Posts Tagged ‘stock market’

Child of the Great Depression

October 9, 2008

  The Great Depression food line on the cover of this week’s Time magazine brought back memories of my childhood. I was a “child of the Great Depression.”  I wrote about it in my memoir The Newsman, and an excerpt about that will follow.

Library of Congress)

Pres. Herbert Hoover was blamed for the Great Depression (Photo: Library of Congress)

    First, though, I’ll comment briefly on the Time article that tells us how history can help us avoid it happening again.

  Fortunately, our Fed Chairman Ben Bernanke studied the Great Depression of the 1930’s intensively. Most economists agree that the federal government did just the opposite of what it should have done when credit seized up during the Great Depression.  It “made a bad situation worse by reducing credit to the banking system,”  writes Niall Ferguson in his Time article “The End of Prosperity?” He has pumped more than $1 trillion into the financial system over the past 13 months.

  And Treasury Secretary Hank Paulson is doing the same thing with his $700 billion bailout of financial institutions, on top of what he has already spent on Freddie Mac and Fannie Mae, AIG, etc.

  It appears this is a case of some key people in government paying attention to the lessons of history. Will it work? Maybe, but things are expected to get worse before they get better.

  Now, here is that excerpt from The Newsman that I promised.

Excerpt from The Newsman

 Our house was not only small, it was crowded with me, my mother, father, sister, and brother, and, from time to time, out-of-work relatives. After all, we were in the grips of the Great Depression, which everyone in my family said was caused by Republican President Herbert Hoover. Later, I learned more about Hoover and that he really was a good, compassionate man, and that Coolidge and a lot of other people like him, Republicans and Democrats, had more to do with causing the Depression than Hoover. Back then about the only thing worse for whites in the South than a Damn Yankee was a Damn Yankee Republican. Now, as you know, the situation has reversed. Race was and is a potent political issue.

 

  My father, like everyone else in the South, except for a few “post office Republicans,” was a Democrat. A “post office Republican” was a person in Dixie who admitted to being a Republican in order to be appointed a postmaster when a Republican president was elected. That didn’t happen for the first twenty-two years of my life.

 

 The only president I had known for my first fifteen years was Franklin D. Roosevelt, special in our area because he made Warm Springs his second home. He was a good Democrat, according to my mother, and Republicans were bad rich people who cared only about their wealth. I picked up all of that valuable information about Republicans from my mother. My father wasn’t as vocal about national politics, concentrating mainly on state races. He was a Talmadge man to the core. My mama was vocal about politics, national and local, and didn’t hesitate to let all within earshot know her views right then and there. Usually, she would do it in such a way that she would have even those who disagreed with her laughing.

 

  Daddy was one of the few men in our extended family who had a job for a number of years in the early thirties. When relatives came to visit with suitcases in hand, they stayed for a while. Since there was no welfare, families had to look out for their own.

 

  One Christmas, after my mother and father had stretched their budget thin by seeing that all of the visiting kids got something from Santa Claus, they discovered they had forgotten guess who. On Christmas Eve they left me in the care of my brother and sister, and, along with other last minute chores, started looking for something for four-year-old-me.

 

  The Stores had already closed, but they found a barber shop open that had a cardboard toy circus for sale. They were late punching out colorful flat sheet of cardboard and folding them into a circus bandwagon, lion cages, elephants and other circus paraphernalia. When I wandered sleepily into the living room on Christmas morning, I was greeted by a huge circus that was spread out all over the floor. It took my breath away. I had never seen such magnificence before. It was probably the most exciting Christmas morning I ever experienced. It might not have cost much, but what does a four-year-old know or care about costs?  

(The Newsman can be purchased at Barnes and Noble in Columbus and online at Xlibris.com.)

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Another, and Quite Interesting, Perspective on the Financial Crisis

October 1, 2008

  I’ve decided that another comment I have received to a post is important enough to run it as an article post. Redoubt, of the Sin City blog, who makes a lot of sense about a lot of things, has an interesting explanation of the stock market drop, and his last paragraph also makes a good point. So here it is.

 

1.      If I may…

“Hardly anyone is using the word “crash” because it brings back the specter of the 1929 crash, but when the market plunges more than 700 points, the largest drop in history, the term does come to mind.”

The numbers are a bit deceiving because while a 777 point is indeed the biggest POINT drop in history, it is far from the largest percentage of total market volume drop. In truth, the crash of 1929 was far larger in scale to the actual size of the market at the time, than yesterday’s fall. In other words, 10 cents off of 1 dollar is ten percent, but even 70 cents off of 100 dollars is but seven tenths of one percent.

Another noteworthy item would be that the markets have rebounded somewhat today… closing up almost 500 points (CBS News), even without $700 billion US taxpayer dollars.

The outcome is going to be tough either way but, we only have ourselves to blame if we bankrupt the nation trying to save those institutions that, basically, created the mess to begin with.

Personally, I’d rather see the money go to the consumer and those in peril of losing their homes, than to hand it over to those who held out the rotten carrot.

 

Inaction by Congress Puts the U.S. in Grave Economic Peril

September 30, 2008

  Only two members of the Georgia members of Congress voted for the bailout for investment banks. They were Rep. Sanford Bishop of Albany and Representative Jim Marshall of Macon, both moderate Democrats.

  Both of Georgia‘s Republican senators, Johnny Isakson and Saxby Chambliss, were not happy about the vote.

  According to Atlanta Business Chronicle, Chambliss said, “The House vote today puts everything in a state of uncertainty and complicates the issue of whether or not the Senate will vote on a financial rescue plan,”

  And Isakson said, “Our country is struggling. Doing nothing is unacceptable. I hope cooler heads will come to the table so we can move forward with a proposal that is in the best interests of the American people.”

  Though it is a hard pill to swallow, using $700 billion tax dollars to buy bad mortgages to bail out Wall Street investment banks, not to do something will be disastrous. Hardly anyone is using the word “crash” because it brings back the specter of the 1929 crash, but when the market plunges more than 700 points, the largest drop in history, the term does come to mind.

  Congress is to reconvene Thursday. Let’s hope the plan presented then will have enough protection in it for the American taxpayer, including homeowners with mortgages that it can get enough support to pass.  To let election year political considerations take priority over saving this country from financial disaster is about as low as a member of Congress can get.