It's a shame that our 90 year-old citizens aren't more vocal than they are these days, because the political discourse in this country could use a heavy dose of wisdom gleaned from people who were old enough to remember the stock market crash of 1929 and the resulting thirteen (yeah, you read that right – 13) years of depression this country experienced afterward. Those thirteen years not only taught people how to handle long periods of extreme personal deprivation and the value of conservation; they also illustrated how the government's response (or lack thereof) could adversely affect the lives of millions for years to come. People today just don't seem to have a clue!
On October 29, 1929 - "Black Tuesday" as it came to be called, the New York stock market began a plunge that overnight wiped out the lifetime savings of millions of Americans who, during the euphoria of the "roaring twenties", had invested in the stock market in greater numbers than ever before. Over the course of the following month the steep decline in the stock market continued, and by the end of November, almost forty percent of investment value in the United States vanished into thin air. One year later, that number had risen to ninety percent.
At the same time the stock market went into a tailspin, panic set into the banking industry, because banks had underwritten a majority of the stock market's traders, and as large financial institutions were going broke overnight, the value of the banks' collateral vanished overnight too. That led to a massive number of insolvent banks, and as news of massive insolvencies reached bank depositors, those depositors quickly descended on banks to withdraw as much as they could from their accounts. The result of the run-on-the-banks that ensued was the total collapse of the U.S. banking system, a collapse that ushered in The Great Depression.
While the stock market was crashing, banks were failing and ordinary Americans were losing their lifetime savings, President Herbert Hoover and his Republican allies refused to intercede in the growing economic collapse on ideological grounds, arguing that the government had no business interfering in the marketplace or trying to regulate commerce. Left to its own devices, they claimed, the economy would turn itself around. It didn't, and in 1932, Franklin D. Roosevelt was elected president.
Roosevelt immediately jumped into action, submitting New Deal legislation to Congress in an attempt to impose prudent regulation on the financial sector and to initiate massive job creation projects to combat crippling unemployment. Again, the Republicans balked, and again on ideological grounds. The fact that the "do nothing" approach of the prior administration had failed miserably didn't matter one iota. Ideology reigned supreme.
Fast forward to 2008…when the stock market was in the process of losing a quarter of its value, the housing market had collapsed and a substantial number of the largest banking and financial institutions in this nation were either insolvent or teetering on the brink of insolvency. Members of President Bush's Treasury Department, the Governors of the Federal Reserve Bank and many high ranking economists informed the President that massive government intervention was necessary to stave off a repeat of the 1929 calamity…a calamity that in today's world would trigger a global depression and massive political instability. And so, the President listened, and with only the backing of members from his opposing party – the Democrats, initiated the sweeping package of government financial intervention we know today as "the bailout".
Republicans who opposed the "bailout package" were more than happy to let the financial markets collapse on their own, despite the fact that the government was still on the hook as backers of the FDIC – the agency that insures bank deposits. Fortunate for everyone, a majority of Democrats were not willing to repeat the mistakes of the Herbert Hoover Administration and went along with the bailout package.
There's a bit of hypocrisy in the fact that many in the GOP had the most to lose if the government had not intervened to prevent a total collapse of our financial sector, but those same individuals were also in the best position to ride out the storm had the government decided to stay neutral. And despite the fact that lax government oversight over the excesses of the financial sector was a primary cause for the instant financial crisis, the GOP continues to wage war against government regulation and the notion of government bailouts in general.
I have to admit that it's a shrewd politician who can convince voters to hate the opponent who has saved their lives. That's what the GOP and the so-called "Tea Party" are doing, and because there are so few people left who remember the hard lessons of the Depression, their shrewdness seems to be working.
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