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Wow. 1908

Remember this was before the Federal Reserve.

I hate quotes where you read, they piss you off, and then you see the quote is from 60 years+ ago and then you think about some AIG dick vacationing in the Cayman Islands.

It sounds so actual…

Certainly unwise consumers buying stuff they couldn’t afford had nothing to do with it, either.

The fireside chats, in addition to being a case study in stakeholder communication, are another, great historical resource that mostly feel like they were written yesterday.

There’s a moral crisis here as well alright. But it cuts both ways. Depositors? What depositors?

If people read, remembered, and took into consideration our history then we might not be in this mess.

Our economy is far different beast than it was in 1908. In 1908 the American economy was driven by industry and agriculture. Today, it is driven by consumer spending

Let’s be clear, there is nothing, absolutely nothing, that has been going on in the offices of fund managers, financiers, trust funds and corporations that has not been going in the homes of every Americans for the better part of four decades. We have all been participants in the building up to this collapse. We, as American consumers, have participated wholly in building the facade that is now collapsing around us. Together, in league with the banks and money lenders, we have constructed an economy not only built upon but addicted to debt and credit.

We have financed, on credit, 300 million lifestyles for far too long. Now, what should otherwise be a moderate economic recession is inevitable, one that can’t “stimulated” or “spent” out of on government’s credit cards. Americans have rightly stopped spending, out of fear, fear of the vast mountain of consumer and debt they have amassed chasing Gomorra.

Small voices crying out for us to repent of our lavish lifestyles and save just a bit of cash and perhaps ourselves, have been drowned by the music of the party and lost in the din of the revelry. Now that the party is over and we’ve made our selves seriously ill, perhaps we should be asking ourselves why we haven’t been listening, saving, living modestly and seeking out the satisfaction of friendship and family. Instead, we have been seeking out the comfort of the big screen TV’s, homes that would take decades of income to repay and cars that lose value as soon as you leave the lot.

No, it’s obviously their fault, those people over there. It couldn’t possibly be anything I’ve done.

—Me.

OK, I’m done pontificating. I just bristle at the implication that decades of our collective financial mismanagement are to be blamed on the “fat cats”.

Black Swan

Holy crap. What was that they always say about history? I think it’s something about it repeating itself….

Almost as true today as it was 100 years ago.

It’s not the first time and it won’t be the last.

I am normally not a fan of CNN , but they are airing the broadcast premiere of the acclaimed documentary I.O.U.S.A. on Saturday, January 10 at 2:00 p.m. EST and on Sunday, January 11 at 3:00 p.m. EST .

A 30 minute preview of this movie is here, http://www.iousathemovie.com, it is very good and well worth the time.

Seriously – hear hear! Greed is the common denominator, whether it be the average working-class person buying a car they can’t afford, or the high-level finance execs with incentive only to sacrifice long-term stability for short-term profits… We all have a hand in this.

@Matt

Not just greed.

I think it’s actually an education problem too. Many people probably couldn’t tell you where credit comes from exactly to start with. And people, it seems, don’t get that things run out. Oil, credit, whatever. Doom and gloomers (and the media) don’t help when they oversell and overhype.

When everything seems magical and endless, people resort to hoping rather than planning. Even good people.

People are losing homes. Yes, they made mistakes, and now they are paying for them. Are the executives at these failed financial institutions paying a similar price?

Corporate executive compensation packages are a national shame. We are told that companies need to pay ridiculous salaries and bonuses in order to attract “top talent”. Seems to me that the top talent isn’t talented enough.

Truly Sucks – We laid of 115 today….

Greed for money or greed for stuff?

What is needed is more saving, both by Americans and the American government, not more spending.

Too many people pulled much of the equity from their homes and maxed out their credit cards all to buy more stuff. Too many government programs, mandating spending money we (Americans) simply do not have.

President elect Obama’s proposed multi trillion dollar stimulus packages may only make things worse, putting all of us deeper in the hole of debt. Unfortunately, most of today’s political leaders simply do not have the courage or perhaps the knowledge, to explain these issues to Americans.

Saving is important, of course, but given that our economy is built upon the expectation of continued consumerism - that a great many people have jobs to produce things that other people don’t strictly need and almost certainly cannot pay for in cash - the hard reality is that we are living unsustainably. This is an inevitable unwinding of artificial affluence. Did you think the bill would never come due?

Gives a new meaning to “business cycle” doesn’t it? We get fat and reckless, then pull back and become cautious. When I was young the assumption was that the town banker was the most conservative guy around – that the only way you could get a loan was if you didn’t need it, and believed that “acceptable risk” was an oxymoron. Of course, in those days the bank was owned by someone who lived in your town, and the money he lent was largely his money.

What I find amazing is that a majority of people on this message board seem to “get it”. There are several posts that show people clearly understand our savings level is too low, the massive amount of debt/credit is way too high, and that a consumer-based economy cannot pull us out of this problem simply by spending more and creating more credit.

And this blog is not the only place I see it. All over the Internet I see people that have a fairly clear understanding of the problem. I assume people on the Internet are somewhat representative of people in general so that most likely means a large number of Americans “get it”.

