DEPRESSION 2.0 by Michael S. Malone
Have we dodged a bullet . . .or is it still heading our way?
I’m in the southwest Oregon beach town of Bandon-by-the-Sea this week, as I have often been during the last twenty-five summers. Long-time readers will know that I periodically measure cultural change by leaving Silicon Valley – one of the most atypical of American communities – and coming here. I’ve watched and reported over the last dozen years as Bandon has grown from a sleepy village largely dependent upon fishing and logging, to a tourist town with the fastest broadband in the nation – and best-known for three new, and famous, golf courses nearby.
Bandon is also the yardstick by which I measure the changes in my own life. I first visited this town with my parents as a thirteen year old in the late Sixties. I returned in 1984 for my honeymoon. Both of my boys came here as infants – every day I’m here I drive by the hill where Tad broke his arm at age nine. Now Tad is a new high school graduate heading off for Oxford, England and staying home this summer in Sunnyvale to work. Meanwhile, Skip (Tim), who used to sit on the beach in his diapers and eat sand, is now a strapping 13 year-old. He’s here with one of his eighth-grade buddies.
As I’ve often noted in the past, as much as I love Oregon, I also have few illusions about the state. My late father, who grew up in Eugene during the Depression, joined the circus the day after he graduated from high school . . .and didn’t return for almost forty years. When I once told him that I thought the state would be “the Next Big Thing” he laughed and said, “Son, Oregon has been the Next Big Thing for more than one hundred years.”
And, sadly, he was right. Because the Oregon is all-but forced by geography to be the economic satellite of California – even in tech it is largely the land of manufacturing divisions of Silicon Valley headquartered companies — the state is inevitably one of the first into and one of the last out of, any economic downturn.
So, how bad are things in Bandon, Oregon these days? Well, keep in mind that despite having just a few thousand residents, Bandon is really two towns: the inland town, composed largely of Oregon natives, and near-natives, who are mostly permanent residents and live in small, low-cost homes, and the Bandon of Beach Loop Rd., the big million dollar houses lining the cliffs above the rocky beaches you see in TV commercials, mostly owned by retired Californians.
Inland Bandon, though it seems largely unchanged – a few businesses have gone bust with none to replace them – it has suffered a burst of foreclosures. Meanwhile, out on Beach Loop, the For Sale signs – always a summer phenomenon by owners looking to see if they can find a rich sucker – are more plentiful than ever. And this is particularly true in the several new housing developments, which now stand forlorn, nearly empty and, if local rumors are true, many of them financially underwater.
I still make my morning drive down to Bandon Coffee – but now the news on the radio is not the status of local salmon run, but the fact that unemployment in the region has now reached 15 percent. I’m reminded that the during the Great Depression, that number reached 25 percent – a figure I used to find unimaginable, and an experience so devastating that my 88 year-old Dust Bowl mother still hoards string and rubber bands and rinses out plastic bags even as she sits in her seven-figure, modernist Eichler home.
Fifteen percent unemployment . . .and the Oregon legislature is preparing to raise taxes. As in California, the people have voted down tax increases, but the legislators refuse to believe them. Instead, they threaten to cut vital services as a sort of punishment for false consciousness by voters, even as they race to preserve as many state government jobs and perquisites as possible.
Fifteen percent unemployment. What does that look like? Well, we all may know soon enough. But what is most disturbing about it is that it doesn’t look that much different. A few more beggars. A few less new cars on the highway. Fewer people in the stores. More vacancies at the local motels. But, for the most part, as surveys are showing around the country, people are hanging on, holding off buying anything but the essentials, taking vacations closer to home, restructuring their debt where they can. There is a general, albeit nervous, sense that we’ve now gotten through the hard times and that Prosperity, if not just around the corner, is at least not too far off.
I have the same queasy feelings about the economy. The Democrats are taking a recession and making it a Depression. Everything they do seems to be aimed at maximum economic damage. Protectionism, regulations, taxes, interference in business, and mountains of debt from wasteful spending.
If Cap and Trade is passed, I’m certain we are in for a long, long Depression.
