Worse than Hoover

So the verdict is in. The House's failure to pass the bailout bill means that George W. Bush's record will not be as bad as Herbert Hoover's. It will be worse.

When Hoover entered office, he called a meeting of economists and business leaders to discuss how the country should best deal with prosperity. Then came October 1929. The stock market plummeted and never really recovered until after World War II. At least Hoover didn't trigger the collapse himself and he didn't mire the country in a trillion dollar war.

Hoover, unlike Bush, was a progressive president. But he was also an adherent of laissez-faire economics, which meant that he was intent on balancing the budget. The economy would never have recovered on his watch. Franklin Roosevelt averted the worst by establishing the New Deal. But not until World War II did the economy really begin to hum.

Today it is Barack Obama who has the potential to create a new New Deal. John McCain joined together with the House Republicans, most likely in an attempt to ingratiate himself with the party's hard right, to scuttle Bush's proposal. Now it's back to the drawing board--if Bush even has anything to draw up. Like Hoover, Bush has been extraordinarily passive, letting his Treasury Secretary Henry M. Paulson and Federal Reserve chairman Ben Bernanke take the lead. They, and he, were unable to close the sale. Will there be anything left to sell in coming weeks?

The irony is that the House Republicans may well be sealing Obama's victory in November.

Should the economy continue to collapse, McCain won't simply lose the election, but be crushed.

Comments

[tsloan]

Like my grandparents, I too will have quaint stories to pass down to my children detailing the Second Great Depression.

[sonoffestus]

As a Patriot and one who will be hit VERY hard by this mess, I vote to let the whole thing collapse.
This of course is not the prudent thing to do. As a business owner I know. BUT, if it will lead to the utter destruction of the Republican Party any true patriot understands what needs to be done.

We have asked over 4000 young people to give their lives for our way of life. It is now OUR TURN to do our part, to save our country and honor those who have died, while we shopped. There will be real pain and many of us will lose,but it is time to get real so the rebuilding of America can begin.

The Republican party sold itself to the neo- fascist and religious right elements of their party. They have willfuly divided and weakened our nation. Like a flesh eating disease, they must be cut and purged from the party. Remember.....'fascism will come carrying a cross and draped in a flag".
The time has come to purge our society of these scum..........

[Kassandra]

I've been saying for months that the Republican Party needs to be held down and a stake driven thru it's heart. They've been sucking America, and the world,dry for nearly 30 years...including Clinton.

[Mikeeee]

I don't see how Clinton leaving bush a $200 billion surplus makes him a republican, but I do agree with your way to remedy the situation..

[vnique]

This administration seems to have all of the media on board with this bailout. Poor people who haven't a dime to put in a pot are even afraid. Government has learned so well to use lies and fear to achieve self serving needs. I don't have money invested in risky stocks, not even close to $100,000 in a bank account and don't work for a failing company that has to borrow for payroll. I reckon you can now refer to me as RICH! Maybe the price of a ball game will come down to where I can enjoy it than trying to figure where did my money go. People might actually start interacting with each other rather than trying to one up each other. Maybe even that demonized coin, a penny, might enjoy a comeback and be appreciated. Back to basics not back to business as usual should be a national war cry. Politicians should pick up a history book and read to pass the time. Maybe they will find out what happens to a society based on glutony!

[LVDantana]

I dont understand why we need the cry baby GOPers to pass this bill. We have enough votes to pass it on our own and than we wouldnt have to share the credit with those idiots!

[DAE]

Pass a bill that addresses the real problems we face. Use the 700 billion to green, rebuild and reindustrialize America on a sustainable basis to meet human needs not corporate profits, invest in education and health care, reemploy the bunemployed and underployed at living wages. YHave a mortgage holiday until we can fix the subprime mess so people can stay bin affordable homes and confiscate the wealth of the leeches who have sucked us dry.

[degenerate1991]

Or, the government should return to reality and, realizing that we don't have $700 Billion to spare, not borrow the money and let the markets deal with their own problems.

[starboymikey]

I dont understand why we need the cry baby GOPers to pass this bill.
____________________________________________________________

The answer is really pretty obvious. Democrats backed out when they saw Republicans were mostly voting against it. If this bill passes with mostly Democratic votes, it becomes the "Bush/Democrat Bill", and Republicans will use to flail Obama and the Democratic congress. "See, it's us Republicans who stand up for the little guy, while the Democrats cater to special interests on Wall Street."

