WASHINGTON — Few prominent economists will say it, but to me it looks and feels like we are in another Great Depression or a reasonable facsimile.
The current meltdown is dubbed a “financial crisis.” But a rose by any other name would still inflict the same hardship and suffering on most people and businesses.
Clearly, the lessons have not been learned from the Herbert Hoover era. Nobel Prize-winning economist Paul Krugman, a columnist for The New York Times, says the current banking crisis is “functionally similar to that of the Great Depression.”
“Many of the symptoms” are the same, including the impotence of monetary policy — like cuts in interest rates — that has not halted the economic downturn.
Typically, the current Republican administration has acted first to bail out the collapsed financial industry, with few strings attached. Belatedly, the government now has come up with an $800 billion program for hard-pressed average Americans to make it easier to get loans for homes, cars and education or borrow through credit cards.
The moves evoke the old quip on Capitol Hill: “A billion here and a billion there and pretty soon you are talking about real money.”
The big three auto-makers — on the verge of collapse — won little or no sympathy from the nation’s lawmakers in a recent appearance before Congress. They will be back again next week to make their appeal along with some representatives of the United Auto Workers union.
Thousands of workers at auto-assembly plants in Michigan and at car-parts suppliers in the Midwest are losing their jobs. No one is predicting a quick turn around from Detroit’s 9 percent unemployment rate.
Former Energy Secretary Spencer Abraham, a former Republican senator from Michigan, said in a New York Times opinion column that allowing the auto industry to go into bankruptcy would be a “disastrous course.” Thousands of Americans would be forced on “the rolls of Medicare and Medicaid, costing billions of dollars,” he said.
President-elect Barack Obama has promised a “strong Wall Street and a strong Main Street” if his multi-billion-dollar stimulus package is adopted after he takes office on Jan. 20. In a radio address last Saturday he promised the creation of 2.5 million new jobs, following Franklin D. Roosevelt’s recovery blueprint for needed public works projects.
After speaking by phone to President Bush on Monday, Obama told a news conference: “We have to do everything we can to keep the financial industry working.”
He also named his economic policy team, many of them familiar from the Clinton era, which prompts the question: Where is the change that Obama promised in his presidential campaign?
It’s all going to get worse, according to the experts. We have had recessions before but nothing like this, with massive layoffs, hundreds of foreclosures, retail stores closing, stock market losses, and widespread fears about the future.
I grant you I have yet to see former wealthy men selling apples on the street corner as I did during the Great Depression in the early 1930s but the current uncertainty is cause for worry.
And the outlook for a return of consumer trust in the market is bleak at this time.
Obama told reporters: “The truth is, we don’t have a minute to waste. With our economy in distress, we cannot hesitate and we cannot delay. Our families cannot keep on waiting and hoping for a solution.”
Obama will have the customary honeymoon and some political running room, at least at the start. But he has to move fast to restore confidence in the market place and trust in the banking system.
His heady presidential campaign is over but prosperity is not just around the corner.
Helen Thomas is a columnist for Hearst Newspapers. E-mail: email@example.com.
By HELEN THOMAS
Last updated November 28, 2008 5:32 p.m. PT
Source: Seattle Post-Intelligencer