By Edward Angly, copyright 1931




Lines of the Times



There is no reason why there should be any more panics.

�Magnus W. Alexander
President, National Industrial Conference Board

JANUARY 1, 1928

There will be no interruption of our present prosperity.

�Myron E. Forbes
President, Pierce Arrow Motor Car Co.

JANUARY 12, 1928.

I cannot help but raise a dissenting voice to statements that we are simply living in a fool�s paradise, and that prosperity in this country must necessarily diminish and recede in the future.

�E. H. H. Simmons
President, New York Stock Exchange

NOVEMBER 15, 1928.

We are only at the beginning of a period that will go down in history as the golden age.

�Irving T. Bush
President, Bush Terminal Co.

AUGUST 28, 2004

In a changing world, there�s nothing like owning your own home to provide hope and stability.

�George W. Bush


In a new term, we�ll continue to promote an ownership society.  Listen, in changing times, if you own something, you bring stability to your life.

�George W. Bush

FEBRUARY 14, 2005

George W. Bush could well turn out to be the best president in recent history....  Supply-side pro-growth economics couldn�t ask for a better champion�nor could any American.


�Arthur Laffer
Supply-Side Economist

JANUARY 6, 2006

...the American economy is firing on all cylinders....  I can tell you that as we begin 2006, we have every reason to be optimistic that this economy�the most flexible, resilient and robust in the world�will continue to grow and create good jobs.

�John Snow
Treasury Secretary

OCTOBER 23, 2008

Throughout the housing finance value chain, many participants contributed to the creation of bad mortgages and the selling of bad securities, apparently feeling secure that they would not be held accountable for their actions.  A lender could sell exotic mortgages to homeowners, apparently without fear of repercussions if those mortgages failed.  Similarly, a trader could sell toxic securities to investors, apparently without fear of personal responsibility if those contracts failed.  And so it was for brokers, realtors, individuals in rating agencies, and other market participants, each maximizing his or her own gain and passing problems on down the line until the system itself collapsed.  Because of the lack of participant accountability, the originate-to-distribute model of mortgage finance, with its once great promise of managing risk, became itself a massive generator of risk.

�John Snow,
Testifying before Congress

OCTOBER 23, 2008

But should the Congress bring to bear additional resources for each of you and for other agencies so that your predictive [computer] modeling and your doomsday scenarios, and specifically for you, Chairman Greenspan, the doomsday scenario we now live with undoubtedly could have been modeled but wasn�t predictively modeled by any of the agencies of government and delivered to Congress.

Congressman Darrell Issa,
at This Hearing

OCTOBER 23, 2008

With all apologies to my New England colleagues here, I feel like I am looking out there at three Bill Buckners, the first baseman for the Red Sox who let the ball go through his legs and cost his team the championship.  All of you let the ball go through your legs.  You didn�t want to let the ball go through your legs, you didn�t try to let the ball go through your legs, but it got through.

Congressman John Yarmuth,
at This Hearing

[The big difference is that baseball doesn�t prize and insist on an ideology that says that if you underestimate the dangers, you�re optimistic, pro-freedom. etc.]

FEBRUARY 8, 2006

Let me first start off with our economy.  It�s strong and it�s getting stronger.

�George W. Bush

MAY 5, 2006

The state of our economy is strong.

�George W. Bush

JUNE 2, 2006

When you look at the U.S. economy today, I�m going to tell you there has never been an economy on planet earth that is performing as well as this one.

�Arthur Laffer
Supply-Side Economist

JUNE 30, 2006

...the nation�s economy today is strong and healthy and vigorous...

�Dick Cheney

OCTOBER 17, 2006

...the economic statistics are fabulous.

�Rush Limbaugh

JUNE 2, 2006

You know what?  The real economic truth is that it doesn�t get much better than this.

�Lawrence Kudlow
Supply-Side Commentator


Prosperity continues.

�Lawrence Kudlow

OCTOBER 18, 2006

...I�m hard put to think of a time when the economy was in better shape than it is right now.  We�re in one of the best economies that we�ve had in recent times....  There isn�t any way you can look at the economy and not conclude that, in fact, things are going very well.  ...the economy is ticking along at an all-time high.

�Dick Cheney


This [housing] boom provided a big lift in morale―even if your house was not for sale, you could look down the block and see other people�s homes going for what seemed like [seemed like?] astonishing prices, which meant your house was worth more too.

�Alan Greenspan
The Age of Turbulence


I was aware that the loosening of mortgage credit terms for subprime borrowers increased financial risk, and that subsidized home ownership initiatives distort market outcomes.  But I believed then, as now, that the benefits of broadened home ownership are worth the risk.  Protection of property rights, so critical to a market economy, requires a critical mass of owners to sustain political support.

�Alan Greenspan,
The Age of Turbulence

(Of course, if those who don�t own their own homes don�t vote for private property rights, they could be treated as MANIPULATIVE sore losers, with the emphasis on LOSERS.  And, of course, those who just bought their own houses for the first time and then defaulted on their mortgages, the erstwhile allies of those fighting for property rights, would now be treated by them as the villains.  Those who underestimated the risks by buying homes that they ended up not being able to afford, would be branded as deadbeats, so what was Greenspan�s underestimating the risks for the world, by trying to create more pro-property voters?)


Niccol� Machiavelli� openly stated that power was in itself the natural end of all politics�

�Erich Auerbach,
Romance Languages & Literature


More than anything he had done, the absurd rationale fueling the mortgage market had to do with lax regulation, the expansion of the welfare state into the mortgage business, greed, and, of course, the blindness and venality of the big rating agencies.

�Charles Gasparino,
The Sellout

(So if these policies had good results they�d strengthen private property rights by creating more home owners, but since these policies had bad results, they strengthen private property rights by making the welfare state seem responsible.  If we must believe, we must believe.)

OCTOBER 23, 2008

Well, you know, it is instructive to go back to the early stages of the subprime market, which has essentially emerged out of the [Community Reinvestment Act, a law from the 1970s that prohibited redlining in the granting of mortgages].

The evidence now suggests, but only in retrospect, that this market evolved in a manner which if there were no securitization, it would have been a much smaller problem and indeed very unlikely to have taken on the dimensions that it did.

...Now, we didn�t know that the deterioration in the standards was occurring until 2005, because you look now at the outstanding subprime mortgages and it is very obvious that those that were made in 2004 and earlier have not turned out to be an incredibly difficult issue.  In other words, the real toxic mortgages occur with the huge increase in securitization and largely the demand from abroad and to whatever extent Fannie and Freddie were involved, from them as well.

�Alan Greenspan,
testifying before Congress

AUGUST 31, 2004

�I am twenty-three years old with zero experience and less credit.  After applying Bob Allen�s techniques, I was able to buy $915,000 worth of properties with no cash out of my pocket and achieved a cash flow of over $85,000 in my first year of investing!��JOSEPH BELMONTE

�Robert G. Allen,
Nothing Down for the 2000s: Dynamic New Wealth Strategies in Real Estate,
Keynote quote at the very beginning of the book

(But, of course, though getting nothing-down loans from government programs seems mollycoddle, getting nothing-down loans through hard bargaining with people desperate to sell seems red-blooded.)

FEBRUARY 10, 2009

Governments and central banks around the world pursued policies that, with the benefit of hindsight, caused a huge global boom in credit, pushing up housing prices and financial markets to levels that defied gravity.

Investors and banks took risks they did not understand.  Individuals, businesses, and governments borrowed beyond their means.  The rewards that went to financial executives departed from any realistic appreciation of risk.

�Timothy Geithner,
Treasury Secretary,
introducing his financial stability plan

(as long as it would get more support for private property rights...)

JANUARY 23, 2007

A future of hope and opportunity begins with a growing economy�and that is what we have....  This economy is on the move, and our job is to keep it that way, not with more government, but with more enterprise.