Well, it’s a good thing that the fools and demogogues have been kept in line and out of power then eh? Oh wait …
Very well written and, I believe, true. This is the wrong time to have a socialist fool (Obama) and a band of thieves (congressional Democrats) in charge. The only thing that trumps their collective ignorance is their collective arrogance. So you’d better spend some time on your knees, folks, because God is your only hope.
There is one thing that we did in 1929-33 that we haven’t done now. The Federal Reserve has done its job of keeping the banking industry liquid. In 1931 the Federal Reserve took a deep financial slump and turned it into a catastrophe after the Europeans went off the gold standard. The Fed tried to save the value of the dollar as gold flowed out of the United States by tightening money and raising interest rates. The banking sysem collapsed on the money supply decreased by 1/4 virtually over night. You can read about what happened in chapter titled the “Great Contraction” Milton and Rose Friedman’s “Monetary History of the United States”
Chairman Berneke is student of the era and he learned the right lessons. Whether this will have any effect on the depth and length of the this depression we can’t yet know. But at least he didn’t make it worse.
FDR didn’t know it wouldn’t work. The Dems today, have 70 years of empirical evidence that it won’t work. So why? We need to know why.
I want to know why.
One important element that we didn’t have back in the ’30′s: a President and administration fully committed to the Alinsky school of radical sociaiism, hell bent to implement change in the Constitution and tearing down our capitalistic system.
There is no mistaken, misguided belief in “recovery” of our traditional economy and culture. There is dedication to socialism, to a global socialist hegemony, to seeing that, within 4 years, everything is changed so that there is no going back.
It is going to take something far different than sulky resignation to overcome this assault on the principles that have made us a great nation, and we’d better start soon.
Thanks, Paulson, for letting Lehman Brothers fail.
Obama’s economic logic is really not logic. It is ideologic.
Uncle Milty Friedman simplified the causes of the great depression to advance his early career. The Fed had to cut back given the gold standard. But the mortgage system then was primitive with five year loans usually rolling over. The drought in the Midwest cut agriculture production.
But the Smoot Hawley tariff was the main cause of the cut in industrial production.
The Hoover raised taxes and FDR’s Fascist oriented policy wonks evoked policies that cut investment.
The Fed has printed trillions of dollars. The monetarists are not being listen to.
Inflation after deflation is most likely.
Start growing your own food.
Livy, The answer is very simple. Very. The Democratic Party is creating Depression 2.0 so that they cement themselves in power for a generation. High taxes and insane regulations harm the economy. Those who have jobs are in fear of losing them, and those who are out of work are desperate for government handouts. The state run media tows the party line, and the pols line their pockets. Punish your enemies (some businesses, and especially small businesses) and reward your friends (unions). This is like what Stalin did to the kulaks (rich peasants if you don’t know the term). We’re being made into beggars, because beggars can’t be choosers.
Anything that happens…we asked for it…seriously!! We voted these guys in office year after year after……
America needs to get angry, or get ready for the bread lines…and jackboots
Please Check out David Horowitz’s site “discover the networks” Research George Soros & his “OSI” (Open Society Institute). Everything on Soros’ agenda is exactly what Obama has promised to do & is implementing at breakneck speed BEFORE the American public catches on. You’ll all see many connections…
Jay:
Friedman listed all those factors in his book. The farm crisis actually started in the 1920′s. The sector never recovered from the post WWI depression and it occured in non-drought stricken areas. My grandfather lost his farm in Canada at this time. The finanical crisis of 1929-33 has nothing to do with financial instruments. It was liquidity crisis caused by a strict adherence to the Gold Standard come hell or high water. The Fed could have gone to Congress and asked to suspend the gold standard instead they collapsed the banking system. The money supply is like the oil used to lubricate an automobile engine. If you starve your car of oil the engine siezes up. If you starve the economy of cash econmic activity dries up.
