Your Citizenship Assignment
On Thursday Congressional Democrats finally decided to “dance with them what brung-em.”
Congress plans Iraq pullout deadlines
Congress plans Iraq pullout deadlines
March 8, 2007 -- Laying out their toughest challenge for the Bush administration since taking control of Congress, Democrats in the House and Senate moved Thursday to set firm deadlines to withdraw all U.S. combat troops from Iraq in 2008. (Full)
God knows they tried to avoid dancing with us, but we insisted, and so now the real debate, the one that should have been had years ago, begins. The time to debate if the US should even be in Iraq in the first place is long gone. All that's left now is to figure out how much longer we stay and how to engineer a disengagement that doesn't make matters worse than we already have. The first task, deciding when to leave Iraq, will not be easy, politically and emotionally. But that decision is inevitable.
The second task, insuring our departure from Iraq doesn't make matters worse is a laudable goal, but matter quite out of our hands. The Iraqis will decide what happens after we leave, not us.
So, after four years it's finally here -- crunch-time for all sides in this debate. Time to put all the political posturing, speechifying and blame-shifting away and get down to the nuts and bolts of the matter. Be it “stay the course” or “surge” or “phased redeployment” or “cut and run,” the devil always has been and remains in the details of each camp's plans. And never has that little devil been more devilish than when it comes to any matter involving the sectarian rats nest, Iraq.
This is the time for all sides here at home to stop talking past one another and start listening – time to consider the beliefs, thoughts and passions that underpin and drive each side's positions. Because a house divided can do little, least of all end a war.
Former State Department official, George Kenney has done is all a huge favor in that regard – and just just in the nick of time. If you don't remember George, in 1992 he was in charge of the State Department's Yugoslavian Desk. The son of a career Foreign Service officer he resigned that post in protest over the Bush 41 administration's inaction in the face of rampant ethnic cleansing by Serbs in Bosnia. (See 1992 interview here)
Earlier this week I got an email from George:
Dear Steve,
I thought you might be interested in a podcast of a panel discussion I put together on Iraq, last Wednesday at the National Press Club, under the auspices of the Center for Defense Information. It's an unusual and outstanding panel, moderated by Alton Frye (former President of the Council on Foreign Relations), and with panelists Ted Galen Carpenter (VP for Defense and Foreign Policy at CATO), Helle Dale (former editor of the Washington Times Op-ed page and now at Heritage), Col. Doug Macgregor (Ret.), Frank Gaffney (President of the Center for Security Studies), and Frank Anderson (former CIA, was chief of the near east division and had served three tours as station chief in the middle east).
It wasn't easy to get prominent neocons and prominent anti-neocons on the same platform, especially not for two hours with questions, and most especially not with someone of the caliber of Alton Frye as moderator, of whom I think it's fair to say that he's the soul of the Washington foreign policy establishment. Alton, btw, steps out of his role as moderator at the end and excoriates the administration in a most eloquent and high-minded way.
If you want to hear just one side there're plenty of places to go. If you're interested, however, in comparing the pro-war and anti-war perspectives at the same time I think this is a unique discussion -- lively, full of good, current information, and good ideas. Myself, I've been anti-war from well before the war, but I do think it's important to be able to interact with the pro-war side of things.
One or two prominent liberal bloggers have responded to my notice of this podcast by saying they would never give time to some of the people on the above panel. My response to that is, it seems to me that the neocons still get numerous high-level media venues to spout their ideas unchallenged. You'd be surprised, actually, at how few were willing to volunteer to appear in a forum where they would be challenged -- I went through over a dozen names prominent here in DC and in NY before getting to Gaffney.
I must say, I believe that neocons should be vigorously challenged and refuted in public so that they cannot live in a Washington bubble and delude themselves that there are no other opinions. Thus opponents of this insane war must persistently engage and defeat them wherever possible, particularly in front of the media.
I hope you have time to listen. If you do, and if you find the panel worthwhile, please pass the link along as you may feel appropriate.
Regards,
George Kenney
I thought you might be interested in a podcast of a panel discussion I put together on Iraq, last Wednesday at the National Press Club, under the auspices of the Center for Defense Information. It's an unusual and outstanding panel, moderated by Alton Frye (former President of the Council on Foreign Relations), and with panelists Ted Galen Carpenter (VP for Defense and Foreign Policy at CATO), Helle Dale (former editor of the Washington Times Op-ed page and now at Heritage), Col. Doug Macgregor (Ret.), Frank Gaffney (President of the Center for Security Studies), and Frank Anderson (former CIA, was chief of the near east division and had served three tours as station chief in the middle east).
It wasn't easy to get prominent neocons and prominent anti-neocons on the same platform, especially not for two hours with questions, and most especially not with someone of the caliber of Alton Frye as moderator, of whom I think it's fair to say that he's the soul of the Washington foreign policy establishment. Alton, btw, steps out of his role as moderator at the end and excoriates the administration in a most eloquent and high-minded way.
If you want to hear just one side there're plenty of places to go. If you're interested, however, in comparing the pro-war and anti-war perspectives at the same time I think this is a unique discussion -- lively, full of good, current information, and good ideas. Myself, I've been anti-war from well before the war, but I do think it's important to be able to interact with the pro-war side of things.
One or two prominent liberal bloggers have responded to my notice of this podcast by saying they would never give time to some of the people on the above panel. My response to that is, it seems to me that the neocons still get numerous high-level media venues to spout their ideas unchallenged. You'd be surprised, actually, at how few were willing to volunteer to appear in a forum where they would be challenged -- I went through over a dozen names prominent here in DC and in NY before getting to Gaffney.
I must say, I believe that neocons should be vigorously challenged and refuted in public so that they cannot live in a Washington bubble and delude themselves that there are no other opinions. Thus opponents of this insane war must persistently engage and defeat them wherever possible, particularly in front of the media.
I hope you have time to listen. If you do, and if you find the panel worthwhile, please pass the link along as you may feel appropriate.
Regards,
George Kenney
Later that same day I made time to listen to George's 2-hour long panel. And, with the exception of panelist Helle Dale (the former editor of the Washington Times Op-ed page who simply parroted administration talking points,) the other four presenters were absolutely riveting.
And if you listen, don't bail out before the question/answer session that follows as some of the most passionate and pointed remarks can be heard there.
I understand that asking you to carve two hours out of your weekend to listen to this podcast is asking much. And frankly I wasn't going to listen the to the whole thing myself, but ended up doing just that. And I'm glad I did. Because, as I said above, it's crunch-time on Iraq. The “easy part” -- being for the war, or being against it -- is over. The time to act has arrived, indeed late, but here it is. And if we're going to act wisely going forward, we need to listen, learn and base our actions on facts rather than passion.
The motto of this administration could best be summed up as, “Ready. Fire! Aim.” Let's make sure those of us that oppose Bush's actions in Iraq get that order right. And a great place to calibrate our sights is George's panel.
And if you listen, don't bail out before the question/answer session that follows as some of the most passionate and pointed remarks can be heard there.
I understand that asking you to carve two hours out of your weekend to listen to this podcast is asking much. And frankly I wasn't going to listen the to the whole thing myself, but ended up doing just that. And I'm glad I did. Because, as I said above, it's crunch-time on Iraq. The “easy part” -- being for the war, or being against it -- is over. The time to act has arrived, indeed late, but here it is. And if we're going to act wisely going forward, we need to listen, learn and base our actions on facts rather than passion.
The motto of this administration could best be summed up as, “Ready. Fire! Aim.” Let's make sure those of us that oppose Bush's actions in Iraq get that order right. And a great place to calibrate our sights is George's panel.