�George W. Bush

JANUARY 23, 2007

As we enter 2007, the economic state of the union is excellent.

�Lawrence Kudlow

JUNE 11, 2007

I think one of the best kept secrets in the country right now is the strength of the economy and the overall affluence and prosperity and the opportunity to achieve it. It�s never been better than it is today in this country.

�Rush Limbaugh


JULY 14, 2006

What I found provided a personal epiphany.  Authoritarian conservatives are, as a researcher told me, �enemies of freedom, antidemocratic, antiequality, highly prejudiced, mean-spirited, power hungry, Machiavellian and amoral.�  And that�s not just his view.  To the contrary, this is how these people have consistently described themselves when being anonymously tested, by the tens of thousands over the past several decades.

�John W. Dean
The Boston Globe

(One test for such traits of authoritarianism, is the F-Scale.)


APRIL 20, 2007

I don�t see [subprime mortgage market troubles] imposing a serious problem.  I think it�s going to be largely contained.

�Henry Paulson

MARCH 11, 2008

We have a good deal of comfort about the capital cushions at these firms [investment banks] at the moment.

�Christopher Cox,
Quoted by Representative Van Hollen,
At the Greenspan Cox and Snow hearings,
October 23, 2008


MARCH 19, 2008

We had been on the brink of the biggest financial meltdown this country had ever seen, but I think the Fed has now turned the psychology around.  The Fed is saying it is ready to supply all the emergency credit banks need to get us out of this crisis.

�David Jones,
chief economist at DMJ Advisors,
New York Times

SEPTEMBER 17, 2008


OCTOBER 26, 1929.

Conditions do not seem to foreshadow anything more formidable than an arrest of stock activity and business prosperity like that in 1923.  Suggestions that the wiping out of paper profits will reduce the country�s real purchasing power seem far-fetched.

�Wall Street Journal

NOVEMBER 1, 1929.

We probably have three more years of prosperity ahead of us before we enter the cyclic tailspin which has occurred in the eleventh year of each of the four great previous periods of commercial prosperity.

�Stuart Chase,

NOVEMBER 9, 1929.

Comparatively few people are reached by this crash.

�Julius Rosenwald,
Sears Roebuck & Co.

NOVEMBER 13, 1929.

STOCKS CRUMBLE                
                 TO LOWEST LEVELS

N. Y. World

NOVEMBER 13, 1929.

To my mind this situation should go no further.

�Jesse Livermore, Financier

NOVEMBER 22, 1929.

It looks as if industry would have to begin scraping around to get employees instead of laying off anybody.

�Alexander Legge, Chairman,
Federal Farm Board


There are no great failures nor are there likely to be.

Monthly Review, National City Bank


(First 9 months only)







Based on Dun�s Review, OCTOBER 17, 1931,


Copyright, 1929, by the Philadelphia Inquirer

                                      �Hanny in the Philadelphia Inquirer. October, 1929


JUNE 27, 2007

They were all friends with Bear Stearns when they thought the spreads were huge  Now that the market has turned, Bear�s standing there like the lone grizzly.  They looked at these high yields, this growing market, and they forgot the basic concept of risk and return.  They got caught drinking their own Kool-Aid.

�Anthony Sanders,
former mortgage bond research analyst,
Deutsche Bank,
Bloomberg News

JANUARY 23, 2008

Bankers, like the rest of us, make mistakes, but the scale of the mistakes, particularly in US banks, has been enormous.  We won�t fully understand for some time quite how they could persuade themselves that bundles of housing loans to clearly uncreditworthy borrowers should be ranked as almost as good as government securities.

�Hamish McRae, The Independent

[These �mistakes,� and this minimization of them, were of the same sort as those described by the following Independent headline:]


JULY 15, 2008

When will the economy turn around?  I�m not an economist, but I do believe that we�re growing.  And, uh, I can remember, you know, this press conference here, there�d be people yelling recession this, recession that, as if you�re economists.  And, uh, I�m an optimist.  You know, I believe there�s a lot of positive things about our economy.

�George W. Bush,
at a press conference

OCTOBER 6, 2008

The Honorable James M. Peck, Bankruptcy Judge for the Southern District of New York, after the first several days of intense hearings in the bankruptcy proceedings, observed: �Lehman Brothers became a victim.  In effect, the only true icon to fall in the tsunami that has befallen the credit markets.  And it saddens me.�...  Lehman Brothers was a casualty of the crisis of confidence that took down one investment bank after another.

�Dick �There�s a Reason Why I�m Not Called Richard� Fuld,
CEO, Lehman Brothers,
Testifying before Congress


(This is a part of a confidential internal Lehman Brothers presentation, but of course those who practice a �red in tooth and claw� Darwinist policy could be victims, even if they aren�t victims of government.  Of course, we�re supposed to have faith that the market and economy somehow benefit over the long term, despite what Greenspan said on March 16, 2008, �But these [economic] models do not fully capture what I believe has been, to date, only a peripheral addendum to business-cycle and financial modeling � the innate human responses that result in swings between euphoria and fear that repeat themselves generation after generation with little evidence of a learning curve.�  We�re to accept that simply because the crises happen, each one must be good in the long term, though the business cycles are at least  greatly shaped by people having irrational swings between euphoria and fear.)


Just before the collapse of Lehman Brothers, executives at [subsidiary] Neuberger Berman sent e-mail memos suggesting, among other things, that the Lehman Brothers� top people forgo multi-million dollar bonuses to �send a strong message to both employees and investors that management is not shirking accountability for recent performance.�

Lehman Brothers Investment Management Director George Herbert Walker IV, second cousin to Former U. S. President George Walker Bush, dismissed the proposal, going so far as to actually apologize to other members of the Lehman Brothers executive committee for the idea of bonus reduction having been suggested.  He wrote, �Sorry team.  I am not sure what�s in the water at Neuberger Berman.  I�m embarrassed and I apologize.�

entry for
Neuberger Berman

OCTOBER 13, 2008

So, does this rescue mean the end of private financial capitalism?  Of course not.  Although the size of the crisis requires an exceptional response, this is but the latest in a long line of banking crises and state rescues.  Nationally owned banks seem likely to be a reality in many countries for a decade.  In the next great financial crisis � rest assured, there will be others � bank rescues with equity purchases may be a first step rather than a last resort.  But stakes in banks will, eventually, be sold back to private investors.  Governments � rightly � will regulate to avoid further crises.  They will fail, and then be forced to act to pick up the pieces.  There is no alternative.

...Businesses and individuals need liquidity and an effective means of turning their savings into productive investments.  But banks perform this function by making bets on the future.  This is the purpose for which they exist � but it makes them inherently unstable.

�Editorial, Financial Times


SEPTEMBER 15, 2008

Well, as you know, we�re working through a difficult period in our financial markets right now as we work off some of the past excesses.  But the American people can remain confident in the soundness and the resilience of our financial system.

�Henry Paulson,
Daily Press Briefing,
as the markets started to crash


�If you look at recent history, there is a disturbance in the capital markets every four to eight years,� I said, ticking off the savings and loan crisis in the late �80s and early �90s, the bond market blowup of 1994, and the crisis that began in Asia in 1997 and continued with Russia�s default on its debt in 1998.

�Henry Paulson,
On the Brink,
describing what he said at at a meeting at Camp David on August 17, 2006


If all that happened during these periods of so-called distress was that foolish investors and lenders lost money, no one else would have cared.  But a problem in one bank raised fears of problems at other banks.  And because financial institutions were so interconnected, borrowing large amounts of money from one another even in the nineteenth century, difficulties in one area would transmit themselves through the entire system.

