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March 14, 2009

Roaring '20s redux?

The headline "Just a recession ... or what? We're at a loss for words" (3/7, A-1) hit the nail on the head.

We in the U.S. seem to be revisiting some of the causes of the Great Depression and have failed to heed them.

The overinvestment in the stock market in the "roaring '20s" boom was much the same as the boom in housing and electronics. Investment in 401(k)s creates artificial value that can't be sustained when the boom ends.

Not enough money chasing the production of goods results in stagnation or deflation. In the '20s it was low wages of workers. Today I don't know. Credit used up? Banks don't lend?

American banks made bad loans in the '20s to Latin America and Europe over World War I, which couldn't repay loans. Today we have subprime defaults.

With all the reforms of the '30s - the Securities and Exchange Commission and the Federal Deposit Insurance Corp. - to regulate markets and banking, we still went south. What happened with our congressional banking committees since the S&L scandal? Our huge bureaucracies?

They failed. Greed and stupidity win hands down.

James L. Atkinson
Kansas City, Kan.



Can you say Barney-the Banking Queen-Frank, Chris-Countrywide-Dodd, Maxine-what me worry-Waters, James? Look no further my friend.

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