Friday Movie Night - The Progressive Era, Roaring 20's & Great Depression

hot buttered popcorn It's Friday Night! Party Time!   Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy!


This evening it is back to high school to watch some films on the Progressive and Populist Political movements as well as the 1920's and 1930's.

No, you are not experiencing a past life.

Didn't someone say history repeats itself?

The Great Depression, Part 1

This article is the first in a series on the Great Depression. I am collaborating on this series with Bonddad. The purpose of this series is simply to talk about the Great Depression. The reason for writing this article is the emergence of the "FDR made the Depression worse" talking point from the Right Wing Noise Machine -- econ division. While none of the stories using this line have an facts to back them up -- no charts, no graphs no data -- they continue to spew this talking point. So, let's get some data -- as in facts -- to see that actually happened.

Black September


On December 3, John Bergstrom of Bergrstrom Automotive, a major auto dealer, appeared on CNBC and said,

on about September 10, we saw our business fall off 30-35%.

A similar sudden decline in consumer spending during September was reported by Shoppertrak:

Throughout 2008, the American shopper has endured record high gasoline prices, hurricanes and flooding, and a stalled housing market in their quest to shop. While the consumer has remained fairly resilient during this time, two very recent events are dramatically impacting mall visits and consumer confidence.
- Once the financial crisis emerged at the beginning of September, retail traffic declined even further. Between August 31 and September 20, SRTI total U.S. traffic fell an estimated 9.2 percent per day....
- After the failure of Washington Mutual, President Bush’s address to the nation, the presidential debate and the initial rejection of the TARP bailout, traffic fell by an average of 10.5 percent (September 21 – 29).
- The day the TARP bailout package was rejected by congress (September 29) and the NYSE Dow Jones Industrial Average lost 778 points, consumers again responded negatively as shopper traffic fell 12 percent as compared to the same day in 2007
- Sales, which were up 4.0 Percent for the Month of July, and up 3.5 Percent for the Month of August, fell 1.0 percent in September – "the first year-over-year sales decline since March 2003."

Shoppertrak has subsequently reported that "retail sales rebounded slightly, posting a very slight 0.7 percent increase in October. sales for the week ending November 15 dropped 3.1 percent as compared to the same period in 2007." But car sales have not recovered at all. In August car sales were already down about 19% YoY. In September the loss was 21%. In October it was 23%. By November car sales had declined close to 40% from already depressed levels in 2007.

And the stock market, which was only down (-18%) from its all time high in 2007 of 1565 to 1282 at the end of August, by October 10 was down (-43%) to 899.

In the 40 day period between September 1 and October 10, the shallow recession which had crippled the housing industry and Wall Street, but left Main Street virtually intact, suddenly metastasized into a collapse of the consumer economy that some were beginning to liken to the 1930s.

This diary is "the first draft of history", an attempt to look at not only what has happened, but as best we can tell from the vantage point of several months later, why it happened.

A Little History of Financial Crises

The claim by the Fed and Treasury that spending $700 billion of public money is the best way to recapitalize banks has absolutely no factual basis or justification. - Nouriel aka Dr. Doom Roubini

I woke up this morning to see the blog buzz word of the day is Nationalization as Economics bloggers hunt for the solution to the financial crisis.


In The 1920s Credit Bubble, I explained how a credit binge gave rise to serial bubbles in housing, durable consumer goods, and the infamous stock bubble of the 1920s. Last week in The Panic of 2008: a Turning Point I gave a big picture overview of how our current credit crunch is unfolding. At that time I pointed out that there were some important differences between our credit crunch, and the collapse of the 1920s credit bubble into the Great Depression. The goal of this diary is to peer into our near future by means of a chronological examination of how the apparently mild if abrupt downturn that began in late 1929 transformed into a much more serious downturn that ultimately snowballed into the Great Depression, during the year following the stock market crash, 1930.

I. Introduction

Imagine it is a time like now, where there has been a remarkable credit binge that has ended in dramatic fashion, with the stock market suddenly crashing and losing 1/3 of its entire value. Consumers are saddled with debt, as are many who speculated on the newest baubles on offer by Wall Street. The assets pledged as collateral to back up the loans that went to buy both the consumer and financial baubles is caught in a vicious downward spiral. Eventually, and very soon, all of this bad debt is going to have to be liquidated, and both debtors and creditors may go under as a result.

Globalization's Biggest Most Dangerous Lie

Over at TPM Cafe, this week Fareed Zakaria's new book, "The Post American World" is being discussed. In it, Zakaria repeats the theory of globalization's most toxic and unproven claim: that countries which participate in trade together do not make war upon one another. So if you want to prevent war, just participate in deep and interwoven trade with the other country and everything will be hunky-dory.

It's a lie.

Zakaria claims that We're Living in Scarily Peaceful Times":