Propaganda
It’s obvious to me that there is some serious propaganda being pushed into the minds of consumers today. There are some interesting contradictions in the headlines. I also came across some news headlines from the Great Depression. They sound strikingly familiar to this downturn.
Contradictions
1. We are in the country’s worst housing downturn since record-keeping began in the late 19th century - But the recession is ending…we are seeing a recovery.
Nearly half of recent sales have been attributed to foreclosures or “short sales” at bargain-basement prices. –
2. The Treasury Department’s assistant secretary for financial institutions, recently said more than 6 million families could face foreclosure over the next three years - Realtor.org reported on October 19th that: “All the leading indicators say housing is definitely on the mend.
The truth is that the worst may be on its way.
That spillover effect from foreclosures is one reason why Celia Chen of Moody’s Economy.com says nationwide home prices won’t regain the peak levels they reached in 2006 until 2020.
I say that some homes won’t recover till 2030. There are homes I have seen that have dropped so far, that it will take at least 20 years to get back to where they were. I was speaking to a client of YouWalkAway.com and they told me that they bought their home at the peak in the 80’s for around $100k. He said It’s now worth around 100k and he couldn’t believe that after over 20 years, all his equity was gone.
3. The Center for Responsible Lending says foreclosures are on track to wipe out $502 billion in property values this year. - Newsweek blog reports Meanwhile, the recovery in stock prices and, to a lesser extent, real-estate values has stabilized households’ net worth (assets minus liabilities). By her estimates, U.S. household net worth will rise 3.7 percent this year and 6.9 percent next year
I recently read a MSN article that said: “Interest-only mortgages were the *standard mortgage in the 1920s*, but they disappeared during the Great Depression…” - Sounds familiar doesn’t it?
The Great Depression 1929-1932 Headlines mixed in with some recent ones:
September 1929
“There is no cause to worry. The high tide of prosperity will continue.”
- Andrew W. Mellon, Secretary of the Treasury
July 12th, 2007
“This is far and away the strongest global economy I’ve seen in my business lifetime.”-
Henry Paulson, US Treasury Secretary
October 29, 1929
Stock market crash
December 5, 1929
“The Government’s business is in sound condition”
-Andrew W. Mellon, Secretary of the Treasury
July 12, 2008
“These institutions [Fannie and Freddie] are fundamentally sound and strong. There is no reason for the kind of [stock market] reaction we’re getting.”
Christopher Dodd, Chair, Senate Banking Committee, Financial Post
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
May 7th, 2008
“The worst is likely to be behind us,”-
Henry Paulson, US Treasury Secretary
June 29, 1930
“The worst is over without a doubt.” –
James J. Davis, Secretary of Labor.
August 29, 1930
“American labor may now look to the future with confidence.” –
James J. Davis, Secretary of Labor.
March 26, 2009
“We, as a nation, have already begun the critical work that will lead to our economic recovery.”
President Obama
September 12, 1930
“We have hit bottom and are on the upswing.”
James J. Davis, Secretary of Labor.
February 24, 2009
“The US will emerge from this recession, stronger than before…”
President Obama
October 21, 1930
“President Hoover has summoned Colonel Arthur Woods to help place 2,500,000 persons back to work this winter.” – Washington dispatch.
February 24, 2009
Over the next two years, this plan will save or create 3.5 million jobs…
-President Obama
November 1930
“I see no reason why 1931 should not be an extremely good year.”
Alfred P. Sloan, Jr., General Motors Co.
June 9, 1931
“The depression has ended.”
Dr. Julius Klein, Assistant Secretary of Commerce.
Final thoughts
We are facing the biggest crisis since the Great Depression yet Bank of America reported a $3.2 billion profit for the second quarter of 2009. They are making all this profit but they are very low on the list of how many loan modifications they’ve done. Only 11% of eligible customers. Citigroup said it earned a $4.3 billion profit in the 2nd quarter of 2009, but received an enormous bailout. Are we getting the whole picture? Are we in a recovery or is there a great facade. Are these the symptoms of more than a recession?
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Headlines and news stories throughout the Great Depression were in denial, just like today. The entire time, the tone of major newspapers and spin from the Government was that the worst was behind us and the future is bright.
At least this time we have an army of bloggers and writers to expose what’s really happening.