Nothing to Fear?

It was in his March 1933* inaugural address that the newly sworn in 32nd president of the United States uttered historic words which seem certain to be echoed by the new president who will be sworn in on January 20, 2013.

"Values," Franklin Delano Roosevelt said, "have sunk to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the withered leaves of industrial enterprise lie on every side ... and the savings of many years in thousands of families are gone. More important, a host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return...Our greatest primary task is to put people to work."

As the elisions in that quote suggest, there are very important differences between 1933 and 2011.  Most significantly, there was no social safety net: no unemployment insurance, no social security, no Medicare, and no Medicaid.  Unemployment bit more deeply, too, in a world with few middle- or upper-class homes in which wives worked outside the home.  Daycare did not exist either.

But massive unemployment, homelessness, and a credit crunch -- well, there's the parallel with the beginning of the Great Depression.  In 1933, the Great Depression was two and a half years old.  In 2011, so is the Great Recession.  And, at this point, we are confronting something which FDR did not face until 1936-38: a Capital Strike brought on by misguided federal policies.

Today, perhaps as much as $3 trillion is being held in cash and marketable securities (or being not repatriated from foreign earnings) by American corporations, large and small, rather than being invested in new growth and employment.

But back to 1933.  When FDR took office, unemployment in the United States stood at one quarter of the labor force.  Agricultural prices (unlike now) had fallen by 60%.  Industrial production had fallen since 1929 by 50%.  Banks and other financial institutions -- in an era of no deposit insurance and no FDIC -- were failing across the country.  Savings disappeared.  Not least, two million Americans were homeless.

Last Friday's "unexpected" employment numbers have brought this reality home with a vengeance.  The MSM spin appears, finally, to be failing.

Today, we confront national unemployment of 9.2 percent and underemployment of 15.2 percent.  That's a total of 25.4%.  And that figure doesn't include the American workers who have simply given up and stopped looking for work.

Chances are you know someone in some or all of those categories.  I do.  In June -- the month in which high school and college seniors graduated into the world -- the American economy created a net gain of 16,000 jobs.  How is this possible?  I know people who are losing their homes and condos, while neighborhood property values all over my community are being negatively impacted by the rate of foreclosures and tax sales.  Houses in my upscale neighborhood -- including the one next door -- have been for sale for three years or more.

Granted, I'm living at the moment in "sand country," so the problems caused by the bursting of the real estate bubble are especially severe.  And my town is a beach resort, so there are many second homes here.  But state and local government have both contracted by about one third, to match the collapse in tax revenues.  Short sales and "deeds in lieu" are the order of the day.  Local realtors are even running "foreclosure tours" for visitors with ready cash, complete with cocktails and snacks, air-conditioned bus, handouts, and a friendly tout talking up "opportunities" over the PA system.

The "foreclosure tours" are the exact reverse of the sight I used to see in Philadelphia's 30th Street Station only a few years ago.  Then, on weekend mornings, young professionals from New York, D.C., and Baltimore would troop off Amtrak and into the realtors' buses, hot to snap up (and, shortly thereafter, flip) row house properties in what was being promoted as New York's sixth borough.  What a different world it is today -- and my daughter is turning 21 right in the midst of it.

Monday, on the floor of the United States Senate, there was -- uncharacteristically -- a moment of stark clarity: "I have little question," Senate Majority Leader Mitch McConnell (R-Ky.) soberly told the World's Greatest Deliberative Body, "that as long as [President Obama] is in the Oval Office, a real solution is probably unattainable."  In other words, as I wrote here back on June 10, the present administration is content with the idea that permanent recession -- à la Western Europe -- is the new normal.  Given the Founders' choice of a presidential system of government rather than a parliamentary system, we're stuck.

Even if, like Eugene McCarthy and RFK against President Lyndon Johnson in 1968 or like Teddy Kennedy and President Jimmy Carter in 1980, Secretary of State Hillary Clinton resigns this fall to launch a primary challenge to President Obama, the Class of 2011 will simply have to wait.

This next election can't come soon enough for our children's future.

*date corrected, with a hat tip to fantail.

