Political Cartoons from the Great Depression Eerily Relevant Today These cartoons say a lot about the era, and the debates which continue today over how government should respond to crises. Also see part 1, Cartoons from the Depression. #1) Like today, confidence was the real issue then too (the fundamentals are fine, just don’t dig too deep). August 1931, by C. #2) Jobless Recovery circa 1931. January 1930, by Robert Brown #3) False “green shoots” in Fall of ’31 November 1931, by Robert Brown #4) 1933 – In a fit of insanity which lasted throughout much of the depression, the American government enacted the Agricultural Adjustment Act, which paid farmers to destroy food and plant less crops. June 1935, George Shellhase #5) Another critique of the AAA, this one from a leading black newspaper. May 1934, L. #6) Broke but hoping. January 1931, by Ed Graham #7) Mixed signals. October 1931, John Cassel #8) Santa gets jacked. December 1931, Ralph Fuller #9) Depression-era critique of Keynesian economics. February 1936, Robert Day #13) Feed the rich.
American Airlines, Bankruptcy, and the Housing Bubble We normally say that a company “went bankrupt,” implying that it had no choice. But when, recently, American Airlines filed for bankruptcy, it did so deliberately. The airline had four billion dollars in the bank and could have kept paying its bills. But it has been losing money for a while, and its board decided that it was foolish to keep throwing good money after bad. Declaring bankruptcy will trim American’s debt load and allow it to break its union contracts, so that it can slim down and cut costs. American wasn’t stigmatized for the move. These people have no hope of ever making a return on their investment in their homes. Part of the answer is practical. Paying your debts is, as a rule, a good thing. When it comes to debt, then, the corporate attitude is do as I say, not as I do. Of course, many borrowers made bad decisions and acted irresponsibly.
New preface to Charles Kindleberger, The World in Depression 1929-1939 J. Bradford DeLong, Barry Eichengreen, 12 June 2012 The parallels between Europe in the 1930s and Europe today are stark, striking, and increasingly frightening. Both the existence of these parallels and their tragic nature would not have escaped Charles Kindleberger, whose World in Depression, 1929-1939 was published exactly 40 years ago, in 1973.1 Where Kindleberger’s canvas was the world, his focus was Europe. These were ideas that Kindleberger impressed upon generations of students as well on his reading public. There was indeed much wisdom in Kindleberger’s lectures, about how markets work, about how they are managed, and especially about how they can go wrong. Summers was right. First, panic. Kindleberger’s second key lesson, closely related, is the power of contagion. It might be hoped that something would have been learned from this considerable body of scholarship. In a sense, Kindleberger predicted all this in 1973. Indeed it is, more so now than ever. 4 Kindleberger (1978).
How Washington Orthodoxy Fails the Middle Class - David Rohde - Business Revitalizing the American middle class in a transformed global economy is a staggeringly complex task. And neither Democrats nor Republicans alone have the answer. Reuters On Tuesday, Barack Obama declared the debate over how to restore growth, balance, and fairness to the American economy the "defining issue of our time." The following day, Republican front-runner New Gingrich said Mr. The arrival of the middle class at the center of the American political debate is a long overdue step forward, but Obama and Gingrich steered clear of an ugly truth. The Republican right, oddly enough, has become more doctrinaire, utopian and out-of-touch with global realities than the "Marxist" Obama administration. A recent study by MIT professors Frank Levy and Thomas Kochan lays out the staggering task that revitalizing the middle class represents. By contrast, Obama's most specific legislative proposal in his speech was a payroll tax cut funded by a surtax on millionaires.
The roaring 1920s and the Crash 1929 The roaring 1920s and the Crash 1929 April 20, 2008 – Comments (11) I'm going to do a two part series about the 1929-1932 bear market and the following great Depression. First a write up and then some nice videoclips of the time with more information and showing the mood back then! The roaring 1920s and the great bull market: The roaring 20s were a time of great prosperity and with many technological developments. Of course the stock market also rose. So since the last bear market 1920 the Dow Jones Industrials rose 5 fold to 381 on September 3, 1929. Chart from djindexes.com who have a nice article with more details of the 1920-1929 bull market. The bear market 1929-1932: There were no real news that caused the crash. After that the market recovered until April 1930 when it reached 294. Chart from Millionaires became beggars, family fortunes were destroyed, the small investor lost everything. Part 1 (4 min) Part 2 (3 min) Part 3 (4:30) Part 4 (4 min) Part 5 (3 min)
What If Lehman Happened Today? - Michael Hirsh and Stacy Kaper Slight, balding, and a bit birdlike in appearance, Gary Gensler is no one’s idea of a biblical David. But Gensler, chairman of the Commodity Futures Trading Commission, is fighting Goliath, and not just one Goliath—he’s challenging several at once. The stakes couldn’t be higher: If he doesn’t win, it’s possible that America could suffer a repeat of the 2008 crash. There’s the Wall Street lobby, which never stops trying to open giant loopholes in the still-evolving Dodd-Frank regulatory overhaul from 2010 that Gensler is trying to implement. And now Gensler—a former Goldman Sachs executive whose stand against his erstwhile Wall Street comrades has won praise from progressives—is facing down the biggest Goliath of all. Between the deepening euro crisis, political stalemate in Washington, a stubbornly slow recovery haunted by the threat of double-dip recession, and the vast deadweight of underwater housing, time is not on Gensler’s side. A panic may be just around the corner. Sen.
Why Innovation Can't Fix America's Classrooms - Marc Tucker - National Forget charter schools and grade-by-grade testing. It's time to look at the best-performing countries and pragmatically adapt their solutions. Reuters Most Atlantic readers know that, although the U.S. spends more per student on K-12 education than any other nation except Luxembourg, students in a growing number of nations outperform our own. Even if we find a way to educate our future work force to the same standards as this latter group -- and we are a very long way from that now -- wages in the United States will continue to decline unless we outperform those countries enough to justify our higher wages. You would think that, being far behind our competitors, we would be looking hard at how they are managing to outperform us. Yet, these proposed solutions are nowhere to be found in the arsenal of strategies used by the top-performing nations. The top-performing nations have followed paths that are remarkably similar and straightforward. Playing to our strengths makes sense.
GDP Needs Help: Let's Build a Second Measure of Economic Strength - Umair Haque - Business If the crowning achievement of 20th-century economics was constructing a national income statement, the crowning achievement of 21st-century economics should be a national balance sheet Reuters Here's a tale of two equations that represent human exchange. It says: output equals consumption, plus government expenditure, plus investment, plus net exports. It says: real human welfare equals natural capital, plus financial capital, plus intellectual capital, plus human capital, plus social, emotional, and organizational capital. The first equation might be said to neatly represent the industrial-age paradigm of business: the implicit question it answers is maximizing the volume of output or "product." The Bureau of Economic Analysis calls GDP "the crowning achievement of 20th century economics"--and it is not overstating the case. You might see social capital--the wealth of relationships--crashing. You might notice human capital--the wealth in people--splintering.