...Such breakdowns are not some historical curiosity.  As I write this in October 2008, the world is in the middle of one such panic�the most severe for seventy-five years, since the bank runs of 1931-1933 that feature so prominently in the last few chapters of this book.  The credit markets are frozen, financial institutions are hoarding cash, banks are going under or being taken over by the week, stock markets are crumbling.  Nothing brings home the fragility of the banking system or the potency of a financial crisis more vividly than writing about these issues from the eye of the storm.  Watching the world�s central bankers and finance officials grappling with the current situation�trying one thing after another to restore confidence, throwing everything they can at the problem, coping daily with unexpected and startling shifts in market sentiment�reinforces the lesson that there is no magic bullet or simple formula for dealing with financial panics.  In trying to calm anxious investors and soothe skittish markets, central bankers are called upon to wrestle with some of the most elemental and unpredictable forces of mass psychology [in which different people have different amounts of power].  It is the skill that they display in navigating these storms through uncharted waters that ultimately makes or breaks their reputation [and plenty else].

...A few months later, in October 1907, the United States was rocked by a severe financial crisis.  The panic began, like so many before it, with the failure of a large speculative venture, this time an attempt by a couple of unscrupulous characters to corner the market in the stock of a copper company.  When they failed and one of them, the president of a Brooklyn-based bank, was rumored to have lost $50 million, most of it borrowed, a run on his bank set in.  By the end of October, the fear had infected the whole city and there were runs on a variety of banks across New York, including the Knickerbocker Trust Company, the third largest in the city.

...Central bankers can be likened to the Greek mythological character Sisyphus.  He was condemned by the gods to roll a huge boulder up a steep hill, only to watch it roll down again and to have to repeat the task for all eternity.  The men in charge of central banks seem to face a similar unfortunate fate�although not for eternity�of watching their successes dissolve in failure.  Their goal is a strong economy and stable prices.  This is, however, the very environment that breeds the sort of overoptimism and speculation that eventually ends up destabilizing the economy.

...[In the late 1920s] The market displayed every classic symptom of a mania: the progressive narrowing in the number of stocks going up, the nationwide fascination with the activities of Wall Street, the faddish invocations of a new era, the suspension of every conventional standard of financial rationality, and the rabble enlistment of an army of amateur and ill-informed speculators betting on the basis of rumors and tip sheets.




�Liaquat Ahamed,
Lords of Finance, The Bankers Who Broke the World

FEBRUARY 9, 2009

Mr. President, at a speech Friday that many of us covered, Vice President Biden said the following thing about a conversation the two of you had in the Oval Office about a subject he didn�t disclose.

�If we do everything right, if we do it with absolute certainty, if we stand up there and we really make the tough decisions, there�s still a 30 percent chance we�re going to get it wrong.�

Since the vice president brought it up, can you tell the American people, sir, what you were talking about?  And if not, can you at least reassure them it wasn�t the stimulus bill or the bank rescue plan and if, in general, you agree with that ratio of success, 30 percent failure, 70 percent success?

�Question at President Obama�s press conference
for the economic stimulus package

(And this is what each systemwide failure risks happening.  About 30%, or about one third, of the well-planned rescue attempts would fail, though we�d like to be reassured that this isn�t true, but the bankers must be both motivated and free to do what they�re to do.)

FEBRUARY 10, 2009

The administration�s very focused; they�re clearly working around the clock to create a plan.  That being said, these are just enormous financial problems.

�Dean Curnutt,
president of Macro Risk Advisors,
regarding the bank bailout program

FEBRUARY 26, 2009

[regarding how many trillions of dollars must be spent on trying to fix the economy after the meltdown, and exactly what a trillion dollars means]  The famed psychiatrist Sigmund Freud wrote about denial, which Webster�s defines as �refusing to admit the reality of something unpleasant.�  He wasn�t talking about the economy, but, if he were around these days, who knows.  He might be.

�Tom Foreman,
CNN correspondent

FEBRUARY 27, 2009

If you want to save the system you have to save the banks.  That is not an intuitive [popular] message.

�Eric Dezenhall,
crisis management consultant in Washington

FEBRUARY 27, 2009

The stimulus plan can not work unless we first have in place a strong financial system, and that means people having confidence that these big banks won�t fail or be nationalized.  When they go after the big banks and attack them they�re just hurting the whole system.

Ken Thomas,
banking industry consultant,
lectures at the University of Pennsylvania�s Wharton School of Finance

(So would not being in denial of the magnitude of the cost, be an attack on the banks?)

MARCH 1, 2009

There�s little confidence that we�re going to get out of this any time soon.  We�re still lacking very clear guidance. All we know is it�s going to be very, very expensive.

�Axel Merk,
portfolio manager at Merk Hard Currency Fund

JANUARY 30, 2009

It�s sort of like the moral hazard question and blaming people and feeling betrayed.  You have to put that aside and just work together.

It�s like you can�t divorce the financial system.  It�s not like a spouse you can get rid of because they betrayed you.  We�re stuck with one another.

Katie Benner,
writer from Fortune magazine,
commenting on CNN

(And, whenever the banking system fails, either we provide whatever money they need not to fail or be nationalized, or we�d seem to be attacking them.  This is certainly a codependent marriage, except that in a real codependent marriage, the codependent has to want to be a martyr.)

OCTOBER 23, 2008

As I wrote last March: those of us who have looked to the self-interest of lending institutions to protect shareholder�s equity, myself especially, are in a state of shocked disbelief.

...I made a mistake in presuming that the self-interest of organizations, specifically banks and others, were such is that they were best capable of protecting their own shareholders and their equity in the firms.

�Alan Greenspan
Testifying before Congress

NOVEMBER 23, 2008

All told, stocks have lost a stunning $2.6 trillion since Nov. 4, as measured by the Dow Jones Wilshire 5000 index, which reflects the value of nearly all U.S. stocks.


JANUARY 7, 2009

What I didn�t know until I read through some of her speeches this week is that [Mary] Schapiro [Obama�s SEC Chairperson] also gets the fundamental problem with Wall Street�s scummy culture.  She understands that it is a culture that rests on a barely disguised contempt for customers; that is dominated by short-term thinking; and that glorifies risk-taking, games-playing and corner-cutting.  It is, as she put it in a speech last October at Dominican University, a culture in which �individuals have allowed the pursuit of wealth to become mere sport, devoid of any ethical meaning or moral obligation to others.�

�Steven Pearlstein
Washington Post



Forgotten, perhaps, by some are the shattering revelations of the Senate Committee�s investigation; forgotten the practices and ethics that The Street followed and defended when its own sway was undisputed in those good old days.

After five short years, we may now need to be reminded what Wall Street was like before Uncle Sam stationed a policeman at its corner, lest, in time to come, some attempt be made to abolish the post.

It is in the hope of rendering this service, especially for the lay reader unfamiliar with the terminology and conduct of The Street, that the author has endeavored, in the following pages, to summarize the essential story of that investigation�an inquiry which cast a vivid light upon the unhabitated mores and methods of Wall Street.

�Wall Street Under Oath,
Ferdinand Pecora
chief counsel for the investigation,
Senate Banking and Currency Committee,




November, 1929

Some reassuring utterance by the President of the United States... would do much to restore the confidence of the public. �WILLIAM RANDOLPH HEARST.

Any lack of confidence in the economic future or the basic strength of business in the United States is foolish.�PRESIDENT HOOVER.



December, 1930

Economic depression cannot be cured by legislative action or executive pronouncement.

�President HOOVER,
Message to Congress.

January 24, 1930

TRADE RECOVERY                
                     PRESIDENT TOLD



No Stimulants Needed


New York Herald Tribune.

January 21, 1930

Definite signs that business and industry have turned the corner from the temporary period of emergency that followed deflation of the speculative market were seen today by President Hoover. The President said the reports to the Cabinet showed that the tide of employment had changed in the right direction.

News dispatch from Washington.

