World leaders confront global crisis
Economic summit in Washington is likely only a first step
to new rules to prevent financial meltdown and market mayhem.
In 1955 the late economist John Kenneth Galbraith wrote a classic book about the stock market crash of 1929 (The Great Crash 1929). It hasn't gone out of print since, thanks, Galbraith observed in a later introduction added in the 1990s, to the penchant of the US economy to have periodic recessions. It is again prominently displayed in bookstores. That's where I noticed it last month and bought a copy. It's a frightening read. All you need is a global search and replace, 2008 for 1929, and you have today's headlines.
At least it sounds like today's headlines. The crash of 1929 went on to become a decade long depression. Whether the current melt down will do something similar no one knows. Scholars are still arguing about what caused the Great Depression. In 1933 GDP was down more than 25% from 1929 and production didn't get back to 1929 levels until 1937, after which the economy tanked again. At one point unemployment was 25%. We're nowhere near any of that. The Great Depression was qualitatively different. At least so far.
But the world economy is evidently precarious. So President Bush has called a summit of the world's top economies (the so-called G20). It convened in Washington, DC this weekend. So it seems appropriate to quote one of the juicier parts of Galbraith's book, the one where he describes a series of mid-November 1929 meetings called by President Herbert Hoover to reassure the markets. It was just weeks after the 1929 crash:
Yet to suppose that President Hoover was engaged only in organizing further reassurance is to do him a serious injustice. He was also conducting one of the oldest, most important -- and, unhappily, one of the least understood -- rites in American life. This is the rite of the meeting which is called not to do business but to do no business. It is a rite which is still much practiced in our time. It is worth examining for a moment.Men meet together for many reasons in the course of business. They need to instruct or persuade each other. They must agree on a course of action. They find thinking in public more productive or less painful than thinking in private. But there are at least as many reasons for meetings to transact no business. Meetings are held because men seek companionship or, at a minimum, wish to escape the tedium of solitary duties. They yearn for the prestige which accrues to the man who presides over meetings, and this leads them to convoke assemblages over which they can preside. Finally, there is the meeting which is called not because there is business to be done, but because it is necessary to create the impression that business is being done. Such meetings are more than a substitute for action. They are widely regarded as action.
The fact that no business is transacted at a no-business meeting is normally not a serious cause of embarrassment to those attending. Numerous formulas have been devised to prevent discomfort. Thus scholars, who are great devotees of the no-business meeting, rely heavily on the exchange-of-ideas justification. To them the exchange of ideas is an absolute good. Any meeting at which ideas are exchanged is, therefore, useful. This justification is nearly ironclad. It is very hard to have a meeting of which it can be said that no ideas were exchanged.
Salesmen and sales executives, who also are important practitioners of the no-business gathering, commonly have a different justification and one that has strong spiritual overtones. Out of the warmth of comradeship, the interplay of personality, the stimulation of alcohol, and the inspiration of oratory comes an impulsive rededication to the daily task. The meeting pays for itself in a fuller and better life and the sale of more goods in future weeks and months.
The no-business meetings of the great business executives depend for their illusion of importance on something quite different. Not the exchange of ideas or the spiritual rewards of comradeship, but a solemn sense of assembled power gives significance to this assemblage. Even though nothing of importance is said or done, men of importance cannot meet without the occasion seeming important. Even the commonplace observations of the head of a large corporation. What it lacks in content it gains in power from the assets back of it. (John Kenneth Galbraith, The Great Crash 1929)
Do you think "the heads of the great economies," after a satisfying weekend screwing each other and you and me, will have morning after remorse and say, "We have to stop meeting like this"?
I doubt it.
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There are two people in that picture that just don't seem to fit in. One is obviously the single individual who is not wearing a basic grey/black/navy-blue business suit.
The other is the guy who can't seem to stand up straight...
This was interesting revere, thank you for posting it.
I had to laugh when I read "the stimulation of alcohol". And then got to the end of your post and read your concluding thoughts. Very interesting.
Yeah, Bush appears to be leaning to the left. And they call Obama a Socialist!
I noted that they were feasting on quail and 500 a bottle wine. The best part of this that the real Democrats and the real Republicans are going to take on the Obama Nation because like me and perhaps Revere they know we can lose this farm and fast.
