When will we ever learn?
It isn’t as if this as never happened before. On several occasions, we have had dire warnings that we are not as invincible as the pols would have us believe. September 30, 2008 is exactly 78 years, 11 months and five days from that day the financial boom of the ’20s lay shattered on the floor of the New York Stock Exchange.
That it could never again happen here has been the belief and the hue and cry of the finanncial and political gurus and wizards over all the intervening years. Back then, the signs leading to “Black Thursday” were written on the wall when stock prices had doubled since 1925 and the Dow Jones Industrial index had reached a record high of 281 in frenzied trading. Sound familiar? Warnings that stockes were grossly overpriced prompted some major investors to pull out of the market, increasing the impulse to sell, and on October 19, the “panic selling” reached epidemic proportions and prices began to tumble. For five days the momentum grew and the market was gripped by the worst panic in its history … so far.
The outcome was obvious. Banks called in loans and foreclosed mortgages, but many failed anyway, wreaking financial ruin on depositors. But, let me be quick to point out that FDIC did not exist then, as it does now. But that alone cannot cure the potential collpases of banks and financial instituions, the losses of homes and small busineses, the inability to borrow, to repay loans or the long-to-be-felt scars on “Main Street.”
Back at that distant time, conventional wisdom held that capitalism was a self-correcting system, and that intervention would be harmful ” so government did little. In the four years folowing the debacle of 1929, worldwide unemployment grew to five times greater than the earlier level. But, that can’t happen here today, right? So, there it is, the mirror on the wall.
The reckless optimism of the Jazz Age, eptiomized by easy credit and wild stock market speculation had proved its own undoing. The time we knew as the “Great Depression” continued grimly and intractable, until the greatest war in history came along to pry it loose.
Is Iraq, then, our salvation? Hardly. Or, maybe not.
1929 ” “The industrial condition of the United States is perfectly sound.” ” Charles A. Mitchell, chairman of the National City bank, a week before the crash.
September 30, 1008 ” “We need to put something back together that works. We need it as soon as possible.” Henry Paulson, Treasury Secretary.
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