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Friday, October 10, 2008

Is America Headed Toward the Next Great Depression?

great depression historical photo

George Santayna said "Those who do not remember the past are condemned to repeat it."

My query for the phrase "Great Depression"in Google Trends showed a notable surge in searches, and there are many Americans wondering if history will repeat itself. Many fiscal conservatives,including house republicans and democrats, viewed the $700 billion-dollar bailout as a more socialist version of FDR's New Deal, and if the results from this week are a valid indication of what's to come, we could all be getting the raw deal.

Gary Becker of the Wall Street Journal insists that we're not heading toward another depression, because "

The United States had about 25% unemployment during most of the decade from 1931 until 1941, and sharp falls in GDP. Other countries experienced economic difficulties of a similar magnitude. So far, American GDP has not yet fallen, and unemployment has reached only a little over 6%. Both figures are likely to get quite a bit worse, but they will nowhere approach those of the 1930s.

I'm not sure what cave Gary Becker is sleeping in when he implies that other countries haven't experienced difficulties of a similar magnitude. He may want to check out the Asian stock reports and the latest news from Iceland. We've all cringed with the sound of the closing bell on Wall Street this week, as the tidal wave of bad news at home has become a has become a global tsunami.

The situation has reached such a dire point that Italian Prime Minister Silvio Berlusconi said political leaders are contemplating  the idea of closing the world financial markets to``rewrite the rules of international finance.''


International relations expert Thomas P.M. Barnett share's Berlusconi's viewpoint. He calls for reform across the board, in every stable democracy.

In the right hands, this crisis becomes a huge impetus for new political understanding among the world's great powers, reminding them all that what really matters in this age is protecting and expanding the wealth among those being lifted out of centuries of poverty. You either meet the expectations of that emerging global middle class or all of the other preferred "trainwrecks" are made reminds us of how irrelevant the whole "league of democracies" concept is.It's called a "league of capitalist great powers," and it needs to be called to order--truly--for the first time in history.

Music is often a great indication of national sentiment, and Eddie Cantor's song "Cheer up,smile, nertz" reflected the attitude of every  American who was simply a victim of circumstance, while mocking empty promises from politicians, during the Great Depression. The song went:

Sure, business is bunk,
And Wall Street is sunk,
We're all of us broke, and ready to croak.
We've nothing to dunk,
Can't even get drunk,
And all the while, they tell us to smile:

Cheer up, gentle citizens, though you have no shirts,
Happy days are here again. Cheer up, smile, nertz!
All aboard prosperity, giggle 'till it hurts!
No more bread-line charity. Cheer up, smile, nertz!

Cheer up, cheer up, cheer up, cheer up, cheer,
Up, cheer up, cheer up, cheer, better times are here.
Sunny smilers we must be, the optimist asserts,
Let's hang the fat-head to a tree! Cheer up, smile, nertz!

The world's in the red,
We're better off dead,
Depression, they say's in session to stay.
Our judges are queer,
Our banks disappear,
And all the while, they tell us to smile

Unfortunately, Cantor's lyrics sound all-too familiar to the messages we're hearing from Wall Street and Washington.

By Matt O'Hern at 02:09 PM | Comments (0)

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