I thought that, for a change of pace, we would discuss a really fun topic like depression. No not the mental breakdown type, but the fiscal meltdown type instead. Although if you have a financial breakdown, it’s sure to cause a plethora of the mental type, so maybe we’ll wind up talking about both. They say that money can’t buy happiness, but tell that to the homeless guy sleeping in a cardboard box in a back alley or under a bridge somewhere. Or to the recent winners of the mega-millions jackpot as they were popping the champagne corks. It’s hard to imagine any individual or family where money doesn’t play a central role.
Throughout American history there’s been at least a dozen major depressions, or panics as they were sometimes called, starting as early as 1807. There was also a few milder recessions thrown in for good luck. (Ronald Reagan used to say that a recession is when your neighbor loses his job, and a depression is when you are thrown out of work. Not a bad definition.) But the depression I would like to focus on is the one back in the thirties. Not the 1930s, but the 1830s, or 1837 to be exact. It’s hard to believe they could have a depression back then when the entire U.S. population was only about 17 million. But not only did they have a depression, it was just as severe and destructive to people’s lives as the 1930s joyride. Those that are such strong advocates of capitalism somehow never get around to talking about capitalism’s failures, and how numerous they have been.
The U.S. government in 1837 was a modern day tea party’s dream come true in that it hardly did anything and hardly spent any money. It had a small Army and a few ships they called a Navy, a State Department that conducted a limited amount of foreign affairs, a small Attorney General’s office, and perhaps something that looked like an agriculture department to help out farmers. Even then people recognized that food was too important to deny at least some government involvement to help offset the hardships that droughts or flooding rains may have caused farmers. But outside of these limited functions there was little government activity. Revenues came primarily from tariffs on imported goods, so tax rates on rich or poor was a non-factor.
In November of 1836, the only man in U.S. history to be elected from the House of Representatives directly to the White House, Martin Van Buren, became president in the following year, succeeding the the 8 year presidency of Andrew Jackson. Economic times were good at the start of the Van Buren presidency, as land values started to sky rocket in value because of increasing numbers of people pushing west. One might say there was a growing real-estate bubble, not unlike the one that has led to our current economic down-turn. Banks were eagerly encouraging people to borrow money and invest in real estate to keep land values rising. Sound familiar? However, with all the cheap money flooding the market, inflation started to soar, and the government, in its infinite wisdom, declared that outstanding debt would have to be repaid in gold or silver, which made all the paper money on the market almost valueless. Instantly, there was widespread panic, as people rushed to their banks to withdraw their life’s savings while they could. Almost overnight, 40% of the banks in the U.S. had to close their shutters, since they were unable to meet their financial obligations. Financial destruction and ruin ensued on a massive scale in most people’s lives, from which they would never recover.
Since governments in those days didn’t do much of anything outside of defense and foreign affairs, Van Buren was clueless as to what remedial actions the government might take to alleviate the hard financial times. So in the end he did nothing, and the unrelenting depression dragged on for 6 years until finally the economy started to improve in 1843. The depression caused Van Buren to lose his re-election bid in 1840, and he probably went to his grave insisting it was not government’s role to bail out the economy. Sort of like today’s far right, who are still monumentally upset that the current administration bailed out General Motors and Chrysler in their time of need, instead of letting them go out of business, with a few hundred thousand more jobs going down the drain.
What is the relevance of the 1837 depression to our current world affairs? It’s not that capitalism is bad. Indeed, it’s probably the only real workable economic system at this stage of man’s evolutionary development. Even Communist China recognized that when they went to a market economy. But capitalism does have some deep fault lines that are ripe for exploitation by the unscrupulous. For example, when my wife and I bought our first house, people acquired real estate primarily for living purposes. We were required to put 20% of the purchase as a down payment. But early in the 21st century the fast-buck artists felt there was a quick killing to be made by constantly inflating real-estate values through convincing potential home-buyers to secure mortgages they could ill-afford with virtually no down payment. Real-estate prices could only go up, they told dubious buyers, before the crash came and all the foreclosures with it. And all the people now sitting in their homes with mortgages that are under-water. The 1930s depression was caused by the same-type of fast-buck artists that were exploiting the stock market, causing ever-increasing and unsustainable stock prices until the crash came.
So in the end it doesn’t matter whether it’s capitalism or socialism, or any other ism. What matters is the honesty and integrity of the people participating in what ever system is put in place. What’s important is to have the safeguards necessary to prevent the dishonest, the unscrupulous, and the out-and-out scammers from perverting whatever the chosen system of economics is. One final note. Mitt Romney has secured the GOP nomination, but during the primaries he referred to himself as a “severe conservative.” I wonder if that’s like a severe depression. Maybe it’s just a severe mental breakdown.
