Some Headlines from 1931

Lest history repeat itself - Then Austria, now Greece.- the US is in much worse straights now with all its debt - I wonder who will bail us out. Mary Anne President Hoover says in March that "prosperity is just around the corner," but financial panic and economic depression engulf most of the world. Vienna's Kreditanstalt comes under pressure in the spring, but the government refuses to abandon the gold standard lest a drop in the value of the schilling magnify the burden of Austria's foreign-currency-dominated debt and raise the specter of hyperinflation. It appeals for help to neighboring countries and to the new Bank for International Settlements, but when little help is forthcoming the government supports the Kreditanstalt with a large infusion of freshly-printed domestic currency; a flight of capital quickly depletes Austria's gold and foreign exchange reserves. The Kreditanstalt goes bankrupt May 11, possibly as a result of French opposition to an Austro-Hungarian credit union, and the panic spreads to Germany, where the Darmstadter und National Bank closes. Between 30 and 40 percent of the German workforce is jobless. The Danatbank goes into bankruptcy July 13, precipitating a general closing of German banks that continues until August 5. The Bank of England advances money to Austria, but Britain's own financial position is shaky. Harlan County, Ky., coal miners and deputized guards have a gunfight May 4 at Evarts following 4 years of strikes and labor-management battles. The Harlan County Coal Operators Association began spending heavily in 1927 to terrorize miners and their families with strong-arm tactics in a move to combat efforts by the United Mine Workers to organize. The conflict has come to a head, three guards and one miner are left dead in the wake of the gunfight, and untold numbers of others are carried dead or dying into the hills. Three San Jose, Calif., canneries cut wages, and workers organized by Communist Party members walk out in the summer. Among the organizers is Dorothy Ray Healey, 16, who has dropped out of high school to work in the Santa Clara valley. Canada raises tariffs June 18, estimating that the new customs duties will cut off two-thirds of goods imported from the United States. President Hoover announces on June 20 a 1-year moratorium on payments of war debts and reparations (see 1932). Britain receives a French-American loan August 1, but London and Glasgow have riots September 10 to protest government economy measures, naval units mutiny September 15 to protest pay cuts, the pound sterling is devalued September 20 from $4.86 to $3.49, and Britain is forced to abandon the gold standard once again September 21. Detroit lays off another 100,000 workers as motorcar sales collapse, reducing employment in auto plants to 250,000, down from 475,000 in 1929. Two out of three Detroit workers (and eight out of 10 Detroit blacks) are totally or partially unemployed; the situation will improve somewhat, but unemployment will remain high in Detroit until 1942 (see 1933). The "Swope Plan" for economic recovery, outlined by General Electric president Gerard Swope, 58, says, in effect, leave the problem to business and let trade associations develop national economic plans to revive the economy. U.S. unemployment tops 8 million. Men and women in New York's Harlem compete with dogs and cats for the contents of garbage cans. Hunger marchers petition the White House December 7 for a guarantee of employment at a minimum wage but are turned away. President Hoover was U.S. food administrator from 1917 to 1918, but he opposes suggestions that the federal government distribute food to the needy, insisting that charitable organizations will provide what is needed, and while American Red Cross dietitians offer advice on how to eat economically, the Red Cross refuses to use its funds to help the unemployed (see Lewis, 1932). U.S. women take in boarders, do sewing, laundry, and dressmaking, provide $1 manicures, and set up parlor grocery stores to supplement their husbands' incomes as economic recession deepens. First National Bank chairman George F. Baker dies at New York May 2 at age 91, leaving $60 million to his son George F., Jr.; former J. P. Morgan & Co. partner Dwight W. Morrow dies at Englewood, N.J., October 5 at age 58. U.S. bank failures total 2,294, up from 1,352 last year. Labor leader Arthur J. Cook dies at London November 2 at age 47, having failed in his efforts to obtain higher wages and shorter hours for British coal miners. President Hoover calls for increased taxation in his annual message to Congress December 8, saying that more revenue is needed to make up for a $900 million deficit. He recommends an emergency Reconstruction Finance Corp. (RFC) and a public works administration; Federal Reserve Board governor Eugene Meyer has been a leading advocate of the RFC, which is to be patterned after the War Finance Corp. that Meyer headed in 1918 and then again after the war (see 1932). Australia's gold mining industry begins to revive following the discovery of Western Australia's biggest gold nugget at Larkinville (the Golden Eagle weighs 1,135 ounces). Japan abandons the gold standard December 11 as her new prime minister Tsuyoshi Inukai tries to reflate the economy. Wall Street's Dow Jones Industrial Average closes at 57.46 December 10, rebounds to 79.63 the next day, but closes December 31 at 77.90, down a record 52 percent from 164.50 at the end of 1930.

