News about the pinheaded things by politicians and governemt.
Posts tagged Great Depression
Recreating the Great Depression
Sep 18th
The Obama administration seems determined to recreate the Great Depression.
It started by recreating “make work” policies of the FDR regime. Of course, the Obama administration referred to this as “stimulus”. Remember all those “shovel ready jobs” he promised, arguing they would stimulate the economy? Well, those were basically Government, make-work projects. Just like FDR.
This was followed by policies directed at aiding Labor Unions. In the original Great Depression, this was done under Hoover during a recession, and deepened it. The Obama administration has adopted a great many policies that also seem directed primarily at aiding labor unions, and again they are doing it during a recession.
Another parallel? Protectionism. There were a great many factors that went into creating the Depression. The tariff wars that occurred in the 1930’s was one of the most important. The world-wide, hyper protectionism gutted world trade and harmed the economies of just about every country.
The latest edition to the Obama’s administration’s attempt to recreate the Great Depression is probably the most outrageous. It doesn’t involve just bad policies, it involves the Government personally destroying peoples’ livelihoods.
The Obama administration, in its infinite wisdom, has decided to recreate the Dust Bowl.
Earlier this year the Government decided to cut off water to the San Joaquin valley. That is where a large amount of our country’s produce is grown. It now looks like Kansas during the 1930’s. Instead of being green, with crops ready to harvest, it is nothing but a vast waste-land.
The farmers that used to grow food for this Nation are now waiting in line at a food bank in order to feed themselves.
There is one important distinction between the original Dust Bowl and the current situation. The first was an Act of God.
The latest is an Act of Government.
And the farmers know where to focus their anger.
Barack Obama, the Second Coming of Herbert Hoover?
Aug 28th
There is a new study on how Herbert Hoover’s policies in response to a recession helped lead to the Great Depression.
While Barack Obama’s policies aren’t exactly the same as Hoover’s, there are some parallels.
“By keeping industrial wages too high, Hoover sharply depressed employment beyond where it otherwise would have been, and that act drove down the overall gross national product,”
While not exactly an Obama policy, the minimum wage was raised right at the start of this recession. Its effect is to artificially prop up wages, especially for union jobs. Unions have a sliding wage scale that often starts with the minimum wage. When the minimum wage increase, it automatically increases the wages of everybody in the union.
“Hoover’s response illustrates the danger of knee-jerk policy reactions in a time of crisis,”
Think “Stimulus Package” and TARP II. (TARP I occurred under Bush, but Obama supported it). All “knee-jerk” reactions to bad economic news.
“Hoover had the idea that if wages were kept high for workers and they shared jobs instead of being laid off, they would be able to buy more goods and services, which would help the economy improve,”
Think “Cash for Clunkers”. It’s a “success” because it caused people to buy more goods. Actually, it just caused car purchases to occur in a narrow window. The vast majority of those that purchased cars were already planning on doing so. They just purchased in August due to the program. What do you think car purchases in the month of September will look like?
Also, the bailouts of the car companies.
After the crash, Hoover met with major leaders of industry and cut a deal with them to either maintain or raise wages and institute job-sharing to keep workers employed, at least to some degree, Ohanian found. In response, General Motors, Ford, U.S. Steel, Dupont, International Harvester and many other large firms fell in line, even publicly underscoring their compliance with Hoover’s program.
Think Car Company bailouts. The main reason behind these was to protect the union jobs at those companies.
The worst part of this one was what the Government did in regards to creditors. It took bond holders, creditors that are first in line in a normal bankruptcy, and placed them behind the Government and Unions in regards to preference.
This means that companies with unions will find it difficult in the future to raise funds by selling bonds. The Government has just told the bond holders that the contract between them and the company is worthless. It will rewrite it to benefit the union.
This means that a great many companies will have difficulty raising funds to expand their business. No expansion means no economic growth.
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