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Gandalf Grey
Guest
Boo Hoo! Deja Vu
By Stephen Pizzo
Created Dec 4 2007 - 9:04am
Every time I post an article warning that the US economy is about to go bust
I get emails from right-wingers telling me I'm an idiot, un-American, a
closet-commie, and worse. They point out that everything is fine, never been
better and, "just look at the stock market," it's up.
I take such criticism seriously -- even personally. So I hit the history
books to see what people of that ilk were saying and doing just before the
US stock market cratered in October 1929. (Hint: They were doing and saying
exactly the same thing.)
That's when I came across a remarkably well-written detailed history of
pre-depression American by historian (and former Harper Magazine Editor,)
Fredrick Lewis Allen. It was long and you can - and should - read the whole
thing yourself. It's free and it's online. [Here [1]]
When I read it I kept having to check the dates he quoted be sure he was
talking about the two-termed Calvin Coolidge administration and not the
two-term George W. Bush administration.
I lifted some of the most startling similarities from Allen's tome and
linked them to their 2007 corollaries. Sorry for the length of this, but it
was unavoidable -- a LOT shorter than the whole book.
(Portions by Fredrick Lewis Allen in black text. My additions in red text.)
Auto-craze drives economy during 1920s "In 1919 there had been 6, 771,000
passenger cars in service in the United States; by 1929 there were no less
than 23 million There you have possibly the most potent statistic of
Coolidge Prosperity.... As early as the end of 1923 there were two cars for
every three families in "Middletown," a typical American
City...Investigators interviewed 123 working-class families of "Middletown"
and found that 60 of them had cars. Of these 60, 26 lived in such
shabby-looking houses that the investigators thought to ask whether they had
bathtubs, and discovered that as many as 21 of the 26 had none. The
automobile came even before the tub!
Today: There are about 300 million Americans, and if you suppose that
everyone over 18 drives, that is 285 million people. Subtract 10% for the
blind and disabled and elderly, and just for error correction. There are
actually more cars than there are people to drive them, so... There are more
than 276 million cars in the US.
and
Study: Auto Loans For American-Made Cars More Likely To Default
UNIVERSITY PARK, PA (August 7, 2007) - New research co-authored by a
professor at Penn State's Smeal College of Business could change the way
banks assign interest rates to auto loans based on the make of the car being
financed. (Full) [2]
Radio technology pushes market in 1920s. "The radio manufacturer occupied a
less important seat than the automobile manufacturer on the prosperity
bandwagon, but he had the distinction of being the youngest rider. You will
remember that there was no such thing as radio broadcasting to the public
until the autumn of 1920, but that by the spring of 1922 radio had become a
craze-as much talked about as Mah Jong was to be the following year or
cross-word puzzles the year after. In 1922 the sales of radio sets, parts,
and accessories amounted to $60,000,000. In 1922 radio sales amounted to
just $60 million. By early 1929 it had exploded 1400 percent to nearly $850
million.)
Today: Back then it was the nacient tele-communications and automobile
industry booms that drove the market up. Over the last decade it was a
housing boom.
Large Retailers squeeze out community shops. "While the independent
storekeeper struggled to hold his own, the amount of retail business done in
chain stores and department stores jumped by leaps and bounds. For every
$100 worth of business done in 1919, by 1927 the five-and-ten-cent chains
were doing $260 worth, the cigar chains $153 worth, the drug chains $224
worth, and the grocery chains $387 worth. Mrs. Smith no longer patronized
her "neighborhood" store; she climbed into her two-thousand-dollar car to
drive to the red-fronted chain grocery and save twenty-seven cents on her
daily purchases."
Today: WalMart, Target and other Big Box stores have been doing the same
thing to small merchants.
Utah activists parade against big chain stores
11/18/2007Activists dress up to boost support for locally owned businesses,
saying they invest in the community "The Four Horsemen of the
Shopocalypse" - greed, waste, vanity...
Dressed up as a giant green elf, University of Utah student Robbie Rich
pushed his shopping cart through the streets of downtown Salt Lake City.
(Full) [3]
The entertainment industry prospered in the 1920s "The movies prospered,
sending their celluloid reels all over the world and making Charlie Chaplin,
Douglas Fairbanks, Gloria Swanson, Rudolph Valentino and Clara Bow familiar
figures to the Eskimo, the Malay, and the heathen Chinese; while at home the
attendance at the motion-picture houses of "Middletown" during a single
month (December, 1923) amounted to four and a half times the entire
population of the city. Men, women, and children, rich and poor, the
Middletowners went to the movies at an average rate of better than once a
week!"
Today: JPMorgan To Invest $200 Mln In Entertainment Sector
12/3/2007 -- JPMorgan Chase & Co. (JPM) confirmed its plans of investing in
entertainment sector. The New York-based investment bank said it would
invest $200 million of its own capital in the entertainment industry. (Full)
[4]
Corporate profits soared in 1920s "Was this Coolidge Prosperity real?
Farmers did not think so. Perhaps the textile manufacturers did not think
so. But soaring corporation profits and wages and incomes left little room
for doubt. "
Today: Profits surge to 40-year high When will corporations spend some of
their hoard? March 30, 2006 -- WASHINGTON (MarketWatch) -- U.S. corporate
profits have increased 21.3% in the past year and now account for the
largest share of national income in 40 years, the Commerce Department said
Thursday.
Easy Credit in 1920 fuels the market "Prosperity was assisted...by two new
stimulants to purchasing, each of which mortgaged the future but kept the
factories roaring while it was being injected....The first was the increase
in the installment buying. People were getting to consider it old-fashioned
to limit their purchases to the amount of their cash balance; the thing to
do was to "exercise their credit." By the latter part of the decade,
economists figured that 15 per cent of all retail sales were on an
installment basis, and that there were some six billions of "easy payment"
paper outstanding.
Today:
According to CNNMoney, consumer spending accounts for some 70 percent of the
US gross domestic product. "So the world economy is leveraged to the US
consumer. And the US consumer is leveraged to the hilt," states the web
site.
and
Next Fear: Corporate Debt
Wall Street Journal - Nov. 7, 2007 -- Financial markets have been hit by a
wave of defaults on mortgage loans. Now it might be time to start worrying
about a more-remote threat: shaky corporate debt. (Full) [5]
Wall Street players prospered in the 1920s "The other stimulant was
stock-market speculation. When stocks were skyrocketing in 1928 and 1929 it
is probable that hundreds of thousands of people were buying goods with
money which represented, essentially, a gamble on the business profits of
the nineteen-thirties. It was fun while it lasted."
