» News

2013 Looks a Lot Like 1937 in Four Fearsome Ways

Home - by - November 21, 2012 - 22:15 America/New_York - 13 Comments

Bloomberg

Will 2013 be 1937? This is the question many analysts are posing as the stock market has dropped after the U.S. election. On Nov. 16, they noted that industrial production, a crucial figure, dropped as well.

In this case, “1937” means a market drop similar to the one after the re-election of another Democratic president, Franklin D. Roosevelt, in 1936.

The drop wasn’t immediate in that case; it came in the first full year after the election. Industrial production plummeted by 34.5 percent. The Dow Jones Industrial Average dropped by half, from almost 200 in early 1937 to less than 100 at the end of March 1938.

It’s hard to imagine stock indexes dropping by half today, or unemployment rising past 15 percent, as they did in the “depression within the Depression.” But the parallels are visible enough to be worth tracing. They have to do with the danger of big government, and can be captured in a few categories.

- Pre-election spree that sets records. In the old days, federal spending amounted to about 19 percent or 19.5 percent of gross domestic product. That ratio was so reliable that economists took it as a given, the American normal, from which divergence was unnatural and temporary. By the old 19 percent rule, federal spending would have dropped back once the worst of the 2008 economic crisis passed.

That didn’t happen. Instead the federal government continued to spend. Most important, even in 2012, when the crisis was long past, the government went on a spree, spending the equivalent of 24.3 percent of the economy, more than the 24.1 percent for the year earlier.

more

h/t   My2Cents

» 13 Comments

  1. Edith McCrotch

    November 21st, 2012

    This is what we get for the teachers not teaching but promoting “let’s play nicey-nicey with others” progressive bullshit.

    War is inevitable.

    The war will be fought in our streets by freedom loving people vs. the established political powers.

    We will be called rebels again.

    I am Sparticus and if you are a teacher, you are first on my list.

    Thumb up +4

     
  2. FreeMan & Sarah Intend to Defend

    November 21st, 2012

    The Democratic party liked FDR so much they enacted a term limit of 2 terms with little help from across the isle.

    I was there before only one term of this clown.

    Thumb up +5

     
  3. Wyatt, Insensitive Progressive Jerk

    November 21st, 2012

    Economies are largely based on confidence in the present and in the future. And with Obama, we don’t have any.

    Thumb up +5

     
  4. F.D.R. in Hell

    November 21st, 2012

    The Fed’s tight money supply was to blame for the 1937 Recession within the Depression.

    Unemployment rose to 19%. Our entry into WWII brought that number down in 1942…but what will cut unemployment in 2013 and beyond? Certainly nothing your boy plans to do in the next four orbits around the Sun.

    Here’s what I said in my Second Inaugural Address (1/20/37):

    “Our progress out of the depression is obvious.”

    Sound familiar? Sadly, very familiar.

    The -Fasten Seat Belts- sign is on. :evil:

    Thumb up +5

     
  5. Bad Brad

    November 21st, 2012

    Wyatt, “Economies are largely based on confidence ”

    No, the stock market is. And that’s not the real economy to working men and women. Stock market finished up today in spite of 410k job loss. Wall Street and Main Street no longer have any connection. It’s a shell game.

    Thumb up +4

     
  6. Major Mal function

    November 21st, 2012

    Nah. In 1936, the USA was the world’s #1 manufacturer. Today, just about everything that can be outsourced, has been outsourced.

    Thumb up +1

     
  7. Eleanor in Hell

    November 21st, 2012

    Franklin, why don’t you just admit you strung out the Depression to serve four terms as President.

    Just like this clown will try to do. :roll:

    Thumb up +5

     
  8. Mr Happy

    November 22nd, 2012

    It’s 1937 in America and no Hitler this time

    Thumb up +1

     
  9. Bad Brad

    November 22nd, 2012

    Mr Happy, Dude, he’s in the freaken White House.

    Thumb up +3

     
  10. Mr. Happy

    November 22nd, 2012

    Of course Bad Brad!
    :)

    Thumb up +2

     
  11. Bad Brad

    November 22nd, 2012

    Happy Thanksgiving everyone. Packing it in.

    Thumb up +4

     
  12. Rick

    November 22nd, 2012

    “It’s 1937 in America and no Hitler this time.”

    Mr. Happy, would Hamas and the moslem Brotherhood do instead??

    Thumb up +3

     
  13. Stranded in Sonoma

    November 22nd, 2012

    The reason for the depression within a depression in 1937 was because the Social Security TAX was ruled constitutional, even though SCOTUS left the question open on the validity of social security itself. With all those extra taxes to pay, employers just started firing employees to cut costs. Which is what all taxes are anyway, just costs.

    As for “FDR getting us out of the depression,” nothing could be further from the truth. When FDR took over in 1933 unemployment was 20%. In April of 1939, after 6 full years of FDR’s New Deal (the old con), unemployment reached 20%. When the U.S. got into WWII, even the democrats in congress realized FDR’s policies were stifiling business and production. So they repealed them, some over the objections of FDR himself. (They had to override his veto.) By 1943, with the New Deal gone, production took off and we became The Arsenal of Democracy.

    Thumb up 0