March 8,1930

President Hoover predicted today that the worst effect of the crash upon unemployment will have been passed during the next sixty days.

Washington dispatch.

JANUARY 16, 2007

We believe the housing slowdown will have dissipated by mid year....

Doug Duncan
Mortgage Bankers Association

JANUARY 23, 2007

... I continue to believe that the prosperity boom is not over ....

�Lawrence Kudlow

FEBRUARY 7, 2007

Nontraditional mortgage products include fixed- and adjustable-rate loans that permit interest only (IO) payments and payment-option loans including option ARMs....

The[se] products and financing tools are not predatory�they help borrowers get into homes....

Currently foreclosures are within normal ranges....

�Doug Duncan
Mortgage Bankers Association

MARCH 5, 2007

The underlying base of the economy is strong.

�Jason Riley, Member
Wall Street Journal Editorial Board

JUNE 5, 2007

...the troubles in the subprime sector seem unlikely to seriously spill over to the broader economy or the financial system.

�Ben Bernanke
Chairman, Federal Reserve

SEPTEMBER 19, 2008

When you listened to him describe it you gulped.

�Senator Charles E. Schumer,
re. Bernanke�s and Paulson�s telling of the run on the bank of September 17

SEPTEMBER 19, 2008

...that we�re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.

�Senator Christopher Dodd,
re. the same meeting

FEBRUARY 17, 2009

It�s the economic equivalent of 9/11 in my view, having been here for both events, ... sitting in that room with Hank Paulson saying to us, in very measured tones, no hyperbole, no excessive adjectives, that unless you act, the financial system of this country and the world will melt down in a matter of days.  There was literally a pause in that room where the oxygen left.

�Senator Christopher Dodd,
re. the meeting of September 18,
interview for Frontline

FEBRUARY 17, 2009

This is DEFCON 4, whatever.  This was the complete nightmare.  I remember looking at the stress measures on, you know, middle of the day Monday and saying, �Gee, they�re looking kind of spiky.�  And by Wednesday, you�d basically had a complete shutdown of the world capital market.  No, this is actually terror.  I�m sure that Paulson is sitting there, doesn�t strike me as the most reflective guy necessarily, but he must have been sitting there�everybody was sitting there saying, �My God, we may be presiding over the second Great Depression.�  This is the utter nightmare of an economic policy-maker.  You�re sitting there, and you may have just made the decision that destroyed the world.  Absolutely terrifying moment.

�Paul Krugman,
interview for Frontline

JUNE 20, 2007

I do believe we are at or near the bottom.

�Henry Paulson
Treasury Secretary


Mr. Risk Goes to Washington of the key architects of a more daring Wall Street, where securities firms are taking greater and greater chances in their pursuit of profits.

BusinessWeek article on Paulson

NOVEMBER 20, 2008

That�s Henry Paulson [who threatened that if Congress didn�t bail out the banks, we�d have another Great Depression, civil unrest, martial law, etc.].  We had a conference call early on, it was on a Friday I think�a week and half before the vote on Oct. 1.  So it would have been the middle� what was it�the 19th of September, we had a conference call.  In this conference call�and I guess there�s no reason for me not to repeat what he said, but he said�he painted this picture you just described.  He said, �This is serious.  This is the most serious thing that we faced.�

�James Inhofe,

OCTOBER 16, 2008

We�re not proud of all the mistakes that were made by many different people, different parties, failures of our regulatory system, failures of market discipline that got us here.

�Henry Paulson.
interview on Fox Business Network

NOVEMBER 17, 2008

WE are going through a financial crisis more severe and unpredictable than any in our lifetimes.

�Henry Paulson,
Beginning of Op-Ed, New York Times

JULY 11, 2007

By any objective measure, ladies and gentlemen, our economy is one of the best in history.

�Rush Limbaugh

JULY 17, 2007

The Bush economic plan worked and it worked brilliantly.

�Rush Limbaugh

OCTOBER 5, 2007

Recession off the table....  [The latest jobs report] sets up a Goldilocks stock market rally that could add another 1000 points to the Dow over the next six months.

�Lawrence Kudlow

A home isn�t just a great place to raise a family, it�s also the key to building long-term wealth.  On average, the value of a home nearly doubles every 10 years.

National Association of Realtors
2008 Advertisement

JULY 15, 2008

Our economy has continued growing, consumers are spending, business are investing, exports continue increasing and American productivity remains strong.  We can have confidence in the long-term foundation of our economy...  I think the system basically is sound.  I truly do.

�George W. Bush

MARCH 16, 2008

Credit market systems and their degree of leverage and liquidity are rooted in trust in the solvency of counterparties.  That trust was badly shaken on August 9 2007 when BNP Paribas revealed large unanticipated losses on US subprime securities.  Risk management systems � and the models at their core � were supposed to guard against outsized losses.  How did we go so wrong?

The essential problem is that our models � both risk models and econometric models � as complex as they have become, are still too simple to capture the full array of governing variables that drive global economic reality.

�Alan Greenspan

SEPTEMBER 24, 2008

Optimism about housing values also led to a boom in home construction.  Eventually, the number of new houses exceeded the number of people willing to buy them.  And with supply exceeding demand, housing prices fell, and this created a problem.

�George W. Bush,
big announcement supporting the bailout

(and this was what was so unpredictable?)

OCTOBER 23, 2008

A Nobel Prize was awarded for discovery of the pricing model that underpins much of the advance in derivatives markets.  This modern risk management paradigm held sway for decades. The whole intellectual edifice, however, collapsed in the summer of last year, because the data inputted into the risk management models generally covered only the past two decades, a period of euphoria.  Had instead the models been fitted more appropriately to historic periods of stress, capital requirements would have been much higher, and the financial world would be in far better shape today, in my judgment.

�Alan Greenspan,
Testimony Before Congress

[If we got what we deserved, then economists should be able to predict what the public will deserve.]

Also, let�s not forget what he said to the Economic Club of New York on February 17, 2009,

The extraordinary risk management discipline that developed out of the writings of the University of Chicago�s Harry Markowitz in the 1950s, produced insights that won several Nobel Prizes in Economics.  It was widely embraced not only by academia but also by a large majority of financial professionals and global regulators.

But in August 2007, the risk management structure cracked.  All of the sophisticated mathematics and computer wizardry essentially rested on one central premise: that enlightened self interest of owners and managers of financial institutions would lead them to maintain a sufficient buffer against insolvency by actively monitoring and managing their firms� capital and risk positions.  When in the summer of 2007 that premise failed, I was deeply dismayed.


The forecasting tools that had made government seem so prescient a decade before were in reality not good enough to let the government fine-tune the economy.  (A poll a few years later showed that the public now rated economists� forecasting ability on a par with that of astrologers.  That made me wonder what astrologers had done wrong.)

�Alan Greenspan,
The Age of Turbulence

[Forecasting whether anyone could pay his mortgage, would certainly have to include macroeconomic forecasting.  Doubting that the government could forecast adequately seems pro-freedom, while doubting that companies could seems anti-freedom.]

MARCH 5, 2008

Look at what is happening to Thornburg Mortgage.  It supposedly only has a 0.44% default on its [$24.7 billion] mortgage portfolio that it services but the bonds it owns are getting pounded.  Result?  Margin call.  The worst part is that the company went to sell some bonds to settle the margin calls but couldn�t.  The ultimate Roach Motel.

�Bennet Sedacca,
president of Atlantic Advisors,
investment management company and hedge fund

SEPTEMBER 24, 2008

Optimism about housing values also led to a boom in home construction.  Eventually, the number of new houses exceeded the number of people willing to buy them.  And with supply exceeding demand, housing prices fell, and this created a problem.

�George W. Bush,
Address to Nation Asking for Wall Street Bailout

[Was this the complexity that was so unpredictable?  Obviously, if housing prices go high enough, builders will build more, and then the prices will go down however far they go down, no matter how euphoric the economy is!]