"In every American city and town, service clubs gathered the flower of the
middle-class citizenry together for weekly luncheons noisy with good
fellowship. They were growing fast, these service clubs. Rotary, the most
famous of them, had been founded in 1905; by 1930 it had 150,000 members and
boasted of--as a sign of its international influence--as many as 3,000 clubs
in 44 countries....these clubs (did not) content themselves with singing
songs and conducting social-service campaigns; they expressed the national
faith in what one of their founders called "the redemptive and regenerative
influence of business." The speakers before them pictured the businessman as
a builder, a doer of great things, yes, and a dreamer whose imagination was
ever seeking out new ways of serving humanity. ..The service clubs
specialized in this sort of mysticism: a speaker of before the Rotarians of
Waterloo, Iowa, quoted by the American Mercury declaring that "Rotary is a
manifestation of the divine"?
Today:
It's a Wall Street bonus bonanza
NEW YORK--2006: - Executives at Wall Street's top financial firms will
probably remember this holiday season with particular fondness, as soaring
profits cascade down to traders and bankers in the form of
multimillion-dollar bonuses...Big Business Lauded in the 1920s, and today.--
All told, this year's bonus pool for Wall Street executives hit $23.9
billion, the New York State Comptroller's office estimates. That's a 17%
jump from last year's bonus pool of $20.5 billion, and it works out to an
average bonus of $137,580 for every person employed in the financial
services industry. (Full) [6]
Business as a manifestation of Godliness
"Indeed, the association of business with religion was one of the most
significant phenomena of the day. When the National Association of Credit
Men held their annual convention at New York, there were provided for the
three thousand delegates a special devotional service at the Cathedral of
St. John the Divine and five sessions of prayer conducted by Protestant
clergymen, a Roman Catholic priest, a Jewish rabbi; and the credit men were
uplifted by a sermon by Dr. S. Parkes Cadman on "Religion in Business."
Today:
(From Small Business Admin. Web site
Mission
SBA's Center for Faith-Based and Community Initiatives seeks to empower
faith-based and other community organizations to apply for federal social
service grants. It supplies information and training, but does not make the
actual funding decisions. Those decisions are made through procedures
established by each grant program, generally involving a competitive
process. There are no grant funding set-asides for faith-based
organizations. Instead, the Faith-Based and Community Initiative creates a
level playing field for faith-based as well as other community organizations
to work with the government to meet the needs of America's communities.
Mainstream Media in 1920's "Newspaper owners and editors found that whenever
a Dayton trial or a Vestris disaster took place, they sold more papers if
they gave it all they had-their star reporters, their front-page display,
and the bulk of their space. They took full advantage of this discovery:
according to Mr. Bent's compilations, the insignificant Gray-Snyder murder
trial got a bigger "play" in the press than the sinking of the Titanic;
Lindbergh's flight, than the Armistice and the overthrow of the German
Empire. Syndicate managers and writers, advertisers, press agents, radio
broadcasters, all were aware that mention of the leading event of the day,
whatever it might be, was the key to public interest. The result was that
when something happened which promised to appeal to the popular mind, one
had it hurled at one in huge headlines, waded through page after page of
syndicated discussion of it, heard about it on the radio, was reminded of it
again and again in the outpourings of publicity-seeking orators and
preachers, saw pictures of it in the Sunday papers and in the movies, and
(unless one was a perverse individualist) enjoyed the sensation of vibrating
to the same chord which thrilled a vast populace.
"The country had bread, but it wanted circuses-and now it could go to them a
hundred million strong....For the system of easy nation-wide communication
which had long since made the literate and prosperous American people a
nation of faddists was rapidly becoming more widely extended, more
centralized, and more effective than ever before.
Today: Police car chases preempt regular programming. Britney, Paris... et
al, Like, duh.
And that brings us to where they were then and where we are today.
Market uncertainy grows "One Day in February, 1928, an investor asked an
astute banker about the wisdom of buying common stocks. The banker shook his
head. "Stocks look dangerously high to me," he said. "This bull market has
been going on for a long time, and although prices have slipped a bit
recently, they might easily slip a good deal more. Business is none too
good. Of course if you buy the right stock you'll probably be all right in
the long run and you may even make a profit. But if I were you I'd wait
awhile and see what happens."
The Federal Reserve steps in "The speculative fever had been intensified by
the action of the Federal Reserve System in lowering the discount rate from
4 per cent to 3'/2 per cent in August, 1927, and purchasing Government
securities in the open market. This action had been taken from the most
laudable motives: several of the European nations were having difficulty in
stabilizing their currencies, European exchanges were weak, and it seemed to
the Reserve authorities that the easing of American money rates might
prevent the further accumulation of gold in the United States and thus aid
in the recovery of Europe and benefit foreign trade."
Today:
Is the dollar leading us into a depression?
A fallen greenback could mean economic turmoil, or it could trigger an
economic crisis. Economists are having trouble predicting the outcome
because investors are not behaving rationally (Taipei Times) [7]
U.S. Fed Reserve Could Slash 25 Points More In Discount Rate Before Dec 11
Meeting:
The Feds has already cut the funds rate two times in the last three months,
brining the short-term interest rates to 4.50 percent...This time, the Feds
are likely to reduce its discount rate by 25 basis points down to 4.75
percent. (Full) [8]
Denial from above "American business was beginning to lose headway; the
lowering of money rates might stimulate it. But the lowering of money rates
also stimulated the stock market. The bull party in Wall Street had been
still further encouraged by the remarkable solicitude of President Coolidge
and Secretary Mellon, who whenever confidence showed signs of waning came
out with opportunely reassuring statements which at once sent prices upward
again. In January 1928, the President had actually taken the altogether
unprecedented step of publicly stating that he did not consider (stock)
brokers' loans too high, thus apparently giving White House sponsorship to
the very inflation which was worrying the sober minds of the financial
community.
Today:
U.S. Treasury's Paulson says economy healthy
Nov 16, 2007 -- (Reuters) - U.S. Treasury Secretary Henry Paulson said on
Friday Washington was following a strong dollar policy and indicated he
expected it to rebound, emphasizing the U.S. economy's long-term strength
should help the currency. (Full) [9]
Sucker rallies of 1929"While stock prices had been climbing, business
activity had been undeniably subsiding. The tone of the business analysts
and forecasters-a fraternity whose numbers had hugely increased in recent
years and whose lightest words carried weight-was anything but exuberant.
