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Posts Tagged ‘Depression

“Everyday, it’s a-gettin’ closer / Goin’ faster than a roller coaster “*…

 

depression

 

The American economy is reopening. In Alabama, gyms are back in business. In Georgia, restaurants are seating customers again. In Texas, the bars are packed. And in Vermont, the stay-at-home order has been lifted. People are still frightened. Americans are still dying. But the next, queasy phase of the coronavirus pandemic is upon us. And it seems likely that the financial nadir, the point at which the economy stops collapsing and begins growing again, has passed.

What will the recovery look like? At this fraught moment, no one knows enough about consumer sentiment and government ordinances and business failures and stimulus packages and the spread of the disease to make solid predictions about the future. The Trump administration and some bullish financial forecasters are arguing that we will end up with a strong, V-shaped rebound, with economic activity surging right back to where it was in no time. Others are betting on a longer, slower, U-shaped turnaround, with the pain extending for a year or three. Still others are sketching out a kind of flaccid check mark, its long tail sagging torpid into the future.

At least four major factors are terrifying economists and weighing on the recovery: the household fiscal cliff, the great business die-off, the state and local budget shortfall, and the lingering health crisis…

Annie Lowrey (@AnnieLowrey) unpacks a painfully-plausible worst-case scenario featuring the four horsemen of what could be an economic apocalypse– the four major forces at work today that are terrifying economists and weighing on the recovery: “The Second Great Depression.”

For more on the fourth and most terrifying force Lowrey cites, see here (and the research that underlies it).

* Buddy Holly

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As we take necessary steps, we might recall that it was on this date in 1867 that Lucien B. Smith patented barbed wire (U.S. No. 66,182).  Eventually competitors produced more than 1,500 different types of barbed wire; but Smith’s patent gave him pride of invention. His simple idea that was an artificial “thorn hedge” consisting of wire with short metal spikes twisted on by hand at regular intervals. For prairie farmers and cattlemen natural fencing materials were scarce, so the invention gave them an accessible way keep their cattle safely away from crops.  It also created tensions between farmers and ranchers: inexpensive barbed wire allowed farmers to fence in their fields, preventing ranchers’ livestock from feeding off of the farmers’ fields, and making it more difficult for cattle drives to cross farmers’ lands.   Ultimately ranchers too recognized the benefits of fencing their herds… and the days of the open range came to an end.

Copy of Lucien B. Smith’s wire fence improvement (barbed wire) Patent, 66,182, dated June 25, 1867 (source)

 

“Fortune’s bubbles rise and fall”*…

 

Gordon Gekko talks tulips. Wall Street: Money Never Sleeps / scottab140

Right now, it’s Bitcoin. But in the past we’ve had dotcom stocks, the 1929 crash, 19th-century railways and the South Sea Bubble of 1720. All these were compared by contemporaries to “tulip mania,” the Dutch financial craze for tulip bulbs in the 1630s. Bitcoin, according some sceptics, is “tulip mania 2.0”.

Why this lasting fixation on tulip mania? It certainly makes an exciting story, one that has become a byword for insanity in the markets. The same aspects of it are constantly repeated, whether by casual tweeters or in widely read economics textbooks by luminaries such as John Kenneth Galbraith.

Tulip mania was irrational, the story goes. Tulip mania was a frenzy. Everyone in the Netherlands was involved, from chimney-sweeps to aristocrats. The same tulip bulb, or rather tulip future, was traded sometimes 10 times a day. No one wanted the bulbs, only the profits – it was a phenomenon of pure greed. Tulips were sold for crazy prices – the price of houses – and fortunes were won and lost. It was the foolishness of newcomers to the market that set off the crash in February 1637. Desperate bankrupts threw themselves in canals. The government finally stepped in and ceased the trade, but not before the economy of Holland was ruined.

Yes, it makes an exciting story. The trouble is, most of it is untrue…

Drawing on ten years of research for her new book, Tulip mania: Money, Honor and Knowledge in the Dutch Golden AgeAnne Goldgar tells a different story, one that’s just as illuminating, but very different: “Tulip mania: the classic story of a Dutch financial bubble is mostly wrong.”

Like most trends, at the beginning it’s driven by fundamentals, at some point speculation takes over. What the wise man does in the beginning, the fool does in the end.”  The world went mad. What we learn from history is that people don’t learn from history.   — Warren Buffett, 2006 Berkshire Hathaway annual meeting

* John Greenleaf Whittier

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As we curb our enthusiasm, we might recall that it was on this date in 1933 that banks began to re-open after the “Bank Holiday” declared by the Roosevelt Administration to calm the market after bank runs had threatened the nation’s financial system during the Depression.

