Writing a Paper on What Should have Been Done to Fix the Great Depression

Federal Reserve Chairman Ben Bernanke has spent his life studying banking and economic cycles. From his days as a graduate student at the Massachusetts Institute of Technology to his 2004 book, Essays on the Great Depression, he has drilled down on managing economies in a crisis. Two days ago, he agreed to buy up short term commercial paper (discussed in my last blog) to ease the credit freeze, and this morning, he presided over an emergency cut of a half point in the rate that the Fed charges banks. How did the markets respond? The NYSE dropped 5% after the first decision, and the markets remained down after the second. He’s clearly not reading my blog… or that of anyone else who has made these suggestions.

Who am I to tell the Fed Chairman that despite his best intentions, the failure of both the Department of the Treasury and the Congress to reach down to the grassroots of America and address the first line of attack – helping human beings with homes (even renters… nothing like renting from a homeowner who is being foreclosed!) who need to know they are not losing their homes – is only making things worse? I somehow feel morally obligated to try. We do not need more houses dumped into a market that cannot sell what’s there now – because no one has money to buy houses and there are almost no loans to support even these low values. The real estate market does not need to be further depressed. Home value is how most folks look at their net worth.

And we need cash at level where small businesses can meet their payrolls. I’m sounding like I am beating a dead horse, but no one seems to be addressing the obvious! When businesses cannot borrow money against stuff that their customers already bought and are paying for, when then cannot meet payroll because of this huge factor, someone has to step in before all the people who need to get paid are laid off instead. Fund that market now!

This mess hurts horribly. We need to stem the tide and address the human beings in the middle and at the bottom who can’t afford lobbyists, who cannot wait for a trickle down from the lending institutions that are getting “bailed out.” According to Peter R. Orszag, director of the Congressional Budget Office, addressing a House subcommittee, our pension plans have loss over $2 trillion in the past 15 months! People cannot retire, and the young folks waiting for new jobs are seeing fewer vacancies, beyond those caused by the meltdown, because fewer people are leaving their jobs for retirement.

It almost seems as if those in Congress, from both sides of the aisle, and the Executive Branch are intentionally leaving a mess that cannot easily be rectified for years to the next President and the next Congress. In the end, where everyman stares blindly at those with “golden parachutes” wondering why that can even happen, perhaps our elected representatives can help us with a lousy old mattress to land on in a world where they seem to have shoved us out a plane door.

I’m Peter Dekom, and I approve this message.