May 1, 1930

While the crash only took place six months ago, I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover. There is one certainty of the future of a people of the resources, intelligence and character of the people of the United States�that is, prosperity.

                                                                                               PRESIDENT HOOVER

Address at annual dinner of the Chamber of Commerce of the United States.

October 20, 1930

President Hoover today designated Robert W. Lament, Secretary of Commerce, as chairman of the President�s special committee on unemployment.

October 21, 1930

President Hoover has summoned Colonel Arthur Woods to help place 2,500,000 persons back to work this winter.

Washington dispatch.

JULY 27, 2007

...I want the American people to take a good look at this economy of ours.  The world is strong�the world economy is strong.  I happen to believe one of the main reasons why is because we remain strong.

�George W. Bush

DECEMBER 7, 2007

The economy has done so well.  It�s the best performing economy ever on earth.

Arthur Laffer
Supply-Side Economist

FEBRUARY 14, 2008

The U.S. economy is fundamentally strong, diverse and resilient.

�Henry Paulson


MARCH 14, 2008

I�m coming to you as an optimistic fellow.  I�ve seen what happens when America deals with difficulty.  I believe that we�re a resilient economy....  In the long run, I�m confident that or economy will continue to grow, because the foundation is solid.

�George W. Bush


[on March 14, 2008, when discussing the disaster at Bear Stearns] �You�ve got to take that line out about the bailouts,� Paulson told Bush, �because we�re about to do one.�

Bush took the news calmly.  How bad was this Bear problem, he wanted to know, and what might it mean for the government?  He asked for more details on the plans for that day.

Paulson, who was totally keyed up, was impressed by his boss�s composure during such a serious crisis.

�Kate Kelly,
Street Fighters,
The Last 72 Hours of Bear Stearns,
The Toughest Firm on Wall Street


(What, me worry?)


               �From Judge,
DECEMBER 14, 1929

President Hoover

JUNE 15, 1931.

I am able to propose an American plan to you....  We plan more leisure for men and women and better opportunities for its enjoyment.  We plan not only to provide for all the new generation, but we shall, by scientific research and invention, lift the standard of living and security of life of the whole people.  We plan to secure a greater diffusion of wealth, a decrease in poverty and a great reduction in crime. and THIS PLAN WILL BE CARRIED OUT IF WE JUST KEEP ON GIVING THE AMERICAN PEOPLE A CHANCE.

Address to Indiana Republican Editorial Association, Indianapolis

OCTOBER 18, 1931.

The depression has been deepened by events from abroad which are beyond the control either of our citizens or our government.

Radio address at Fortress Monroe, Va.






Statement Cheers Street


New York Times, OCTOBER 31, 1929.

John D. Rockefeller, Sr.

OCTOBER 30, 1929.

Believing that fundamental conditions of the country are sound and that there is nothing in the business situation to warrant the destruction of values that has taken place on the exchanges during the past week, my son and I have for some days been purchasing sound common stocks.  We are continuing and will continue our purchases in substantial amounts at levels which we believe represent sound investment values.

Some Sound Common Stocks

                       COMPARATIVE PRICES

                       Oct. 30,1929         1931
                         close               low


Anaconda Copper           95                12 5/8
Amer. Tel. & Tel.        240               121 1/8
Chrysler                  35                11 3/4
Du Pont de Nemours       129                53 3/4
Gen. Motors               49 3/4            22 1/8
Montgomery Ward           66                 8 5/8
N. Y. Central            199 1/2            49 5/8
St. Oil N. J.             65 5/8            28 1/4
St. Oil Cal.              63 7/8            28 1/8
Sears Roebuck            105                31
U. S. Steel              185                62 1/4
Western Union            202                83 1/8

James J. Davis

FEBRUARY 14, 1930.

Let us be thankful that we are getting back on our feet again.


Davis�JUNE 28, 1930.

The worst is over without a doubt, and it has been a disciplinary and in some ways a constructive experience.  People have learned once again that only work produces wealth.

Davis�AUGUST 7, 1930.

Courage and resource are already swinging us back on the road to recovery.  And we are fortunate in having a President who sets us a shining example of that courage and initiative.


SEPTEMBER 24, 2006

In the long run, Americans have good reason to be confident in our economic strength.  Despite corrections in the marketplace and instances of abuse, democratic capitalism is the best system ever devised.

It has unleashed the talents and the productivity and entrepreneurial spirit of our citizens.  It has made this country the best place in the world to invest and do business. And it gives our economy the flexibility and resilience to absorb shocks, adjust, and bounce back.

�George W. Bush

Davis�AUGUST 29, 1930.

American labor may now look to the future with confidence.

Labor Day message to The Staten Island Transcript

Andrew W. Mellon


There is no cause for worry.  The high tide of prosperity will continue.


Mellon�DECEMBER 5, 1929

The Government�s business is in sound condition.


Mellon�JANUARY 1, 1930.

I see nothing, however, in the present situation that is either menacing or warrants pessimism.  During the Winter months there may be some slackness or unemployment, but hardly more than at this season each year.  I have every confidence that there will be a revival of activity in the Spring and that during the coming year the country will make steady progress.

New Year�s message.

Mellon�MAY 5, 1931.

In this country there has been a concerted and determined effort on the part of both government and business not only to prevent any reduction in wages but to keep the maximum number of men employed, and thereby to increase consumption.

It must be remembered that the all-important factor is purchasing power, and purchasing power, in so far as America is concerned, is dependent to a great extent on the standard of living which obtains in this country. That standard of living must be maintained at all costs, and certainly the present is no time to undertake drastic and doubtful experiments which may even conceivably result in breaking down the standard of living to which we have become accustomed.

Address before the Congress of the International Chamber of Commerce.


The Aluminum Co. of America and subsidiaries [controlled by the Mellon family] reduced wages of all employees ten per cent, effective October 1, 1931.

Standard Statistics.

NOVEMBER 12, 1999

We are here today to repeal Glass-Steagall because we have learned that government is not the answer.  We have learned that freedom and competition are the answers.  We have learned that we promote economic growth and we promote stability by having competition and freedom.  I am proud to be here because this is an important bill; it is a deregulatory bill.  I believe that�s the wave of the future, and I am awfully proud to have been a part of making it a reality.

�Phil Gramm

♦♦♦      ♦♦♦

OCTOBER 30, 2006

Q: you have any thoughts on administration policy for the regulation of hedge funds, the regulation of private equity funds?...

A: Well, I�m reluctant to see additional regulation.

�Dick Cheney
CNBC Interview

FEBRUARY 23, 2007

Officials Reject More Oversight of Hedge Funds

The Bush administration said Thursday that there was no need for greater government oversight of the rapidly growing hedge fund industry and other private investment groups to protect the nation�s financial system.

�New York Times

OCTOBER 11, 2007

The solution to the current housing problem [Bush said] �is not more government or more regulation.....�


MARCH 3, 2008

I�m always for less regulation....  I am fundamentally a deregulator.

�John McCain

SEPTEMBER 14, 2008

And indeed we shouldn�t try to protect every single institution.

�Alan Greenspan,
Re. Not Bailing Out Lehman Brothers

SEPTEMBER 29, 2008

Well, we could try stopping these nutty experiments.  I mean Paulson had this nutty experiment of letting Lehman Brothers fail.  Now he�s got this nutty experiment of saying make me the czar of the whole economy and don�t have, give me�don�t have any oversight over me except a tiny little bit.

�Economist Ben Stein,
on Larry King Live

[Of course, we all know which of these two would, and which wouldn�t, be feared as an �experiment� on the management of society, a �social experiment.�]

OCTOBER 23, 2008

We are in the midst of a once-in-a century credit tsunami.