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Written by LW

March 13, 2018 at 1:01 am

“Only kings, presidents, editors, and people with tapeworms have the right to use the editorial ‘we'”*…

 

The photos look just like the most famous FSA images of Depression-era America. Laborers with weathered faces stare into the distance, sharecropping families stand on splintered porches and rag-clad children play in the dust.

But each picture is haunted by a strange black void. It hangs in the sky like an inverted sun, it eclipses a child’s face, it hovers menacingly in the corner of a room.

The black hole is the handiwork of Roy Stryker, the director of the FSA’s documentary photography program. He was responsible for hiring photographers such as Dorothea Lange, Walker Evans, Arthur Rothstein and Gordon Parks and dispatching them across the country to document the struggles of the rural poor.

Stryker was a highly educated economist and provided his photographers with extensive research and information to prepare them for each assignment. He was determined to get the best work possible out of his employees — which also made him a bit of a tyrannical editor.

When the photographers returned with their negatives, Stryker or his assistants would edit them ruthlessly. If a photo was not to his liking, he would not simply set it aside — he would puncture the negative with a hole puncher, “killing” it…

More of this sad story– and more punched photos– at “1930s ‘Killed’ photographs.”  More on Stryker here.

* Mark Twain

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As we fill in the blanks, we might recall that it was on this date in 1941 that Diane Nemerov, the privileged daughter of department store owners, married Allan Arbus, a penniless City College student, in New York. Allan went to work in his in-laws’ store, but supplemented his income doing fashion photography– with Diane as his assistant, and later full partner.  But after the birth of her second child, Diane found herself drawn to less traditional and more candid subjects– children at first; later “the forbidden.”  While Allan continued to run the fashion studio, Diane became noted for photographs of marginalized people—dwarfs, giants, transgender people, nudists, circus performers—anyone whose “normality” was denied by the general public.

“Child with Toy Hand Grenade in Central Park,” New York City (1962)

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“Eddie Carmel, Jewish Giant, taken at Home with His Parents in the Bronx,” New York, 1970

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photo of Diane Arbus by Allan Arbus (a film test), c. 1949

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Written by LW

April 10, 2016 at 1:01 am

Imagining a new New Deal…

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It was almost 80 years ago that Franklin Roosevelt’s administration initiated the New Deal.  Recognizing that those days have a poignant resonance with our own, Ready Made asked a number of contemporary artists to “reimagine the populist poster art of the first Great Depression”…

Christoph Niemann

See the others at Ready Made.

[TotH to VSL]

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As we recall our roots, we might send heartfelt birthday wishes to Alexandre Dumas fils; he was born– the illegitimate child of Marie-Laure-Catherine Labay, a dressmaker, and novelist Alexandre Dumas on this date in 1824.  A novelist and playwright, Dumas fils is probably best remembered for his romantic novel The Lady of the Camellias (La Dame aux camélias); adapted into a play, Camile, which became the basis for Verdi’s 1853 opera, La Traviata… and then for any number of plays and movies, including Baz Luhrmann’s Moulin Rouge.

Business? Why, it’s very simple: business is other people’s money.

– La Question d’argent (1857), Act II, sc. vii

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They giveth; they taketh away…

 

The Economist reports that participation in the U.S. Food Stamps program– designed to insure that poor Americans have enough to eat– had, by this past April,  reached almost 45 million, or one in seven Americans.

At the same time, Reuters reports that In 11 states, lotteries provided more revenue than the state corporate income tax in 2009… The Rhode Island lottery netted the state more than $3 for each dollar of state corporate income tax in fiscal 2009.

click image above, or here, for larger version

 

As we strain to think of even more regressive ways to raise revenue, we might recall that it was on this date in 1932 that General Douglas MacArthur, on the order of President Herbert Hoover,  led two regiments and six tanks against the Bonus Marchers in Washington, D.C.  The Bonus Army was a group of 43,000 marchers– 17,000 World War I veterans, their families, and affiliated groups– who gathered to demand cash-payment of the certificates they’d been issued by the government at the end of World War Two as a bonus for their service.  MacArthur’s cavalry charged the protestors’ camp, and his infantry entered with fixed bayonets and adamsite gas, an arsenical vomiting agent, evicting veterans, families, and camp followers.

The Bonus Army incident proved disastrous for Hoover’s chances at re-election; he lost the 1932 election in a landslide to Franklin D. Roosevelt.

Shacks that members of the Bonus Army erected on the Anacostia Flats burning after the confrontation with the military (source)

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