Their Party Crashed. Ours May Too.

[ecdab]

By Robert S. McElvaine
Sunday, September 28, 2008; Page B02

"History doesn't repeat itself, but it rhymes." Mark Twain was supposed to have said that, but even if he didn't, there's no denying that we're seeing proof of the adage in today's financial crisis.

Consider this statement: "The extraordinary rate of default on residential mortgages forced banks and life insurance companies to 'practically stop making mortgage loans. . . .' " Sounds like 2008, doesn't it? It is in fact a comment from Ben S. Bernanke, current chairman of the Federal Reserve board. But when he wrote those words in 1983, he was talking about the Great Depression.

We've been hearing a lot of comparisons to the Great Depression lately, because today's crisis rhymes with that one to an extraordinary degree. At the most basic level, the cause of the current crisis is simple: Economists, business leaders and policymakers have all been ignoring the lessons learned from that early 20th-century calamity.

.......more at
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/26/AR2008092602836.html

This is a piece that is well worth your time.

[deutsey]

1. "ignoring the lessons learned from that early 20th-century calamity"

Or even more recent calamities like the collapse in Argentina, as Naomi Kline has pointed out.

[ecdab]

3. We should all hope that this latest lesson in the failure of

Trickle Down economics is in fact the Final Verdict on the Republicans approach to the economy.

[teach1st]

2. A kick and a recommend

From the editorial:

...If the masses are going to be able to buy what they've been persuaded to want, they have to receive a sufficient share of total income to do so. Yet the opposite happened in the '20s. President Calvin Coolidge and his Treasury secretary, Andrew Mellon, drastically reduced taxes on the highest incomes. Meanwhile, anti-union policies produced less income for worker-consumers. The share of total national income going to the very richest grew enormously, peaking in 1928, just months before the economy began to contract in the summer of 1929. The top 10 percent of American earners then were getting 46 percent of total income.