Is Obama A Depression President?

And I thought the H stood for Hussein, not Hoover. Geez.

These haunting ghost ship images are getting a lot of blogospheric action today. Cross-reference that with reports of growing problems with China due to Obama's decision to apply duties to tires, problems that will negatively impact Global Trade and an even more frightening image may begin to appear. It was protectionism damaging global trade that many view as the real reason behind the Great Depression. Whatever it all means, I don't think it's good.

The biggest and most secretive gathering of ships in maritime history lies at anchor east of Singapore. Never before photographed, it is bigger than the U.S. and British navies combined but has no crew, no cargo and no destination - and is why your Christmas stocking may be on the light side this year

Comments

[SacTownMan]

I think the answer to this problem is "Free healthcare for all"!!!

Hey it seems to be the answer for all of the Democrats problems!!

[Art Deco]

If I am not mistaken, about 5% of America's domestic product was in 1929 produced for export. The competitive round of tariff hikes and devaluations which followed upon the passage of the Smoot-Hawley in 1930 were certainly injurious to the United States economy, but the losses to the American economy attributable to the implosion of international trade might have amounted to 3 or 4% of the prelapsarian domestic product. The contraction in the rate at which the economy was producing good and services was (between the fall of 1929 and the spring of 1933) on the order of 30%. Britain's was a far more trade dependent economy that that of the United States, but the decline in industrial production therein during the period running from 1929 to 1932 was a modest fraction of our own (~5% v. 28%). I have not studied the question, but my guess would be that Smoot-Hawley was quite an important factor in the implosion of the Canadian economy. Canada suffered as severely as the United States during those years, in spite of the fact that Canada did not have a large mass of distressed banks. Canada has long been dependent on the American market for its manufactures and raw materials.

Given that they are soaking up our T-Bills big time, it would seem the Administration would wish to treat China with kid gloves. Protectionism might not be much of a threat, but a currency crisis sure would be.

[MarkJ]

Fearless predictions for 2010:

1. "Obamavilles" will start sprouting up faster than mushrooms in May.

2. The general party line of Obama & Co. by next year will be, "Prosperity is just around the corner."

3. "Hope & Change" will morph into "What? Me Worry?"

[bud]

It's mostly gone now, but there were huge numbers of ships parked in suisun Bay for years - freighters from WWII that the gov't left there "just in case". Google "mothball fleet".

The Chinese bet big-time on the US economy carrying them into the 21st century, but it looks like it isn't going to happen. They're now desperately looking for another way, which hopefully doesn't result in WWIII.

[Jack Okie]

Art Deco:

Milton Friedman thought the Federal Reserve's decision to tighten the money supply, rather than loosen it, was a major contributor to the depth of the Depression. Not sure what contributed to the '36-'37 downturn.

[A. Stephens]

MarkJ,
I would typically agree with your prognostications, but......
while no one is really paying attention, the street hustler and his congressional posse who are presently playing the U.S. economic version of 3-Card Monty has distributed just 6% of the "Stimulus" dollars to the country. My sense is that they plan to use the bulk of those dollars in 010 as a massive infusion to the states in an election year drive to buy the vote.

It's disturbing enough that they appear to be gaming the process, but the depravity of anyone who would willingly see people hurting -knowing they lied and rushed a bill through ostensibly to assist those same people, and who would now use the funds in the bill as a campaign war chest is beyond comprehension.

The above is my opinion based on a lot of reading of the situation, the spending so far, and the principals involved.

[Art Deco]

The Roosevelt Administration elected at the beginning of 1937 to attempt to balance the budget for the fiscal year concluding in June 1938. Output in 1938 was around 4% lower than it had been in 1937. That was the only year-over-year contraction during the period running from 1933 through 1945. By contrast, the year-over-year contraction registered in 1929/30 was about 8.5%, that for 1930/31 was 6.5%, and that for 1931/32 was 13%.

Dr. Friedman's co-author, Anna Schwartz, has criticized Dr. Bernanke for 'fighting the last war'. She maintained in the fall of 2008 that the fundamental problem was not insufficient liquidity but severe uncertainty over who was insolvent and who was not and about just what the protocol of public policy was.

During the period running from 1929 to 1933, there was a small decline in the monetary base in the face of what appears to have been a considerable increase in the demand for cash balances. We saw last fall as well an abrupt increase in the demand for cash balances. The difference has been that the Federal Reserve, not constrained by a gold standard, pumped up the monetary base and maintained M1. Thus far, we have avoided the destructive deflation that took place after 1929. The trouble has been that we already had an overhang of bank loans of dubious quality, so loans are going sour even though real interest rates remain low and borrowers have not had to attempt to repay principal in (nominal) dollars with a higher real value.

We have had a reprieve in recent months. The Congress and the Administration might have used the time to contrive a revised architecture of financial regulation and to contrive means of re-organizing the troubled megabanks. Instead, they pissed it away drafting rococo plans for public health insurance. The modalities of financing medical and custodial care are a problem, but we do not have to fix it this year. The banks we do. If I am not mistaken, the first stage of the Depression consisted and abrupt decline in aggregate demand during the 12 months after the crash. We saw something like that during the period running from September 2008 through this spring, albeit on a smaller scale. The second stage was a trifecta of bank runs, the first erupting in November 1930 (and extending for a few months), the second in May 1931 (which extended for about nine months), and the third in November 1932 (which lasted until the bank holiday in March 1933). I sure as hell hope another shoe is not about to drop.