Monday, January 12, 2009

A Bad Economy Appears to be a Recurring American Theme

It's interesting sometimes to read up on slices out of American history - in the actual words of those who played a key role in some aspect of our past. For example, this State of The Union speech by president Lyndon Johnson, from January 8, 1964. Two months before I was born actually. If you read it thoroughly, you will very likely walk away thinking it was spoken in the past few weeks, rather than 45 years ago.

The residual malaise that followed the 1929 crash lasted throughout the 1930's and into WWII. This Annual Message to Congress speech by Herbert Hoover highlights the conditions of 1932. Only after the war ended, and forces returned home to start families, buy houses and cars, and relocate to find better career prospects, did things begin to turn around for the better.

The 1950's also saw a period of sagging economic conditions. This repeated again in the 1960's and the 1970's and 1980's. The 1990's saw a boom from technology sectors and a resurgence in manufacturing, until the .com bubble bust. We began yet another recovery in 2000, but 9-11 pushed our economic "reset" button and we had to rebuild the markets again. Only until 2007 when the bottom fell out with the beginnings of the current housing market bust, and the credit swap default problems.

I'm not a financial or economic expert by any stretch. I studied this stuff in college like millions of other students. It does make you wonder though, just how credible the "free market economy" really is though. Because, we have never really had a "free market economy", ever. The closest we came to it was the wild west period of the 1920's, which led up to the big crash. That brought government oversight and regulation into the game, which capped off the "free" part immediately. We actually have a quasi- socialist / capitalist system. Many public services are entirely controlled by the government. Many more are regulated by them, such as utilities, communications, and so on. The the recent asertions made under the conditions of the TARP, have now placed our banking system under a blended oversight+control condition. We are inching closer to a Socialist system than a Democratic system (which we have never been).

So this current hole we've dug ourselves into is timed about right. It falls pretty much in line with cyclical falls in the market since the 1920's at least. But it seems this time around, it's been exascerbated by artificial forces from credit excess to uncontrolled housing markets to unrestricted lending and rating systems and good old-fashioned stupid human greedy behavior.

As I said, I'm no expert. But I have slept at a Holiday Inn Express before.
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