I saw Obama on 60 Minutes tonight.... I still am vastly underwhelmed at his leadership abilities. But, he did say that he was going to ensure that there is "Security." Now if that entails a new 10 division paramilitary police force then he is going to have trouble down South and in the West.
Waco still burns in my mind and how the rights of those people were trampled. They never did find any illegal weapon, nor was there any proof that there were children being abused.
The Obama Nation is planning on bailing out a union... The UAW by bailing out Detroit. Well boys and girls the music is going to stop playing in about a year and a half...Then we might see that second collapse that Revere suggested happened in 37. It did happen then, but only because they raised taxes...Specifically capital gains taxes. History is about to repeat itself and all of the same mistakes are being made.
I could care less whether they bail out Detroit, plenty of car makers out there and a GM doesnt necessarily have to build mine.
BTW
Here are a pair of real Republicans. You know, the ones who want limited government in their lives and intervention. These bailouts are going to only keep the fat cats meowing.
http://www.google.com/hostednews/ap/article/ALeqM5gA2mr12dJLiWM1QN59MYf…
http://inhofe.senate.gov/public/index.cfm?FuseAction=PressRoom.PressRel…
Better idea... Drop the tax rate now and say no capital gains taxes until maybe 2011. Else, we are all going to be in deep trouble.
So...exactly what are they going to do? Figure out how to keep the world's wealth within the the richest 1/2 of 1 percent of the population? They are pretty good at that...
When I heard the radio news report begin with "President Bush convened a major meeting to address the economic crisis," I nearly laughed. What an exercise in sheer pointless strutting about, about as productive as hearing a thrice-convicted arsonist lecture about forest fires.
Aside from offering a public apology at doing to the USA what he did to at least one company he owned in his lifetime, the best thing he could do for the economy would be to resign, along with Cheney. If that means two months of a caretaker administration, so be it.
Now here is the real cost of doing business right now.
http://www.cnbc.com/id/27719011
Even larger than the 2.5 that I was touting with all of the add ins.
4.23 trillion. I keep a running feed with CNBC and FBN and THIS is going to do us when the AMT kicks in in two years. We will have high taxes and high interest rates in the middle of a recovering economy. You cant tax and spend in the middle of that because the money simply runs out every time. The only sustainable operation is the open market place.
We have another turd in the punchbowl to deal with as well. The troops will be heading or be home by that time for the better part and will put about 230,000 out onto the unemployment lines. Couple it up with no DOD spending (assumption being that Obama guts the military to pay for his programs)and you got a second collapse. Second one larger than the first.
Its the bonds that have to be solvent and we aint going to get it with anything other than taxes to make that happen. Cant pay them now, so we have to borrow or print paper. We are doing a fine job of that ink job. But the return is so low no one will buy them including the Chinese.
The government needs to get out of our lives completely and this would be the richest country in the world again. If they dont, we are done. I can only envision what those seniors are going to do when either their money is worthless due to inflation, their benefits cut that they paid for and they are basically cut adrift by the Congress eventually in the light of the fiscal realities.
G336.... if you think that a resignation would do anything to move it forward then you are sadly misinformed. It would put Pelosi in charge and god forbid, if she couldnt do it then Robert Byrd, then Condi Rice. Then absolutely and totally pathetically-Paulson.
Yeah, resignation... Thats the ticket.
The government needs to get out of our lives completely and this would be the richest country in the world again. If they dont, we are done.
Agree MRK.
We are nearing "retirement". Ha-Ha!
Like I said to you, we own a good tent, sleeping bags, good boots and nice camping equipment.
Plus we are mildly knowledgeable on what plants in the wild are edible.
To understand what is happening now one needs to read The Collapse of Complex Societies by Joseph Tainter and then do a through study of Peak Oil. The players and actions they take now are irrelevant - they may change the way our globalized world civilization collapses and they may hasten or prolong the process but it is inevitable and will occur regardless. It is as inevitable as the death of each an every individual human. '
BTW anyone living in an area where MayPops grow should know these are highly edible and delicisious. Passiflora Incarnata - a food from heaven for the hellish times that are coming. Good time to like Lea bone up on what nature provides for free that is edible.
In the face of the economic crisis in the world - I think this Meeting is verry good idea.