The National City Bank looked for gradual improvement in business and the
Standard Statistics Company suggested that a turn for the better had already
arrived; but the latter agency also sagely predicted that the course of
stocks during the coming months would depend "almost entirely upon the money
situation." The financial editor of the New York Times described the picture
of current conditions presented by the mercantile agencies as one of
"hesitation." The newspaper advertisements of investment services testified
to the uncomfortable temper of Wall Street with headlines like "Will You
`Overstay' This Bull Market?" and "Is the Process of Deflation Under Way?"
The air was fogged with uncertainty.
Today:
Bernanke and the Last Legs of the Stock Market Sucker's Rally Nouriel
Roubini | Nov 29, 2007: How sharply will the US stock market fall if the US
experiences a recession? Given the recent flow of very negative macro news,
the likelihood of a US hard landing has sharply increased; thus, it is
important to assess the implication of such growth slowdown, hard landing or
outright recession on the stock market...It is true that in the last two
days the US stock market has recovered sharply after a significant 10%
downward correction in the period from early October until Monday. But the
most sensible interpretation of the upward move on Tuesday and Wednesday
this week (in spite of an onslaught of lousy macro news: consumer
confidence, existing home sales, Beige Book, fall in durable goods orders,
regional Fed manufacturing reports, initial claims for unemployment
benefits, expectations that Q4 growth will be closer to 0% after the revised
4.9% in Q3, sharply rising credit losses, falling home prices and a
worsening housing recession, etc.) is that this is the last leg of a
sucker's rally (or dead cat's bounce) driven by wishful hopes that the Fed
easing will prevent a recession. (Full) [10]
Whistling past the graveyard in Fall of 1929 "Anybody who had chosen this
moment to predict that the bull market was on the verge of a wild advance
which would make all that had gone before seem trifling would have been
quite mad-or else inspired with a genius for mass psychology. The banker who
advised caution was quite right about financial conditions, and so were the
forecasters. But they had not taken account of the boundless commercial
romanticism of the American people, inflamed by year after plentiful year of
Coolidge Prosperity. For on March 3, 1928-the very day when the Harvard
prophets were talking about intermediate declines and the Times was talking
about hesitation--the stock market entered upon its sensational phase.
(In the weeks that followed the stock market actually rose.) "What on earth
was happening? Wasn't business bad, and credit inflated, and the stock-price
level dangerously high? Was the market going crazy? Suppose all these madmen
who insisted on buying stocks at advancing prices tried to sell at the same
moment! Canny investors, reading of the wild advance in Radio, felt much as
did the forecasters of Moody's Investors Service a few days later: the
practical question, they said, was "how long the opportunity to sell at the
top will remain."
Today: Pump it and dump it. [11]
Insider/Government market-fixers "What was actually happening was that a
group of powerful speculators with fortunes made in the automobile business
and in the grain markets and in the earlier days of the bull market in
stocks-men like W. C. Durant and Arthur Cutten and the Fisher Brothers and
John J. Raskobwere buying in unparalleled volume.... The big bull operators
knew, too, that thousands of speculators had been selling stocks short in
the expectation of a collapse in the market, would continue to sell short,
and could be forced to repurchase if prices were driven relentlessly up. And
finally, they knew their American public. It could not resist the appeal of
a surging market. It had an altogether normal desire to get rich quick, and
it was ready to believe anything about the golden future of American
business. If stocks started upward the public would buy, no matter what the
forecasters said, no matter how obscure was the business prospect. They were
right. The public bought.
Today:
Stock Market Manipulation!
"When God throws ... The dice are loaded!"?Greek Proverb
I have been around the markets for more time that I do care to remember and
I have seen some really "incredible games" played by market makers, brokers,
traders and many other individuals and or various groups!
http://www.greekshares.com/manipulat.php
On June 12th 1928 a new decline began. The ticker slipped almost two hours
behind in recording prices on the floor....But had the bull market
collapsed? On June 13th it appeared to have regained its balance. On June
14th, the day of Hoover's nomination, it extended its recovery. The promised
reckoning had been only partial. Prices still stood well above their
February levels. A few thousand traders had been shaken out, a few big
fortunes had been lost, a great many pretty paper profits had vanished; but
the Big Bull Market was still young. (Full) [12]
Volume and Volatility
"During that "Hoover bull market" of November, 1928, the records made
earlier in the year were smashed. Had brokers once spoken with awe of the
possibility of five-million-share days? By the summer of 1929, prices had
soared far above the stormy levels of the preceding winter into the blue and
cloudless empyrean. All the old markers by which the price of a promising
common stock could be measured had long since been passed; if a stock once
valued at 100 went to 300, what on earth was to prevent it from sailing on
to 400? And why not ride with it for 50 or 100 points, with Easy Street at
the end of the journey?"
Today:
Just two months ago the DOW Industrial average passed the 14,300 mark.. a
new record high.
Rationalizations "By every rule of logic the situation had now become more
perilous than ever. If inflation had been serious in 1927, it was far more
serious in 1929, as the total of brokers' loans climbed toward six billion
(it had been only three and a half billion at the end of 1927). If the price
level had been extravagant in 1927 it was preposterous now; and in
economics, as in physics, there is no gainsaying the ancient principle that
the higher they go, the harder they fall. But the speculative memory is
short. As people in the summer of 1929 looked back for precedents, they were
comforted by the recollection that every crash of the past few years had
been followed by a recovery, and that every recovery had ultimately brought
prices to a new high point. Two steps up, one step down, two steps up
again-that was how the market went. If you sold, you had only to wait for
the next crash (they came every few months back then) and buy in again. And
there was really no reason to sell at all: you were bound to win in the end
if your stock was sound. The really wise man, it appeared, was he who
"bought and held on."
Today:
No Sign of `Sell' on Wall Street as Analysts Say: `Buy,' `Hold'
Dec. 3 (Bloomberg) -- Anybody who followed the advice of Wall Street's
top-ranked analysts, none of whom would say ``sell'' for a single company in
the securities industry this year, is reckoning with subprime-like
losses...Merrill Lynch & Co.'s Guy Moszkowski, UBS AG's Glenn Schorr and
Sanford C. Bernstein & Co.'s Brad Hintz maintained either buy or hold
recommendations on Bear Stearns Cos. as it fell 39 percent in 2007, the most
since the firm went public in 1985. Moszkowski and Hintz had buy ratings on
Morgan Stanley while the stock shed 22 percent in New York trading.