Can Iraq Be Fixed?
Have a nice weekend.
(Oh, and yes, there will be a quiz ;-)
Steve
March 8, 2007
Pardon Me ?
Oh how they howled, waving their arms and slamming their desks like hell and damnation preachers of old.
"How could he do it!!? What a violation of public trust! What a scar he has made on public office!"
Who? What? Where?
- Bill Clinton,
- Lied under oath,
- Before a grand jury.
"This nation sits at a crossroads,” DeLay said of how Congress should react to Bill Clinton's grand jury perjury. “One direction points to the higher road of the rule of law. Sometimes hard, sometimes unpleasant, this path relies on truth, justice and the rigorous application of the principle that no man is above the law. Now, the other road is the path of least resistance. This is where we start making exceptions to our laws based on poll numbers and spin control. This is when we pitch the law completely overboard when the mood fits us, when we ignore the facts in order to cover up the truth. No man is above the law, and no man is below the law. That's the principle that we all hold very dear in this country."
Well not all that dear, apparently. Perjury by a public official only poses a risk to life, liberty and the American way of life apparently when the liar is a Democrat.
Conservatives press Bush for Libby pardon
March 7, 2007 -- USA TODAY-- With the ink hardly dry on Lewis "Scooter" Libby's perjury conviction, some conservatives are urging President Bush to wipe away the jury's finding of guilt by granting the former vice presidential aide a pardon. -- The calls have come from longtime critics of the Libby prosecution, including pundit William Kristol, former federal prosecutor Victoria Toensing and George Mason University Law professor Ronald Rotunda. (Full)
March 7, 2007 -- USA TODAY-- With the ink hardly dry on Lewis "Scooter" Libby's perjury conviction, some conservatives are urging President Bush to wipe away the jury's finding of guilt by granting the former vice presidential aide a pardon. -- The calls have come from longtime critics of the Libby prosecution, including pundit William Kristol, former federal prosecutor Victoria Toensing and George Mason University Law professor Ronald Rotunda. (Full)
The Libby case, you see, is nothing like the Clinton perjury, according to GOP conservatives. Libby's prosecution was in fact a political persecution. Bill Clinton's impeachment, on the other hand, was the rule of law at it's best.
Okay. So Libby's perjury is "different." But how?
Well let's see if we can figure that out with a side-by-side comparison:
The Clinton Case:
Article I of the impeachment resolution against President Clinton -- “alleges that he committed perjury before the grand jury. On August 17, 1998, President Clinton swore to tell the truth, the whole truth, and nothing but the truth. The evidence shows that contrary to that oath, the President willfully provided perjurious, false, and misleading statements to the grand jury."
The Libby Case:
From the Libby indictment: "On or about March 5, 2004, in the District of Columbia,I. LEWIS LIBBY, also known as “SCOOTER LIBBY,” defendant herein, having taken an oath to testify truthfully in a proceeding before a grand jury of the United States, knowingly made a false material declaration..."
Difference:
Clinton was charged with ONE count of perjury. Libby was charged with FIVE counts of perjury.
Clinton was charged with ONE count of perjury. Libby was charged with FIVE counts of perjury.
The Clinton Case:
Clinton committed perjury during testimony in a case of sexual harassment, (Paula Jones,) a crime for which Clinton was never charged.
From the Clinton Articles of Impeachment: “The key to understanding the facts of this case is to understand why the President was asked, under oath, questions about his private life in the first place. Despite the popular spin, it wasn't because Members of Congress or lawyers from the Office of the Independent Counsel, or a gaggle of reporters suddenly decided to invade the President's privacy. No. This all came about because of a claim against the President from when he was the Governor of Arkansas.”
The Libby Case:
Libby committed perjury during testimony in a case of outting a covert CIA agent, (Valarie Plame,) a crime for which Libby was never charged.
Difference:
None. Both men ended up getting charged for lying in cases they were never charged in – Clinton for on a sexual harassment charge, and Libby on violating national security laws.”
None. Both men ended up getting charged for lying in cases they were never charged in – Clinton for on a sexual harassment charge, and Libby on violating national security laws.”
The Clinton Case:
Democrats claimed the case against Clinton was politically motivated:
Herald Tribune Jan 1998: “Kenneth Starr, the independent prosecutor investigating allegations that President Bill Clinton had an affair with a young aide and then told her to deny it under oath, promised Thursday to move ahead quickly with his investigation and denied that he was motivated by politics.”
The Libby Case:
Republicans claim the case against Libby was politically motivated.
“William Kristol attacked special counsel Patrick Fitzgerald's investigation into the 2003 leaking of CIA operative Valerie Plame's identity as "absurd" and a "politically motivated attempt to wound the Bush administration." He also asserted that Fitzgerald is "out to discredit the administration." (Watch)
Difference:
None. Both Clinton and Libby lied under oath before a federal grand jury. The fact that political partisans made hay off those lies is – well, “shocking! Simply shocking. (As in, “Duh!”)
None. Both Clinton and Libby lied under oath before a federal grand jury. The fact that political partisans made hay off those lies is – well, “shocking! Simply shocking. (As in, “Duh!”)
The Clinton Case:
Proponents of impeachment claimed that the rule of law demanded that everyone, no matter their status in life, be held to the same standard of the rule of law.
"What is on trial here is the truth and the rule of law,” shouted Republican Representative, James Sensenbrenner. “Our failure to bring President Clinton to account for his lying under oath and preventing the courts from administering equal justice under law, will cause a cancer to be present in our society for generations."
The Libby Case:
The same GOP that felt that way when Clinton perjured himself now say Libby deserves a break -- as in a complete pardon.
"I think ultimately, of course, there are going to be pardons," said Joseph diGenova, a former prosecutor and an old Washington hand who shares that view with many pundits."These are the kinds of cases in which historically presidents have given pardons," said the veteran Republican attorney.
(See also the excellent 1998 profile done by Howard Kutz of the diGenova/Toensing team.)
(See also the excellent 1998 profile done by Howard Kutz of the diGenova/Toensing team.)
Difference:
None that I can see. I agree with original sentiment expressed by Republicans in 1998 -- that no one should be above the law.
None that I can see. I agree with original sentiment expressed by Republicans in 1998 -- that no one should be above the law.
The Clinton Case:
Proponents of Clinton's impeachment claimed that nothing less than the American way of life wase at stake:
From the Articles of Impeachment Jan 14, 1999: “On behalf of the House of Representatives and in the name of the people of the United States, I will be presenting to the Senate evidence against the President to demonstrate he committed perjury before a Federal grand jury as set forth in article I of the articles of impeachment....More than 20 years ago, the Supreme Court addressed this very concept of perjury and its dangerous effect on our system of law. Listen to the words of the U.S. Supreme Court:
Proponents of Clinton's impeachment claimed that nothing less than the American way of life wase at stake:
From the Articles of Impeachment Jan 14, 1999: “On behalf of the House of Representatives and in the name of the people of the United States, I will be presenting to the Senate evidence against the President to demonstrate he committed perjury before a Federal grand jury as set forth in article I of the articles of impeachment....More than 20 years ago, the Supreme Court addressed this very concept of perjury and its dangerous effect on our system of law. Listen to the words of the U.S. Supreme Court:
'In this constitutional process of securing a witness' testimony, perjury simply has no place whatever. Perjured testimony is an obvious and flagrant affront to the basic concepts of judicial proceedings. . . . Congress has made the giving of false answers a criminal act punishable by severe penalties; in no other way can criminal conduct be flushed into the open where the law can deal with it.'”
