Sunday, 21 February 2010

Our First Depression in America (1819)

I sat and did a fair amount of research this afternoon. The internet...frankly...is a lousy place to research on economic history. I probably would have to go the Library of Congress...to find any decent books or documents to my topic...the first economic depression of America.

I got into this pondering last night after watching Beck and grasping all of the recessions and depressions that America has endured.

The curious thing...is that we've repeated this process...over and over. It's funny though...if you Google depression....you end up with the 1930s "Great Depression". That's basically the only depression that they want you to know about.

After a while, I came to realize that most economical experts...aren't historians. It's virtually the same with environmentalists...none can recall any event past the 1960s....and in terms of bad weather....it's a three-year memory that most of these guys have at best.

An economical expert isn't going to waste his time talking about 1812 because that doesn't any impact on today. The same issue exists with 1880.

So I went around to fifteen sites and gleaned what I could for the first depression of America...the Panic of 1819...as it is referred to.

Apparently, most folks think that its start really came from the War of 1812...and it was simply a delayed thing.

Strangely enough....when you look at the top five things of manufacture in those days (NOT cars, TVs, steel, frozen pizza or chainsaws...if you were curious)...it leads back to cotton. Cotton made men wealthy in the South, and made bankers on Wall Street wealthy as well.

It's a curious agricultural situation. In this period of 1812 to 1819...cotton is really the big money maker. You grow the stuff...you pick it...and you market it...worldwide. So ships come in from France, Britain, and Europe....and you sell it at a profit. Prices tended to be stable...up until period. Then...a collapse came and vast speculation started to occur.

Adding to this fury...was the issue of credit. We could easily compare to this banking issue today...where home loans went into this fantastic twist...but then the home pricing scheme came to collapse...dragging the banks down. In the same way....these credit organizations...got themselves too deep into a market where cotton prices weren't going to readily recover.

So as the credit organizations and individuals started to fold....banks got caught in the middle. Sound familiar?

You still had the same amount of cotton....like we have the same amount of houses today...but moving the house or moving the cotton...without real credit...simply wasn't going to happen.

The American cotton market went stagnate....just as home purchases today in Arizona, Florida, and California have gone stagnate.

Banks started to go back to credit organizations/individuals...wanting their money back. Folks with loans....were called to pay off the loans...which they couldn't. So foreclosures of cotton farms, credit institutions, and businesses started to occur.

Remember...lots of folks were happy for the past decade...acting on a good good cotton sales environment and buying into the market, the credit, and the trade business.

Blame? This is the curious thing. Newspapers (our media of the time)...sat and blamed Wall Street, the banking industry, and political folks. Naturally....since this was a disaster that affected mostly southerners....then it came to pass that northerners had to be blamed for part of this.

Sound familiar?

So from 1819....through part of 1821...this episode continued on. At some point...the cotton prices stabilized, the credit industry rebuilt itself, and life got back to a norm.

Although, this is a curious thing. The US government didn't pay out a single penny to fix anything. No banks were bailed out. No credit industries were given hand-outs. No cotton farms were given stimulus checks. No political figures visited a single region to get their pictures taken or have comments written for distribution to the voting establishment.

The only end result? Andrew Jackson ended up getting a huge plus in the 1820s because of the bitterness. Naturally, you might want to note that Andrew Jackson was a southerner....and supported to a great extent by the southern vote.

There are three things to draw out of the Panic of 1819.

First, whatever minor regulation existed before the depression or panic...created an atmosphere afterward that everyone felt the government needed to control things more. Yes, barely forty years into the republic...and the tendency of the public was that only the government could halt such a mess from happening again. The newspapers suggested more rules...and eventually...congress did some minor rule changes to make folks happy.

Second, blame got tossed around enough...to be one of the ten causes of the 1860 attitude of North versus South. Some folks didn't get over this panic and suffered financially for years and decades. The media of the time...the newspapers...didn't help the matter, and likely fanned the flame even more.

Third, and final...the panic simply came to an end...new credit came...and the cotton market stabilized to go back into full-swing. Not a penny of national money or taxes came to be used. Stimulus never got discussed. TARP money simply wasn't an idea that they were going to discuss. The government allowed people, banks, and businesses to fail. It didn't step in. The sun rose eventually over American, and life went on.

Now, you could sit and imagine this great moment where the President of 1819 might have stepped in....tossed out $76 million (the $750 billion number of today)...saved the banks, the credit organizations, the businesses, and did stimulus to pull folks back into line. But the sad thing is that whatever debt we incurred there in 1821...would likely still be on our plate today...and we'd still be paying our debt of that generation off today.

So, that was your history lesson for today. I realize most of you don't really care about how our first depression came about or why it was significant in a way (it did help pave the first road to the Civil War, if you didn't notice).

Sorry if I didn't use Beck's chalkboard or preach to you in a more formal way.

