Foreword: First written in late 2008, this is prescient four years and a month later as 2012 is now rolling. Since then there have been more Fed-engineered bailouts of American financial institutions and corporations as well as of European Union ones. Wars continue their relentless spread around the world, and the Euro appears to be in collapse unless the EU becomes a political union by coercion, i.e. nondemocratic. Iran was rocked by revolts and the Arab Spring swept through North Africa and the Middle East. Europe erupted into anti-austerity revolts including a violent insurrection across the UK, Occupy Wall Street protests have spread across the U.S. and then the world with mass demonstrations in places as far away as Russia, China, and Nigeria.
Yet the suave talking heads of the mainstream mass media continue to reassure us things are getting better, look on the bright side, ignore the dark, ignore those stinky hippies protesting in the street (never mind many of them are unemployed and foreclosed-upon middle and upper class people), but go stand in long lines to go shopping to buy overpriced junk with credit cards instead. Things are indeed getting better. Forgive my cynicism, as I detest cynicism, but this time, I say “Yeah, right.”
Rushing into the Second Great Depression
No beast slouching to Bethlehem here, folks. We’re tearing into the Second Great Depression. We’re accelerating as we go, too. The nations of the world are racing to get through it as fast as possible. And yes, although some are using the term “Great Recession,” this event is far more complex and destructive than a mere economic downturn that drags on for a couple of quarters. We’re upon the cusp of a depression, the Second Great Depression. It will be as different from the first as the Second World War was from the First World War.
One of the most bizarre aspects of this approaching perfect storm, excuse me, we are already in it, is the number of talking heads in the mainstream mass media telling us it’s not so bad and don’t worry, as things will get better simply because we’re “resilient.” Many factors converged to trigger this economic and financial catastrophe. Pragmatic steps need to be taken fast. If not, then this growing calamity will demand a drastic and radical response.
Bailouts are short-term fixes that consume trillions of dollars. Trillions! The so-called bailouts, officially loans with interest, are no different from giving an alcoholic a free bottle of whiskey. Yet we want to keep that alcoholic alive long enough to get him into a hospital and then into rehab. We DO want to keep that alcoholic alive, don’t we? So give him the damn liquor and give it to him now so we can keep alive long enough to fix him. Then, by golly we better fix ‘im or he’s gonna die. And that’s gonna cost a bunch to deal with.
It is imperative to keep our economy alive long enough so we can reform and rehab it, and thus ourselves. We are all alcoholics in this mess. Greed got the best of many of us. There’s a reason the blazing hot industries of finance, insurance, and real estate got stamped as FIRE. Even I got caught up in the greed of those wild times and made three decisions with real estate and investments I now regret.
There are a number of short-term fixes and short-term reforms being bandied about. Even implementing them is proving challenging. Yet implement them we must. If we are to tackle problems even more serious than our economy such as environmental catastrophe and a proliferation of war we need to restructure our entire economy. And to do so on all levels from the global to the local and back.
The American bailout plan being pushed by the Bush Regime, supported by the incoming Obama Administration, and imitated by other countries in peril is officially known as TARP, for Troubled Assets Relief Program. Its acronym also stands for a sheet of fabric one throws over a frame for protection from the elements, whether a stack of firewood, a leaky roof, or a shelter while camping. Or to hide something. Jokes about TARP buzz about.
One camp calls the bail-out a scam defrauding the taxpayers while fat cat banksters profit while the other argues it is necessary to save those same taxpayers, that to save Main Street we first have to save Wall Street, and that the government may even profit. The truth lies somewhere in the middle of these opposing points of view.
Earlier this month (December 2008), the NBER, the National Bureau of Economic Researchers declared official what many already knew, that the United States was in recession and has been since December 2007. The NBER is a private group that charts economic trends with a focus on marking the start and end of downturns. They like to wait “a long time” so they can make accurate checks of various economic measurements. In some cases warning signs go back into 2006 as the housing bubble overheated.
An economic year is divided into four quarters of three months each. A significant economic decline across a span of several months is termed a recession. In conventional thinking the economy has to experience two quarters of decline before it becomes a true recession, but the NBER claims this to be a common myth and a fallacy. Another popular misconception is that after the first two quarters a recession becomes all “psychological.” This approach borders on dismissal of all things mental and denies the role of other negative events impacting the economy.
Psychology is an important component of the human economy. The failure to fully understand and appreciate it is as harmful as divorcing our economy from our planetary environment. For example, the actual uncoupling of the economy from the environment with the resultant ecological and social problems including pollution, deforestation, desertification, resource depletion, energy consumption, and global climate disruption first began in the human psyche before it became manifest in physical reality.
Our current “Great Recession” officially started in December 2007, although some see warnings as far back as 2006 if not earlier even while the economy continued to heat up. This is the eleventh recession since the end of the Great Depression and the Second World War. According to statistics of the NBER, the longest two recessions lasted sixteen months each and the shortest only six months. Two other recessions lasted eleven months apiece and two others ten months. Three recessions lasted eight months each. The last recession lasted officially from March through November of 2001 and was punctured by the terrorist attacks of 9/11.
