FEAR, DAMAGE, AND BIG BEN ROTHLISBERGER

 

 

When I get frustrated, things in my immediate vicinity are at risk of being broken.  That is why I don’t allow golf clubs or baseball bats in the computer room.  That %&#@! machine is a constant source not just of frustration, but outright rage at times.  For me, the equation can be written: frustration = broken things.

 

I bring up this personal failing because, right now, there’s another emotion out there preparing to unleash untold wreckage from one end of this globe to another: FEAR.  The Dow is tanking, unemployment is headed through the roof while property values go through the floor.  World governments are running around frantically throwing money they don’t have at every wobbly institution that’s big enough to wear the label “indispensible”.  Fear is in the air, and it holds the very real possibility of giving way to an escalated emotion: PANIC.

 

Historically, what’s happening today used to go by that very name: panics. 

 

The Panic of 1819:  This was the first of a succession of financial crises that shook the country from 1819 through the Great Depression of the 1930’s.   It was brought about by factors which may sound uncomfortably familiar:  a flood of easy credit  from the banking industry (and backed by the government) led to reckless land speculation and rapidly increasing real estate values.  A deluge of imported goods entered the country, outpacing exports, resulting in a precarious balance of trade that siphoned off massive capital from  the nation. http://mises.org/rothbard/panic1819.pdf   When the bubble finally burst, the result was a tidal wave of bankruptcies, mortgage foreclosures, bank failures, and massive unemployment. http://en.wikipedia.org/wiki/Panic_of_1819.

 

The Panic of 1837:  The 1819  pattern was repeated 20 years later.  Once again, rampant land speculation was spurred by reckless lending practices of the banking industry. http://en.wikipedia.org/wiki/Panic_of_1837.  The result was the same: bank failures, mortgage foreclosures and mass unemployment.

 

The Panic of 1857:  Once again, reckless land speculation fueled the crash of 1857.  The crisis was actually brought about by the failure of a large insurance company, Ohio Life Insurance and Trust Company (can you spell AIG?) http://blueandgraytrail.com/event/Panic_of_1857.  Foreclosures and unemployment followed until the outbreak of the Civil War brought an ocean of government spending to the rescue.

 

Is any of this starting to sound familiar?

 

The Panic of 1873:  This time, it wasn’t land speculation but railroad speculation.  The bubble popped on September 18, 1873 when a large banking establishment that was promoting stock in the Northern Pacific Railroad declared its insolvency.  http://thehistorybox.com/ny_city/panics/panics_article9a.htm  The same results followed.

 

The Panic of 1893:  Speculation again — -this time in industrial stocks.  Same results.  http://thehistorybox.com/ny_city/panics/panics_article10a.htm

 

The panic of 1901: More of the same, this time fed by pyramid stock schemes that created fortunes out of thin air.  http://thehistorybox.com/ny_city/panics/panics_article12a.htm

 

The Great Depression:  We all know about this one: stocks bought on margin, millionaires in every office — -th is bubble of bubbles spawned mass unemployment, home foreclosures and  bank failures.  All of it was so easy to foresee to anyone who had taken a look backward.

 

“Those who ignore history are doomed to repeat it.”

 

Isn’t that the phrase?  Well, it kind’a looks like we didn’t do much looking back either — -land speculation based on easy bank credit, stocks (even whole companies) bought on margin (we called it leverage this time), millionaires on every corner, a world awash in funny money.  And now our bubble has popped. 

 

It is not the intent of this blog article to point fingers or to go on ad nauseum about what has brought us to this unpleasant reality.  It is not the causes that concern me right now, it’s the effect.  It is the emotional reaction to this financial crisis and the potential for damage that is caused by that reaction.   Roosevelt’s oft-quoted phrase, “We have nothing to fear but fear itself,” has been told and retold so many times that we have forgotten what he was trying to say — -that it was fear that was doing all the damage in 1932-33.

 

We, too, stand poised to start breaking things.  And right now, the principal candidate for damage is the automobile industry.  Everyone seems ready to allow our nation’s ability to produce vehicles to go down the drain.  We must not allow this to happen.  We are going to desperately need an infrastructure capable of producing non-carbon burning cars.  Our future and the future of our children depends upon our ability to turn a corner on this critical issue.  If we trash the only industry we have that knows how to build cars (not to mention the tens of thousands of workers who actually do the work), we cripple our ability to create the very cars and trucks we will need to carry us out of a looming carbon holocaust. 

 

Enter Ben Rothlisberger. 

 

I’ve been watching the Congressional hearings on the “Big 3” automotive “bailout”.  And I’ve been reading the vitriolic emails that the general public has been sending to the networks:

 

          “Those (expletive deleted) C.E.O.’s were warned that they needed to build smaller cars, and they chose to go on building Hummers!” 

           “Let them go bankrupt!” 

           “Those %#@*&!!s deserve everything that’s happening to them!”

 

Well, Ben Rothlisberger, the quarterback of the ‘05 Super Bowl Champion Pittsburg Steelers, was nearly killed in a motorcycle accident in June of ’06.  He wasn’t wearing a helmet.  Is there any doubt that he had been repeatedly warned that about riding a motorcycle without a helmet?  Of course he knew.  And it’s equally clear that he chose to ignore the warnings.

 

My point is this:  if you had come across his mangled body at the intersection of the accident, would you have stood there and yelled, “You idiot!  You were told to wear a helmet!  You brought this on yourself!” If you had been there, would you have let him bleed to death?

 

The truth is that someone went ahead and put him back together, and he’s been a pretty good quarterback ever since.

 

Our auto industry hasn’t been wearing a helmet either.  Now we can all stand here and yell, “You idiots!”, and let the entire industry bleed to death from its self-inflicted wounds.  Or we can remember Ben Rothlisberger, and give the industry an I.V.  Maybe they won’t win any Super Bowls for a while, but they will be in the running.  And if they’re in the running, we’re all going to be winners.

 

It’s a bit scary out there right now. But let’s not let our fears turn to anger and panic.  It’s time to start the IV’s,  not kick the bleeding dummies.   

 

Richard

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2 Responses to “FEAR, DAMAGE, AND BIG BEN ROTHLISBERGER”

  1. Spadijer says:

    Nice summary.

    BUT something things to note - true, the panics of 1819, 1837, 1857 were all caused by land speculation. *But* the Panic of 1873 was too - remember railroad speculation and land speculation are mutually inclusive, or as one speculator put it, “land speculation and railroad speculation go hand in hand” - you buy land near where railways will be placed to get a capital gains, a windfall. The result? Exoberant debt due to commercial land speculation - http://www.consumerwarningnetwork.com/2008/10/27/todays-crisis-echoes-of-1873/

    The same is true for the panic of 1907 - http://query.nytimes.com/gst/abstract.html?res=9C05E4DB1738E033A25753C2A9679D946697D6CF

    And the Great Depression.

  2. Richard Kelley says:

    Dear Spadijer,

    Thank you for your thoughtful comments. Whether it be land, or stocks, or as was most recently demonstrated, oil, it is the UNBRIDLED quest for capital from speculation (as opposed to producing something new of true value), that has repeatedly demonstrated a grave potential for damage on a large scale. Jesus only kicked over the tables of the money changers. He let those who actually raised the goats and the doves return home with their profits intact.

    One last comment: Big Ben just led his team to the Super Bowl championship. That holds great promise for both G.M. and Ford. And, given the fact that the lowly Arizona Cardinals almost pulled off a victory, perhaps there is a ring in the future for Chrysler as well. Richard

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