�Alan Greenspan
Testifying before Congress

Alan Greenspan
The Age of Turbulence, 2007 (when the economy still seemed fine)

Telling of Situations that
Could Have Led to a
Similar Meltdown
(Maybe possible meltdowns keep happening, but once per century they couldn�t be stopped?):


 Simply ordering a bank to make a loan, say, would be an abuse of government power and would damage the functioning of the market.  Instead, the gist of Gerry�s message to the banker had to be: �We�re not telling you to lend; all we ask is that you consider the overall interests of your business.  Just remember that people have long memories, and if you shut off credit to a customer just because you�re a little nervous about him, but with no concrete reason, he�s going to remember that.�  That week Corrigan had dozens of conversations along these lines, and though I never knew the details, some of those phone calls must have been very tough.  I�m sure he bit off a few earlobes.

...Despite our best efforts, there were a half dozen near disasters, mostly involving the payment system.  A lot of transactions during the business day on Wall Street aren�t made simultaneously: companies will do business with one another�s customers, for instance, and then settle up at day�s end.  On Wednesday morning Goldman Sachs was scheduled to make a $700 million payment to Continental Illinois Bank in Chicago, but initially withheld payment pending receipt of expected funds from other sources.  Then Goldman thought better of it, and made the payment.  Had Goldman withheld such a large sum, it would have set off a cascade of defaults across the market.  Subsequently, a senior Goldman official confided to me that had the firm anticipated the difficulties of the ensuing weeks, it would not have paid.  And in future such crises, he suspected, Goldman would have second thoughts about making such unrequited payments.


In Congress, remarkably, leaders from both parties were in accord; potential chaos in a nation [Mexico] of eighty million people with whom we shared a two-thousand-mile border was too serious to ignore.  On January 15, President Clinton; Newt Gingrich, the new House Speaker; and Bob Dole, the new Senate majority leader, jointly put forward a $40 billion package for loan guarantees for congressional approval....  Gene Sperling, one of Clinton�s top economic advisers, summed up the political dilemma: �How do you deal with a problem that to the public doesn�t seem important, that seems like giving money away, that seems like bailing out people who made dumb investments?�


This mess [in Korea] took weeks to unwind.  Rubin�s task forces worked virtually around the clock, and the IMF assembled a financial-support package of $55 billion�its largest financial rescue ever....  There was always the chance that a rescue this large would set a bad precedent: how many more times would investors pour money into willing but shaky economies, figuring that if they got into big enough trouble, the IMF would bail them out?  This was a version of what the insurance industry calls the �moral hazard� of protecting individuals from risk.  The bigger the safety net, the theory goes, the greater the recklessness with which people, businesses, or governments will tend to behave.

Yet the consequences of allowing South Korea to default would have been worse, possibly far worse.  A default by a nation of Korea�s size would almost certainly have destabilized global markets.  Major banks in Japan and elsewhere would likely have failed, sending additional tremors through the system.  Shell-shocked investors would have withdrawn not just from East Asia but from Latin America and other emerging regions, causing development to stall.  Credit would very likely have become much tighter in the industrialized nations as well.


Among its [Long Term Capital Management] principals were two Nobel-laureate economists, Myron Scholes and Robert Merton, whose state-of-the-art mathematical models were at the heart of the firm�s money machine....  The Russian default turned out to be the iceberg for this financial Titanic.  That development contorted the markets in a way even the Nobel winners had never imagined....  The story of how [Bill McDonough] godfathered LTCM�s bailout by its creditors has been told so many times that it is part of Wall Street lore.  He literally gathered top officials of sixteen of the world�s most powerful banks and investment houses in a room; suggested strongly that if they fully comprehended the losses they would face in a forced fire sale of LTCM�s assets, they would work it out; and left.  After days of increasingly tense negotiations, the bankers came up with an infusion of $3.5 billion for LTCM.  That bought the firm the time it needed to dissolve in an orderly way.

No taxpayer money was spent (except perhaps for some sandwiches and coffee), but the Fed�s intervention touched a populist raw nerve.  �Seeing a Fund as Too Big to Fail, New York Fed Assists Its Bailout,� trumpeted the New York Times on its front page.  A few days later, on October 1, McDonough and I were called before the House Banking Committee to explain why, as USA Today put it, �a private firm designed for millionaires [should] be saved by a plan that was brokered and supported by a federal government organization.�


Recessions are tricky to forecast because  they are driven in part by nonrational behavior.  Sentiment about economic outlook usually does not shift smoothly from optimism to neutrality to gloom; it�s like the bursting of a dam, in which the flood backs up until cracks appear and the dam is breached.  The resulting torrent carries with it whatever shreds of confidence there were, and what remains is fear.

(If a real crash happens only once per century, then this must be only because guv�mint nannyism somehow stops plenty of potential crashes!)


For efficient-market theorists, Enron was a poster child: a profitable, flexible, and efficient firm operating in new, unregulated markets.  On December 9, 1997, economist Myron Scholes, then at Long-Term Capital Management, delivered a lecture in Stockholm, Sweden, after he received the Alfred Nobel Memorial Prize in Economic Sciences for his work in options pricing.  He singled out two companies�General Electric and Enron�as having the ability to outcompete existing financial firms, and noted, �Financial products are becoming so specialized that, for the most part, it would be prohibitively expensive to trade them in organized markets. According to Scholes, Enron�s trading of unregulated over-the-counter energy derivatives was a new model that someday would replace the organized securities exchanges.

Frank Partnoy,
Infectious Greed,
How Deceit and Risk Corrupted the Financial Markets


Just before the LTCM crisis, the head of risk management at Merrill Lynch told me [about the beloved computer programs that are supposed to predict what will happen in the markets]:

The mathematicians tell you that a one-day 20 percent drop in equities happens how often�once every fifty years?  And what about a $150 billion loss in S&Ls, or overnight yields of 1,000 percent in European currencies [1992], or a collapse in a major market like junk bonds?  How often can those happen?  Well, we�ve seen them all within just a few years.  And if you�re hedging Italian equities, what do you do when the market suddenly decides to close for five days, so there�s no way of knowing what values are?

�Charles R. Morris,
The Two Trillion Dollar Meltdown

copyright 2009

Financial crises that are deemed �once-in-a-lifetime� by financial models seem to be occurring with alarming regularity....  After examining how financial institutions used to create economic value in the past, Tilman offers a concise new risk-based approach to thinking about economic performance.  He then develops a practical decision-making framework he calls Financial Darwinism that is designed to help financial institutions navigate the dynamic new world.  Financial Darwinism�a blend of business strategy, corporate finance, investment analysis, and risk management�gives financial executives and investors a menu of broad choices on how to create economic value.

Publisher�s Notes of Leo M. Tilman,
Financial Darwinism: Create Value or Self-Destruct in a World of Risk

(While �Social Darwinism� sounds scary, �Financial Darwinism� doesn�t even suggest helplessness, and if it does scare you, you�d be sardonically treated as an unrealistic whiner, loser, manipulator, etc.)



FEBRUARY 26, 2009

AIG�s business model�a sprawl of $1 trillion of insurance and financial services businesses, whose AAA credit was used to backstop a $2 trillion dollar [sic] financial products trading business�has many inherent risks that are correlated with one another.  As the global economy has experienced multi-sector failures, AIG�s vast business has been weakened by these multi-sector failures....  Insurance is the oxygen of the free enterprise system.  Without the promise of protection against life�s adversities, the fundamentals of capitalism are undermined.

statement to the Treasury Department
begging for $30 billion more of a bailout,
to add to the $152 billion it had already gotten

(Of course, AIG, despite its risky business model than no one forced them to have, seems to need protection from �adversities� that it created itself, very different from Darwinism.  And, of course, they created their own �adversities� through risky gambles with money that was supposed to take care of policyholders� adversities, though this could be called very Darwinist.  If you choose to build a house on a sandbar, you really aren�t a victim if �the perfect storm� hits it.)


