July 23, 2002
Is Greenspan Blaming Hoover?
by
Lois Erwin
Dear Buzz,
I
just read the following excerpt in: "Fed Chief Now Blamed for Inflating
Stock Bubble" at:
http://www.latimes.com/business/la-fi-greenspan21jul21.story:
"And in a May 1998 interview with Lawrence B. Lindsey, a former Fed governor who has since become President Bush's chief economic advisor, Greenspan acknowledged striking parallels between the years leading up to the 1929 crash and the late 1990s. But he noted confidently that if actions after the 1929 crash 'were taken differently ... we would not have had the deep fall that we know as the Great Depression.'"
We need to remember one important fact. The president Greenspan is referring to is Herbert Hoover, Republican; it was the Hoover administration that took NONE of the right steps and most of the WRONG steps to correct the situation resulting from the crash. The Great Depression took a little while to get going full bore; there were many opportunities for Hoover to put corrections in place. He did not. Why didn't he? For the same reasons we are hearing from Bush and his followers -- the market is strong; the market forces will correct the situation; just let the market work.
The Crash occurred in Oct. 1929. Hoover was president until March 1933. He had three and a half years to do something. Once President Franklin Delano Roosevelt took office in March 1933, it took him only 100 days to turn the country around and give the people hope. He moved swiftly to put stock market regulations in place to prevent such a disaster from ever happening again. Those regulations essentially stayed in place -- protecting investors -- for the next 50 years, until the Republicans Had A Better Idea. Gradually, starting with Ronald Reagan's taking office in 1981, the Republicans moved relentlessly to roll away those same regulations -- until we came to the market meltdown we have just witnessed.
All of Hoover's pep talks in the 1930s were small consolation to the men standing in bread-lines hoping to get some food to take home to their hungry families. Those "market forces" that would "eventually" work were small consolation to those men without jobs who stood on the streets selling apples, or with sandwich boards on their shoulders advertising themselves as available for work, any work. (Unemployment stood at 25% during The Depression.) Those "market" forces that Hoover claimed were working were small consolation to those families that had been evicted from their homes for non-payment of rent, and who sat on the sidewalks on top of their furniture, which had been thrown out along with the family.
Small consolations.
Bush
assures us all is well, all will be well. For those who were alive in
Hoover's day, that has a familiar ring. And is small consolation.
Lois
Erwin
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