I wonder who will bail us out.
Mary Anne

It will be the Asian countries of China, Asian tigers & India. All have large foreign currency
surpluses. And they have much lower median age population who is becoming more affluent
every month.

Especially China can not afford to let US go bankrupt. Because they are export driven and
can not afford to lose their largest export market.

As for Obama policies, they can not continue for ever. He is term limited by US Constitution.

Edited by pdx5, 20 May 2010 - 05:43 PM.

I wonder who will bail us out.
Mary Anne

It will be the Asian countries of China, Asian tigers & India. All have large foreign currency
surpluses. And they have much lower median age population who is becoming more affluent
every month.

Especially China can not afford to let US go bankrupt. Because they are export driven and
can not afford to lose their largest export market.

As for Obama policies, they can not continue for ever. He is term limited by US Constitution.

These comments are very strange. How can your 5 kids pay you a salary so that you keep paying them to wash your car?!?

Chinese economy is less than half of US economy, they cannot possibly buy enough US assets to float US to prosperity.

Instead the cheap labor from China is enough to completely depress the US labor and keep them that way for a long long time.

China will surpass US, if US continues to spend like a drunken sailor without any real return to its economy, then China will come and buy the bankrupt US assets to only split and take home the ones they like and sell the rest in pieces...

Wake up!

arbman- Because the entire US economy will not collapse. Germany did not stop functioning when it's currency failed. China will not have to buy every single asset in US to bail it out. Just like to save Greece there is no need to buy every piece of Greek economy and every Greek asset. A couple of hundred Billion dollars can bail Greece out. US might need a couple of Trillion for a bailout. China can do it all by itself. The only bail out necessary is to provide enough capital so that the government can fulfill it's obligations. The banking industry was saved from collapse by TARP which was not equal to or greater than the entire assets of banking industry. TARP was much smaller than total assets of banks. Please don't get the impression I want US to need a bailout. I am just as disgusted at what is going on as you. My post was in answer to MaryAM's question who will bail US out. My answer is there are countries out there with enough surplus reserves to bail US out if needed.

Edited by pdx5, 20 May 2010 - 07:48 PM.

US Banking is floating not because of TARP but roughly $3T devaluation that at least about $1.5T of that amount is still sitting in Fed's balance sheet. The rest of their bankrupt debt is being buried in FNM/FRE at the moment. Paying back TARP is a joke, they paid you back with your own money!

China needs to buy a couple trillion dollars of US assets. That's it;

Hello? Is this China? nǐ hǎo! nǐ hǎo! Oh yes! Send in 3 Trillions, we need some quick money here, oh by the way, please Include some chopsticks and fortune cookies, we'll need them, click!

... and that's how we will be bailed out, we will spend yet another cycle of no pain, only gain decade so that we can go back to China this time maybe to ask for 10 trillions or else we'll say 'all of your previous trillions are worth nothing!'.

Wait a minute! We already did this and it didn't work in 2008!

If Obama did recently say a recovery is around the corner...I interpret it differently...that Obama is about to use what he thinks is an ace in the hole below. Just before the March 2009 low...I recall he came on to say it was a good time to buy stocks. That was days before the govt's 1.25 trillion dollar market intervention program was announced.

The Fed is just about done with its 1.25 trillion dollar purchase program. Normally that would leave the notorously unreliable foreign central banks to do the heavy lifting but thanks to the maneuver just before year-end 2009 there could be an extra couple hundred billion left of ammo in a last ditch effort to prop the markets.

http://blogs.reuters...port-increased/

Edited by entre, 20 May 2010 - 08:30 PM.