�By and large, credit-default swaps have distributed the risks.  They didn�t create it.  The only reason people have focused on them is that some politicians don�t know a credit-default swap from a turnip.�

�Phil Gramm



Robert P. Lamont

SEPTEMBER 9, 1929.

Not only has there been, since 1921, an unusually prolonged period substantially free from so-called crises, or ups and downs, in economic activity representing the so-called business cycle, but even those variations from month to month of the year, which are the result of seasonal influences and which were formerly considered inevitable, have been cut down in extent.

This result must be attributed largely to greater foresight on the part of business men producing and selling commodities as well as on the part of buyers of goods.


FEBRUARY 20, 2004

The Great Moderation

One of the most striking features of the economic landscape over the past twenty years or so has been a substantial decline in macroeconomic volatility.  In a recent article, Olivier Blanchard and John Simon (2001) documented that the variability of quarterly growth in real output (as measured by its standard deviation) has declined by half since the mid-1980s, while the variability of quarterly inflation has declined by about two thirds.  Several writers on the topic have dubbed this remarkable decline in the variability of both output and inflation �the Great Moderation.  Similar declines in the volatility of output and inflation occurred at about the same time in other major industrial countries, with the recent exception of Japan, a country that has faced a distinctive set of economic problems in the past decade.

�Ben Bernanke,
beginning of a speech at the meetings of the
Eastern Economic Association, Washington, DC


WASHINGTON, Oct. 14 (1929)�Secretary Lamont and officials of the Commerce Department today denied rumors that a severe depression in business and industrial activity was impending, which had been based on a mistaken interpretation of a review of industrial and credit conditions issued earlier in the day by the Federal Reserve Board.

New York Times

APRIL 1, 2006

...there�s much too much concern about some disaster that�s waiting out there with the newer products....  We believe there�s just too much concern about a potential downturn because of delinquencies and things like that....

So at the end of the day, will we see some problems emerge?  Yes....  But in terms of the share of the whole market, it�s not going to bring the housing market down.

�Doug Duncan
Mortgage Bankers Association

FEBRUARY 26, 2007

The market knows what the economic worrywarts do not, which is that the housing sector is already making a comeback.

�Kenneth Fisher, Columnist
Forbes Magazine

NOVEMBER 2, 2007

Message to all you worrywarts out there:  The U.S. economy remains strong.  There is no recession ahead.

�Lawrence Kudlow

OCTOBER 23, 2008

So I just want to suggest�and I�m not really asking a question.  I really want to suggest to my colleagues for them to say that there�s no way you could have known what was going on, there�s no way you could have acted, there is a long list of warning signs and prominent economists were saying things should have been done and this problem is going to get out of hand, and yet the Federal Reserve, the SEC, the Department of Treasury and other agencies didn�t act, and to say now we need regulations is helpful.

�Chairman Waxman,
at the Congressional Hearings


WASHINGTON, Dec. 28 (1929)�Maintenance of a general high level of business in the United States during December was reviewed today by Robert P. Lamont, Secretary of Commerce, as an indication that American industry had reached a point where a break in New York stock prices does not necessarily mean a national depression.

Associated Press dispatch.


WASHINGTON, Jan. 13 (1930)�Reports to the Department of Commerce indicate that business is in a satisfactory condition, Secretary Lamont said today.

 �News item.


WASHINGTON, Feb. 10 (1930)�An approximately normal level in the production and distribution of commodities in the United States for this season was announced today by Secretary Lamont after a study of business survey data received at the Department of Commerce.

�There is ground for assuming that this is about the normal year,� he said....

Associated Press dispatch.

LamontMARCH 3, 1930.

As weather conditions moderate we are likely to find the country as a whole enjoying its wonted state of prosperity.  Business will be normal in two months.


Lamont�MAY 20, 1930.

Should the present tendencies in American business continue, normal conditions should be restored in two or three months.



It is perfectly clear that business, on the whole, has ceased the marked decline which was characteristic of a number of earlier months and there are some distinctly encouraging features.


Lamont�SEPTEMBER 26, 1930.

Those who predict a prolonged period of depression are just as foolish as those who predict business will jump magically up to the abnormal levels of early 1929 within a few weeks....  Our information indicates the probability that the decline in business has substantially if not wholly ceased.


Lamont�DECEMBER 6, 1930.

We have already weathered the worst of the storm and signs of stability and recovery are already appearing.

Radio address at Chicago.


WASHINGTON, March 20 (1931)�Secretary Lamont estimates that 6,050,000 persons were jobless and looking for work in January with from 250,000 to 300,000 more on laid-off status or working part time. �Since the time of the census there has been evidence of a slight but unmistakable improvement in the employment situation,� he said.

News dispatch.

Lamont�MARCH 22, 1931,

There undoubtedly will be an appreciable decrease in the number of unemployed by mid-summer.


Lamont�APRIL 25, 1931.

I have canvassed the principal industries, and I find no movement to reduce the rate of wages. On the contrary, there is a desire to support the situation in every way.






                                                                                          �New York Times, JUNE 13, 1931.

Special to the New York Times

WASHINGTON, Aug. 2 (1931)�Operating schedules in many manufacturing establishments were cut still further and the number of part time workers increased in July, the monthly employment bulletin of the Federal Employment Service reported today.



WASHINGTON, July 2 (1931)�Secretary Lamont today described as �entirely without foundations� rumors that he was planning to resign.

New York Times.

Simeon D. Fess


Persons high in Republican circles are beginning to believe that there is some concerted effort on foot to utilize the stock market as a method of discrediting the administration. Every time an Administration official gives out an optimistic statement about business conditions, the market immediately drops.

New York World, OCTOBER 15, 1930.


DECEMBER 8, 2008

BILL O�REILLY: All right, so you are agreeing with me then that there is a conscious effort on the part of The New York Times and other liberal media to basically paint as drastic a picture as possible, so that when Barack Obama takes office that anything is better than what we have now?


�on The O�Reilly Factor

DECEMBER 22, 2008

Back to this October surprise.  I am just wondering�as I say, it can�t be proven�I�m just wondering if a lot of this was by design to create economic panic.  Remember now�the Iraq war had dominated everything, and the economy was said to no longer be an issue in the campaign for the first time.  Corruption, other things were�ethics (well, the Republicans had those problems)�but the economy wasn�t.  They wanted to create economic crisis, a mindset of this.

So Chuck Schumer starts a run�a $1.3 billion run on IndyMac [founded by Angelo Mozilo, who also founded Countrywide], and then all of a sudden, look what we learn!  All these mortgages are worthless.  All the mortgage derivatives and the mortgage-backed assets are worthless.  Everything was worthless.  There was no there there.  Every institution, every guy in the institution was an empty suit.  We had to bail out this, we had to bail out that; it didn�t help.  I just wonder if what was a planned attempt to scare people economically�starting a run on the bank, doing this, that, and the other thing�has spun so far out of control, it�s gone so far beyond what the intention was, just to win an election, that nobody knows what to do about it.

�Rush Limbaugh

APRIL 3, 2009

BILL MOYERS: You�re talking about significant American companies.

WILLIAM K. BLACK: Huge!  One company produced as many losses as the entire Savings and Loan debacle.

BILL MOYERS: Which company?

WILLIAM K. BLACK: IndyMac specialized in making liars� loans.  In 2006 alone, it sold $80 billion dollars of liars� loans to other companies.  $80 billion.