“Every sane adult knows what it takes to pull out of an economic deadfall: you tighten budgets, cut inessentials, pay as you go and restructure your debt…”
Ummm, I agree that ‘sane’ adults do in fact understand this. The problem is that the present economy is NOT ‘sane’. it has been ,in fact, INSANE for many years. It has been built almost solely upon the sheeple buying everything and anything, whether or not the buyers can actually ‘afford’ the purchases, or even if they even NEED the things. Without debt up to the eyeballs, both from the STATE and from individual consumers, there is no growth happening. The WORST thing that consumers can do is become ‘sane’. The economy depends upon their continued lunacy. You have to take one for the team. Spend.Spend.Spend. And don’t look back— something may be gaining on you.
And frankly — that is a VERY,VERY BAD thing. No matter how fast everyone runs they cannot outrun the weakness of the system itself, but if they stop running —it’s all over.
Instead of the free lunch everyone was promised, and which caused a massive wave of sheer mindless gluttony, we now get a ‘you can run, but you can’t hide’ outcome. I read a stat(and I stand to be gladly corrected here if I am wrong) that indicated that a full 17% of ALL the World’s Production was generated by US consumerism. 17% !!!
That’s INSANE. More importantly —That’s Un-Sustainable. It’s going to crash and burn. It may not be this year or next or even this CRISIS. But it IS going to happen. That is what is ,IMAO, causing the angst. Even instinctively, people seem to understand that the Party is over and that those damned pipers really do want to be paid. Of course we will desperately now try to fix(oops, I mean kick down the road so some other poor sap has to pay for the binge) the problems so as to prevent the worst.
Good luck with that.
One big advantage they had in the ’30s: the US was self-sufficient in oil, and in a lot of manufactured goods that we literally don’t know how to make now. When we can’t afford crude and shoes, because our bux are worth nothing, we’re going to be in a much more serious fix than they were then.
Oregon has been through worse, and survived. As for the comment about Oregon being an economic satellite of Californistan, well, the Klingon homeworld, there, looks like it’s about to implode, so, no better time than the present to go sailing off across the cosmos, as it were. I think the socio-economic future of Oregon is largely up to its’ citizens, and what people want, people tend to get, and I think that most people don’t want Oregon to turn into California II. Maybe some CA expats want to clone themselves on Oregon residents, but most folks want to be able to hunt, fish, and generally go about their business without being bodily sucked into the mess that is CA, which is probably the same reason that a lot of people are leaving CA, to have some kind of life that doesn’t involve traffic gridlock, idiots on cellphones, and the other niceties of modern urban life that motivate folks to go find a nice desert island to dwell upon.
I like Bandon, I like the fact that Bandon has not gentrified to the point of alienation, I don’t play golf so I don’t care about their golf courses, the main attraction of the coast is the ocean anyway, and that’s why I go visit there.
Real estate moguls watching their dreams go bust? Good riddance, I say, that’s how CA became the ‘stuccoed wastelands’ to begin with, too many land speculators, too many people trying to ‘flip’ homes and other interesting forms of business, Oregon may not have much in the way of money, but what we lack in revenue is more than made up for by NOT being like other states. So what if our state unemployment is 12-13%? Michigan still has us beat by a good margin, and CA is bringing up a close third or fourth, so let it tank, I say. In Oregon, we’ve got the descendants of the pioneers, robust, innovative people that’ve made do with less and done better than a lot of other people, and we’ll excel and succeed in the future, even if it’s not the kind of success you could exploit and measure on Wall St.
I say ‘go enjoy the ocean’, and let financial concerns wash away with the tide. There’s more to life than money, so if’n you don’t have all that you wanted, be sure to remember all the OTHER things you don’t have, like high blood pressure and non-stop phone calls. There’s trade-offs, and sanity ain’t such a bad yield, in the Deal Of Life.
Not everybody believes in the tea parties but, it shook ‘em up on April 15th. Even the present administration tried to make fun of them. the 4th is the next one and it needs to be bigger than the last. get involved. When congress sees that we are willing to protest on one of the countries biggest family holidays they will start paying more attention to us.
I have 3G wireless nationwide, can take the train or bus and maintain excellent communications with sales force in Europe, Canada, and Africa. There are magnetic levitation trains that will travel over 200MPH being laid, nationwide, 2 systems already up and running, faster than taking a plane when airport time is added. There is 150 Million USD in real estate being sold each day in the province i live in, because the government is spending its savings on infrastructure improvement and economic development.
