Boosting Confidence Is Not Enough

When the stock market suffered its famous crash in October 1929, then president, Herbert Hoover, gave a statement saying that the "fundamentals of the economy are sound." The President was trying to instill confidence in a market and nation that had been badly shaken. In those times, economic data was nowhere near what it is today,*** and having been in office for only a few months, the President sacrificed a large part of his credibility by giving his statement. It would come back to haunt him many times over, as he spent almost four years in office grappling with one crisis after another; all wrapped into a package called "The Great Depression. On the other hand, presidents are expected to step up to the plate and try to instill confidence in uncertain times. Some historians have called Hoover one of the unluckiest presidents we've ever had. Hoover's statement notwithstanding, the economy was NOT fundamentally sound, and it wasn't long before he and his administration came to that realization, as he called a conference of business and labor leaders just weeks later to try to avert a more serious downturn. It was too late, however.

Later, Ronald Reagan and Bill Clinton would each issue similar statements after stock market meltdowns; that is, "The economy is fundamentally sound." Why did the country not experience another depression after these stock market crashes? Because even though the economy is never perfect, it was more fundamentally sound when these two presidents were confronted with stock market panics.

So what about now? Well Bush took office, inheriting a government surplus. He got tax cuts passed, mainly tilted toward upper income people, and then he got into two wars.@@@ At no time did the president say that we needed to pay for these wars. Then he got prescription coverage added to Medicare, an admirable thing, but the costs were far higher than his administration had estimated. Again, no call on the American people to sacrifice to help cover the costs of any of these major expenditures. The two ongoing wars cost many billions each month. Then there was a tax package that gave breaks to oil companies, with the idea being that they would bring more fuel online to American consumers. They took the money, but have you seen or heard of ANY new refineries being opened, or even started? Maybe they're keeping it a secret. The biggest income inequality since just prior to the Great Depression has been pointed to even by Alan Greenspan and Ben Bernanke, among others, and they're hardly candidates for any "Socialist of the Year" award. Huge trade deficits, trade deals done without concern for American workers, cuts in job training for American workers, unions in decline, illegal immigrants at record numbers, oil/gas prices at record levels, record budget deficits, bank failures, and millions of Americans losing their homes,### all of this has led us to the present. "When you want to dance to the music, you've got to pay the piper." Bush has danced, but now we, the American people, will pay. The fundamentals are not there.

John McCain uttered those words about "the economy being fundamentally sound" just about ten days ago. Like Hoover, I'm sure he's regretted it ever since. He then said that we're in a crisis, and that we have tough times ahead. You can't have it both ways.

Treasury Secretary Paulson has been out trumpeting the economy, telling us things are not that bad. He must have been talking to former McCain economic adviser, Phil Gramm, who called us a bunch of "whiners." Then suddenly, Paulson tells us we're on the brink of catastrophe. Throughout the "Dubya era," Bush and his administration have looked the other way, or just didn't recognize what was coming, or they have been in serious denial. They and most Republicans in Congress, along with some Democrats (I'm not letting them off the hook) have "wedded" themselves to this "free market" philosophy. They have been so dogmatic, that they didn't even evaluate things on a case by case basis, they just clung to this philosophy. Now, like a marriage gone wrong, they will find that getting a "divorce" from this philosophy is not easy in the world of politics. As they seek election or reelection, we won't forget what they've done to us!

The "powers that be" have reacted too late, in my opinion. Unlike Hoover, they HAD solid and up to date economic data showing how bad things were getting, but they waited, and waited. Denial is a terrible thing!

***Ironically, it was Hoover who had developed many of the economic gathering services of the government during his time as Secretary of Commerce during the 1920s. He was highly praised for that work, but it can't compare to the technology and information that we have today, so he and his advisers can at least be excused for not always recognizing developing economic problems.

@@@I'm not judging whether these wars were/are right or wrong, only that they took place, and, indeed, continue to this day.

###Even Ed McMahon, of "Tonight Show" fame, has had trouble keeping his home. I'll tell ya, when millionares are in foreclosure trouble, things are bad all over!