Moszkowski and Schorr advised holding on to Citigroup Inc. as it dropped 40
percent. (Full) [13]
Warnings met by happy talk "Time and again the economists and forecasters
had cried, "Wolf, wolf," and the wolf had made only the most fleeting of
visits. Time and again the Reserve Board had expressed fear of inflation,
and inflation had failed to bring hard times. Business in danger? Why,
nonsense!...On every side one heard the new wisdom sagely expressed:
"Prosperity due for a decline? Why, man, we've scarcely started!" "Be a bull
on America." "Never sell the United States short." "I tell you, some of
these prices will look ridiculously low in another year or two." "Just watch
that stock-it's going to five hundred." "The possibilities of that company
are unlimited." "Never give up your position in a good stock."
Today:
US News: Nov. 3, 2007 --About the only people who still see the glass half
full are Chairman Ben Bernanke and his colleagues at the Federal Reserve
Board. They propped the market up on Halloween with a treat of a
quarter-point drop in the overnight bank lending rate to 4.5 percent and
also pumped in $41 billion to help steady the credit markets. The Fed
explained the rate cut in a statement that said the following in a nutshell:
"Credit markets stable. Economy and inflation stable. We're done. Mission
accomplished." But the happy talk was interrupted by panic on Wall Street,
as traders digested news of more trouble at the world's big banks resulting
from the ongoing credit crisis. (Full) [14]
1929 "patriots" encouraged to shop "Meanwhile, one heard, the future of
American industry was to be assured by the application of a distinctly
modern principle. Increased consumption, as Waddill Catchings and William T.
Foster had pointed out, was the road to plenty. If we all would only spend
more and more freely, the smoke would belch from every factory chimney, and
dividends would mount."
Today:
"The unemployment rate has remained low, at 4.5 percent. A recent report on
retail sales shows a strong beginning to the holiday shopping season across
the country -- and I encourage you all to go shopping more." George W.
Bush -- December 2006
Milking consumers "Gradually the huge pyramid of capital rose. While
super-salesmen of automobiles and radios and a hundred other gadgets were
loading the ultimate consumer with new and shining wares, super-salesmen of
securities were selling him shares of investment trusts which held stock in
holding companies owned the stock of banks which had affiliates which in
turn controlled holding companies--and so on ad infinitum. Though the
shelves of manufacturing companies and jobbers and retailers were not
overloaded, the shelves of the ultimate consumer and the shelves of the
distributors of securities were groaning. Trouble was brewing-not the same
sort of trouble which had visited the country in 1921, but trouble none the
less. Still, however, the cloud in the summer sky looked no bigger than a
man's hand.
Today:
Are you a patriot? Are you pulling your weight? Got your iPod, your X-Box,
your Hummer, your iPhone? Why not? Why do you hate America?
Obscuring the "oh ****,"moment "Early in September 1929 the stock market
broke. It quickly recovered however, indeed, on September 19th the averages
as compiled by the New York Times reached an even higher level than that of
September 3rd. Once more it slipped, farther and faster, until by October
4th the prices of a good many stocks had coasted to what seemed first-class
bargain levels.... there was little real alarm until the week of October
21st. The consensus of opinion, in the meantime, was merely that the
equinoctial storm of September had not quite blown over. The market was
readjusting itself into a "more secure technical position."
Today:
Stocks Rally Sharply; What Bad News?
Barrons Dec. 3, 2007 -- AMNESIA HAS LONG BEEN A convenient plot device in
daytime soap operas, but lately it's also showing up in stock-market
dramas...We recount the saga of the market's epic run at a pivotal point:
The Dow Jones Industrial Average had just careened to its first 10%
correction of this bull market, and the U.S. economy was fighting the
unknowable spread of mortgage-related cancer at its core when through the
door burst the beloved Dr. Bernanke...So smooth was the good doctor (such
soothing words! that authoritative beard!), and so effective his promise of
relief (a likely interest-rate cut!) Full [15]
"In view of what was about to happen, it is enlightening to recall how
things looked at this juncture to the financial prophets, those gentlemen
whose wizardly reputations were based upon their supposed ability to examine
a set of graphs brought to them by a statistician and discover, from the
relation of curve to curve and index to index, whether things were going to
get better or worse...Professor Irving Fisher, however, was more optimistic.
In the newspapers of October 17, 1929 he was reported as telling the
Purchasing Agents Association that stock prices had reached "what looks like
a permanently high plateau." He expected to see the stock market, within a
few months, "a good deal higher than it is today."
"The disaster which was impending was destined to be as bewildering and
frightening to the rich and the powerful and the customarily sagacious as to
the foolish and unwary holder of fifty shares of margin stock. On October
29, 1929 the market crashed.
"Prosperity is more than an economic condition; it is a state of mind. The
Big Bull Market had been more than the climax of a business cycle; it had
been the climax of a cycle in American mass thinking and mass emotion. There
was hardly a man or woman in the country whose attitude toward life had not
been affected by it in some degree and was not now affected by the sudden
and brutal shattering of hope.
"With the Big Bull Market zone and prosperity going, Americans were soon to
find themselves living in an altered world which called for new adjustments.
new ideas, new habits of thought, and a new order of values. The
psychological climate was changing; the ever-shifting currents of American
life were turning into new channels.
My parents, now in the 80's, remember making those "adjustments," and were
both painful and ugly. Eventually an unlikely savior -- a member of the very
monied class that had pumped and dumped the entire American economy --
appeared on the scene and put America's engine back on the tracks. Franklin
Roosevelt may have lived a privileged life but he understood the key
ingredient that keeps any free market economy perking right along -- a
vibrant working middle class. And that's where he began his rescue efforts
with the WPA.
Roosevelt understood something that any good stone fence builder knows
instinctually -- that when building a loose stone fence or wall the big
rocks are impressive, but it's the little rocks that hold them in place.
_______
--
NOTICE: This post contains copyrighted material the use of which has not
always been authorized by the copyright owner. I am making such material
available to advance understanding of
political, human rights, democracy, scientific, and social justice issues. I
believe this constitutes a 'fair use' of such copyrighted material as
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Law. In accordance with Title 17 U.S.C. Section 107
"A little patience and we shall see the reign of witches pass over, their
spells dissolve, and the people recovering their true sight, restore their
government to its true principles. It is true that in the meantime we are
suffering deeply in spirit,
and incurring the horrors of a war and long oppressions of enormous public
debt. But if the game runs sometimes against us at home we must have
patience till luck turns, and then we shall have an opportunity of winning
back the principles we have lost, for this is a game where principles are at
stake."