The Libby Case:
The same conservative commentators that made the case against Clinton now say that Libby's perjury was different, in part, because “it really didn't seriously impede” the federal investigation.
Difference:
Clinton lied about extra-marital sex. (And, let's remember, Clinton's perjury didn't "seriously impede" the case against him either. He still got caught.)
Libby lied to hide how the Bush administration had tried to cover up it's own lies that led America into war resulting in the death of over 3200 Americans and countless Iraqis.
Clinton lied about extra-marital sex. (And, let's remember, Clinton's perjury didn't "seriously impede" the case against him either. He still got caught.)
Libby lied to hide how the Bush administration had tried to cover up it's own lies that led America into war resulting in the death of over 3200 Americans and countless Iraqis.
The Clinton Case:
Congress failed to convict, (impeach.) Bill Clinton
The Libby Case:
Libby was convicted on four of the five perjury charges brought against him.
Difference:
None really, if you think about it. Clinton will always be remembered for being charged and facing impeachment. And, while he escaped the worst, everyone knows, and history will record, that he was guilty of the charge of perjury.. an obvious fact he has taken responsibility for, if grudgingly.
None really, if you think about it. Clinton will always be remembered for being charged and facing impeachment. And, while he escaped the worst, everyone knows, and history will record, that he was guilty of the charge of perjury.. an obvious fact he has taken responsibility for, if grudgingly.
Libby has not yet escaped the worst, though he likely will via a pardon. But a jury of his peers ruled him guilty of perjury, a fact that everyone knows and history will record.
I hope this has helped you understand why those 1998 holier-than-thou, defenders of American justic, law-and-order Republicans now consider say convicted perjurer, Scooter Libby, got a raw deal and deserves a pardon.
And if this did help you understand that, would you drop me an email and enlighten me too.
March 6, 2007
Surging for Shiites
Never try to outsmart an Arab rug merchant. You'll come out on the losing end every time. If George W. had curled up at the ranch with some T.E. Lawrence he'd understand that. But he didn't, which explains why he thinks his “surge” in Iraq is actually working -- so much so he wants to surge again:
Associated Press, 3/6/07 – Washington: The White House is ready to ask Congress for more money for President Bush's plan - already hotly debated - to send 21,500 new combat troops into Iraq...The move would pay for support personnel and otherwise update last month's request for the Iraq war. It is expected to draw criticism from Democrats who say the Pentagon underestimated the costs of Bush's plan for improving security in Baghdad and Anbar province.
But like almost everything this administration either believes or claims to believe, you just have to dig a centimeter below the surface to discover something completely different. And so it is with the surge.
What They Say: Less than a month into the surge the level of violence in and around Baghdad has fallen sharply. US and Iraqi government troops have moved peacefully into Sadr City, the stronghold of the powerful Shia Mahdi Army.
All that is true. Violence has dropped and the Mahdi Army has become all but invisible.
The question is not what's happening, but why it's happening. Why has the violence dropped?
The administration believes it's because their latest “clear and hold,” surge strategy has finally turned the trick for them. High fives all around.
Wrong. Quite the opposite in fact. Here's what's really happening.
When Bush first announced his surge plan Shiite leaders, (particularly that little two-legged tumor, Muqtada al-Sadr,) took stock of the situation and decided that, rather than being a threat to them, Bush's surge was a potential solution – to the “Sunni problem.”
The last time Americans tried to pacify Baghdad, including Sadr City, both Shia and Sunni engaged US troops and took a beating. They weren't defeated, but they lost lots of fighters, expended valuable resources and their own neighborhoods were left shattered.
This time, Shiites decided why not just lay low, just sit out the surge. It;s a luxury Shiites knew their Sunni opponents could not afford. The Sunnis, Iraq's minority sect, is fighting for nothing less than its very survival. And the day the Sunnis stop fighting is the day they lose, in a region where “losing” doesn't mean “wait til next season.” Because there will be no next season for the losers.
And so it has come to pass. The car and suicide-bombs going off in Baghdad today are almost entirely Sunni inspired attacks. Those attacks will spark precisely the kind of counter-attacks by US/Iraqi troops in Sunni strongholds Shiites are counting on.
The second part of Bush's surge strategy focuses on Iraq's troubled Anbar province -- more good news for Iraq's Shiites and their supporters in Tehran. Anbar is the center of gravity of the Sunni insurgency. And yes, there are also a few thousand foreign al Qaida fighters headquartered in Anbar as well – a very uneasy marriage of convenience with indigenous Sunnis.
Getting the picture? Bush's surge is going to end up weakening the Sunni insurgency and strengthening Shiite dominance. Why on earth would Shiite fighters do anything but sit back and enjoy the show? Which is precisely what they are doing.
While George W. Bush makes Iraq safe for Iranian-backed Shiites, leaders like perennial troublemaker al Sadr are busy too. They are in Iran spending their surge down-time to do some post-graduate training at the University of Lunatic Islamic Governance in Tehran.
So the next time you hear an administration official touting the success of the surge, understand that what they are really bragging about is that they are succeeding in doing Maliki and al Sadr's dirty work for them. That's right, American soldiers are dying and being maimed now to make Iraq safe for the likes of Muqtada al-Sadr and to prepare Iraq for Iran's flavor of Islamic oppressive governance.
But wait, there's more. If Bush's surge succeeds in knocking Iraq's Sunnis out of commission it would hand Iran one more piece to it's dream of creating a “Shia Crescent” from the Gulf to the Mediterranean -- a Shia Crescent with it's capital in Tehran.
Personally I could give a fig if that happens or not. While Sunni-run governments tend to be more secular than Shia-run governments, neither are exactly examples of progressive thought or behavior. Quite the opposite. What I worry is that Sunni nations, like Jordan, Egypt, Lebanon and Syria, will not just turn the keys of government over Iran's mullahs. They'll fight. Because, while Sunnis and Shiites share a hated for America, they hate each other even more.
Therefor if Bush's surge “succeeds,” it may simply spark a wider war, one that will set fire to the entire Middle East. That in turn will draw western nations in order to protect their most important sources of oil. Call it World War III or the Third Gulf War. Whatever it's called it'll be a whooper.
Just when you think George & Co. couldn't possibly screw things up worse than they already have, they do.
Heck of a job, Georgie.
March 5, 2007
Is it Trouble Yet?
What would a 21st-century depression look like? We have all seen those stark black and white photos and grainy newsreel clips of the 20th century depression 80 years ago. But it's unlikely a worldwide finanical collapse today would repeat that script heartbreak by heartbreak.
The answer is I don't know. And neither does anyone else. But I have the sneaking suspicion we're about to find out. Maybe I'm just imagining things. You tell me. I recently read a detailed history of pre-depression American by historian Frederick Lewis Allen. It was long and you can – and should – read the whole thing yourself. It's free and it's online. (Here)
When I read it I kept having to check the dates he quoted be sure he was talking about the Calvin Coolrdige administration and not the two-term George W. Bush administration. While history may not repeat itself precisely, it clearly repeats itself.
So what I did was to lift some of the more startling similarities from Allen's tome, and linked them to their 2007 corollaries. Sorry for the length of this, but it was unavoidable. It could have been a lot longer .. which you will see if read Allen's original text. Please do.
