DEL.ICIO.USMY OPINION: THOMAS OLIVER
It’s past time for this panic to be stopped
Wednesday, October 08, 2008
This is going to be painful.
You know that’s true because no one dares predict when or where it will end.
• CNN/Opinion Research Corp. said this week that six out of 10 people think the economy will sink into a depression.
For comparison purposes, we’re nowhere near the 1930s. Not yet anyway.
Unemployment stands at 6.1 percent and will undoubtedly get worse. But no one really believes we’ll see the 25 percent unemployment our grandparents and great-grandparents experienced.
Joe Bransby, 93, who retired in 1980 as president of the Atlanta YMCA, said, “This is not like the Great Depression.”
Bransby remembers as a 14-year-old when the homeless began appearing on a regular basis at his home. “My mother always shared whatever we had.”
Wilton Looney, retired chairman of Genuine Parts Co., said a big difference for Southerners is that in 1930, folks in the South didn’t have anything to begin with.
“I heard my mom and dad talking about the banks closing and asked my dad about it,” Looney recalled. “He said it didn’t matter ‘cause he didn’t have anything in the bank.”
Looney, 89, who grew up in Hart County, said modern communications are another huge difference.
“Then, there was no TV, no radio, really, not many had telephones. We got the Atlanta paper on Sunday.”
Now, of course, you have to go to sleep to escape the 24/7 media drumbeat.
It’s more like watching a train wreck. You may wish to avert your eyes, but you can’t help yourself.
Many, if not all, economists and historians believe the Depression was prolonged, if not caused, by Uncle Sam assuming a fetal position after the 1929 crash. The Federal Reserve restricted the money supply and basically relished the winnowing out of bad banks. (Congress raised taxes, too, but that’s fodder for another column.)
Fed chairman Ben Bernanke “is known for excellence in one academic area: the Great Depression,” says Jeffrey A. Rosensweig, associate professor of finance at Emory University and a former student of Bernanke’s at MIT.
In Bernanke’s writings, he pretty much blames the Fed for the Great Depression.
Therefore, it isn’t surprising that the Fed is now everywhere doing the opposite of what it did back then. The stingy Uncle has changed into a Santa Claus costume, stuffing stockings full of cash.
The country experienced acid reflux last week over Congress authorizing the U.S. Treasury to spend $700 billion.
Yet, not even a hiccup this week over the Fed’s ever-widening intervention that will send $900 billion flowing into the banking system by year’s end.
We have passed the point of debating how to stop this panic. We just want it stopped.
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