Cenk Uygur and others have pointed out what a sucker punch Dems are being set up for. If the Republicans, for pretty much the first time ever, won't back George W. Bush, their own president, why should the Dems do it? This is a Republican mess, but the GOP is now trying to squirm out of it and put it all on the shoulders of the Democrats. F**k that.

As Collin Powell said about Iraq: "you break it, you own it."

If I were Obama I would now say this to the Republicans: "There are only two possibilities left. Either you shoulder responsibility and vote for this bill in meaningful numbers, or else it goes down and you leave Bush and John McCain swinging in the wind. We're through being your punching bag."

[CostaDelBarto]

"Should the economy continue to collapse, McCain won't simply lose the election, but be crushed."

If that's true, and I believe it probably is, then McCain will definitely be crushed because the chances of the economy suddenly being revitalised in the next month are not exactly good. Like close to zero.

[Maxwell511]

The "Great Depression" had Hoovervilles, we'll soon have Bushvilles. Before WWII, World War I was called the "Great War." It's therefore logical that the "Great Depression" will soon and forever after be known as "World Depression I"

[Yermammy]

And if the vote for this second version of bail out bill, Congress will be seen as worse. There's absolutely nothing in here for us. A lot of Democrats voted no and they are the smart ones. This is BS.

[Dynamohum]

I agree. It is time to email, write or call you Senators and Representatives and tell them not to vote for the piece of trash they call the bailout bill. I sent emails to my 2 senators, 1 representative and Obama. Do not pass this bill.

It needs to be organized in the same fashion as FDR did it, period. Or something similiar, maybe a little more progressive for the 21st century, but on the same basis and principles. People have to realize that the party is over. It is time to start living within our means. Cash only. Get over the credit card addiction and become fiscally responsible. This problem is not only at the top.

It is time to tighten our belts collectively, and if not we all will perish together.

[Lazslo]

If it's Bush's fault, how come the dems are so eager to bail Bush out? In the days to come we'll see that the dems have been heavily invested in the financial firms that preyed on people with unfair mortgages, I guarantee it.

[milo h minderbinder]

"If it's Bush's fault, how come the dems are so eager to bail Bush out?"

They're not eager to bail him out, they're eager to bail the COUNTRY out. I hope you're not suggesting that it would be better for them to let the economy tank just to make GWB look bad.

[DAE]

The dems are caught between a rock and a hard place. Some are holding their nose and voting for the bailout because they naively think its for the good of the country. Others have seen the light and know its a sham. If the bill really nationalized the financial industry which through the latest consolidation is now controlled by 3 banks and used the finacial levers to help rebuild the country I'd be all for it. But as now framed the loop holes and exceptions totally eviserate any progressive features of the legislation and its just another vehicle for Wall Street to enrich itself.

[misanthropologist]

The market and the economy are not the same thing, and this bill STINKS. Kucinich is right when he says "no cash for trash." These MSB's are worhtless

The market is a house of cards built on nothing and these fat bastards will swallow $700 billion and beg for more, while cashing out and leaving the wreckage that is America for someone else to deal with.

Come on, your moniker is milo freakin minderbinder - Joseph Heller's character in "Catch-22." Remember "the syndicate... we all have a share" ? You use THAT as you're moniker and you can't even grasp the colossal swindle taking place here? The irony leaves me awestruck. Reading comprehension, my son.

[PDXKevin]

They aren't trying to bail Bush out, they are trying to bail the financial sector out. Finance=money=what we all need to live in this society. Duh.

[tsloan]

by heavily invested, you mean like repub Rudy Guilliani lining his firm up to get a stake in the bailout?

[tsloan]

by heavily investing you mean like Rudy G. trying to line up deals to cash in on the bailout?

[oldfart1]

Another republican airhead. Demos are willing to do thee right thing, even if it involves bailing out Bush.

Besides, we'll nail him later anyway.

[Krikkit]

Maybe the Republicans are trying to prove that America is still the number one leader in the world: If we can no longer lead the world in greatness, we'll just lead the world into another great depression.

[katok]

Right on Jacob, lets hope that somone is around to maintain records

[chrisro]

Hoover did *not* adhere to laissez-faire principles...not even close!

That meeting with businessmen was held to convince them to keep wages and prices *up* instead of allowing them to fall. There was also the disastrous Smoot-Hawley Tariff...a bill that grinds trade to a near halt can hardly be called free market. It is the exact opposite.

Hoover was an intervener, plain and simple. Both he and FDR helped create the Great Depression by doing everything possible to prevent the necessary liquidations from the credit boom of the 1920's.

