Why Have We Not Learned from History and What Should be Done About the Economic Crisis

Haven't we seen this all before? Well, at least the few of us who were alive when it happened. The main reason why we are in this current economic state is due to the fact that we have failed to learn from our own history. Many say, if you do not know your history, you are doomed to repeat it. I believe that is a false statement, partly in due to the fact that things change and yet some things may seem the same, they actually are not. One quote that could not say this any better is, "The past does not repeat itself, but it rhymes" by Mark Twain. History never repeats itself in its entirety, it only tends to make sense because the certain event is similar to that of a past event. With our current economic state, we are not doing the same things, but just because we are doing things differently does not mean they will not have a similar and catastrophic conclusion.

In 1929, on October 29th, America joined the rest of the world in what would become to be known as the Great Depression. In the market leading up to "Black Tuesday", there was an incredible sell off the weeks prior, then days leading up the crash, the market would go back up, and then back down once again before it officially bottomed out on October 29th. Everyday Americans began panicing and going to the banks to take out money they had deposited there, only to find out that many of these banks had run out of money, leaving many broke and eventually leading to the creation of the FDIC. The crash and proceeding depression was also do to dropping real estate values and the lack of banks having money to back up the loans they were freely given out to almost anyone who wanted one. All of this sound familiar? It sure does rhyme.

What has caused the current economic crisis is very similar to what happened in 1929, when the market crashed. Real estate values were dropping then, and for the past couple years there has been another huge drop in real estate values. While that is something that is exactly the same, everything else that has happened to lead to the current crisis is not. The things that have caused this current economic meltdown is the sub-prime lending crisis(people who are taking out loans on houses that they can't afford to pay back), lack of regulation, jobs being shipped overseas, the lack of new jobs being created in the place of these jobs, the weakening US dollar, and the basic irresponsibility of Americans taking out loans they can't handle and the predatory lenders for making these people believe they can afford to do so. Unless the following things are done, there is no way, in my view, to avoid another financial collapse that could perhaps plunge the world into another Great Depression.

 Economic Stimulus Package: In order to fix things in the short term, we need another economic stimulus package to be given out. Since we are all going to have to pay for the $700 billion bailout, we should get some of this back in the form of another stimulus package. If the proposed amount by President-elect Obama were to be given out, it would certainly help many families and small businesses in the short term. It's obvious what the benefits of a package of the magnitude would do for the country. People would have some extra money to spend, to pay off credit cards or help with other various types of everyday needs. If people have money in their pocket, they are more likely to go spend it, which in turn, helps struggling businesses, namely small businesses. Also, in this package, stimulus checks should also be made out to small businesses making less than a quarter million($250,000) per year. This would give the opportunity to these businesses to make any payments that need to be made, pay employees, and stay afloat in order to help their business prosper.

Job Creation: One investment that has to be made is in job creation, especially jobs that can not be outsourced. Two million of these jobs could easily be creating by rebuilding our infrastructure, building wind and solar panels, finding creative ways to become energy dependent, and to make sure those people who are building these things are in the end rewarded with a self-satisfying job/career. An economic stimulus package would in turn create more jobs in itself. The ability of small businesses to hire employees would create countless more jobs that are less likely to be outsourced than they are of staying right here in America.

More Regulation: One of the main reasons we are in this mess in the first place is due to the fact that less regulation means more speculation and speculation means more trouble and losses. We have seen for the past eight years the effects that George W. Bush and his continued philosophy of trickle down economics has had on the economy. Everyone since Ronald Reagan, the first Bush, Clinton, and the aforementioned president of the past eight years has stuck with this philosophy and we have all seen how badly this has turned out. With more regulation, speculators are less likely to run up prices, the lending crisis would all but disappear, and stability would be restored on Wall Street, which in turn would help out those on Main Street.

An Auto Industry Bailout: As we have seen for the past few weeks, a bailout plan for the auto industry is a neccessity in order to save thousands, if not millions of American jobs. It was to my disappointment, but not to my surprise that earlier this week, the Senate, namley Senate Republicans, turned down a bailout that would do exactly what is needed. Even though I do not support the luxury jets and other luxuries the CEOs of these companies have, this package is not about them. It is about those who are working everyday building these automobiles that need this bailout plan more than anything. I think the proposed $15 billion would do just that, help those that need help the most. In order to save the jobs of these hard working, blue collar people, they need the help of the rest of us Americans. Since the $15 billion bailout deal failed in the Senate, it has been spoken that Bush and Treasury Secretary Paulson are going to try to allocate some of the money from the $700 billion bailout  in order to help these struggling automobile companies. In my opinion, this could be the one thing that I actually agree with President Bush on, and one thing he wants to do that is right.

Now, of course if all these steps were taken, it would not totally dig us out of the mess we're in, but it would certainly be a step in the right direction. More would have to be done, but in order to take further action, some of the above mentioned ideas need to be taken and applied to the crisis.

If you believe I missed something, or have a different philosophy, leave a comment as I always appreciate feedback and other ideas from my readers.

Thank You,

Mark C. Miller II