1) Auto craze drives economy during 1920s – Today it's the Housing boom
"In 1919 there had been 6, 771,000 passenger cars in service in the United States; by 1929 there were no less than 23 million There you have possibly the most potent statistic of Coolidge Prosperity.... As early as the end of 1923 there were two cars for every three families in "Middletown," a typical American City...Investigators interviewed 123 working-class families of "Middletown" and found that 60 of them had cars. Of these 60, 26 lived in such shabby-looking houses that the investigators thought to ask whether they had bathtubs, and discovered that as many as 21 of the 26 had none. The automobile came even before the tub!"
2)Radio technology pushes market in 1920s. Today cellphones and “iPods”:
"The radio manufacturer occupied a less important seat than the automobile manufacturer on the prosperity bandwagon, but he had the distinction of being the youngest rider. You will remember that there was no such thing as radio broadcasting to the public until the autumn of 1920, but that by the spring of 1922 radio had become a craze-as much talked about as Mah Jong was to be the following year or cross-word puzzles the year after. In 1922 the sales of radio sets, parts, and accessories amounted to $60,000,000. People wondered what would happen when the edge wore off the novelty of hearing a jazz orchestra in Schenectady or in Davenport, Iowa, play "Mr. Gallagher and Mr. Shean." What actually did happen is suggested by the cold figures of total annual radio sales for the next few years. In 1922 radio sales amounted to just $60 million. By early 1929 it had exploded 1400 percent to nearly $850 million.) -- Don't hurry past those figures. Study them a moment, remembering that whenever there is a dip in the curve of national prosperity there is likely to be a dip in the sales of almost every popular commodity. “
3) In 1920s chain merchandisers squeezed out small, local merchandisers. Today WalMart, Target etc, are doing this again.
“While the independent storekeeper struggled to hold his own, the amount of retail business done in chain stores and department stores jumped by leaps and bounds. For every $100 worth of business done in 1919, by 1927 the five-and-ten-cent chains were doing $260 worth, the cigar chains $153 worth, the drug chains $224 worth, and the grocery chains $387 worth. Mrs. Smith no longer patronized her "neighborhood" store; she climbed into her two-thousand-dollar car to drive to the red-fronted chain grocery and save twenty-seven cents on her daily purchases.”
4) Corporate Profits soar in 1920s, and today.
“Was this Coolidge Prosperity real? Farmers did not think so. Perhaps the textile manufacturers did not think so. But the figures of corporation profits and wages and incomes left little room for doubt. “
5) Easy Credit in 1920 fuels the market, as it does today.
“Prosperity was assisted...by two new stimulants to purchasing, each of which mortgaged the future but kept the factories roaring while it was being injected....The first was the increase in the installment buying. People were getting to consider it old-fashioned to limit their purchases to the amount of their cash balance; the thing to do was to "exercise their credit." By the latter part of the decade, economists figured that 15 per cent of all retail sales were on an installment basis, and that there were some six billions of "easy payment" paper outstanding.'
6) Wall Street players prospered in the 1920, and today.
“The other stimulant was stock-market speculation. When stocks were skyrocketing in 1928 and 1929 it is probable that hundreds of thousands of people were buying goods with money which represented, essentially, a gamble on the business profits of the nineteen-thirties. It was fun while it lasted.”
7) Big Business Lauded in the 1920s, and today.
“In every American city and town, service clubs gathered the flower of the middle-class citizenry together for weekly luncheons noisy with good fellowship. They were growing fast, these service clubs. Rotary, the most famous of them, had been founded in 1905; by 1930 it had 150,000 members and boasted of--as a sign of its international influence--as many as 3,000 clubs in 44 countries....these clubs (did not) content themselves with singing songs and conducting social-service campaigns; they expressed the national faith in what one of their founders called "the redemptive and regenerative influence of business." The speakers before them pictured the businessman as a builder, a doer of great things, yes, and a dreamer whose imagination was ever seeking out new ways of serving humanity. ..The service clubs specialized in this sort of mysticism: a speaker of before the Rotarians of Waterloo, Iowa, quoted by the American Mercury declaring that "Rotary is a manifestation of the divine"?
8) Business seen as a manifestation of Godliness, then and now.
“Indeed, the association of business with religion was one of the most significant phenomena of the day. When the National Association of Credit Men held their annual convention at New York, there were provided for the three thousand delegates a special devotional service at the Cathedral of St. John the Divine and five sessions of prayer conducted by Protestant clergymen, a Roman Catholic priest, a Jewish rabbi; and the credit men were uplifted by a sermon by Dr. S. Parkes Cadman on "Religion in Business."
9) The Mainstream Media, then and now.
"For the system of easy nation-wide communication which had long since made the literate and prosperous American people a nation of faddists was rapidly becoming more widely extended, more centralized, and more effective than ever before....To begin with, there were fewer newspapers, with larger circulations, and they were standardized to an unprecedented degree by the increasing use of press-association material and syndicated features. ...Newspapers all over the country were being gathered into chains under more or less centralized direction: by 1927 the success of the Hearst and Scripps-Howard systems and the hope of cutting down overhead costs had led to the formation of no less than 55 chains controlling 230 daily papers with a combined circulation of over 13,000,000... No longer did the local editor rely as before upon local writers and cartoonists to fill out his pages and give them a local flavor; the central office of the chain, or newspaper syndicates in New York, could provide him with editorials, health talks, comic strips, sob-sister columns, house- hold hints, sports gossip, and Sunday features prepared for a national audience and guaranteed to tickle the mass mind. “
10) Anna Nicole Smith and O.J., then and now.
“Newspaper owners and editors found that whenever a Dayton trial or a Vestris disaster took place, they sold more papers if they gave it all they had-their star reporters, their front-page display, and the bulk of their space. They took full advantage of this discovery: according to Mr. Bent's compilations, the insignificant Gray-Snyder murder trial got a bigger "play" in the press than the sinking of the Titanic; Lindbergh's flight, than the Armistice and the overthrow of the German Empire. Syndicate managers and writers, advertisers, press agents, radio broadcasters, all were aware that mention of the leading event of the day, whatever it might be, was the key to public interest. The result was that when something happened which promised to appeal to the popular mind, one had it hurled at one in huge headlines, waded through page after page of syndicated discussion of it, heard about it on the radio, was reminded of it again and again in the outpourings of publicity-seeking orators and preachers, saw pictures of it in the Sunday papers and in the movies, and (unless one was a perverse individualist) enjoyed the sensation of vibrating to the same chord which thrilled a vast populace.
The country had bread, but it wanted circuses-and now it could go to them a hundred million strong.”
And that brings us to where they were then -- and where we are now:
“One Day in February, 1928, an investor asked an astute banker about the wisdom of buying common stocks. The banker shook his head. "Stocks look dangerously high to me," he said. "This bull market has been going on for a long time, and although prices have slipped a bit recently, they might easily slip a good deal more. Business is none too good. Of course if you buy the right stock you'll probably be all right in the long run and you may even make a profit. But if I were you I'd wait awhile and see what happens."
11) Federal Reserve then and today:
“The speculative fever had been intensified by the action of the Federal Reserve System in lowering the discount rate from 4 per cent to 3'/2 per cent in August, 1927, and purchasing Government securities in the open market. This action had been taken from the most laudable motives: several of the European nations were having difficulty in stabilizing their currencies, European exchanges were weak, and it seemed to the Reserve authorities that the easing of American money rates might prevent the further accumulation of gold in the United States and thus aid in the recovery of Europe and benefit foreign trade.”
12) Happy Talk from above, then and today:
"American business was beginning to lose headway; the lowering of money rates might stimulate it. But the lowering of money rates also stimulated the stock market. The bull party in Wall Street had been still further encouraged by the remarkable solicitude of President Coolidge and Secretary Mellon, who whenever confidence showed signs of waning came out with opportunely reassuring statements which at once sent prices upward again. In January 1928, the President had actually taken the altogether unprecedented step of publicly stating that he did not consider (stock) brokers' loans too high, thus apparently giving White House sponsorship to the very inflation which was worrying the sober minds of the financial community."
