Obama, Breaking 'From A Troubled Past'

That was the headline in the NY Times Feb. 27th and it was historical. As readers of my blog will recall I have been regularly comparing this economic mess with the depression of the thirties. (Benefit of being a nonagenarian.) There should be no doubt that what Obama proposes are very serious changes He wants to reverse the trend of the last few years in which the rich have gotten richer at the expense of the poor. Obama agenda includes, letting the Bush tax cuts for the rich expire, universal health care, arrest global warming, reduce the cost of war,eliminate our dependence on foreign oil, slash agriculture subsidies to agribusiness making over $500.M etc. Four billion in subsidies to banks that make student loans etc.etc..Wow this is some agenda.

Obama’s proposals for change represent a “Second New Deal.” The first was under FDR. I don’t particularly like the constant comparison between Obama and FDR. Why? Because the situations are not comparable. Back in the thirties the US was the major manufacturing country. Now, while there continues to be some manufacturing, we have become the major banking and service country. The result can be seen in the people who are losing their jobs. Many are folks who spent their working lives in front of a computer screen. Back in the thirties they were folks who worked in steel mills, hard rock mines, rubber plants and sewing factories. They were very different. They belonged to unions, worked with their hands, and were used to the “class struggle.” That working class world grew into a huge movement of support for FDR’s efforts, such as Unemployment Insurance, Home Relief and most important the Federal Deposit Insurance Corp.known as the FDIC, etc. Through the efforts of their unions, the Communist Party, and the mass of Democrats who elected FDR, they were able to build enough grass roots support to assure legislative success of the New Deal. It is important to understand that FDR faced a fierce resistance from the Republicans as well as the nation’s newspapers. Without his grass roots support there would have never been a New Deal.

Another significant difference between now and then is the “global market” nature of the present crisis. The thirties depression was basically the US and Europe. The present crisis is world wide including Asia, Latin America and Africa. This also complicates Obama’s agenda because it makes the US dependent on these other countries to do their part in getting the system working again. “What system?” The Capitalist system of course. Yes, it is true that Karl Marx writing in the 1800’s predicted that capitalism would suffer periodic crisis. But I don’t think that many people are paying much attention to him anymore. Those of us who did pay attention to Marx might have some ideas of what went wrong.

Some economists who have suggested that the present crisis is basically caused by the loss of the credit market. I happen to agree with them. I remember studying the early development of Mercantile Capitalism. The bankers in Amsterdam made credit offers to ship captains. If they took their square riggers to the far east, the bankers would foot the bill in return for forty to fifty percent of the profit from the sale of whatever they brought back. Now without that credit, the ships would have never made it even for a cruise around the Mediterranean. At times it took years for these ships to return to Amsterdam. When they did, the bankers made their money back with generous interest. The critical element here was the trust factor between the bankers and the ship owners. Without that trust the whole arrangement would have never worked That became the heart of how capitalist financing works and it has been expanding ever since. The key word here is trust and I’ll come back to that.

The whole collapse of the credit market is grinding the system to a halt. Without some kind of available credit there is no business. A major problem now is people have lost trust in the system. (Back in the 1930’s FDR. needed the FDIC that insured bank deposits to again create peoples trust in the banking system.) In the present situation people have ceased purchasing or borrowing, and are just hoarding because they have lost their trust in the system.

That leads me to what Obama now has to do to regain that trust. This ain’t going to be easy. He has to boldly nationalize the big major banks because that’s the only way he can quickly get the credit market functioning again. He can do it short or long term. Oh my God, will the Republickcrats scream “socialism!” Obama needs to take that head on and explain to his base why he is doing this and the consequence if he doesn’t. What’s important is that it be done soon. Because the longer the markets are without credit the deeper the recession until we are in a full blown depression.

I do believe that Obama can succeed primarily because we are already in a deep crisis. More important, his major opposition is made up of folks like Rush Limbaugh and Bobby Jindal, the Governor of Louisiana, and the rest of the McKinley Republickcrats. They have even managed to disgust people like David Brooks. He said in one of his columns that the Republicans’ don’t have a clue as to how times have changed. But having said that, I believe Obama needs to get ready for a devastating storm of attacks the likes of which he cannot even imagine. He might even think that the South Side of Chicago is a piece of cake compared to what’s coming. If he is to have any success, his support troops will have to find ways to make their collective voices felt. “Fasten your seat belts for the ride ahead.”

Thanks Kate N.H.W.Y.