I left California 3 years ago, used to live 20 Miles southeast of San Francisco. Saw the writing on the wall, sold everything and came to greener pastures and have never regretted a minute. The Nation was being led off the cliff by inept politicians and even more inept federal reserve pumping massive amounts of cash into the economy creating massive bubble in equities and real estate.
Live in Northeastern China, and love every minute. If your tired of the idiots running the Nation, there are many alternatives.
Of course the US consumes 17% of global output, because the US produces over 20% of the global GDP.
Businesses large and small continue to layoff employees here in Silicon Valley and the S.F. Bay area. Many of my neighbors have lost their job’s in the last three months. I believe by any global economic measurement (industrial output, stock markets, world trade)the world is in a new depression!
I personally hope the Dems are over-reaching. We are in a race, and they know it. They have to put it all into place before America wakes up. Obama even said so. FDR said the same thing in the late 30′s.
The question then becomes, how long will it take us to wake up? People kept voting for FDR, even when he was screwing over the economy. They were ready to vote for someone else, but the rumblings of WWII forestalled them. Then, the war forced abandonment of many of the destructive policies. America had awakened.
Now, however, the people are more stupid and less self-reliant. The Tytler Cycle is coming around to Dependence and Bondage. It is about 25 years late. It’s supposed to be about every 200 years for the cycle. I think Reagan managed to forestall it for about 25 years, but here we are anyway.
Hang onto your hats. It’s gonna be a rough ride.
The Democrats know their stimulus policies
won’t work. It is state control over
the economy they want and being economic
Marxists they believe they will then be
able to effect social changes they desire.
Property rights and being able to earn a
living independent of the state have
always been stumbling blocks to social
engineers. If you can tip enough people
into dependence the state will then call
all the shots. Anyone who wants to reverse
the process will face an extremely hostile
and difficult environment.
#6. Livy,
The reason for the irrationality of the Dems ultimately must be sought in psychopathology and philosophy.
The typical Democrat is both ignorant and willfully self-deceived. 70 years of empirical evidence is irrelevant to the intellectually dishonest person. It could be 700 years of evidence and it wouldn’t matter — evidence doesn’t matter to these people. Feelings, hopes, beliefs, and wishes are what they’re all about.
The ideological core of the Democratic party is Marxism. Marxists actually believe that the laws of logic vary based on one’s economic class, and that contradictions exist in reality rather than only in one’s mind. Attempting to unify opposites is regarded as a sublime activity, rather than as a natural impossibility. They also believe in the metaphysical primacy of society, so individuals are conceived as expendable cells of an organic state, rather than as ends in themselves.
These are strange days. During the Cold War, the mission of the intelligence community and the military was to defeat communism. Today, these same institutions now serve a Marxist commander-in-chief, who wouldn’t even qualify for a security clearance. That can’t be good for morale. For some, the battle for freedom has no doubt turned inward.
What we have today is a kind of Second Cold War where the front line is world wide, and the primary weapons are intellectual.
Apathy Ren.
[P.S., you have to be a "Ren & Stimpy" nut job to 'get' that']. lol
Today Bernie Madoff was sentenced to 150 years behind bars for running a Ponzi scheme. The politicians who have spent every dime of the Social Security “trust”fund since the day it was begun, in 1935, deserve the same prison time. I’m not minimizing what Madoff did, just saying that the exact same conduct is condoned when done by “public servants”…I mean serpents.
P.S.- Both democrats AND republicans are to blame.
(Republicans are stupid- Democrats are crazy.
What part of “God-damn America” don’t you get?
And yes, Soros has his country now.
history has a way of repeating itself when ignored.
Hello Michael Malone: I live in Bandon. I remember all about the depression of ’29 etc.
Michael: one of my sons writes on PajamasMedia.
Hi Edna:
Glad to hear from a fellow Bandonite. We’ve been coming up there at least once per year for 25 years. My wife and I now have several homes on Beach Loop. We got up there for a couple weeks this summmer — and with luck, will get back by Christmas. If not, we’ll be there over Spring Break. Have a cup of coffee at Rayjens and breakfast at the Minute for me. — Mike Malone