Are we depressed yet?
Those who brought you the Great Depression and our own current emergency are still running the show.
By Steve Fraser
October 7, 2008
During the last few weeks, we've all grown reluctantly accustomed to comparing the current financial meltdown to 1929. Forebodings that this financial crisis may soon enough descend into a more widespread economic disaster are everywhere. Yet almost nobody is willing to use the word "depression." We talk instead of a "slowdown" or "recession," words that somehow fail to do justice to the specter that haunts the nation.
This taboo persists in the face of ominous signs to the contrary: an ever-accelerating rate of unemployment and home foreclosures, a credit freeze that touches everyone from major manufacturers to ordinary consumers, the accordion-like contraction of businesses from automobile plants in Detroit to software makers in Silicon Valley, the rapid erosion of the dollar's value in world money markets, and so on. All of this resembles, at least in broad outline, the liquidity crisis that was prelude to the Great Depression. Still we avoid that word, and for reasons that are all too understandable.
.... there is the irony that the New Deal's response to the Great Depression lends assurance, even among those who otherwise despise what the New Deal wrought, that a second Great Depression can't happen. The "automatic stabilizers," such as unemployment insurance, Social Security and even Keynesian-inspired deficit spending, installed during the Roosevelt years provide some real counter- cyclical weight to prevent a bottomless descent into an economic hell. Or so people believe.
Will the refusal to use the word "depression" be an effective talisman against the real thing? We will know soon enough. But whatever their psychological effectiveness, taboos can't substitute for effective public policy. At the moment, the signs are not encouraging. Those who brought you the first Great Depression and our own current emergency -- the laissez-faire financial establishment and their political enablers -- are still running the show, drafting the bailout legislation, crafting amendments to protect their interests, riding free of most regulatory constraints and scarcely addressing the downturn that is real, no matter what you call it: the rapidly declining fortunes of ordinary Americans.
Please read the entire article at:
http://www.latimes.com/news/opinion/commentary/la-oe-fraser7-2008oct07,0,1507518.story
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