It was in his March 1933* inaugural address that the newly sworn in 32nd president of the United States uttered historic words which seem certain to be echoed by the new president who will be sworn in on January 20, 2013.

"Values," Franklin Delano Roosevelt said, "have sunk to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the withered leaves of industrial enterprise lie on every side ... and the savings of many years in thousands of families are gone. More important, a host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return...Our greatest primary task is to put people to work."

As the elisions in that quote suggest, there are very important differences between 1933 and 2011.  Most significantly, there was no social safety net: no unemployment insurance, no social security, no Medicare, and no Medicaid.  Unemployment bit more deeply, too, in a world with few middle- or upper-class homes in which wives worked outside the home.  Daycare did not exist either.

But massive unemployment, homelessness, and a credit crunch -- well, there's the parallel with the beginning of the Great Depression.  In 1933, the Great Depression was two and a half years old.  In 2011, so is the Great Recession.  And, at this point, we are confronting something which FDR did not face until 1936-38: a Capital Strike brought on by misguided federal policies.

Today, perhaps as much as $3 trillion is being held in cash and marketable securities (or being not repatriated from foreign earnings) by American corporations, large and small, rather than being invested in new growth and employment.

But back to 1933.  When FDR took office, unemployment in the United States stood at one quarter of the labor force.  Agricultural prices (unlike now) had fallen by 60%.  Industrial production had fallen since 1929 by 50%.  Banks and other financial institutions -- in an era of no deposit insurance and no FDIC -- were failing across the country.  Savings disappeared.  Not least, two million Americans were homeless.

Last Friday's "unexpected" employment numbers have brought this reality home with a vengeance.  The MSM spin appears, finally, to be failing.

Today, we confront national unemployment of 9.2 percent and underemployment of 15.2 percent.  That's a total of 25.4%.  And that figure doesn't include the American workers who have simply given up and stopped looking for work.

Chances are you know someone in some or all of those categories.  I do.  In June -- the month in which high school and college seniors graduated into the world -- the American economy created a net gain of 16,000 jobs.  How is this possible?  I know people who are losing their homes and condos, while neighborhood property values all over my community are being negatively impacted by the rate of foreclosures and tax sales.  Houses in my upscale neighborhood -- including the one next door -- have been for sale for three years or more.

Granted, I'm living at the moment in "sand country," so the problems caused by the bursting of the real estate bubble are especially severe.  And my town is a beach resort, so there are many second homes here.  But state and local government have both contracted by about one third, to match the collapse in tax revenues.  Short sales and "deeds in lieu" are the order of the day.  Local realtors are even running "foreclosure tours" for visitors with ready cash, complete with cocktails and snacks, air-conditioned bus, handouts, and a friendly tout talking up "opportunities" over the PA system.

The "foreclosure tours" are the exact reverse of the sight I used to see in Philadelphia's 30th Street Station only a few years ago.  Then, on weekend mornings, young professionals from New York, D.C., and Baltimore would troop off Amtrak and into the realtors' buses, hot to snap up (and, shortly thereafter, flip) row house properties in what was being promoted as New York's sixth borough.  What a different world it is today -- and my daughter is turning 21 right in the midst of it.

Monday, on the floor of the United States Senate, there was -- uncharacteristically -- a moment of stark clarity: "I have little question," Senate Majority Leader Mitch McConnell (R-Ky.) soberly told the World's Greatest Deliberative Body, "that as long as [President Obama] is in the Oval Office, a real solution is probably unattainable."  In other words, as I wrote here back on June 10, the present administration is content with the idea that permanent recession -- à la Western Europe -- is the new normal.  Given the Founders' choice of a presidential system of government rather than a parliamentary system, we're stuck.

Even if, like Eugene McCarthy and RFK against President Lyndon Johnson in 1968 or like Teddy Kennedy and President Jimmy Carter in 1980, Secretary of State Hillary Clinton resigns this fall to launch a primary challenge to President Obama, the Class of 2011 will simply have to wait.

This next election can't come soon enough for our children's future.

*date corrected, with a hat tip to fantail.