Now and then//1929, 2009//the coming Depression. Part III

By , August 28, 2009 8:59 pm

Now and then//1929, 2009//the coming Depression. Part III It is not Bush or Obama that got us into the economic situation our Nation is in. It is US, yes, we, ourselves created this chaotic financial mess we are in. It’s true that our government, both parties, did or didn’t do things right on “oversight”, “regulation” and eventually failing to realize where our Nation was headed financially. None of this is new; we saw all this happen before; in 1929, the Great Depression. The very sad part of this is that many financial and economic experts, Wall Street analysts and even some government officials were talking and writing about the direction (south) our nation was headed financially and economically; which always lead to “unemployment”. When were they writing of this, you ask? They started warning us about where America was headed in September 2005; that’s right; in 2005 there were plenty of warnings in print of the coming “real estate” bust and a down turn in the economy and the potential collapse of Wall Street. I said that Obama did not create the financial disaster we are in, but, it is Obama’s policies and vision for America that will make it worst and lengthen the period of the depression, yes, I said “depression”; it’s coming. There are a few authors and economists that have written articles and books of the coming depression, some of these folks having been writing and researching the economy for 30 plus years and at least one has perfected models which he uses to define his predictions. Where I disagree with all of these “contrarian” opinions is that almost all of them predict a mild depression which can and will be controlled by the Government and the Fed; I disagree, I believe that we are facing a depression unlike anything we have seen in 200 years and that it will certainly be a global depression. Here is why I stand by my belief even in the face of the Stock Market having gained almost 40% since March’s low. The “roaring twenties” have so much in common with the “greatest economic boom” (1983-2006); supercharged real estate prices, accumulation of multiple real estate ownership by individuals, interest only real estate loans and Yuppies (the young, 30 years old and under) having control over so much wealth and power. Yet in the midst of those golden years where nothing could possibly go wrong; we came face to face with 1929. While today we may have more government controls to soften problematic financial situations, a doubling of the national deficit in only six months is hardly the right start to head off an extended recession or prevent a depression. More importantly is what we have today that 1929 didn’t have. In the 1930’s our government didn’t have “benefit programs” going broke (social security/Medicare), an automatic tax increase (Bush tax cuts expire), a major housing bubble going bust (20 trillion lost this year), a falling dollar, an extremely large debt to foreign governments, the most unqualified and ill-prepared “White House” in the history of our nation (yes-worst than Carter) and a large percentage of Americans and Businesses that have totally lost all confidence in our Government. Normally in the world of politics and economics there would be enough smart individuals in Government that could provide a solution to alleviate the situation to at least making it like a migraine headache instead of a brain tumor. We can’t restructure the banking system, big auto companies, big insurance companies and provide government assistance to taxpayers (stimulus); we’ve already done that during the last 10 months (started with Bush) and it hasn’t worked, in fact, unemployment just kept creeping up. If the government takes over what it believes is failing while if fact those systems and business were “failed”; then we have a failed government. All of government’s bail-outs and interventions were done on the hope of “future economic progress”; all of Obama’s proposed programs depend on this “future economic progress” or “savings”. We will not see this “future economic progress” for at least 10 years unless this government immediately ends its direction of bail-outs, social programs, spending, taxing and the introduction of “new” entitlements; and even then the next sustained upward trend in economy activity will still not come before 2015. Most politicians every two or four years (time for re-election) remind us of the funding problems in social security and Medicare, budget short falls, deficits and the continued imbalances in our Economic, Social and Political issues which govern our daily lives. Soon after the elections most if not all of these “politicians” and in fact even we the voters collectively go into complete “denial” on these issues or at best put them on the after burner for a future day, why is that? These imbalances have been building for about 70 years; the reason is cost. It is “cost prohibitive” to provide everything to everyone so we all look forward to future economic growth that would provide the means for the government’s entitlement programs.This was going to be a three part series but I have some other thoughts to share with you so there will be a forth part where I will discuss something we have not seen since the 1930’s.

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