A Hooverville from the 1930's
"Those who ignore history are doomed to repeat it."
I live by it.
(Actually, Santayana said: "Those who cannot remember the past are condemned to repeat it," a statement that can be applied to world and personal histories.)
As a history major in undergrad and grad school my sense of current and future events is rooted through links to what I understand about the past. Having studied the Great Depression of the 30's, I have always been worried about The Big One hitting again, probably one of the reasons I have always been very fiscally conservative waiting like some spinster for deflation to strike once again.
But all those years I was reassured that it couldn't happen again - Glass-Steagall and all that stuff, you know. But with the complicence of the free-market Democrats - Clintons and the rest of the skunks - in the 90's, and the Bush/Chaney crew this century, we may be getting into the same territory.
I monitored the lost decade and beyond in Japan. How the nikkei - the Japanese Dow - was once close to 40,000 in the late 80's and is less than 10,000 today. People in Tokyo were walking away from their highly priced apartments as the real estate market crashed.
When the crisis here hit in 2007/8 and the market tanked, followed by a supposed recovery, I was remembering my history lessons. That after the 1929 crash, the market rebounded. The full depression didn't hit until 1932. So by my accounting, we are somewhere in 1930 or 31.
So whenever I get into big political arguments - mostly with my wife's family, many of whom will vote for Sarah Palin over Obama no matter how much they protest - and they talk about coming threats of inflation (Obama will just print money they say) - I always say I'm holding onto my cash - or rather continue to sleep on whatever I can stuff into my mattress.
I'm a very big fan of Paul Krugman, who always makes sense to me and Monday's column (The Third Depression) made a lot of sense. He is predicting that with the world-wide retrenchment in lieu of stimulus spending, we are headed for what he calls the third really deep depression. He feels that the deficit can be solved while a deflationary spiral cannot. He reminds us that as the FDR spending spree began to bring us out of the depression in 1935/6, FDR was worried about the Republican attacks for the 1936 election and was also convinced it was time to deal with the deficit. So spending was cut- and whammo - right back into the much by 1937. It took WWII to bring us out of it.
When Obama was elected in the midst of an economic crisis - the major reason he won - I wrote:
Will Obama turn out to be a great president or a failure? An FDR or a Herbert Hoover, who had an even lower approval rating than W? It could go either way. When you think of great presidents, they seem to emerge only in times of crisis. Think there are just a few lurking? FDR ran for president with a very different agenda than he ended up enacting due to desperate times. He showed the kind of flexibility that was needed. Policies that had a major impact for generations.
The only thing I have to fear is fear of Obama's dependence on the same old, same old Clinton people, who come out of places like Goldman Saks when we need some truly radical thinking.
Well, that THAT question has been answered and we know he is certainly no FDR. If Krugman proves to be right, Obamavilles will spring up all over the nation - similar to those shantytowns of the 30's (there was one in Central Park). At least Obama is calling for more stimulus spending, so he will not be looked at in the same exact light as Hoover, who was fiscally conservative.
Obama may be more LBJ than Hoover: Will he run in 2012?
In addition to the possibility of a depression, we can't expect a war to bring us out of it. Because we are in a war. And have been for 9 years. A war that is doomed to fail. Vietnam-like quagmire, anyone?
LBJ was elected overwhelmingly in 1964 and was viewed as a shoo-in for 1968. Let's view the 2012 election in that same light.
Obama is much weaker than LBJ at a comparable time after the election. We are still in 1966 territory. So let's project this scenario:
- Democrats get smashed in 2010 mid-term elections.
- We sink into economic crisis ala Krugman.
- The war gets worse and worse as Obama removes some troops for political purposes and body bags accumulate. The right attacks him for being weak. The left is totally disgusted.
- It becomes pretty clear he cannot win in 2012.
- Sarah Palin kicks Mitt Romney's ass all over the place and looks to be a real possibility to be the Republican nominee.
- Rampant fear races through the nation at the prospect she will be president.
- Enormous pressure is put on Obama to withdraw.
- Hillary Clinton comes to the rescue and becomes the Democratic nominee.
- Election 2012: Palin vs. Clinton.
How much more fun can a politcal junky have?
That is if you are observing from your new residence in Canada.
