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Posts Tagged ‘Depression

“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


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.



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


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)


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


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



Written by LW

April 10, 2016 at 1:01 am

Imagining a new New Deal…


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]


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



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)

“…what remains after one has forgotten everything he learned at school.”*

A guest post from Scenarios and Strategy (here, with an almanac entry)…

The Bureau of Labor Statistics reminds us that it’s smart to stay in school:

But as Calculated Risk reports, while unemployment among the best educated is still lowest, it’s increased as much in percentage terms for them during this current recession as for any other group.

click to enlarge

One notes that all four groups** were slow to rebound after the 2001 recession– not an encouraging reminder if one is hoping for a brisk employment-led, consumption-fueled recovery this time around.

But in some ways more striking is a difference we might expect, but that hasn’t yet emerged.  Calculated Risk:

I’d expect the unemployment rate to fall faster for workers with higher levels of education, since their skills are more transferable, than for workers with less education. I’d also expect the unemployment rate for workers with lower levels of education to stay elevated longer in this “recovery” because there is no building boom this time. Just a guess and it isn’t happening so far … currently the unemployment rate for the highest educated group is still increasing.

Clearly, from an individual’s point-of-view, it’s still smarter to get more education than less.  But the perturbations of past periods remind us that the gearing between between academic degrees and financial success isn’t always perfectly tight…  Indeed, those with sharply-defined professional credentials in fields– e.g, finance– that are unlikely even in the intermediate term (if ever) to recover their bubble-fueled growth rates, may find their advanced degrees at best unhelpful; at worst, downright prejudicial.

Economic recovery and growth will be driven to some large extent by innovation; that innovation will create new– and new kinds of– jobs.  Looking even just five years out, much less ten, one has to admit that it’s just not possible to predict what these emergent jobs, nor their requirements, will be.  (Consider, e.g., the hottest topic– and job category– in marketing/advertising these days: “social media marketing”…  which wasn’t even a glimmer a decade ago, and was just being born five year ago.)  This is a challenge for those new to the work force, who have to wrangle the product of their schooling and their personal experience into a shape that can fit the entry-level positions they seek.  It is a much bigger challenge for those  mid-career who find themselves needy of making a move:  these more mature folks have not only to learn new fields, they also have to re-direct the considerable momentum of perception and habit that characterized their old– and they have to do those things, usually, in ways that justify salaries way north of entry-level.

All of which underlines for your correspondent the extraordinary value of a liberal arts education.  When one is faced with a “working adulthood” that is one transitional challenge after another, no skill is more valuable than the capacity to adapt.  And no capability is more central to that adaptation than the ability effectively and efficiently to learn.

This is precisely what, at its core, a liberal arts education is about:  learning to learn.

There are many, many other reasons, rooted in personal and societal benefits, to pursue a liberal arts education, and top support a strong foundation of liberal arts in higher education.  But the lessons of the last couple of years– indeed, of the last several decades– suggest that the economic rationale is plenty strong as well…

And besides, it’s fun.

* “Education is what remains after one has forgotten everything he learned in school.”
– Albert Einstein

** To put these cohorts into perspective, the Census Bureau suggests that, of these folks “25 yrs. and over” (in 2008):
– 13.4% had less than a high school diploma.
– 31.2% were high school graduates, no college.
– 26.0% had some college or associate degree.
– 29.4% had a college degree or higher.

UPDATE:  Reader JK directs our attention to another treatment of the data, in the NY Times. As he suggests, even more dramatic.

As we revisit our course catalogues, we might recall that it was on this date in 1933 that Congress passed the Emergency Banking Act, the first major legislative step in Franklin Delano Roosevelt’s New Deal  program.  The sense of urgency was sufficiently high– four days earlier Roosevelt had declared a “Banking Holiday,” closing all of the nation’s banks– that most legislators passed the Act without even reading the single copy that was available for review.  The EBA gave the government authority to shutter insolvent banks; that, coupled with the Federal Reserve’s informal-but-explicit pledge to guarantee the deposits of banks allowed to reopen (de facto deposit insurance), eased the crisis of public confidence:  within two weeks of banks’ re-opening on March 13, Americans had re-deposited over half the cash they’d withdrawn and hoarded through the period of bank failures that marked the first chapter of the Great Depression.  Later that year, the (more considered and embracing) Banking Act of 1933 replaced the EBA, and established such lasting practices and institutions as the FDIC.

Roosevelt signing the Emergency Banking Act

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