13) Sucker rallies, then and today:
"While stock prices had been climbing, business activity had been undeniably subsiding. The tone of the business analysts and forecasters-a fraternity whose numbers had hugely increased in recent years and whose lightest words carried weight-was anything but exuberant. The National City Bank looked for gradual improvement in business and the Standard Statistics Company suggested that a turn for the better had already arrived; but the latter agency also sagely predicted that the course of stocks during the coming months would depend "almost entirely upon the money situation." The financial editor of the New York Times described the picture of current conditions presented by the mercantile agencies as one of "hesitation." The newspaper advertisements of investment services testified to the uncomfortable temper of Wall Street with headlines like "Will You `Overstay' This Bull Market?" and "Is the Process of Deflation Under Way?" The air was fogged with uncertainty."
14) Whistling past the graveyard, then and today:
"Anybody who had chosen this moment to predict that the bull market was on the verge of a wild advance which would make all that had gone before seem trifling would have been quite mad-or else inspired with a genius for mass psychology. The banker who advised caution was quite right about financial conditions, and so were the forecasters. But they had not taken account of the boundless commercial romanticism of the American people, inflamed by year after plentiful year of Coolidge Prosperity. For on March 3, 1928-the very day when the Harvard prophets were talking about intermediate declines and the Times was talking about hesitation--the stock market entered upon its sensational phase.
(And in the weeks ahead the market actually rose.) What on earth was happening? Wasn't business bad, and credit inflated, and the stock-price level dangerously high? Was the market going crazy? Suppose all these madmen who insisted on buying stocks at advancing prices tried to sell at the same moment! Canny investors, reading of the wild advance in Radio, felt much as did the forecasters of Moody's Investors Service a few days later: the practical question, they said, was "how long the opportunity to sell at the top will remain."
15) Insider/Government market-fixers, then and today:
“What was actually happening was that a group of powerful speculators with fortunes made in the automobile business and in the grain markets and in the earlier days of the bull market in stocks-men like W. C. Durant and Arthur Cutten and the Fisher Brothers and John J. Raskobwere buying in unparalleled volume.... The big bull operators knew, too, that thousands of speculators had been selling stocks short in the expectation of a collapse in the market, would continue to sell short, and could be forced to repurchase if prices were driven relentlessly up. And finally, they knew their American public. It could not resist the appeal of a surging market. It had an altogether normal desire to get rich quick, and it was ready to believe anything about the golden future of American business. If stocks started upward the public would buy, no matter what the forecasters said, no matter how obscure was the business prospect. They were right. The public bought."
(On June 12th 1928 a new decline began) "The ticker slipped almost two hours behind in recording prices on the floor....But had the bull market collapsed? On June 13th it appeared to have regained its balance. On June 14th, the day of Hoover's nomination, it extended its recovery. The promised reckoning had been only partial. Prices still stood well above their February levels. A few thousand traders had been shaken out, a few big fortunes had been lost, a great many pretty paper profits had vanished; but the Big Bull Market was still young.
During that "Hoover bull market" of November, 1928, the records made earlier in the year were smashed. Had brokers once spoken with awe of the possibility of five-million-share days? Five million share days were now occurring with monotonous regularity..By the summer of 1929, prices had soared far above the stormy levels of the preceding winter into the blue and cloudless empyrean. All the old markers by which the price of a promising common stock could be measured had long since been passed; if a stock once valued at 100 went to 300, what on earth was to prevent it from sailing on to 400? And why not ride with it for 50 or 100 points, with Easy Street at the end of the journey?”
16) Market "logic," then and today.
"By every rule of logic the situation had now become more perilous than ever. If inflation had been serious in 1927, it was far more serious in 1929, as the total of brokers' loans climbed toward six billion (it had been only three and a half billion at the end of 1927). If the price level had been extravagant in 1927 it was preposterous now; and in economics, as in physics, there is no gainsaying the ancient principle that the higher they go, the harder they fall. But the speculative memory is short. As people in the summer of 1929 looked back for precedents, they were comforted by the recollection that every crash of the past few years had been followed by a recovery, and that every recovery had ultimately brought prices to a new high point. Two steps up, one step down, two steps up again-that was how the market went. If you sold, you had only to wait for the next crash (they came every few months) and buy in again. And there was really no reason to sell at all: you were bound to win in the end if your stock was sound. The really wise man, it appeared, was he who "bought and held on."
17) Warnings met by happy talk, then and today:
"Time and again the economists and forecasters had cried, "Wolf, wolf," and the wolf had made only the most fleeting of visits. Time and again the Reserve Board had expressed fear of inflation, and inflation had failed to bring hard times. Business in danger? Why, nonsense!...On every side one heard the new wisdom sagely expressed: "Prosperity due for a decline? Why, man, we've scarcely started!" "Be a bull on America." "Never sell the United States short." "I tell you, some of these prices will look ridiculously low in another year or two." "Just watch that stock-it's going to five hundred." "The possibilities of that company are unlimited." "Never give up your position in a good stock."
18) Americans encouraged to shop, then and today:
“Meanwhile, one heard, the future of American industry was to be assured by the application of a distinctly modern principle. Increased consumption, as Waddill Catchings and William T. Foster had pointed out, was the road to plenty. If we all would only spend more and more freely, the smoke would belch from every factory chimney, and dividends would mount.”
19) Consumers encouraged to buy more cars and radios, then, houses today.
“Gradually the huge pyramid of capital rose. While super-salesmen of automobiles and radios and a hundred other gadgets were loading the ultimate consumer with new and shining wares, super-salesmen of securities were selling him shares of investment trusts which held stock in holding companies owned the stock of banks which had affiliates which in turn controlled holding companies--and so on ad infinitum. Though the shelves of manufacturing companies and jobbers and retailers were not overloaded, the shelves of the ultimate consumer and the shelves of the distributors of securities were groaning. Trouble was brewing-not the same sort of trouble which had visited the country in 1921, but trouble none the less. Still, however, the cloud in the summer sky looked no bigger than a man's hand."
20) Recognizing the “oh shit,”moment then and today.
“Early in September the stock market broke. It quickly recovered however, indeed, on September 19th the averages as compiled by the New York Times reached an even higher level than that of September 3rd. Once more it slipped, farther and faster, until by October 4th the prices of a good many stocks had coasted to what seemed first-class bargain levels.... there was little real alarm until the week of October 21st. The consensus of opinion, in the meantime, was merely that the equinoctial storm of September had not quite blown over. The market was readjusting itself into a "more secure technical position."
In view of what was about to happen, it is enlightening to recall how things looked at this juncture to the financial prophets, those gentlemen whose wizardly reputations were based upon their supposed ability to examine a set of graphs brought to them by a statistician and discover, from the relation of curve to curve and index to index, whether things were going to get better or worse...Professor Irving Fisher, however, was more optimistic. In the newspapers of October 17th he was reported as telling the Purchasing Agents Association that stock prices had reached "what looks like a permanently high plateau." He expected to see the stock market, within a few months, "a good deal higher than it is today."
The disaster which was impending was destined to be as bewildering and frightening to the rich and the powerful and the customarily sagacious as to the foolish and unwary holder of fifty shares of margin stock. On October 29, 1929 the market crashed."