What I am baffled by that is that despite a decent understanding of the problem we continue to see the Government propose ridiculous solutions to the problem (bailouts R us and “stimulus packages”) and we continue to see the major media continue to push the wrong ideas and the wrong solutions.

I don’t understand why there is such a mismatch. I have read several article recently that express concern about the fact that the savings level of the average American has risen a little bit. This to me is a good thing for our economy but the media is trying to get people to believe this is bad and they should go back to spending (see http://online.wsj.com/article/SB123120525879656021.html for an example of this craziness).

@Eric Anderson… there are no votes to be gained by telling people that they can’t get everything that they want, that they have to save to get that which they want RIGHT NOW , that our SS programs were designed shortsightedly and may have to be sacrificed for the greater good, that taxes are really, actually important for a functioning republic, etc., etc., etc.

In the hypothetical, the problems are easily identified and the solutions are entirely logical. In the actual… well, we are growing out of this house, and check out that hottub!

Ahh, I think they forgot to mention the government in this mix. Funny how they forget to mention Barney Frank, Chris Dodds, Maxine Waters, not to mention the other libs who are also responsible for this mess. They used Fannie and Freddie as a socialist “affordable housing” (Barney Franks’s words, not mine) tool. Dodds still won’t release details on the sweetheart loans given to him by Countryside, the Government award winning conduit. Has anyone seen the youtube videos of the congressional testimony of the Fannie and Freddie regulators being accused of racism just for finding evidence of corrupt actions within Fannie and Freddie. Let’s not forget the government’s lowering interest rates to extrem lows and the CRA mandate that precipitated private institutions to take on large risk investments at low cost. To ignore the government’s actions, is negligent at best. Wall Street has always been greedy, but what’s changed in the last ten years? Not Wall Street.

Why was my post removed? Including the government in this debacile is “off-topic, blatantly inflammatory, or otherwise inappropriateoff-topic”? I suppose the truth has never been kind to the liberals.

Sorry, it appears it’s back. My apologies

Another, more recent viewpoint:

“[Keyne’s] most important lesson is that one should not treat the economy as a morality tale. In the 1930s, two opposing ideological visions were on offer: the Austrian; and the socialist. The Austrians – Ludwig von Mises and Friedrich von Hayek – argued that a purging of the excesses of the 1920s was required. Socialists argued that socialism needed to replace failed capitalism, outright. These views were grounded in alternative secular religions: the former in the view that individual self-seeking behaviour guaranteed a stable economic order; the latter in the idea that the identical motivation could lead only to exploitation, instability and crisis.

Keynes’s genius – a very English one – was to insist we should approach an economic system not as a morality play but as a technical challenge.”

- Martin Wolf

Keyne’s Genius? Spending did not get us out of a depression nor will it save us today. And, by the way, Road To Serfdom is one of my favorite books.

Sorry, forgot to put my initials. That was my post above.

The answers can be found We can learn from digging down But no-one ever seems to be digging

- Jack Johnson, Traffic in the Sky

I had entirely expected to check back in with this thread and find that my earlier thoughts had been skewered, thoroughly. Accountability and personal responsibility just don’t seem to be a hallmark of our society today.

@Eric Anderson

And this blog is not the only place I see it. All over the Internet I see people that have a fairly clear understanding of the problem. I assume people on the Internet are somewhat representative of people in general so that most likely means a large number of Americans “get it”.

First of all, a large number is not a majority, and it’s the majority that got us in this trouble. Secondly, there’s a difference between ‘getting’ a concept and actually living by it. Just look at epidemiology reports for any number of terrible things.

What I am baffled by that is that despite a decent understanding of the problem we continue to see the Government propose ridiculous solutions to the problem (bailouts R us and “stimulus packages”) and we continue to see the major media continue to push the wrong ideas and the wrong solutions.

I think there’s a real problem with the understanding of buffering and thresholds. So when pundits or Nobel prize winning economists or the president or the National academy of Science tell us something, people look for evidence from their past experience, usually finding less reason for alarm (but sometimes more, see Iraq, occupation of).

Remember pH titration? Do they still teach that? They should. In social science and history classes too, not just chemistry. The problem is, the world three drops from now may be drastically different, even if the world three drops ago was pretty much the same.

And yet The Machine rolls on 100 years later. It’s fascinating to see a system so encumbered with unchecked greed working so well.

Phil Hughes (former publisher of “Linux Journal”) has escaped and has some new things going on:

Nicaragua Living

Cool Top

(I have no connection to any of this other than being a daily reader of Nicaragua Living. Personally speaking, I chose to bury my nuts in the garden and now I can’t go anyplace anymore. Kinda tied to one spot, like.)

The problem with equating the economic crisis with a moral crisis is that the question then becomes “Who’s morality?” Depending on your ideologically commitments, you will interpret events as “objective” proof of the necessity of your narrow opinion.

It doesn’t matter if you position yourself against the Fat Cats or against the Welfare Queens, I think its the same rhetorical strategy that leads to gridlock and religious wars instead of solutions.