Economy Part 3 of 3, Bailout!! Bailout!!

Bailout!

That was a term that struck fear into every WWII bomber crewman. It meant that events were so severe that jumping was your best choice!

It’s a Wonderful Life

 I love that movie, the main theme is so spiritual.  An enigma in that movie, is the underlying dilemma in our current recession. Remember Old Mr. Potter, the skin-flint banker who required a significant amount of cash/collateral and income before the “Potter Bank” would lend money for a house and yet the “good old Savings and Loan”, benevolent as it was believed in the American Dream that everyone should have an opportunity to have a home.  We don’t read the signs well, a few years before this recession, a Savings and Loan crisis hit this country and they sank like pebbles in a lake.

I’m not going to point fingers at an administration, it all started years and years ago, when my kids weren’t even teenagers yet…but understand this, no president signs anything that isn’t passed by congress. So, there’s responsibility everywhere.   Does this strike home: especially high consumer debt, ill-regulated markets that permitted overoptimistic loans by banks and investors, the lack of high-growth new industries, and growing wealth inequality, all interacting to create a downward economic spiral of reduced spending, falling confidence, and lowered production.  No this is not today, but the events of 1929.  The crash of 1929 led to a world wide depression.  The U.S. experienced a double dip, mixed with the dust-bowl of the 30’s; what brought us out of the depression?  Cranking up the war-manufacturing machine in 1940.  Count that, 11 years of depression.

Today, we bailed out the banks, whose debt was underwritten by foreign banks, so our money went over there. We bailed out GM, who closed it’s only profitable car line-Saturn.

In the 30’s the Government set farm prices, banking regulations, created the FDIC, funded CCC camps for federal forests, WPA projects for new roads, bridges, supported unionization to raise wages, established the Social Security System AND bailed out business in the manufacturing of war equipment (building for allies), on a cost plus contract basis.  The Federal Government paid the wages of manufacturers employees plus a profit bonus.

Sounds like things aren’t too different today than then….point, we can’t get out of this by building houses, we’ve got too many now.  I also don’t see us building a whole bunch of war machinery for other counties…..that’s to dangerous in the world today.

In the great depression, 25% of the labor force was out of work, or 58% of those that could work were working. Today, we have around 10% unemployed, but not really, that doesn’t include those that don’t want to work on welfare, nor the those that don’t want to work on disability.

Hey, I just heard that two Americans just won the Nobel Prize for Economics.  They won it for their study of the current Recession….they studied it, talked about it, they wrote about it, but they confirm that they don’t have the answer to resolve it…I’ve got a prize for them, put them into politics, they sound like all the other politicians.

Where is our leadership…..I see none on the horizon.

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About tgriggs17

Retired, CPA, enjoy freshwater fishing, being with my grandchildren, friends and family
This entry was posted in Education, Learning, Life, The Economy, Uncategorized and tagged , , , . Bookmark the permalink.

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