Mr Allen ends his essay with this reflection on the 1929 crash and the depression that swept American and the world in its aftermath:
"Prosperity is more than an economic condition; it is a state of mind. The Big Bull Market had been more than the climax of a business cycle; it had been the climax of a cycle in American mass thinking and mass emotion. There was hardly a man or woman in the country whose attitude toward life had not been affected by it in some degree and was not now affected by the sudden and brutal shattering of hope. With the Big Bull Market zone and prosperity going, Americans were soon to find themselves living in an altered world which called for new adjustments. new ideas, new habits of thought, and a new order of values. The psychological climate was changing; the ever-shifting currents of American life were turning into new channels."
So?
What would a 21st century depression look like? How will it change our lives? Stay tuned. In the meantime I think it's time stop thinking big and to start thinking small. That is, get small yourself. Lower exposure to speculative stocks and funds, and instead invest your money in sustainable, - home-centric assets. That would include a nice garden and greenhouse in your backyard. Silly? Maybe. But if I'm wrong my punishment will be more vegetables than I can eat.
For those of you buried in credit card debt, what can I say? You have been one of those consumer horses that pulled the bull-market wagon for Wall Street bunch and bankers. But have no doubt about it, the second they suspect you've broken a leg, they'll drag you behind the barn and shoot you.
So much for the godliness of big business.
The answer is I don't know. And neither does anyone else. But I have the sneaking suspicion we're about to find out. Maybe I'm just imagining things. You tell me. I recently read a detailed history of pre-depression American by historian Frederick Lewis Allen. It was long and you can – and should – read the whole thing yourself. It's free and it's online. (Here)
When I read it I kept having to check the dates he quoted be sure he was talking about the Calvin Coolrdige administration and not the two-term George W. Bush administration. While history may not repeat itself precisely, it clearly repeats itself.
So what I did was to lift some of the more startling similarities from Allen's tome, and linked them to their 2007 corollaries. Sorry for the length of this, but it was unavoidable. It could have been a lot longer .. which you will see if read Allen's original text. Please do.
1) Auto craze drives economy during 1920s – Today it's the Housing boom
"In 1919 there had been 6, 771,000 passenger cars in service in the United States; by 1929 there were no less than 23 million There you have possibly the most potent statistic of Coolidge Prosperity.... As early as the end of 1923 there were two cars for every three families in "Middletown," a typical American City...Investigators interviewed 123 working-class families of "Middletown" and found that 60 of them had cars. Of these 60, 26 lived in such shabby-looking houses that the investigators thought to ask whether they had bathtubs, and discovered that as many as 21 of the 26 had none. The automobile came even before the tub!"
2)Radio technology pushes market in 1920s. Today cellphones and “iPods”:
"The radio manufacturer occupied a less important seat than the automobile manufacturer on the prosperity bandwagon, but he had the distinction of being the youngest rider. You will remember that there was no such thing as radio broadcasting to the public until the autumn of 1920, but that by the spring of 1922 radio had become a craze-as much talked about as Mah Jong was to be the following year or cross-word puzzles the year after. In 1922 the sales of radio sets, parts, and accessories amounted to $60,000,000. People wondered what would happen when the edge wore off the novelty of hearing a jazz orchestra in Schenectady or in Davenport, Iowa, play "Mr. Gallagher and Mr. Shean." What actually did happen is suggested by the cold figures of total annual radio sales for the next few years. In 1922 radio sales amounted to just $60 million. By early 1929 it had exploded 1400 percent to nearly $850 million.) -- Don't hurry past those figures. Study them a moment, remembering that whenever there is a dip in the curve of national prosperity there is likely to be a dip in the sales of almost every popular commodity. “
3) In 1920s chain merchandisers squeezed out small, local merchandisers. Today WalMart, Target etc, are doing this again.
“While the independent storekeeper struggled to hold his own, the amount of retail business done in chain stores and department stores jumped by leaps and bounds. For every $100 worth of business done in 1919, by 1927 the five-and-ten-cent chains were doing $260 worth, the cigar chains $153 worth, the drug chains $224 worth, and the grocery chains $387 worth. Mrs. Smith no longer patronized her "neighborhood" store; she climbed into her two-thousand-dollar car to drive to the red-fronted chain grocery and save twenty-seven cents on her daily purchases.”
4) Corporate Profits soar in 1920s, and today.
“Was this Coolidge Prosperity real? Farmers did not think so. Perhaps the textile manufacturers did not think so. But the figures of corporation profits and wages and incomes left little room for doubt. “
5) Easy Credit in 1920 fuels the market, as it does today.
“Prosperity was assisted...by two new stimulants to purchasing, each of which mortgaged the future but kept the factories roaring while it was being injected....The first was the increase in the installment buying. People were getting to consider it old-fashioned to limit their purchases to the amount of their cash balance; the thing to do was to "exercise their credit." By the latter part of the decade, economists figured that 15 per cent of all retail sales were on an installment basis, and that there were some six billions of "easy payment" paper outstanding.'
6) Wall Street players prospered in the 1920, and today.
“The other stimulant was stock-market speculation. When stocks were skyrocketing in 1928 and 1929 it is probable that hundreds of thousands of people were buying goods with money which represented, essentially, a gamble on the business profits of the nineteen-thirties. It was fun while it lasted.”
7) Big Business Lauded in the 1920s, and today.
“In every American city and town, service clubs gathered the flower of the middle-class citizenry together for weekly luncheons noisy with good fellowship. They were growing fast, these service clubs. Rotary, the most famous of them, had been founded in 1905; by 1930 it had 150,000 members and boasted of--as a sign of its international influence--as many as 3,000 clubs in 44 countries....these clubs (did not) content themselves with singing songs and conducting social-service campaigns; they expressed the national faith in what one of their founders called "the redemptive and regenerative influence of business." The speakers before them pictured the businessman as a builder, a doer of great things, yes, and a dreamer whose imagination was ever seeking out new ways of serving humanity. ..The service clubs specialized in this sort of mysticism: a speaker of before the Rotarians of Waterloo, Iowa, quoted by the American Mercury declaring that "Rotary is a manifestation of the divine"?
8) Business seen as a manifestation of Godliness, then and now.
“Indeed, the association of business with religion was one of the most significant phenomena of the day. When the National Association of Credit Men held their annual convention at New York, there were provided for the three thousand delegates a special devotional service at the Cathedral of St. John the Divine and five sessions of prayer conducted by Protestant clergymen, a Roman Catholic priest, a Jewish rabbi; and the credit men were uplifted by a sermon by Dr. S. Parkes Cadman on "Religion in Business."
9) The Mainstream Media, then and now.
"For the system of easy nation-wide communication which had long since made the literate and prosperous American people a nation of faddists was rapidly becoming more widely extended, more centralized, and more effective than ever before....To begin with, there were fewer newspapers, with larger circulations, and they were standardized to an unprecedented degree by the increasing use of press-association material and syndicated features. ...Newspapers all over the country were being gathered into chains under more or less centralized direction: by 1927 the success of the Hearst and Scripps-Howard systems and the hope of cutting down overhead costs had led to the formation of no less than 55 chains controlling 230 daily papers with a combined circulation of over 13,000,000... No longer did the local editor rely as before upon local writers and cartoonists to fill out his pages and give them a local flavor; the central office of the chain, or newspaper syndicates in New York, could provide him with editorials, health talks, comic strips, sob-sister columns, house- hold hints, sports gossip, and Sunday features prepared for a national audience and guaranteed to tickle the mass mind. “
10) Anna Nicole Smith and O.J., then and now.