A depression, however, is an unusually severe recession. A number of recessions in the United States and Europe during the 19th Century were called “panics.” Panics tended to be painfully sharp, sudden, and wild, coming in the wake of boom and bust cycles or after a binge of speculation crashes. Some of these panics were depressions. A great depression, however, is not only unusually severe but also quite prolonged and is often accompanied by social and political turmoil.
So far there has only been one Great Depression in Modern and Post-Modern world history. It officially began in the wake of the American stock market Crash of October 1929 and lasted well into the World War II years. The official story is the Great Depression began in the U.S.A. on Wall Street and spread around the world. In actuality, however, the agricultural sector of the United States was already in depression while the financial sector boomed during the so-called Roaring ‘20s. The depression began spreading to the industrial sectors in early to mid 1929 before the stock market crashed that October.
In other countries such as Germany, devastated by defeat and loss in the First World War, were in depression even earlier and certainly by 1928. Countries from South America to Asia to Europe were experiencing economic decline toward the mid to late 1920s and began to fall into depression in 1928 and 1929. Canada’s depression began in early 1929 as well.
The Germans pulled out of the Great Depression under the Nazis in 1936. The Soviets pulled the U.S.S.R. up so quickly after World War I and the resultant Russian Civil War that it did not suffer from the Great Depression. The Soviets paid at great cost in human life, however, in purges and forced collectivization. The Italians made their “trains run on time” after the Fascists took power in 1922, but paid the price of allowing dictatorship. In the industrial capitalist democracies, however, the Great Depression dragged on until the early 1940s. It was over in the U.S.A. by 1942.
The prolonged nature of the Great Depression led to many in the West gravitating toward Communist and Fascist dictatorships as an alternative to capitalism, and it led to direct government intervention into the marketplace in the West including the United States and Great Britain. In fact it led to such an unprecedented level of government intervention that many European and American governments including the administration of U.S. President Franklin Delano Roosevelt were called “Socialist.”
Much wisdom and experience has been gained since those terrible years. Governments and central banks are now quick to intervene. We enjoy for better or for worse a mixed economy. Many are confident the depth and breadth alone of our interdependent global-national-regional-local economic web will sustain us through any crisis of our making. Our global civilization has evolved to a level of complexity and redundancy that provides incredible strength and flexibility. We human beings are confident in our ability to figure out solutions to our problems.
And yet we fall into the unknown. We appear headed toward a financial and economic firestorm of global proportions with new challenges never before faced. All the chickens are coming home to roost. Environmental catastrophes rear their heads, not just global climate disruption with melting polar ice caps but the on-going deforestation, desertification, and mass species extinction with industrial and chemical pollution with toxins in our food, air, soil, and water, combined with poverty, hunger, disease epidemics, population pressures, and energy issues. These challenges combine with a world roiled by increasing levels of violence from domestic violence and crime waves at home to international wars and terrorism.
The entire structure and mechanism of finance capitalism with private or at best quasi-public control of the Money Power has to be restructured. The power of the International Bank Cartel and their Central Bank System has to shift to the public sector. Public control of government at all levels from the international to the national to the state and even town, county, and village levels has to be recaptured from the intimidating power and monetary influence of corporations and banks.
The government has to regain control of its military-industrial-intelligence complex and the people regain control of their government. We need to shift toward a sustainable economic system that is reintegrated into Earth’s environment. We need to replace finance capitalism with a dynamic, integral capitalism that is socially and environmentally responsible. We the People of Earth need to regain control of our governments, our markets, our streets, and our lives.
National governments, including America’s, have to regain control of the public’s money from the private and pseudo-public global central bank cartels and their bankster allies on Wall Street and the City of London and elsewhere, set a fixed rate of value for currency, and print what it needs as it needs without interest and without unnecessary taxation. The marketplace is where the public does business and therefore it is our social responsibility to regulated it with the tools of government to make trade not only truly free but also fair and responsible. We must work together to establish public control of the money power similar in principle to civilian control of the military power.
The nations and peoples of Earth all need to work together to develop a democratic planetary economic system that works for all people at all levels from local communities to global alliances. All this will take time even if agreed upon. If we can all work together across our planet to resolve these challenges we can keep this Second Great Depression short … and peaceful. The latter is important, and seems to be sliding further away into the abyss of primal reactivity and strategic violence.
William Dudley Bass
10 December 2008
Revised and rewritten 10 January 2012
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NOTE: This essay was originally published as “Tearing into the Second Great Depression” on my older Current Affairs blog, At the Brink with William Dudley Bass on December 2008 at, http://atthebrinkwithwilliamdudleybass.blogspot.com/2008/12/tearing-into-second-great-depression.html. It was revised and reposted here this January 2012. Thank you.
Copyright © 2008, 2012, 2016 by William Dudley Bass. All Rights Reserved until we Humans establish Wise Stewardship of and for our Earth and Solarian Commons. Thank you.