-Thomas Jefferson
By Stephen Pizzo
Created Dec 4 2007 - 9:04am
Every time I post an article warning that the US economy is about to go bust
I get emails from right-wingers telling me I'm an idiot, un-American, a
closet-commie, and worse. They point out that everything is fine, never been
better and, "just look at the stock market," it's up.
I take such criticism seriously -- even personally. So I hit the history
books to see what people of that ilk were saying and doing just before the
US stock market cratered in October 1929. (Hint: They were doing and saying
exactly the same thing.)
That's when I came across a remarkably well-written detailed history of
pre-depression American by historian (and former Harper Magazine Editor,)
Fredrick Lewis Allen. It was long and you can - and should - read the whole
thing yourself. It's free and it's online. [Here [1]]
When I read it I kept having to check the dates he quoted be sure he was
talking about the two-termed Calvin Coolidge administration and not the
two-term George W. Bush administration.
I lifted some of the most startling similarities from Allen's tome and
linked them to their 2007 corollaries. Sorry for the length of this, but it
was unavoidable -- a LOT shorter than the whole book.
(Portions by Fredrick Lewis Allen in black text. My additions in red text.)
Auto-craze drives economy during 1920s "In 1919 there had been 6, 771,000
passenger cars in service in the United States; by 1929 there were no less
than 23 million There you have possibly the most potent statistic of
Coolidge Prosperity.... As early as the end of 1923 there were two cars for
every three families in "Middletown," a typical American
City...Investigators interviewed 123 working-class families of "Middletown"
and found that 60 of them had cars. Of these 60, 26 lived in such
shabby-looking houses that the investigators thought to ask whether they had
bathtubs, and discovered that as many as 21 of the 26 had none. The
automobile came even before the tub!
Today: There are about 300 million Americans, and if you suppose that
everyone over 18 drives, that is 285 million people. Subtract 10% for the
blind and disabled and elderly, and just for error correction. There are
actually more cars than there are people to drive them, so... There are more
than 276 million cars in the US.
and
Study: Auto Loans For American-Made Cars More Likely To Default
UNIVERSITY PARK, PA (August 7, 2007) - New research co-authored by a
professor at Penn State's Smeal College of Business could change the way
banks assign interest rates to auto loans based on the make of the car being
financed. (Full) [2]
Radio technology pushes market in 1920s. "The radio manufacturer occupied a
less important seat than the automobile manufacturer on the prosperity
bandwagon, but he had the distinction of being the youngest rider. You will
remember that there was no such thing as radio broadcasting to the public
until the autumn of 1920, but that by the spring of 1922 radio had become a
craze-as much talked about as Mah Jong was to be the following year or
cross-word puzzles the year after. In 1922 the sales of radio sets, parts,
and accessories amounted to $60,000,000. In 1922 radio sales amounted to
just $60 million. By early 1929 it had exploded 1400 percent to nearly $850
million.)
Today: Back then it was the nacient tele-communications and automobile
industry booms that drove the market up. Over the last decade it was a
housing boom.
Large Retailers squeeze out community shops. "While the independent
storekeeper struggled to hold his own, the amount of retail business done in
chain stores and department stores jumped by leaps and bounds. For every
$100 worth of business done in 1919, by 1927 the five-and-ten-cent chains
were doing $260 worth, the cigar chains $153 worth, the drug chains $224
worth, and the grocery chains $387 worth. Mrs. Smith no longer patronized
her "neighborhood" store; she climbed into her two-thousand-dollar car to
drive to the red-fronted chain grocery and save twenty-seven cents on her
daily purchases."
Today: WalMart, Target and other Big Box stores have been doing the same
thing to small merchants.
Utah activists parade against big chain stores
11/18/2007Activists dress up to boost support for locally owned businesses,
saying they invest in the community "The Four Horsemen of the
Shopocalypse" - greed, waste, vanity...
Dressed up as a giant green elf, University of Utah student Robbie Rich
pushed his shopping cart through the streets of downtown Salt Lake City.
(Full) [3]
The entertainment industry prospered in the 1920s "The movies prospered,
sending their celluloid reels all over the world and making Charlie Chaplin,
Douglas Fairbanks, Gloria Swanson, Rudolph Valentino and Clara Bow familiar
figures to the Eskimo, the Malay, and the heathen Chinese; while at home the
attendance at the motion-picture houses of "Middletown" during a single
month (December, 1923) amounted to four and a half times the entire
population of the city. Men, women, and children, rich and poor, the
Middletowners went to the movies at an average rate of better than once a
week!"
Today: JPMorgan To Invest $200 Mln In Entertainment Sector
12/3/2007 -- JPMorgan Chase & Co. (JPM) confirmed its plans of investing in
entertainment sector. The New York-based investment bank said it would
invest $200 million of its own capital in the entertainment industry. (Full)
[4]
Corporate profits soared in 1920s "Was this Coolidge Prosperity real?
Farmers did not think so. Perhaps the textile manufacturers did not think
so. But soaring corporation profits and wages and incomes left little room
for doubt. "
Today: Profits surge to 40-year high When will corporations spend some of
their hoard? March 30, 2006 -- WASHINGTON (MarketWatch) -- U.S. corporate
profits have increased 21.3% in the past year and now account for the
largest share of national income in 40 years, the Commerce Department said
Thursday.
Easy Credit in 1920 fuels the market "Prosperity was assisted...by two new
stimulants to purchasing, each of which mortgaged the future but kept the
factories roaring while it was being injected....The first was the increase
in the installment buying. People were getting to consider it old-fashioned
to limit their purchases to the amount of their cash balance; the thing to
do was to "exercise their credit." By the latter part of the decade,
economists figured that 15 per cent of all retail sales were on an
installment basis, and that there were some six billions of "easy payment"
paper outstanding.
Today:
According to CNNMoney, consumer spending accounts for some 70 percent of the
US gross domestic product. "So the world economy is leveraged to the US
consumer. And the US consumer is leveraged to the hilt," states the web
site.
and
Next Fear: Corporate Debt
Wall Street Journal - Nov. 7, 2007 -- Financial markets have been hit by a
wave of defaults on mortgage loans. Now it might be time to start worrying
about a more-remote threat: shaky corporate debt. (Full) [5]
Wall Street players prospered in the 1920s "The other stimulant was
stock-market speculation. When stocks were skyrocketing in 1928 and 1929 it
is probable that hundreds of thousands of people were buying goods with
money which represented, essentially, a gamble on the business profits of
the nineteen-thirties. It was fun while it lasted."