“Newspaper owners and editors found that whenever a Dayton trial or a Vestris disaster took place, they sold more papers if they gave it all they had-their star reporters, their front-page display, and the bulk of their space. They took full advantage of this discovery: according to Mr. Bent's compilations, the insignificant Gray-Snyder murder trial got a bigger "play" in the press than the sinking of the Titanic; Lindbergh's flight, than the Armistice and the overthrow of the German Empire. Syndicate managers and writers, advertisers, press agents, radio broadcasters, all were aware that mention of the leading event of the day, whatever it might be, was the key to public interest. The result was that when something happened which promised to appeal to the popular mind, one had it hurled at one in huge headlines, waded through page after page of syndicated discussion of it, heard about it on the radio, was reminded of it again and again in the outpourings of publicity-seeking orators and preachers, saw pictures of it in the Sunday papers and in the movies, and (unless one was a perverse individualist) enjoyed the sensation of vibrating to the same chord which thrilled a vast populace.
The country had bread, but it wanted circuses-and now it could go to them a hundred million strong.”
And that brings us to where they were then -- and where we are now:
“One Day in February, 1928, an investor asked an astute banker about the wisdom of buying common stocks. The banker shook his head. "Stocks look dangerously high to me," he said. "This bull market has been going on for a long time, and although prices have slipped a bit recently, they might easily slip a good deal more. Business is none too good. Of course if you buy the right stock you'll probably be all right in the long run and you may even make a profit. But if I were you I'd wait awhile and see what happens."
11) Federal Reserve then and today:
“The speculative fever had been intensified by the action of the Federal Reserve System in lowering the discount rate from 4 per cent to 3'/2 per cent in August, 1927, and purchasing Government securities in the open market. This action had been taken from the most laudable motives: several of the European nations were having difficulty in stabilizing their currencies, European exchanges were weak, and it seemed to the Reserve authorities that the easing of American money rates might prevent the further accumulation of gold in the United States and thus aid in the recovery of Europe and benefit foreign trade.”
12) Happy Talk from above, then and today:
"American business was beginning to lose headway; the lowering of money rates might stimulate it. But the lowering of money rates also stimulated the stock market. The bull party in Wall Street had been still further encouraged by the remarkable solicitude of President Coolidge and Secretary Mellon, who whenever confidence showed signs of waning came out with opportunely reassuring statements which at once sent prices upward again. In January 1928, the President had actually taken the altogether unprecedented step of publicly stating that he did not consider (stock) brokers' loans too high, thus apparently giving White House sponsorship to the very inflation which was worrying the sober minds of the financial community."
13) Sucker rallies, then and today:
"While stock prices had been climbing, business activity had been undeniably subsiding. The tone of the business analysts and forecasters-a fraternity whose numbers had hugely increased in recent years and whose lightest words carried weight-was anything but exuberant. The National City Bank looked for gradual improvement in business and the Standard Statistics Company suggested that a turn for the better had already arrived; but the latter agency also sagely predicted that the course of stocks during the coming months would depend "almost entirely upon the money situation." The financial editor of the New York Times described the picture of current conditions presented by the mercantile agencies as one of "hesitation." The newspaper advertisements of investment services testified to the uncomfortable temper of Wall Street with headlines like "Will You `Overstay' This Bull Market?" and "Is the Process of Deflation Under Way?" The air was fogged with uncertainty."
14) Whistling past the graveyard, then and today:
"Anybody who had chosen this moment to predict that the bull market was on the verge of a wild advance which would make all that had gone before seem trifling would have been quite mad-or else inspired with a genius for mass psychology. The banker who advised caution was quite right about financial conditions, and so were the forecasters. But they had not taken account of the boundless commercial romanticism of the American people, inflamed by year after plentiful year of Coolidge Prosperity. For on March 3, 1928-the very day when the Harvard prophets were talking about intermediate declines and the Times was talking about hesitation--the stock market entered upon its sensational phase.
(And in the weeks ahead the market actually rose.) What on earth was happening? Wasn't business bad, and credit inflated, and the stock-price level dangerously high? Was the market going crazy? Suppose all these madmen who insisted on buying stocks at advancing prices tried to sell at the same moment! Canny investors, reading of the wild advance in Radio, felt much as did the forecasters of Moody's Investors Service a few days later: the practical question, they said, was "how long the opportunity to sell at the top will remain."
15) Insider/Government market-fixers, then and today:
“What was actually happening was that a group of powerful speculators with fortunes made in the automobile business and in the grain markets and in the earlier days of the bull market in stocks-men like W. C. Durant and Arthur Cutten and the Fisher Brothers and John J. Raskobwere buying in unparalleled volume.... The big bull operators knew, too, that thousands of speculators had been selling stocks short in the expectation of a collapse in the market, would continue to sell short, and could be forced to repurchase if prices were driven relentlessly up. And finally, they knew their American public. It could not resist the appeal of a surging market. It had an altogether normal desire to get rich quick, and it was ready to believe anything about the golden future of American business. If stocks started upward the public would buy, no matter what the forecasters said, no matter how obscure was the business prospect. They were right. The public bought."
(On June 12th 1928 a new decline began) "The ticker slipped almost two hours behind in recording prices on the floor....But had the bull market collapsed? On June 13th it appeared to have regained its balance. On June 14th, the day of Hoover's nomination, it extended its recovery. The promised reckoning had been only partial. Prices still stood well above their February levels. A few thousand traders had been shaken out, a few big fortunes had been lost, a great many pretty paper profits had vanished; but the Big Bull Market was still young.
During that "Hoover bull market" of November, 1928, the records made earlier in the year were smashed. Had brokers once spoken with awe of the possibility of five-million-share days? Five million share days were now occurring with monotonous regularity..By the summer of 1929, prices had soared far above the stormy levels of the preceding winter into the blue and cloudless empyrean. All the old markers by which the price of a promising common stock could be measured had long since been passed; if a stock once valued at 100 went to 300, what on earth was to prevent it from sailing on to 400? And why not ride with it for 50 or 100 points, with Easy Street at the end of the journey?”
16) Market "logic," then and today.
"By every rule of logic the situation had now become more perilous than ever. If inflation had been serious in 1927, it was far more serious in 1929, as the total of brokers' loans climbed toward six billion (it had been only three and a half billion at the end of 1927). If the price level had been extravagant in 1927 it was preposterous now; and in economics, as in physics, there is no gainsaying the ancient principle that the higher they go, the harder they fall. But the speculative memory is short. As people in the summer of 1929 looked back for precedents, they were comforted by the recollection that every crash of the past few years had been followed by a recovery, and that every recovery had ultimately brought prices to a new high point. Two steps up, one step down, two steps up again-that was how the market went. If you sold, you had only to wait for the next crash (they came every few months) and buy in again. And there was really no reason to sell at all: you were bound to win in the end if your stock was sound. The really wise man, it appeared, was he who "bought and held on."
17) Warnings met by happy talk, then and today:
"Time and again the economists and forecasters had cried, "Wolf, wolf," and the wolf had made only the most fleeting of visits. Time and again the Reserve Board had expressed fear of inflation, and inflation had failed to bring hard times. Business in danger? Why, nonsense!...On every side one heard the new wisdom sagely expressed: "Prosperity due for a decline? Why, man, we've scarcely started!" "Be a bull on America." "Never sell the United States short." "I tell you, some of these prices will look ridiculously low in another year or two." "Just watch that stock-it's going to five hundred." "The possibilities of that company are unlimited." "Never give up your position in a good stock."
