Werd: Bailout - Part Three

Posted by Patrick Snajder Categories: Business, Domestic Policy, Editorials, US Economy

So the much belabored point of Part Two was that, in my opinion, we all realize that a bailout is needed.

There are some dissenters that would argue that no taxpayer money should rescue financial organizations or our American auto makers.  But anyone that seriously supports this philosophy is following the terrible advice that pushed us into the Great Depression:

Even today, with an economy much less dependent on bank loans than it was in 1930, a wholesale failure of the banking system, together with an extended fall in prices, could have a devastating impact. The reason most economists discount this possibility is that they don’t believe policymakers will make the same disastrous mistakes their predecessors made in the 1920s and 1930s, when the authorities stood by as the financial system imploded and withering deflation developed.  [Full article here.]

The lesson learned from the Great Depression was that no government intervention at all is a sure-fire way to see the system collapse severely.  There are many debates about what the government should specifically do, but all the debaters agree that doing nothing is the worst option of all. Nonetheless, many citizens seem to be opposed, in principle, to any bailouts at all that move taxpayer money towards rescuing banks or our automakers.

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Read More | Portfolio's Economic Predictions for 2009

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The Bush Legacy

Posted by Charles Mitri Categories: Business, Domestic Policy, Editorials, Foreign Policy, Foreign Relations, History, US Economy, Wall Street, War

When George W. Bush vacates the White House on January 20, 2009, the floodgates will open, as political pundits line up to take pot shots at his eight years as Chief Executive.

Presidential rankings are nothing new. Every former president has one and have eschewed the usual practice of getting an objective view of a president’s legacy after leaving office. These days, the Internet and instant readers’ polls have made the tried and true method of waiting a few years for a ranking virtually obsolete.

Down to business. America’s best presidents are a very elite group, usually judged by how well they react during a crisis. At the top of the heap there are Lincoln, FDR, Washington, Jefferson, Teddy Roosevelt and Woodrow Wilson. Over the last few years there’s been a shift in rankings at the bottom of the barrel. Grant and Harding used to occupy the number one and two slots. Over recent years, James Buchanan has assumed the bottom spot with Herbert Hoover right on his heels. Buchanan gets the blame for the Civil War. Hoover is charged with the 1929 stock market crash and onset of the Great Depression two years later.

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The Myth of FDR

Posted by George Regal Categories: History, US Economy

The Great Depression was brought about as a result of monetary inflation (68%) from 1921-1928. (See: What is the Federal Reserve Doing?) There were other factors involved, but this was the primary factor. This was mostly the result of “easy credit” (a recurring theme isn’t it?). Credit expansion, as we have seen again, leads to malinvestment. John Maynard Keynes, the father of Keynesian Economics, called Federal Reserve policy (1921-1928) a triumph in currency management. Hey, good call John!  It’s amazing that Keynesian Economics is still with us.

The inflation fueled boom and resulting depression are often blamed on Herbert Hoover and his laissez-faire policies. Nothing could be further from the truth and we need to look no further than Hoover’s words from the 1932 presidential campaign.

“We might have done nothing. That would have been utter ruin. Instead we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic.”

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