"In every American city and town, service clubs gathered the flower of the
middle-class citizenry together for weekly luncheons noisy with good
fellowship. They were growing fast, these service clubs. Rotary, the most
famous of them, had been founded in 1905; by 1930 it had 150,000 members and
boasted of--as a sign of its international influence--as many as 3,000 clubs
in 44 countries....these clubs (did not) content themselves with singing
songs and conducting social-service campaigns; they expressed the national
faith in what one of their founders called "the redemptive and regenerative
influence of business." The speakers before them pictured the businessman as
a builder, a doer of great things, yes, and a dreamer whose imagination was
ever seeking out new ways of serving humanity. ..The service clubs
specialized in this sort of mysticism: a speaker of before the Rotarians of
Waterloo, Iowa, quoted by the American Mercury declaring that "Rotary is a
manifestation of the divine"?
Today:
It's a Wall Street bonus bonanza
NEW YORK--2006: - Executives at Wall Street's top financial firms will
probably remember this holiday season with particular fondness, as soaring
profits cascade down to traders and bankers in the form of
multimillion-dollar bonuses...Big Business Lauded in the 1920s, and today.--
All told, this year's bonus pool for Wall Street executives hit $23.9
billion, the New York State Comptroller's office estimates. That's a 17%
jump from last year's bonus pool of $20.5 billion, and it works out to an
average bonus of $137,580 for every person employed in the financial
services industry. (Full) [6]
Business as a manifestation of Godliness
"Indeed, the association of business with religion was one of the most
significant phenomena of the day. When the National Association of Credit
Men held their annual convention at New York, there were provided for the
three thousand delegates a special devotional service at the Cathedral of
St. John the Divine and five sessions of prayer conducted by Protestant
clergymen, a Roman Catholic priest, a Jewish rabbi; and the credit men were
uplifted by a sermon by Dr. S. Parkes Cadman on "Religion in Business."
Today:
(From Small Business Admin. Web site
Mission
SBA's Center for Faith-Based and Community Initiatives seeks to empower
faith-based and other community organizations to apply for federal social
service grants. It supplies information and training, but does not make the
actual funding decisions. Those decisions are made through procedures
established by each grant program, generally involving a competitive
process. There are no grant funding set-asides for faith-based
organizations. Instead, the Faith-Based and Community Initiative creates a
level playing field for faith-based as well as other community organizations
to work with the government to meet the needs of America's communities.
Mainstream Media in 1920's "Newspaper owners and editors found that whenever
a Dayton trial or a Vestris disaster took place, they sold more papers if
they gave it all they had-their star reporters, their front-page display,
and the bulk of their space. They took full advantage of this discovery:
according to Mr. Bent's compilations, the insignificant Gray-Snyder murder
trial got a bigger "play" in the press than the sinking of the Titanic;
Lindbergh's flight, than the Armistice and the overthrow of the German
Empire. Syndicate managers and writers, advertisers, press agents, radio
broadcasters, all were aware that mention of the leading event of the day,
whatever it might be, was the key to public interest. The result was that
when something happened which promised to appeal to the popular mind, one
had it hurled at one in huge headlines, waded through page after page of
syndicated discussion of it, heard about it on the radio, was reminded of it
again and again in the outpourings of publicity-seeking orators and
preachers, saw pictures of it in the Sunday papers and in the movies, and
(unless one was a perverse individualist) enjoyed the sensation of vibrating
to the same chord which thrilled a vast populace.
"The country had bread, but it wanted circuses-and now it could go to them a
hundred million strong....For the system of easy nation-wide communication
which had long since made the literate and prosperous American people a
nation of faddists was rapidly becoming more widely extended, more
centralized, and more effective than ever before.
Today: Police car chases preempt regular programming. Britney, Paris... et
al, Like, duh.
And that brings us to where they were then and where we are today.
Market uncertainy grows "One Day in February, 1928, an investor asked an
astute banker about the wisdom of buying common stocks. The banker shook his
head. "Stocks look dangerously high to me," he said. "This bull market has
been going on for a long time, and although prices have slipped a bit
recently, they might easily slip a good deal more. Business is none too
good. Of course if you buy the right stock you'll probably be all right in
the long run and you may even make a profit. But if I were you I'd wait
awhile and see what happens."
The Federal Reserve steps in "The speculative fever had been intensified by
the action of the Federal Reserve System in lowering the discount rate from
4 per cent to 3'/2 per cent in August, 1927, and purchasing Government
securities in the open market. This action had been taken from the most
laudable motives: several of the European nations were having difficulty in
stabilizing their currencies, European exchanges were weak, and it seemed to
the Reserve authorities that the easing of American money rates might
prevent the further accumulation of gold in the United States and thus aid
in the recovery of Europe and benefit foreign trade."
Today:
Is the dollar leading us into a depression?
A fallen greenback could mean economic turmoil, or it could trigger an
economic crisis. Economists are having trouble predicting the outcome
because investors are not behaving rationally (Taipei Times) [7]
U.S. Fed Reserve Could Slash 25 Points More In Discount Rate Before Dec 11
Meeting:
The Feds has already cut the funds rate two times in the last three months,
brining the short-term interest rates to 4.50 percent...This time, the Feds
are likely to reduce its discount rate by 25 basis points down to 4.75
percent. (Full) [8]
Denial from above "American business was beginning to lose headway; the
lowering of money rates might stimulate it. But the lowering of money rates
also stimulated the stock market. The bull party in Wall Street had been
still further encouraged by the remarkable solicitude of President Coolidge
and Secretary Mellon, who whenever confidence showed signs of waning came
out with opportunely reassuring statements which at once sent prices upward
again. In January 1928, the President had actually taken the altogether
unprecedented step of publicly stating that he did not consider (stock)
brokers' loans too high, thus apparently giving White House sponsorship to
the very inflation which was worrying the sober minds of the financial
community.
Today:
U.S. Treasury's Paulson says economy healthy
Nov 16, 2007 -- (Reuters) - U.S. Treasury Secretary Henry Paulson said on
Friday Washington was following a strong dollar policy and indicated he
expected it to rebound, emphasizing the U.S. economy's long-term strength
should help the currency. (Full) [9]
Sucker rallies of 1929"While stock prices had been climbing, business
activity had been undeniably subsiding. The tone of the business analysts
and forecasters-a fraternity whose numbers had hugely increased in recent
years and whose lightest words carried weight-was anything but exuberant.
