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History repeats itself in many ways, but oftentimes the parallels we seek to draw from past events are not so neatly drawn. How we got into the New Depression; what it means to you and your lifestyle and how long it will last are very relevant questions, and for perhaps the first time in history, because of film, we have some insight into living through such times. First, though, here is why it is a Depression, and not - contrary to the mainstream meme - a Recession: In a Recession, unemployment and inflation are high, the market drops, but investors run to commodities and bonds. In a Depression, there are no safe havens. Right now, the stock market has fallen 35% from its high, values of gold, platinum, copper, and even aluminum have plummeted to levels not seen in years, and treasury bonds are paying less than 1% interest. Meanwhile, the government’s labor statistics are transparently fudged, as they report a decline of over a million jobs in the first nine months this year, yet claim the unemployment rate remains at 6.1%. Uh-huh-sure. More like ten percent and growing…. So every factor in the entire economy is failing, not least of which is that chronicled by the ocean of ink (blood red) that’s been spilled already on the number of foreclosures and consequential homelessness. Much has been written in the last few weeks about how our economy got to where it is now. The root of it all, of course, is unbridled greed and lack of oversight. There have been two distinct segments squeezing every cent out of the global economy: Energy and Finance. I have chronicled the energy scams writ large by the Bush Administration in my series of columns about Petrofraud (you can start here), defined as the singular overarching kleptocratic policy of this Presidency. Economic, Foreign and “Defense” policies all serving a transfer of wealth from the government coffers and your pocketbook to the oil industry cronies and OPEC monarchy friends of Bush and Cheney drained our economy of trillions of dollars which, had they remained flowing within, rather than out of our economy, could have alone deflected or postponed the damage done simultaneously by Wall St. But the Casino Capitalism that was created by free-market legislators who deregulated commodities trading, and unwound 75-year old (and wise) banking regulations, thus allowing the creation of purely fictional tradable commercial paper - equivalent, basically to poker chips - sold as bonds, stocks, SIV’s, and myriad other classifications with creative names and acronyms; all these investments were backed by fractions of theoretical, dubious accounts receivable (ARM and sub-prime mortgages) and speculative odds on futures. The worst insult of the con is that it was perpetrated by people educated at the finest institutions in the nation – but in an illegitimate philosophy. Several hundred thousand well (and expensively) educated investment and banking industry employees, mostly young and prone to get caught up in the cult of the theology of greed, taught to them as science, were more than eager to participate in the sham, and now must face the inner demon that is their collective guilt. But that is for them to deal with (along with the foreclosure notice on their Chelsea or Century City condominiums). Life in The New Depression: Look to the Great DepressionMany of us grew up with a parent or grandparent whose personality and behavior was formed during the depression or the Second World War. Unfortunately, many baby boomers and Gen-Xers found humor in the thriftiness and aversion to credit displayed by their parents and grandparents. These younger generations were also the beneficiaries of the great postwar boom in the economy that seduced them away from the practicality that perhaps had been instilled at home. Now they, too, will have a chance to learn what it was all about – and that perhaps the last laugh is on them; it’s time for these younger generations to learn the hard lessons their elders tried to teach them (they will whether they want to or not). Here’s where this writer’s obsession with “Pre-code” Hollywood films steps in [note: I’ve been an avid fan/student of early film for over 35 years]. Many films made between 1929 and 1934 allow us to see the real-world existence, matter-of-factly portrayed contemporaneously, thus, generally do so better and more accurately than subsequent “period pictures”. I’m going to keep this really simple. One film packs in the 14-year journey of a WWI vet overcoming combat induced drug addiction, oppressive narcotic legislations, government raids on labor activism, bourgeoning socialism vs. free-market capitalism, the displacement caused by the Depression, but with a hopeful ending invoking FDR’s inaugural address – all in just 71minutes! William Wellman’s “Heroes For Sale” (Warner Bros./First National Pictures, 1933) packs in the 14-year journey of a WWI vet overcoming combat-induced drug addiction, oppressive narcotic legislations, government raids on labor activism, bourgeoning socialism vs. free-market capitalism, the displacement caused by the Depression, but with a hopeful ending invoking FDR’s inaugural address – all in just 71minutes! Find it or demand a screening on TCM! You’ll want to view it over and over, because you will see how closely recent history has repeated what happened 80 years before, but watching this, and you’ll find chilling parallels to that earlier 15 year sweep: Gulf War syndrome, societal marginalization (and imprisonment) of narcotic addiction, and the difficulties getting treatment, government persecution of dissent against free-trade and trade unionism, the greed that accompanies a free market banking system, and how when a Depression comes, we all end up under a bridge or sharing a room. How Long Will It Last?I don’t have a crystal ball and if I did, I’d probably be hocking it right about now, since I don’t believe in them, and I’m not fond of unnecessary tchochkes. Still, history shows us that these kinds of collapses take at least a decade to fully recover, and how a nation emerges from such things is unpredictable. With good governance, we may well emerge better than ever – and all of us – no crystal needed – will be older, wiser, and much more careful with our money.
Michael Fox is a writer and economist based in Los Angeles. He has been a corporate controller, professor, and small business entrepreneur. After a life-altering accident, he spent five years learning more about medicine and the healthcare industry than he ever intended. In addition to writing about economics and related geopolitical issues, he is passionate about the performing arts and writes theatre, film, and opera criticism.
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