Teachers That Make a Million

Today....out of the New York Post....came a short and curious story over pensions. The paper apparently went out and asked for Freedom of Information details on teacher's pensions in New York City.

The results? There are 738 teachers making a pension greater than $100k, and even three folks making more than $200k. When they reviewed the entire package....the teacher's retirement deal is one pension fund that the city runs....which is the most expensive.

There wasn't a lot of comeback from the union or the pension folks. The problem here is living in New York City isn't cheap. A guy needs a minimum of $50k just to have a decent apartment and simple lifestyle.

The catch to this entire topic is that pension costs mount and spiral upward. You end up standing there and having to figure a pension deal for a guy at age 60....and he might actually live another twenty-five years. If a guy is pulling in $150k...and lives just twenty more years.....you've pushed out $3 million for one guy. If you asked the guy who votes on stuff like this...how he can afford this in a decade....he just sits there quietly and can't respond.

We can go to just about every major city....and look at the cops, the firemen, and the city staff...and they've all got the same issue. No one is sure how things will be funded in two decades...or if they can be.

Face it....it's a financial mess that is unfixable.

Movie Review: Period of Adjustment

I woke up early this morning....real early in fact....and couldn't sleep. So I turned on the TV. Somewhere between the Home Shopping Network and some crime show.....was the TMC Channel....with a strange comedy of sorts.

Period of Adjustment.

It's a Tennessee Williams piece, which is kinda shocking....being a comedy. The curious thing is how well it fits for today.

Two GI's returned from the Korean War.....married....issues with their jobs, their wives, and their vision of a future. It works well in today's atmosphere for guys returning from Afghanistan or Iraq.

It's one of those movies that you'd probably never see on your local channel. I've come to appreciate TMC and its vast library of movies from the 1930 up to the 1960s.

So, if you've got two hours and ever notice Period of Adjustment coming up.....feel free to sit back and enjoy a four-star movie that rarely got noticed.

Five Moments of Observation

First, Tiger Woods and the Friday "weeper". It didn't really matter to me what Tiger Woods said in his confession on Friday. I don't care. The only person who might really care? His wife. Otherwise, this is mostly just a soap opera with forty-four players, and a thousand TV analysts who want to let you know their in-depth knowledge of Tiger and his troubles.

In four months....Tiger will likely appear on Oprah....to apologize again. And a week after that....maybe he'll appear on Larry King. Eventually....you're tire of the Tiger woes.

Second, as tomorrow comes and all these wonderful credit card "fixes" occur....compliments of Senator Snuffy and Representative Wanda....expect something different to occur. The boys in DC were supposed to fix various problems and give you the protection you needed over the credit card mafia.

The interesting expectation? Your fee's which were mostly non-existent for the past decade? They are quietly going to occur. There's already discussions about this....with thirty-five percent of all credit card deals now involving a yearly fee. It'll grow and all of us will eventually pay some kind of yearly fee. This is the credit card "fix" for the congressional "fix".

Third, the passing of Al Haig reopens a vast repository of history. For the best and worst of history in the 1970s and 1980s....there's Al. He delivered brilliant moments and uttered great speeches. He also did some really stupid things at times and probably wasn't the greatest at common sense. Al was Al.

If you asked Al one simple question....he could answer it in three simple lines. But the more complex a question you gave him....the more of a unanswerable response that he gave. In the end...if you wrote a book on the guy....it'd have to be 3,000 pages....and you'd still miss a quarter of his life.

Fourth, in Bama....there is a tight race of sorts going on with bingo. On the sinner's side....there is the threat of the evil that bingo brings and the sad spiraling of American society into hell. Yes, bingo will only bring you closer to hell.....so they say. Sadly, in this case....there is opposition with folks agreeing that legitimate bingo can be played in Bama....and the money could be distributed out to various educational causes....which makes everyone guilty of gambling in bingo....feel good.

The truth of the matter is that bingo is a working man's and retiree hobby. You don't have the upper class playing it like poker or roulette. So when Aunt Sally takes $120 of her monthly $1000 social security check out to the bingo game this weekend....it's a social environment that she's craving and getting. She's happy. There's no neutral point with bingo....that's the blunt truth.

Fifth, another episode of Lost came this week. Instead of answering questions for the last season....they are merely doubling up on more questions. This past week's episode gave us a moment of brilliance as Sawyer took a moment to hint of his favorite book of all time....Steinbeck's Of Mice and Men. For about three seconds....I was amused beyond my imagination. Being like the fictional character of Sawyer....I'm from Bama and Of Mice and Men is my favorite book of all time as well....I could only grin.

As for the moment when they buried John Locke six feet down....in the holy sands of the lost island.....I sat and wondered over the medical marvels of the island and how it fixed John Locke's legs when he arrived on the island.