The National City Bank looked for gradual improvement in business and the
Standard Statistics Company suggested that a turn for the better had already
arrived; but the latter agency also sagely predicted that the course of
stocks during the coming months would depend "almost entirely upon the money
situation." The financial editor of the New York Times described the picture
of current conditions presented by the mercantile agencies as one of
"hesitation." The newspaper advertisements of investment services testified
to the uncomfortable temper of Wall Street with headlines like "Will You
`Overstay' This Bull Market?" and "Is the Process of Deflation Under Way?"
The air was fogged with uncertainty.
Today:
Bernanke and the Last Legs of the Stock Market Sucker's Rally Nouriel
Roubini | Nov 29, 2007: How sharply will the US stock market fall if the US
experiences a recession? Given the recent flow of very negative macro news,
the likelihood of a US hard landing has sharply increased; thus, it is
important to assess the implication of such growth slowdown, hard landing or
outright recession on the stock market...It is true that in the last two
days the US stock market has recovered sharply after a significant 10%
downward correction in the period from early October until Monday. But the
most sensible interpretation of the upward move on Tuesday and Wednesday
this week (in spite of an onslaught of lousy macro news: consumer
confidence, existing home sales, Beige Book, fall in durable goods orders,
regional Fed manufacturing reports, initial claims for unemployment
benefits, expectations that Q4 growth will be closer to 0% after the revised
4.9% in Q3, sharply rising credit losses, falling home prices and a
worsening housing recession, etc.) is that this is the last leg of a
sucker's rally (or dead cat's bounce) driven by wishful hopes that the Fed
easing will prevent a recession. (Full) [10]
Whistling past the graveyard in Fall of 1929 "Anybody who had chosen this
moment to predict that the bull market was on the verge of a wild advance
which would make all that had gone before seem trifling would have been
quite mad-or else inspired with a genius for mass psychology. The banker who
advised caution was quite right about financial conditions, and so were the
forecasters. But they had not taken account of the boundless commercial
romanticism of the American people, inflamed by year after plentiful year of
Coolidge Prosperity. For on March 3, 1928-the very day when the Harvard
prophets were talking about intermediate declines and the Times was talking
about hesitation--the stock market entered upon its sensational phase.
(In the weeks that followed the stock market actually rose.) "What on earth
was happening? Wasn't business bad, and credit inflated, and the stock-price
level dangerously high? Was the market going crazy? Suppose all these madmen
who insisted on buying stocks at advancing prices tried to sell at the same
moment! Canny investors, reading of the wild advance in Radio, felt much as
did the forecasters of Moody's Investors Service a few days later: the
practical question, they said, was "how long the opportunity to sell at the
top will remain."
Today: Pump it and dump it. [11]
Insider/Government market-fixers "What was actually happening was that a
group of powerful speculators with fortunes made in the automobile business
and in the grain markets and in the earlier days of the bull market in
stocks-men like W. C. Durant and Arthur Cutten and the Fisher Brothers and
John J. Raskobwere buying in unparalleled volume.... The big bull operators
knew, too, that thousands of speculators had been selling stocks short in
the expectation of a collapse in the market, would continue to sell short,
and could be forced to repurchase if prices were driven relentlessly up. And
finally, they knew their American public. It could not resist the appeal of
a surging market. It had an altogether normal desire to get rich quick, and
it was ready to believe anything about the golden future of American
business. If stocks started upward the public would buy, no matter what the
forecasters said, no matter how obscure was the business prospect. They were
right. The public bought.
Today:
Stock Market Manipulation!
"When God throws ... The dice are loaded!"?Greek Proverb
I have been around the markets for more time that I do care to remember and
I have seen some really "incredible games" played by market makers, brokers,
traders and many other individuals and or various groups!
http://www.greekshares.com/manipulat.php
On June 12th 1928 a new decline began. The ticker slipped almost two hours
behind in recording prices on the floor....But had the bull market
collapsed? On June 13th it appeared to have regained its balance. On June
14th, the day of Hoover's nomination, it extended its recovery. The promised
reckoning had been only partial. Prices still stood well above their
February levels. A few thousand traders had been shaken out, a few big
fortunes had been lost, a great many pretty paper profits had vanished; but
the Big Bull Market was still young. (Full) [12]
Volume and Volatility
"During that "Hoover bull market" of November, 1928, the records made
earlier in the year were smashed. Had brokers once spoken with awe of the
possibility of five-million-share days? By the summer of 1929, prices had
soared far above the stormy levels of the preceding winter into the blue and
cloudless empyrean. All the old markers by which the price of a promising
common stock could be measured had long since been passed; if a stock once
valued at 100 went to 300, what on earth was to prevent it from sailing on
to 400? And why not ride with it for 50 or 100 points, with Easy Street at
the end of the journey?"
Today:
Just two months ago the DOW Industrial average passed the 14,300 mark.. a
new record high.
Rationalizations "By every rule of logic the situation had now become more
perilous than ever. If inflation had been serious in 1927, it was far more
serious in 1929, as the total of brokers' loans climbed toward six billion
(it had been only three and a half billion at the end of 1927). If the price
level had been extravagant in 1927 it was preposterous now; and in
economics, as in physics, there is no gainsaying the ancient principle that
the higher they go, the harder they fall. But the speculative memory is
short. As people in the summer of 1929 looked back for precedents, they were
comforted by the recollection that every crash of the past few years had
been followed by a recovery, and that every recovery had ultimately brought
prices to a new high point. Two steps up, one step down, two steps up
again-that was how the market went. If you sold, you had only to wait for
the next crash (they came every few months back then) and buy in again. And
there was really no reason to sell at all: you were bound to win in the end
if your stock was sound. The really wise man, it appeared, was he who
"bought and held on."
Today:
No Sign of `Sell' on Wall Street as Analysts Say: `Buy,' `Hold'
Dec. 3 (Bloomberg) -- Anybody who followed the advice of Wall Street's
top-ranked analysts, none of whom would say ``sell'' for a single company in
the securities industry this year, is reckoning with subprime-like
losses...Merrill Lynch & Co.'s Guy Moszkowski, UBS AG's Glenn Schorr and
Sanford C. Bernstein & Co.'s Brad Hintz maintained either buy or hold
recommendations on Bear Stearns Cos. as it fell 39 percent in 2007, the most
since the firm went public in 1985. Moszkowski and Hintz had buy ratings on
Morgan Stanley while the stock shed 22 percent in New York trading.
