he said. “You just hear this constant whining, complaining about a loss of competitiveness, America in ‘decline’ despite a major export boom that is the primary reason that growth continues in the economy.”
In 1930, as the U.S economy was sinking into deep recession, President Herbert Hoover told Congress: “Economic depression cannot be cured by legislative action or executive pronouncement. Economic wounds must be healed by the action of the cells of the economic body – the producers and consumers themselves.”
In a speech earlier this year, President Bush declared: “The temptation of Washington is to say that anything short of a massive government intervention in the housing market amounts to inaction. I strongly disagree with that sentiment.”
Finally, here’s a passage from a guide to the Great Depression (written for kids): “Stores and factories were closed and left millions of Americans jobless, homeless, and penniless. Many people came to depend on the government or charity to provide them with food. The Depression became a worldwide business slump of the 1930s that affected almost all nations. It led to a sharp decrease in world trade as each country tried to protect their own industries and products by raising tariffs on imported goods. Some nations changed their leader and their type of government. In Germany, poor economic conditions led to the rise to power of the dictator Adolf Hitler. The Japanese invaded China, developing industries and mines in Manchuria. Japan claimed this economic growth would relieve the depression. This militarism of the Germans and Japanese eventually led to World War II.”
Is it any wonder that I whine?