Mirroring the 70′s or the Depression?
I caught a program over the weekend on the History channel that compared our current economic condition to teh Gread Depression. The show made a case for the current government involvement in the economy (bailouts) by referencing the lack of government involvement in the early days of the Depression. I tend to disagree with this assessment. Prior to the Great Depression, there were little rules or regulations that surrounded the stock market or the banking system. When the sock bubble burst, people paniced and withdrew their money from the banks to protect their assets. As a result, many rules, regulations, and safeguards were put into place. The current meltdown was caused by a collapse in sub-prime lending and the creative house of cards that propped up an entire society living on credit. Infusing government money into the system will do nothing more than prolong the pain. As for more rules and regulations, the system we have in place is just fine, however, we have to live my those rules. Sub-prime lending is a bad business practice that was encouraged by the government. This mess should have never happened had good business rules applied.
But with the current political and economic climate, there is lots of talk about a renewed “New Deal” and comparisons being made between the 2008 election and the FDR defeat over Hoover. A recent article seems to dispute this and draws a closer comparison between 2008 and the election of 1976.
“The mood of the country in 1976 also parallels our present situation, with a pervasive sense of disgust at politics as usual and widespread fears of national decline. As if the end of the Vietnam War and the Watergate fiasco were not catastrophic enough, foreign-policy disasters in Africa and Asia suggested that the U.S. was losing its hegemony. The oil crisis pointed to a vast transfer of wealth and power to the Middle East, while many pundits predicted environmental catastrophe. The sharp economic downturn resulted in heavy unemployment and rising inflation. A concatenation of scandals tarnished once-trusted institutions: corporations, the military, intelligence agencies, police, and, of course, the politicians.”