�Bill Moyers� interview with William K. Black,
investigator of the savings and loan scandal of the late 1980s,
and author of The Best Way to Rob a Bank Is to Own One

FEBRUARY 20, 2009

I think that what�s happening here, there�s an anger, there�s a rage, and there is an effort here to totally restructure American society and American culture, that there is a desire on the part of the Obama White House, and the liberal Democrats in Congress, to expand the welfare state to include many of the middle class and even some in the upper middle class by so damaging the economy that nobody has any choice but than to take unemployment, welfare checks, what have you, in order to be able to feed their families.

�Rush Limbaugh

(One of the traits that the F-Scale tests for, is a belief in John-Birch-Society-style conspiracy theories, which would require that �the intellectual elite� and others who get the upper hand through abstractions, surreptitiously use it since their claims of righteousness are actually reflections of their SELF-WILLS.  One could also compare this supposed Machiavellianism, to the REAL Machiavellianism of �Protection of property rights, so critical to a market economy, requires a critical mass of owners to sustain political support,� the REAL cause of the crisis.)

JANUARY 16, 2009

If I wanted Obama to succeed, I�d be happy the Republicans have laid down.  And I would be encouraging Republicans to lay down and support him.  Look, what he�s talking about is the absorption of as much of the private sector by the US government as possible, from the banking business, to the mortgage industry, the automobile business, to health care.  I do not want the government in charge of all of these things.  I don�t want this to work.  So I�m thinking of replying to the guy, �Okay, I�ll send you a response, but I don�t need 400 words, I need four: I hope he fails.�

�Rush Limbaugh

FEBRUARY 28, 2009

This notion that I want the president to fail, this shows you the problem we�ve got.  This is nothing more than common sense and to not be able to say it?  Why in the world would I want what we just described: rampant government growth, wealth that is not being created yet is being spent?...  They hoped George Bush failed.  So what is so strange about being honest and saying I want Barack Obama to fail if his mission is to restructure and reform this country so that capitalism and individual liberty are not its foundation?...  And I�m supposed to say I don�t want the president to fail?  We are in for a real battle.

�Rush Limbaugh,
Conservative Political Action Committee conference,
at which he was much-cheered

MARCH 2, 2009

[in response to RNC Chairman Michael Steele�s statement, regarding Limbaugh�s saying he hopes Obama fails, that Limbaugh was just an entertainer whose message can sometimes get �ugly�]  Michael Steele, you are head of the Republican National Committee.  You are not head of the Republican party.  Tens of millions of conservatives and Republicans have nothing to do with the Republican National Committee...and when you call them asking for money, they hang up on you.  I hope that changes.  It�s time, Mr. Steele, for you to go behind the scenes and start doing the work that you were elected to do instead of being some talking-head media star.

�Rush Limbaugh

MARCH 2, 2009

There was no attempt on my part to diminish his voice or his leadership.

�Michael Steele,
apologizing to Limbaugh

MARCH 3, 2009

The Democrat Party, and you people in the media ought to be ashamed.  You tried to talk the people in this country into believing that we had a bad economy.

�Rush Limbaugh

MARCH 4, 2009

Republicans better understand and look at the role model he�s presenting ... Stand up and fight!

�Tom DeLay

MARCH 4, 2009

There is someone working inside the White House who is sort of coordinating with other folks on the [embarrass] Rush Limbaugh situation.

�Craig Gordon,
White House Editor,

MAY 29, 2009

�At some point, there has to be a recognition of the fact that while President Obama clearly won a resounding victory in winning the White House, he has to win bond vigilantes� votes every day,� said Edward Yardeni, head of Yardeni Research Inc. in Great Neck, N.Y.  �And he�s losing them now.  That�s the heart of it.�

Yardeni coined the term �bond vigilante� in 1984 to describe investors who protest monetary or fiscal policies they consider inflationary by selling bonds.

Brendan Moynihan,
Bloomberg News





Charles M. Schwab

MARCH 5, 1929.

I do not feel that there is any danger to the public in the present situation.  Money is now being lent in Wall Street by people who never lent it before.  As long as the people remain enthusiastic and interested the market will hold up.  We must remember that today the United States is doing half the world�s business and will continue to do so.  Who can compete with us?

Ship news interview

SchwabOCTOBER 25, 1929.

In my long association with the steel industry I have never known it to enjoy a greater stability or more promising outlook than it does today.

Address before American Iron and Steel Institute

SchwabDECEMBER  10, 1929.

Never before has American business been as firmly intrenched for prosperity as it is today.  Steel�s three biggest customers, the automobile, railroad and building industries, seem to me to justify a healthy outlook.  This great speculative era in Wall Street, in which stocks have crashed, means nothing in the welfare of business.  The same factories have the same wheels turning.  Values are unchanged.  Wealth is beyond the quotations of Wall Street.  Wealth is founded in the industries of the nation, and while they are sound, stocks may go up and stocks may go down, but the nation will prosper.

Address before Illinois Manufacturers Association, Chicago

SchwabOCTOBER 16, 1930.

Looking to the future I see in the further acceleration of science continuous jobs for our workers.  Science will cure unemployment.

Address at Dedication of Laboratory at Lehigh University

SchwabFEBRUARY 7, 1931.

I am not predicting anything.



$36,000,000 BONUSES               
               ARE ATTACKED IN SUIT

New York Times, JANUARY 14, 1931.



My experience is where there is a one-to-one relation between if I do X, money will hit my pocket, you tend to see people doing X a lot.  You�ve got to be very careful about that.  Don�t just say: �If you hit this revenue number, your bonus is going to be this.�  It sets up an incentive that�s overwhelming.  You wave enough money in front of people, and good people will do bad things.

�Franklin Raines,
CEO, Fannie Mae,
Business Week

JANUARY 29, 2009

WASHINGTON � President Obama branded Wall Street bankers �shameful� on Thursday for giving themselves nearly $20 billion in bonuses as the economy was deteriorating and the government was spending billions to bail out some of the nation�s most prominent financial institutions.

�There will be time for them to make profits, and there will be time for them to get bonuses,� Mr. Obama said during an appearance in the Oval Office with Treasury Secretary Timothy F. Geithner.  �Now�s not that time.  And that�s a message that I intend to send directly to them, I expect Secretary Geithner to send to them.�

�New York Times


BETHLEHEM NET                        
              $5.25 A SHARE



�New York Herald Tribune, JANUARY 30, 1931.


SchwabJULY 8, 1931.

Just grin, keep on working.  Stop worrying about the future and go ahead as best we can.  We always have a way of living through the hard times.


U. S. STEEL AND                        
             WAGES 10% OCT. 1

Headline�all papers, SEPTEMBER 23, 1931.



OCTOBER 17, 2008

Around the world, free market policies have lifted millions of people out of poverty, and given them the opportunity to build a more hopeful life.  And here at home, it has given our large and dynamic economy the flexibility and resilience to absorb shocks, adjust, and bounce back stronger.

George W. Bush



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 Home Page

 About Us, Introduction

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My Story

To The [Abuse] Survivors ♥♥♥♥♥

Men Dying for Love

On Doping

Index of �Oh, Yeah?

Victim Correction as a Panacea, the Summary (Top of Page 1)

(Page 2)(Main Page 3)

Cancer Victims Corrected Too

The Main Victim Correction as a Panacea

 Documentation On the Social Problem of Unnaturally Rampant Depression

 Standard Rationales for Victim Correction as a Panacea

 Schopenhauer on Predators

 Emphasis on Victim-Self-Blaming

Darwinist Lehman Brothers� INSIDE Sales Tips

Darwinist Lehman Brothers� INSIDE Introduction to Management Book

Out of the Same Mold as the Great Crash of 2008

Message for Intellectuals in the Islamic World

Candace Newmaker�s Experience

Breaking Important Confidences for Your Own Good

A Glimpse Into the Soul of Victim Correction

Cigarette Industry and Victim Correction

Niebuhr�s Ideas on Our Nature and Destiny

Herbal Experiences for Women

Some Ideas for Rapport