Tuesday, July 15, 2008

Sliding Into The Rabbit Hole: The Great Depression, Part 1

Once upon a time, our President and his corporate cronies fell down a rabbit hole, similar to the one in Alice In Wonderland but with more mad hatters. They've finally dragged down the rest of us.

Before I discuss the present, I'll share some photos and brief interesting stories of how my late folks and others survived the first Great Depression. It might help us prepare for the 21st Century version.

My parents hadn't met when the Great Depression hit. My late mother was the youngest of four by her mother's first husband who died from the Spanish Flu epidemic when she was an infant. She had two younger brothers by her mother's second husband.

shared memories of being in her early teens and of waiting by the window and looking for her mother to come home late in the evening from her job as a maid and cook.

"I'd see her walking slowly up the alley, carrying her purse and a bag of leftovers from the family she worked for," she said. "She was so tired. My stepfather tried to gamble to get extra money, but often he lost his week's paycheck. Mama would get so mad. We ate a lot of soup. He bought milk, but would only allow his two sons to drink it."

Famous photo of a worried, hungry family during the Great Depression.

I always thought that was pretty selfish of her step-father, but people can get that way when they go into survival mode. They protect themselves and children first. It was still selfish.

Birth control was horrible back then. My mother also recalls her mother having two sets of twins.

"The first set died," she said. "She prayed for this. Only one in the second set survived. She was happy about this too."

"Why?", I asked in shock.

"She already had six of us. We were always a little bit hungry as it was, and they also worried about keeping up with house payments."

Imagine that. A mother glad that God took away her infants, and this making sense.

My father had his sad story too. It was so bad that he only told me about it once.

He grew up deep in the Mid-west woods, "so far in that if you went any further, you'd be on your way out of the woods."

His family of 11 or 12 siblings and two parents owned and farmed a small plot of land and lived in a one room shack. He loved it because he didn't know any different.

Typical rural black family in the 1930s

"The water was so clean back then. We'd drink out of the creeks, swim, fish and hunt."

They worked hard too, and because of his required time to farm, he missed a lot of school. It was a five mile walk each way.

Then he met a girl, and for whatever reason, they didn't get married. She had two babies by him. He couldn't have been a day over 20 when he left them to go to Kansas City.

Black folks in line for something during the Great Depression

He lied to the school officials and said he was younger than he was so he could get his high school diploma, and rented a room and worked whatever jobs he could get.

In his youthful wishful thinking, he took for granted that someone would look after his woman and those babies in the friggin' Great Depression when everyone was dirt poor and weather had fucked up the crops.

Dust storms and drought during the Great Depression.

Illness and hunger can kill people in less than a week. She and the babies starved to death.

She became ill with fever and couldn't get out of bed and walk a few miles to ask for help, and the next time someone brought her a rabbit or squirrel to eat and a jar of canned vegetables, they were all dead. Remember that back then, few people had cars or phones. If you needed to tell someone something, you had to walk to their house.

A family walks 30 miles (!) to visit other family during the Depression.
You know they had to be hurting.

Lessons he learned from this: 1) having money solves most problems, which was in short supply for everyone, 2) a skill or education could help even a black man get paid, 3) friends and family who watch your back are invaluable, but sometimes they fail big time, 4) you cannot let your mistakes destroy you.

As I look at many of the photos I'm posting today, I think of how poverty is the great equalizer between the races. Clearly a lot of people suffered.

The first thing that failed back then was the stock market, followed by the housing market.

Many people became homeless. People with cars often hit the road and would drive across country to find work. Many headed for California. At least gas was cheap back then.

In the 80s, my favorite social worker practicum instructor told us, "Don't assume I've been comfortable all my life because I'm white. I was a young boy during the Great Depression. My family lived in a car for part of it. We became migrant workers. My father drove from place to place, looking for a job to get us by until the next day. We had nothing for a long time."

After the stock market followed by the housing market crashing and burning and banks failing. Folks made a run on the banks. For many it was too late; the country was broke.

A run on one bank during the Great Depression

Deja vu: history is repeating itself, with a vengence.

The first sign of baaad news was the stock market crash several years ago, followed by continued bad corporate decisions that took off with the Reagan area, although seeds of disaster capitalism had already been planted.

Anyway, the U.S. housing market was red hot until two or three years ago, then cooled off. If a miracle doesn't happen, will be comatose by the end of this year, maybe even by this summer.

This year, airlines have gone under. Several banks have failed - Bear Sterns was the biggest story, followed by IndyMac Bank which was shut down on Friday. The feds took over and re-opened it Monday. Same lines, different faces.

Customers lined up outside a branch in Pasenda, CA.
Photo by Monica Almeida, The New York Times

The bad news is many other banks are on a list as being in trouble, and IndyMac BankCorp wasn't even on it.

Keep in mind that IndyMacs failure eats up 10% of all the money the FDIC has to bail out failed banks.

Here's the simple math: if 90 banks are at high risk of failing, but one bank alone can suck up to 10% of what the feds have in reserve to save it, this economy is fried.

In addition, the FDIC only insures up to $100,000 per account, which means that a small (or large) business with excess of that won't be able to pay their employees.

Who does your employer bank with? Might be a great time to look at your paycheck and find out.

The temporary good news is that the feds will bail out the mortgage lending giants, Fannie Mae and Freddy Mac. They have to, or hardly anyone will be able to buy (or sell) a house with a 40% or more required down payment.

If you bank with Wachovia, they're FUBAR, (F'd Up Beyond All Repair) and in the news too.

We are seeing a shift of wealth from the massive middle class to the rich. They'll be buying up distressed real estate in droves with cash. When the purge is over, the much of the middle class we be starting over again, from the bottom.


This is the summer of Super Shock to us all. As a brilliant blogger named Walter titled his excellent June article, prepare for dark days ahead. If all this news isn't bad enough, our collapsed housing market and banks are only a few steps ahead of the price of gas doubling at the pump next year.

Expect the unexpected and lots of fairy tales about our economy doing better than it is. We've already been told by McCain's top economic adviser Phil Gram, a guy who helped create some of our problems, that it's all in our head and to stop whining.

I'm no financial adviser, but I think it's time to:

1. Put your most time-consuming hobbies on hold and take a second job if possible.

2. Get a roommate to help with the rent.

3. Stop eating out.

4. Shop at your local Farmers Market, the produce is much cheaper, and if you have a yard, try your hand growing something.

5. Buy only what is absolutely necessary.

6. If you have a friend in or retired from the military, see if he/she will take you to the PX. Food is cheaper there.

7. If you live in an area known for tornadoes and hurricanes, make contingency plans for what you need to grab if you have to get out quick, and which friends or relatives will put you up. Keep bottled water in your car and fill up if you hear about a serious weather warning.

8. Make sure your kids are up to date on vaccinations, because you may not have insurance or be able to afford a doctor if you lose your job. If you can't recall the last time you had a tetanus shot, it might be a good time to get one.

9. Read, think and talk with one another about how we're gonna survive this shit.

This is an up to date list of the health of every US bank, credit union and thrift. Use their drop down menu to check out yours.


Next: Sliding Into The Rabbit Hole, Part 2


  1. I hate to think things will get much worse but it does appear so. Your advice and links was good and the photos wonderful.

    It never occurred to me to ask my grandparents how they survived the Depression. Thanks for sharing your parents stories.


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