I recently finished The Great Depression, A Diary, by Benjamin Roth — an Ohio lawyer who chronicled his daily observations of the economy and politics from 1931 – 1941. It’s riveting reading, as the events Roth describes are eerily similar to those of today — a real estate bubble and crash complete with banksters (amongst whom the politically connected are saved by taxpayers), communities falling apart, growing international tension, massive government intervention, the discovery of the printing press, etc.
Roth, an intelligent man and excellent writer, tries desperately to understand the causes for the upheaval and speculates as to the best remedies. To read his entries is to have a front row seat in the theater of investor emotions. He despairs as things get progressively worse, and rejoices when the economy seems to be turning the corner — only to despair again through the endless false starts.
Investors in 2012 are no less confused. Though a third of American homeowners are underwater, a parade of industry and government mouthpieces declare the real estate crash over. Our national debt grows by a trillion dollars annually, but our bonds command historically low yields. And, despite labor force participation rates at 30-year lows, we get huge stock market rallies on “game changing” employment improvement.
One constant, then and now, is the willingness of our elected leaders to say and do whatever it takes to safeguard the power of the real owners of this country. The military-financial complex that owns America will continue in power as long as citizens don’t realize just how tilted are the tables, how rigged the game. When truth accidentally slips out, Congress always investigates. Underlings sometimes even go to jail. But, does the system ever change?
Consider this passage Roth wrote about two of the 4,000 bank failures in 1933:
“In Cleveland the collapse of the Guardian and Union Trust Banks is under investigation and criminal action will probably follow. The investigation shows that the banks were run for the benefit of officers and directors: juggling of figures in financial reports; no examination by State banking board for 8 years; immense loans to officers and directors for speculative purposes without collateral; speculation by the bank in common stocks through subsidiaries formed for the business; hiding of losses on bad loans by methods of accounting.”
Change the names and the dates and the stories are essentially the same as today’s. If anything, Roth’s description of Depression-era banksters’ underhanded dealings seems quaint by today’s standards — where banksters bribe politicians in broad daylight and politicians return the favors by the hundreds of billions.
Just this past weekend, the NY Times broke one story about a man who blew the whistle on the mortgage industry’s foreclosure improprieties in 2003 — years before “robo-signing” had been coined, and another story on a $25 billion settlement between mortgage companies and state attorney’s general to compensate those who lost their homes due to those improprieties. Yes, nine years after being caught screwing people out of their homes, banksters are buying their way out of jail by offering the foreclosed a whopping $2,000 each.
When FDR took office in 1932 he laid blame at the feet of the Depression’s banksters.
“…the rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men…. By failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.”
But, FDR bailed out his share of banks (often chosen by political connectedness) and later opposed creation of the FDIC — one of he recognized the importance of reform, establishing the SEC and the FDIC.