THE FREAK SHOW
I had promised myself that I wouldn’t write about Trump at least until it was clear that he would become the Republican nominee. But the latest shenanigans going on in that continuing circus known as the Republican debates made it all too irresistible. The latest kerfuffle occurred when Trump, always seeking to travel the low road, questioned whether his nearest rival in the upcoming Iowa caucus, Ted Cruz, is really a legitimate citizen of the U.S. Seems that good ole Ted was born in Canada, but to an American mother. That Cruz is a U.S. citizen is undeniable. But the Constitution states that to run for president, one must be a “natural born citizen.” Since Ted was born in Canada, Trump claims that the Democrats could “sue” Cruz’s eligibility to sit behind the desk in the oval office, should he be the party’s nominee. Since mudslinging is the name of the game in Trump’s world, these phony allegations reminded me of the 2012 election when Trump based his attempted march to fame on the “birther” allegation that Barack Obama was not a naturally born U.S. citizen, i.e., that he was really born in Kenya. Didn’t work out too well for him back then, and likely won’t this time around too.
First a few observations. Canada practically is the U.S., and would have been if not for the seditious actions of Aaron Burr, back in the days of our founding fathers. Secondly, most legal scholars agree that Cruz meets the definition of a “natural born citizen” and that Trump’s allegations constitute a “red herring.” It also noteworthy that the Iowa “caucus” followed right after by the New Hampshire primary, have an outlandish influence in selecting 2 candidates, one of which will go on to become the most powerful person in the world. Iowa and New Hampshire combined, constitute 1.4% of the total U.S. population. Yet if one candidate sweeps both states, it gives him or her a powerful leg up, and lots of momentum in winning future primaries in the more populous regions of the country. Such is the irrational or insane method this country employs to select its presidential candidates. Any third or fourth world banana republic would be too ashamed to admit to this method of choosing their leaders.
So Trump goes non-stop on Twitter bashing Ted Cruz, in an effort to tweet his way to the White House. The latest polls show the 2 of them in a dead heat in Iowa. Now, normally I would be the last person to come to Cruz’s defense, since he’s a right-wing whacko extraordinaire. He’s anti-abortion, anti-gay rights, anti-immigration, and anti-gun control for openers. He’s also vociferously against government assistance to the poor, the sick, and the elderly. (If you’re poor, sick and old, you’re really up the creek without a paddle, in Cruz’s world.) He was instrumental in shutting down the government for 5 weeks in 2013, because he felt it was spending far too much on assistance for the disadvantaged. But, he’s also open and honest about his beliefs and priorities, such as they are, and doesn’t resort to mud-slinging demagoguery in order to achieve his goals. His views were largely shaped by his father, Rafael Cruz, who escaped from Castro’s Cuba, and equates all governments to the way the Castro brothers have ruled Cuba for the last 65 years. Rafael runs a mega-church in Texas, and has passed on his “all governments are tyrannical and godless” philosophy to son Ted who absorbed this type of thinking like a sponge.
Besides the bombastic, bullying Trump, and the far right, delusional Cruz, there’s a whole slew of Republican candidates eager for a shot at occupying the White House. There were originally 17 clowns on stage, and it’s now down to 13, I believe. But the only other candidate performing in these circus shows, that might have an outside chance at winning the nomination, is Marco Rubio. I’ve written about Rubio before; about his youth, good looks and even a dash of charisma, (unusual for a Republican.) There is no question that the young, handsome Marco would easily trounce the aging and highly damaged Hillary Clinton in a final showdown. The problem is that Rubio has run a rather lackluster campaign that has failed to energize most of the Republican base. He could easily win the election, but likely will not be able to secure the nomination.
Then there are the also-rans like Jeb Bush. Bush used to be Governor of Florida but that was 8 years ago. Somehow Jeb believed that he could parlay the Bush family name into lining up big time cash donors that would buy the nomination and then the presidency for him. He did get the cash donors, but it’s not translating into potential votes in the upcoming primaries. Seems that the mostly disastrous administration that brother George ran for 8 years, is still on voters minds. The thought of putting yet a third Bush in the Oval Office actually makes some people nauseous. There are also some of the longest of long-shots up on stage, hoping that lightening will somehow strike in their favor. For example, Chris Christie, Governor of New Jersey, believes he somehow has a chance. But it’s not going to to happen and he should stick to blogging about his favorite restaurants in New Jersey. If anyone knows food, it has to be Gov. Christie. And, of course, these circus performances would not be complete without the one woman in the Republican race, Carly Fiorina. She speaks well, and exhibits great poise and decorum. But many years ago, Carly used to be CEO of Hewlitt-Packard, and nearly ran that company into ground with her decision to acquire the Compaq computer company. She was promptly fired from her job because of that fiasco. Then not too long ago she ran for senator in California and was soundly defeated in that quest, primarily because she was vociferously anti-abortion in a very blue state. Put her odds for the nomination at about a thousand to one. And the beat goes on.
There will be many more circus performances to write about before the eventual outcome, which will likely culminate with a Trump nomination. Then look at all the fun I could have, writing about The Donald’s exploits and ensuing disasters.