Prior depressions were sharp, but short, because the government did not intervene. But Hoover and FDR ushered in the longest depression of 16 yrs.

Interventions *began* with Hoover and were continued on an even greater scale by FDR.

Connecting Hoover with laissez-faire is a total fairy tale.

[lebec]

For those who think the bill does not provide for getting stock in return for purchasing assets, read the draft bill (especially sect 113(d) )
http://online.wsj.com/public/resources/documents/bailoutbill20080928.pdf
Equity positions are in the bill and they are reasonably required (must be a publicly traded company, anti-dilution requirements, required if more than $100M of assets bought (may be required for lesser amounts), etc).
There is a lot of disinformation going around. I am against rewarding the guilty, but this is a case where we are all in the same ship and we run the likelihood of cutting off our nose to spite our face.

[Yermammy]

Horse hockey. This is the rich vs. the poor and middle class in a classic Mexican Standoff. Submit a better bill. This second one is a sham.

[lebec]

you evidently haven't read the bill. Read it and then tell me what has to be changed.
Is it good? no... Is it better than doing nothing? very... Is a better bill possible? maybe, but is it worth the little extra bit it gains us and the delay it will require? I doubt it.

[milo h minderbinder]

People DO need to look at the details.

The initial bush bill was horrible, but it has had many improvements in the past week.

I can't count on how many comments I've seen "the bill should have..." listing something the bill DOES have.

[veracity]

EXACTLY, Jacob! I always use WWII as THE MODEL for any nation's potential economic growth.

Doing so, I divide what economists call "CAPITAL" into five distinct categories:
#1. technology
#2. raw materials & resources
#3. labor
#4. industrial capacity to convert raw materials to finished products
#5. the cash, liquidity, surplus, or "money" to facilitate above.

You can have millions of dollars, but if you don't have the technology, you can not build airplanes.

On the eve of WWII, WE HAD the RAW MATERIALS & LABOR & even industrial capacity - but they were NOT being put to use during the Depression.

But MONEY can be GENERATED, almost out of thin air, by putting the above to use creating products, which process builds more industrial capacity.

To sum up the above in one sentence, on the eve of WWII, one could barely imagine the HUGE fleets of aircraft, tanks, ships, trucks, and other supplies the US wartime economy produced - all in the span of 4 short years!

Clearly, the POTENTIAL was there before the war, it just took A NEW MOTIVATION to HARNESS that potential. In doing so CREATING MILLIONS upon BILLIONS of dollars worth of value & production, in the process of converting raw materials to finished goods. BILLIONS of dollars that WERE NOT THERE _before_ the war.

Today, Americans barely realize that TEN YEARS of BUSH ADMINISTRATION politics, has MADE AMERICA 100% DEPENDENT on FOREIGN OIL and FOREIGN CREDIT!

[DavidNOE]

The war also took something like 10% of the total population - a much larger proportion of the actual work force, since they were mostly males between 18 and 35 - out of the civilian economy by putting them (whether by draft or enlistment) into the armed forces, which solved the unemployment problem and then some.

[DAE]

When its all totaled up the Bush WH has squandered at least $10 trillion if not twice as much. If the money had been properly invested in providing social capital (health care, education) and physical capital (infrastructure and alternative energy) the return on investiment would have doubled or tripled the initial outlay and created a vast storehouse of wealth. Instead we pissed it away and are trillions of dollars in debt. So add it up folks and the bottom line is that we squandered $10+ trillion on needless spending and defferred taxation that is being financed by China and Soverieign wealth funds for a total liability of over 20billion add to that the loss on the potential return on investment if the money had been spent on capital improvements and you get a total of nearly $50 trillion dollars that we've kissed goody over the last 8 years.

[cavitywall]

A bailout withut consequences for the perpetrators can't fly. They need to be made an example of, at least by minimally confiscating their assets and indictments for fraud. Then, for the good of the public, if a bailout shows to be necessary, it can be done with a clearer conscience.

[Yermammy]

NOW YOU'RE TALKING! Confiscate their VISAs/Passports and tell them not to leave town. Freeze their personal assets (the one's that haven't wired them offshore, already) and tell them it's jail time if accountability is forthcoming. How about REAL justice for once? Is that asking too much?

[milo h minderbinder]

McCain was the one who scuttled this?

If that's the case, why was he taking credit for it passing earlier today?

[dagnome27]

because the Straight Talk Express of 2000 has become the Double-Talk express of 2008 (or No-Talk Express if you're Pa lin)

[CostaDelBarto]

Well... err... John McCain would happily take credit for the sun rising.