It's Not Often We Get To Relive History: Bush Out-Hoovers Coolidge

BY MICHAEL LINN JONES

By 1932 the economy was so bad that a children's rhyme came about that mentioned then President Hoover and his Secretary of Treasury, Andrew Mellon:

Mellon drove the engine,
Hoover rang the bell,
Wall St. blew the whistle,
and the country went to hell.

From the mouth of babes, as they say....it condenses into a short poem the feelings and beliefs at the time. Herbert Hoover got stuck with the policies of Calvin Coolidge, yet President Hoover was a captive of what John Kenneth Galbraith later described as "the conventional wisdom."

The Franklin Roosevelt administration came into office at a time when American business was looking for someone to save them from themselves. What Roosevelt did certainly alleviated many of the harshest aspects of the Depression, but never cured it. But at least he tried which is more than can be said for his predecessors. One good, and lasting side of FDR's time was the imposition of some common-sense regulation on American finance.

Since the 1970's, many of those regulations were removed by Congress, sometimes at the behest of the president in office. It all looked great, "unleashing the shackles" from business. The first inkling of the wisdom of this was the mortgage crisis of the late 1980's. We were returning to the "conventional wisdom" with a vengeance. Several years ago Congress passed, and President Bush gleefully signed something called the consumer protection act. I love their sense of humor. That law was written by, and for, credit card companies. It was to address the problem of the irresponsible behavior of individuals who ran up credit card debt and then declared bankruptcy. Keep that logic in mind.

Last Friday, President Bush gave a speech at The Economic Club of New York. You can't get more grassroots than that; a roomfull of millionaires/billionaires filling their shorts with fear; fear of losing what they have taken risks with other peoples' money for great personal gain. In Bush Acknowledges Weakness In American Economy by Jennifer Loven (AP writer), our president regurgetated thoughts expressed 80 years ago.

NEW YORK - Trying to calm jitters about the economy, President Bush conceded on Friday that the country "obviously is going through a tough time" but expressed confidence that it will rebound. He cautioned against overreacting to fix the problems.

In a speech to The Economic Club of New York, Bush said this was not the first time the economy has been rattled and that he is certain that it will ride out its troubles. "These are uncertain times," he said.

SNIP,

The president chose American's financial center as the backdrop — and the titans of finance and commerce as the audience — for his attempts to calm nerves from Wall Street to Main Street.

The Economic Club of New York is an exclusive, wealthy, largely homogenous group of top executives. Speaking before the gathering had Bush somewhat literally preaching to the choir — the 101-year-old group's new chairman is Glen Hubbard, the first head of the White House Council of Economic Advisers for Bush.

SNIP,

His main message, aside from optimism, stuck to Republican economic orthodoxy: warning repeatedly against too much government intervention.

For instance, while insisting his administration has an "active plan" to deal with the problems, Bush said he opposed several measures pending on Capitol Hill. They included proposals to allocate $400 billion to purchase abandoned and foreclosed homes, to change the bankruptcy code to allow judges to adjust mortgage rates, and to artificially prop up home prices.

"It's important not to overcorrect, because when you overcorrect, you end up in a ditch," Bush said. "It's important to be steady."

He said his administration would address the crisis "in a way that respects the ingenuity of the American people, that bolsters the entrepreneurial spirit and ensures that when we make it through this rough patch, that the driving will be smooth."

President Bush went on to lament Democrats' recalcitrance on approving more of those "free trade" deals that have done so much for American multinational corporations.

I love the bit where he emphasizes the growth of productivity was one of the strengths of the economy. That is a half-truth. Presidents Coolidge and Hoove also bragged about the growth of productivity. What all fail to realize is that increased productivity is useless if the wages do not rise in accordance with them.

To my dying day I will be a strong proponent of capitalism. It isn't pretty, but it creates wealth; no other system does. Greed is not good, but it's a much better catalyst in wealth creation, however it is distributed. That is the role of government to some degree; to curb the excesses of unfettered capitalism.

Two days after President Bush's speech in New York, it was announced that the Federal Reserve was loosening credit (again) for business. And, that it was involved in pulling Bear Stearns bacon out of the fire (by having it sold to J.P. Morgan for pennies on the dollar).

Some argued that Bear Stearns, an investment bank that screwed the pooch with subprime mortage notes, should go under...to deal with the consequences of its unwise actions. You know, like those individuals who got lectured vehemently several years ago when those bankruptcy laws were tightened.

But, to the Bush administration....like the Coolidge and Hoover administrations....the worth of one bank is much greater than millions of individuals. Suddenly on Wall Street we don't hear the usual cries of "rugged individualism." Of course not; such a notion is silenced in times like these.

Simply put, if our economy is a ship, if it is taking on water, the first thing the captain is going to do is ensure the lifeboats are filled with the first class passengers FIRST.

The wealthy elites are, to borrow from Neil Young, the silver seeds of a grandiose future.

George Carlin was once asked if he thought we had a dope problem in America.

"Sure,' he said, " I think we have too many dopes."
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Cross-posted at Michaellinnjones.com