The Second Coming
A friend introduced me to this detailed timeline by the late Steve Kangas of what happened leading up to the Great Depression and found some rather disturbing similarities with what’s going on now. This is Kangas’ timeline concerning the 1920s:
- During World War I, federal spending grows three times larger than tax collections. When the government cuts back spending to balance the budget in 1920, a severe recession results. However, the war economy invested heavily in the manufacturing sector, and the next decade will see an explosion of productivity… although only for certain sectors of the economy.
- An average of 600 banks fail each year.
- Agricultural, energy and coal mining sectors are continually depressed. Textiles, shoes, shipbuilding and railroads continually decline.
- The value of farmland falls 30 to 40 percent between 1920 and 1929.
- Organized labor declines throughout the decade. The United Mine Workers Union will see its membership fall from 500,000 in 1920 to 75,000 in 1928. The American Federation of Labor would fall from 5.1 million in 1920 to 3.4 million in 1929.
- “Technological unemployment” enters the nation’s vocabulary; as many as 200,000 workers a year are replaced by automatic or semi-automatic machinery.
- Over the decade, about 1,200 mergers will swallow up more than 6,000 previously independent companies; by 1929, only 200 corporations will control over half of all American industry.
- By the end of the decade, the bottom 80 percent of all income-earners will be removed from the tax rolls completely. Taxes on the rich will fall throughout the decade.
- By 1929, the richest 1 percent will own 40 percent of the nation’s wealth. The bottom 93 percent will have experienced a 4 percent drop in real disposable per-capita income between 1923 and 1929.
- The middle class comprises only 15 to 20 percent of all Americans.
- Individual worker productivity rises an astonishing 43 percent from 1919 to 1929. But the rewards are being funneled to the top: the number of people reporting half-million dollar incomes grows from 156 to 1,489 between 1920 and 1929, a phenomenal rise compared to other decades. But that is still less than 1 percent of all income-earners.
Now, I’m no historical scholar on the the 1920s and the Great Depression but if this is all true, let it sink in. Basically each and every one of these points has happened in the last decade except perhaps the details of the third point and some details of the rest, including the numbers and the fact World War I ended a long time ago.
Now consider what Gonzalo Lira wrote on the excellent Yves Smith’s blog as a guest blogger on the “extend and pretend” nature of the fixes since the Great Recession began:
Therefore, once the era of Musical Chair Trading ends with some ridiculous non-event that will send everyone panicking, the banking sector will be right back where it was on Septmber [sic] 18, 2008—the only difference, of course, being that Bernanke has already shot his wad, and politically, it will be impossible to pass another TARP.
That’s when the world ends—the second crisis will be loads worse than the one in the fall of ’08. Loads worse, even, than ’29.
Call me stupid but this shivers my timbers. Bloggers need to stop writing scare pieces like this. If we’re going to go down and are royally screwed, at least stop warning us so don’t watch ourselves circling the drain.
Wait, why don’t we just stop the downward spiral?