Day: February 21, 2009

Did FDR’s “New Deal” Work?

If you listen to the talking points of the day for the conservatives it did not.  If you listen to the fiscal conservative economists, it did not.

Many liberal economists said that shows the virtue of boosting spending. Dean Baker, co-director of the Center for Economic and Policy Research, said that “when Roosevelt came in, he started spending money, and from 1933 to 1937 the economy grew at a double-digit annual rate. It was soaring, and the unemployment rate fell at 4 percentage points a year.”

But in 1937, the economy started tumbling backward again. Drawing an analogy to today’s fiscally conservative Democrats in Congress, Baker said Roosevelt “listened to the Blue Dogs of his day and cut spending, and the unemployment rate rose again.”

Many economists say fiscal stimulus did not end the Depression because it was not really tried; the spending increases were too small.

Senate Minority Leader Mitch McConnell, R-Ky., said last week that “the big-spending programs of the New Deal did not work.” Sen. Richard Shelby, R-Ala., said, “If we look back, even to the New Deal, it’s not going to help employment.” Two economists argued in The Wall Street Journal that “there was even less work on average during the New Deal than before FDR took office.”

McConnell said last week that “in 1940, unemployment was still 15 percent. What got us out of the doldrums that we were in during the Depression was the beginning of World War II.”

All this argument is just so much crap!  Economist and politicians are arguing semantics.  If one talks with someone that was there, like my father and my grandfather, they will tell you a different story all together…..both of them tell the story of being hungry and not having a job….when FDR started his WPA and the CCC ….they had work and money coming in…so everyone ate and could buy things like clothes and even after a while a car.  They do not give a crap what McConnell thinks or what some geek with thick glasses says…they know that FDR was a success!

Now Explain The Bank Bailout Again

I thought it was to get these institution to start lending again to make the economy strong and help create demand…again.  As usual…I was mistaken.

The largest U.S. banks reduced the availability of money for consumers and businesses during the final months of 2008 even as the government invested tens of billions of dollars to help them make new loans, according to data released yesterday by the Treasury Department.

The banks that got the most government money, Bank of America and Citigroup, led the retreat. Mortgage loan originations by the two companies in December fell $3.6 billion, or 15 percent, compared with October. New lending commitments to commercial and industrial customers dropped by $2.4 billion, or 11 percent. And the companies reduced the collective spending limit of their credit card holders by $45 billion, about 2 percent.

But yet they found the time and money to buy other banks to enhance their balance sheets…..when will the American people realize what is happening here?  The only thing that the bailout is about is the survival of the banks not the economy.