Moszkowski and Schorr advised holding on to Citigroup Inc. as it dropped 40
percent. (Full) [13]
Warnings met by happy talk "Time and again the economists and forecasters
had cried, "Wolf, wolf," and the wolf had made only the most fleeting of
visits. Time and again the Reserve Board had expressed fear of inflation,
and inflation had failed to bring hard times. Business in danger? Why,
nonsense!...On every side one heard the new wisdom sagely expressed:
"Prosperity due for a decline? Why, man, we've scarcely started!" "Be a bull
on America." "Never sell the United States short." "I tell you, some of
these prices will look ridiculously low in another year or two." "Just watch
that stock-it's going to five hundred." "The possibilities of that company
are unlimited." "Never give up your position in a good stock."
Today:
US News: Nov. 3, 2007 --About the only people who still see the glass half
full are Chairman Ben Bernanke and his colleagues at the Federal Reserve
Board. They propped the market up on Halloween with a treat of a
quarter-point drop in the overnight bank lending rate to 4.5 percent and
also pumped in $41 billion to help steady the credit markets. The Fed
explained the rate cut in a statement that said the following in a nutshell:
"Credit markets stable. Economy and inflation stable. We're done. Mission
accomplished." But the happy talk was interrupted by panic on Wall Street,
as traders digested news of more trouble at the world's big banks resulting
from the ongoing credit crisis. (Full) [14]
1929 "patriots" encouraged to shop "Meanwhile, one heard, the future of
American industry was to be assured by the application of a distinctly
modern principle. Increased consumption, as Waddill Catchings and William T.
Foster had pointed out, was the road to plenty. If we all would only spend
more and more freely, the smoke would belch from every factory chimney, and
dividends would mount."
Today:
"The unemployment rate has remained low, at 4.5 percent. A recent report on
retail sales shows a strong beginning to the holiday shopping season across
the country -- and I encourage you all to go shopping more." George W.
Bush -- December 2006
Milking consumers "Gradually the huge pyramid of capital rose. While
super-salesmen of automobiles and radios and a hundred other gadgets were
loading the ultimate consumer with new and shining wares, super-salesmen of
securities were selling him shares of investment trusts which held stock in
holding companies owned the stock of banks which had affiliates which in
turn controlled holding companies--and so on ad infinitum. Though the
shelves of manufacturing companies and jobbers and retailers were not
overloaded, the shelves of the ultimate consumer and the shelves of the
distributors of securities were groaning. Trouble was brewing-not the same
sort of trouble which had visited the country in 1921, but trouble none the
less. Still, however, the cloud in the summer sky looked no bigger than a
man's hand.
Today:
Are you a patriot? Are you pulling your weight? Got your iPod, your X-Box,
your Hummer, your iPhone? Why not? Why do you hate America?
Obscuring the "oh ****,"moment "Early in September 1929 the stock market
broke. It quickly recovered however, indeed, on September 19th the averages
as compiled by the New York Times reached an even higher level than that of
September 3rd. Once more it slipped, farther and faster, until by October
4th the prices of a good many stocks had coasted to what seemed first-class
bargain levels.... there was little real alarm until the week of October
21st. The consensus of opinion, in the meantime, was merely that the
equinoctial storm of September had not quite blown over. The market was
readjusting itself into a "more secure technical position."
Today:
Stocks Rally Sharply; What Bad News?
Barrons Dec. 3, 2007 -- AMNESIA HAS LONG BEEN A convenient plot device in
daytime soap operas, but lately it's also showing up in stock-market
dramas...We recount the saga of the market's epic run at a pivotal point:
The Dow Jones Industrial Average had just careened to its first 10%
correction of this bull market, and the U.S. economy was fighting the
unknowable spread of mortgage-related cancer at its core when through the
door burst the beloved Dr. Bernanke...So smooth was the good doctor (such
soothing words! that authoritative beard!), and so effective his promise of
relief (a likely interest-rate cut!) Full [15]
"In view of what was about to happen, it is enlightening to recall how
things looked at this juncture to the financial prophets, those gentlemen
whose wizardly reputations were based upon their supposed ability to examine
a set of graphs brought to them by a statistician and discover, from the
relation of curve to curve and index to index, whether things were going to
get better or worse...Professor Irving Fisher, however, was more optimistic.
In the newspapers of October 17, 1929 he was reported as telling the
Purchasing Agents Association that stock prices had reached "what looks like
a permanently high plateau." He expected to see the stock market, within a
few months, "a good deal higher than it is today."
"The disaster which was impending was destined to be as bewildering and
frightening to the rich and the powerful and the customarily sagacious as to
the foolish and unwary holder of fifty shares of margin stock. On October
29, 1929 the market crashed.
"Prosperity is more than an economic condition; it is a state of mind. The
Big Bull Market had been more than the climax of a business cycle; it had
been the climax of a cycle in American mass thinking and mass emotion. There
was hardly a man or woman in the country whose attitude toward life had not
been affected by it in some degree and was not now affected by the sudden
and brutal shattering of hope.
"With the Big Bull Market zone and prosperity going, Americans were soon to
find themselves living in an altered world which called for new adjustments.
new ideas, new habits of thought, and a new order of values. The
psychological climate was changing; the ever-shifting currents of American
life were turning into new channels.
My parents, now in the 80's, remember making those "adjustments," and were
both painful and ugly. Eventually an unlikely savior -- a member of the very
monied class that had pumped and dumped the entire American economy --
appeared on the scene and put America's engine back on the tracks. Franklin
Roosevelt may have lived a privileged life but he understood the key
ingredient that keeps any free market economy perking right along -- a
vibrant working middle class. And that's where he began his rescue efforts
with the WPA.
Roosevelt understood something that any good stone fence builder knows
instinctually -- that when building a loose stone fence or wall the big
rocks are impressive, but it's the little rocks that hold them in place.
_______
--
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"A little patience and we shall see the reign of witches pass over, their
spells dissolve, and the people recovering their true sight, restore their
government to its true principles. It is true that in the meantime we are
suffering deeply in spirit,
and incurring the horrors of a war and long oppressions of enormous public
debt. But if the game runs sometimes against us at home we must have
patience till luck turns, and then we shall have an opportunity of winning
back the principles we have lost, for this is a game where principles are at
stake."
-Thomas Jefferson