18) Americans encouraged to shop, then and today:
“Meanwhile, one heard, the future of American industry was to be assured by the application of a distinctly modern principle. Increased consumption, as Waddill Catchings and William T. Foster had pointed out, was the road to plenty. If we all would only spend more and more freely, the smoke would belch from every factory chimney, and dividends would mount.”
19) Consumers encouraged to buy more cars and radios, then, houses today.
“Gradually the huge pyramid of capital rose. While super-salesmen of automobiles and radios and a hundred other gadgets were loading the ultimate consumer with new and shining wares, super-salesmen of securities were selling him shares of investment trusts which held stock in holding companies owned the stock of banks which had affiliates which in turn controlled holding companies--and so on ad infinitum. Though the shelves of manufacturing companies and jobbers and retailers were not overloaded, the shelves of the ultimate consumer and the shelves of the distributors of securities were groaning. Trouble was brewing-not the same sort of trouble which had visited the country in 1921, but trouble none the less. Still, however, the cloud in the summer sky looked no bigger than a man's hand."
20) Recognizing the “oh shit,”moment then and today.
“Early in September the stock market broke. It quickly recovered however, indeed, on September 19th the averages as compiled by the New York Times reached an even higher level than that of September 3rd. Once more it slipped, farther and faster, until by October 4th the prices of a good many stocks had coasted to what seemed first-class bargain levels.... there was little real alarm until the week of October 21st. The consensus of opinion, in the meantime, was merely that the equinoctial storm of September had not quite blown over. The market was readjusting itself into a "more secure technical position."
In view of what was about to happen, it is enlightening to recall how things looked at this juncture to the financial prophets, those gentlemen whose wizardly reputations were based upon their supposed ability to examine a set of graphs brought to them by a statistician and discover, from the relation of curve to curve and index to index, whether things were going to get better or worse...Professor Irving Fisher, however, was more optimistic. In the newspapers of October 17th he was reported as telling the Purchasing Agents Association that stock prices had reached "what looks like a permanently high plateau." He expected to see the stock market, within a few months, "a good deal higher than it is today."
The disaster which was impending was destined to be as bewildering and frightening to the rich and the powerful and the customarily sagacious as to the foolish and unwary holder of fifty shares of margin stock. On October 29, 1929 the market crashed."
Mr Allen ends his essay with this reflection on the 1929 crash and the depression that swept American and the world in its aftermath:
"Prosperity is more than an economic condition; it is a state of mind. The Big Bull Market had been more than the climax of a business cycle; it had been the climax of a cycle in American mass thinking and mass emotion. There was hardly a man or woman in the country whose attitude toward life had not been affected by it in some degree and was not now affected by the sudden and brutal shattering of hope. With the Big Bull Market zone and prosperity going, Americans were soon to find themselves living in an altered world which called for new adjustments. new ideas, new habits of thought, and a new order of values. The psychological climate was changing; the ever-shifting currents of American life were turning into new channels."
So?
What would a 21st century depression look like? How will it change our lives? Stay tuned. In the meantime I think it's time stop thinking big and to start thinking small. That is, get small yourself. Lower exposure to speculative stocks and funds, and instead invest your money in sustainable, - home-centric assets. That would include a nice garden and greenhouse in your backyard. Silly? Maybe. But if I'm wrong my punishment will be more vegetables than I can eat.
For those of you buried in credit card debt, what can I say? You have been one of those consumer horses that pulled the bull-market wagon for Wall Street bunch and bankers. But have no doubt about it, the second they suspect you've broken a leg, they'll drag you behind the barn and shoot you.
So much for the godliness of big business.
March 1, 2007
Is It
Unity Party
Time?
Time?
Well, are you getting nervous yet about the 2008 presidential race? I know I am. I can't even list the number of things about the 08 race that make me nervous. But I guess my biggest fear is that, after all the primary hope and hoopla, I'll wake up on election day 2008 faced with just another choice between a couple of painfully mediocre party hacks.
Then there I'll be in the voting booth again torn, arguing with myself over what to do. It's an argument that goes like this:
Then there I'll be in the voting booth again torn, arguing with myself over what to do. It's an argument that goes like this:
“Neither of these candidates deserve my vote so, screw-em both, I'm not voting for either.”
“Oh yeah, that's a solution, Steve. One of them has to be worse than the other. At least by voting for the least-worst candidate we might deny the office to the worst one.”
“Yeah, well, isn't that the theory we exercised the last two times? Lots of good it did us. We still ended up with the worst of the two.
“That's true, but if we don't vote we have no right to complain about the leaders we get stuck with.”
“Oh great. So that's what the most important exercise in democracy has boiled down to – complaining rights. Terrific.”
I bet every person reading this has had the same voting booth argument with himself or herself. And I bet you're just as sick of it as I am.
And that's why I've signed up to be a Unity08 delegate.
I figure that, until the two parties can be convincingly threatened by a viable third party they will continue playing us for suckers. Yes they will. Absolutely. They will continue to calculate, triangulate and prevaricate. They call that process “the primaries.” And at the end of that hyperbolic dog and pony show both parties will again offer us a choice between canned Spam and Velveeta processed cheese.
And again there we'll be asking, “Hey, where's the beef?”
There'll be no beef. Because the party hacks don't believe we'll vote for the real deal.
That's what I'm really afraid will happen again -- that the parties will chose the bland, safe, the lowest possible denominators, the least likely to offend, to push, to imagine, inspire or dare. It's what the apparatchiks that run both parties consider, “electable.”
Until now there's been nothing we could do about that because both the GOP and Dems knew that third parties posed no genuine risk to their dual-orcracy. That's because third parties often begin with a reasonable enough platform and founders, but seem to be magnets for megalomaniacs, wing-nuts and down right raving lunatics. In short order the founders flee and there goes the alternative.
Unity08 might – just might – be different. At least it's worth a try. The idea is to put up a unity ticket in 08. The candidates would be chosen by delegates that sign up online.
I signed up and suggest you do as well. After all, whatya got to lose? Who knows, Unity08 may devolve into another third-party nut basket too. But until we present the two parties with a real threat to their electoral monopoly they will continue giving us candidates that present us only Hobson's choices.
There's another reason to hope that Unity08 succeeds. If America ever needed a unity government it's today. And not just in the White House, but in Congress. Republicans and Democrats have devolved from loyal opposition parties into the political equivalent of Shiites and Sunnis. Legislation has become their version of IEDs. Each day they send their troops up to the The Hill to snipe and plant LEDs (Legislative Explosive Devices) -- not to solve America's growing list of problems, but in the hope of maiming the other party.
It may be a bloodless uncivil war at home, but it is not without real casualties. You can count among the casualties those killed and wounded in a war Congress should end, but won't. You can count as casualties the nearly 50 million Americans who can't get health insurance. You can count America's children, that each year get a worse and worse education. You can count the American working and middle classes, which are watched the American dream diminish before their eyes and are now watching it dissolve for their children and grand kids.
There's only one thing that can end this uncivil war in Washington, and it's a viable threat from a third unity party. A party that puts candidates on the ballot dedicated to fixing what's broke at home and ending our numskull involvement in 1200-year-old religious/sectarian conflicts in the Middle East.
I've made no secret that I like Obama, and I hope to see him win a spot on the Dem ticket in 08. But I over 60-years old and I've been through too many primaries to have any illusions left that the best person can win their party's nomination. The smoke-filled room may be gone, but it's been replaced by something even worse – a gauntlet that punishes the brave and the righteous to the benefit of the conniving and cautious.
Which I why, while I will cheer Obama on, I will also participate as a Unity08 delegate.
Because I shouldn't have to feel dirty after I vote.