Where he could not walk.....the island found a way to heal John Locke and bring him whole. So as they said their words over Locke's grave and left.....I'm pretty much convinced that in a episode or two in the future....the sands will move above John's grave.....and he will be brought back to life. If you gaze at the picture over at the Lost sight that they use for this season's appearance of the crew....it's a "Jesus-like" table where John Locke sits in the Jesus-position of the table. I think this is the hint of Locke's rising, and his moments of being more than just mortal.

What We Should Know

I sat and watched the CPAC episode last night with Glenn Beck's one-hour history "lesson". In some ways, the "lesson" leads people to sit there and think. It's hard to get that feeling with any of the CNN analysts, the MSNBC talkers, or the network news guru's. Most of their agenda is to do a news dump and you just believe what they say....and then move on. Beck is tempting you.....he wants you to pick up books and investigate what else lies out there.

So I sat and pondered over the concept of recessions and depressions. If you type in American economic depressions.....you get Google's long list of topics on the "Great Depression". I sat there and laughed. It typically leads to Wiki....and a long-winded discussion on the Great Depression. I wanted the whole list. So it took around a dozen attempts.....before I finally got the entire list of depressions and recessions since 1776.

Note, all of the following data came from Wiki...so you have to trust it to a degree. It may not be 100 percent complete or 100 percent accurate...it's just Wiki-accurate.

The events:

Panic of 1797 1796 – 1799

1802–1804 recession 1802 – 1804

1812 recession 1812

1815–21 depression 1815 – 1821

1822–1823 recession 1822 – 1823

1825–1826 recession 1825 – 1826

1828–1829 recession 1828 – 1829

1833–34 recession 1833 – 1834

Panic of 1837 1836 – 1838

Depression of 1839–43 1839 Late – 1843 Late

1845–46 recession 1845 – 1846 Late

1847–48 recession 1847 Late – 1848 Late

1853–54 recession 1853 – 1854 Late

Panic of 1857 1857 June – 1858 Dec

1860–61 recession 1860 Oct – 1861 June

1865–67 recession 1865 April – 1867 Dec

1869–70 recession 1869 June – 1870 Dec

Panic of 1873/Depression 1873 Oct – 1980 Mar

1882–85 recession 1882 Mar – 1885 May

1887–88 recession 1887 Mar – 1888 April

1890–91 recession 1890 July – 1891 May

Panic of 1893 1893 Jan – 1894 Jun

Panic of 1896 1895 Dec – 1897 Jun

1899–1900 recession 1899 June – 1900 Dec

1902–04 recession 1902 Sep – 1904 Aug

Panic of 1907 1907 May – 1908 June

Panic of 1910–1911 1910 Jan – 1912 Jan

Recession of 1913–1914 1913 Jan – 1914 Dec

Recession of WW I 1918 Aug – 1919 Mar

Depression of 1920–21 1920 Jan – 1921 Jul

1923–24 recession 1923 May – 1924 Jun

1926–27 recession 1926 Oct – 1927 Nov

Great Depression 1929 Aug – 1933 Mar

Recession of 1937 1937 May – 1938 June

Recession of 1945 1945 Feb – 1945 Oct

Recession of 1949 1948 Nov – 1949 Oct

Recession of 1953 1953 July – 1954 May

Recession of 1958 1957 Aug – 1958 Apr

Recession of 1960–61 1960 Apr – 1961 Feb

Recession of 1969–70 1969 Dec – 1970 Nov

1973–75 recession 1973 Nov – 1975 Mar

1980 recession 1980 Jan – 1980 Jan

Early 1980s recession 1981 Jul – 1982 Nov

Early 1990s recession 1990 Jul – 1991 Mar

Early 2000s recession 2001 Mar – 2001 Nov

Late 2000s recession 2007 Dec - 2009 Dec

So as you gaze at this list and feel kinda shocked over the extent of recessions and depressions...then you wonder why Wiki kinda leans with just one real reminder..."The Great Depression"?

So in our minds tonight...as we prepare to sleep....some questions.

Before the 1930s...the US government rarely did anything to fix or solve an economic recession or depression...so does it really matter that the President, or Senator Snuffy, or Representative Wanda, or news analyst Ted don't really know much of anything?

If we undergo a recession every five to eight years on average....do we need to get real worried?

Shouldn't we relax and already start expecting a short-term fix and return by 2015 of another recession? And another recession by 2014? And another recession by 2022

If recessions occur this often...shouldn't we kinda get used to this?

At the end of WW I....we endured a depression...then entered the "roaring twenties", which everyone always gets all happy and peppy about. Isn't it interesting that we endured two recessions in the roaring twenties? Strange how we never did get that history lesson in high school and college over those two recessions in the midst of a boom period....isn't it?

How much history do we really know?

There...I've left you with a good twenty minutes of pondering. Beck is right in one degree....we really don't know alot.

American history in high school was a joke.

American history in most university classes was a joke.

You are left with self-taught moments and reading on your own....to figure out what professors didn't give you.