Comments: Abraham Lincoln Speaks Out On Public Money And Banks

The fact that the bursting of the speculative bubble in 1837 led to a six-year contraction is one of the reasons that governments have become empowered to deal with these crises.

Besides radically overhauling the capitalist system or replacing it with something else (which I heartily endorse), bailouts of some sort seem necessary to prevent a banking crisis from shutting down the economy.

Is it this particular bailout that you oppose? Or any bailout? I personally think that the banksters who produced this particular crisis, with their greed and incompetence, ought to suffer personally for their failings, including serving jail terms for fraud. (Despite the fact that finance was deregulated, I'm pretty sure the legal definition of fraud is broad enough to capture their massive junk peddling and misrepresentations to howe owners and investors.

Posted by thwap at September 29, 2008 09:33 AM

Wait, what's the moral of this story. Lincoln's stand sounded good, but then the United States experienced an extensive economic crisis.

Posted by graeme at September 29, 2008 10:00 AM

Jon, you do not ask the burning question: why does Abe Lincoln hate the free market and America?

Posted by almostinfamous at September 29, 2008 11:54 AM

Did they get the money or not? Looks like not: there's mention of a $2m loan, but nothing more. The comparison with the great depression is interesting. The consequences seem less severe, so though the financial scale was similar, perhaps the financial sector was not so integrated with the economy as it was in the 1930s. However, I suspect it's even more integral to the US' GDP than it was. After all, now non-military manufacturing is all but destroyed, and the net use of fossil is far greater than it's production, current or potential, what does the US actually produce? Sitcoms. Blockbusters. Subsidised corn. One of the world's most aggressive and virulent strains of religion. Military technology. Anything else? Anything sustainable?

Posted by me at September 29, 2008 12:14 PM

And in 2008 we have Georgie Porgie, Barbara's little mental case. What has happened to "The DECIDER", The "WAR President", the "COWBOY"? Suddenly no macho? In 7.5 years W(rong) has done more to destroy America than the Nazis, the Communists, and Al Queda combined ever managed. The "Bush Legacy"? The "BUSH DEPRESSION" !

Posted by William at September 29, 2008 01:29 PM

I love how there was once a time when an American politician could use the word "capitalists" in public.

Posted by SteveB at September 29, 2008 02:12 PM

I sent an email, with the following contents to my senator(Boxer) and Obama:
To put it bluntly: NO CASH FOR TRASH!

I'm against giving money to bankers for their toxic waste. This plan was devised by, and is for the benefit of, the same people who got us into this situation.

There are other alternatives. Congress needs to hold hearings and listen to economists who saw this coming – for example, Nouriel Roubini, Robert Kuttner, and Dean Baker. It may take a couple of weeks longer, but this is a time to do what is NECESSARY, not what is convenient.

The fear-based stampede that the Bush Gang is trying to provoke is a giant rip-off. Although it is merely robbery, instead of mass murder (wars of choice against nations that never harmed us), it is yet another crime. I hope to live long enough to see fair trials for the lot of them.

Pass it on!

Cheers,
IB

Posted by Iron Butterfly at September 29, 2008 02:45 PM

"[Martin Van Buren's] refusal to involve the Government in the economy was said by some to have contributed to the damages and duration of the Panic."

Posted by James Cape at September 29, 2008 02:53 PM

If Abraham Lincoln were alive today . . . he'd be damn old.
But he would still be right on this.

Posted by Monkay at September 29, 2008 03:29 PM

This out of context quotation from 27 year old state legislator Abraham Lincoln involved the disputed distribution of one bank's shares of stock among its well off shareholders, the resolution of which dispute Lincoln rightly concluded the State should not bear the court costs. He also rightly said that the private stock dispute was "a question in which the people have no interest, and about which they care nothing." Would Lincoln now say that people today are indifferent to or care nothing about the financial crisis confronting the Congress and the country? Of course not. Let's then not insult the memory of young Abe Lincoln by quoting that unrelated small segment of his lengthy statement in the Illinois House of Representatives in January 1837 to justify today's defeat of the bill
addressing that crisis. Oppose it if you will, but Lincoln is not your authority for doing so.

Posted by H. Richard Penn at September 29, 2008 05:05 PM

This out of context quotation from 27 year old state legislator Abraham Lincoln involved the disputed distribution of one bank's shares of stock among its well off shareholders, the resolution of which dispute Lincoln rightly concluded the State should not bear the court costs. He also rightly said that the private stock dispute was "a question in which the people have no interest, and about which they care nothing." Would Lincoln now say that people today are indifferent to or care nothing about the financial crisis confronting the Congress and the country? Of course not. Let's then not insult the memory of young Abe Lincoln by quoting that unrelated small segment of his lengthy statement in the Illinois House of Representatives in January 1837 to justify today's defeat of the bill
addressing that crisis. Oppose it if you will, but Lincoln is not your authority for doing so.

Posted by H. Richard Penn at September 29, 2008 05:05 PM

It sounds like the same principle, though, H. Richard Penn. Now there might be good reasons for the bailout, if it really is the only way to avoid another depression--I don't know. But even some of the people who support the bailout admit that it has the moral problem Lincoln is talking about here.

Posted by Donald Johnson at September 29, 2008 09:29 PM

ai:

Interesting he waits until now to make this view public. I'm shocked—shocked—he didn't do anything about it during his administration. Now it's the viewpoint of the guy saddled with reams of corruption charges who enjoys

Posted by Save the Oocytes at September 29, 2008 10:08 PM

["less than" sign] 2% support.

Posted by Save the Oocytes at September 29, 2008 10:10 PM

Mr. Thwap

RE:

“Besides radically overhauling the capitalist system or replacing it with something else (which I heartily endorse), bailouts of some sort seem necessary to prevent a banking crisis from shutting down the economy.”

The first issue is whether or not the prospective banking crisis will shut down the economy. Whenever I hear people talking about the specific results of inaction, it doesn’t seem as bad as when they’re talking about inaction in general terms. It seems to me that there is a lot of hyperbole when talking about the effects of inaction that makes it hard for me to believe a lot of what I’m hearing unless people are talking about specifics. Some of what is said is utterly ridiculous and clearly wrong and I don’t hear much from people who saw this coming which also tends to destroy the credibility of what I hear.

Beyond that, no matter what the government does, it seems clear that there is going to be some pain. From my uneducated analysis of the bill that was voted down today, over the long term there will be less pain through inaction then if the bill passed. It should be clear that there are lots of options other than a bailout, especially a bailout of the people who have been preventing real economic growth in favor of illusitory economic growth for a decade in a half and written by the same. It doesn’t take a lot of looking around to find some of these alternative solutions but I will present my on.

I am not an expert on the economy and I have not discussed these options with anybody but here is what I think I would like to see the immediate government response be:

1) There should be an 18 month moratorium on foreclosures with an option for homeowners to abandon their homes and forfeit any ownership of their homes and any liabilities in owning the home.

2) Over the next 30 months, if a credit card company or bank (or any other company providing personal loans) declares bankruptcy, all debt held by the company’s customers to the company is voided.

3) Increase in food stamps.

4) Crash program to provide increased bus service, especially in rural areas.

5) 700 bill$ (or other figure) be appropriated to a newly created emergency federal bank operated by the executive branch and under heavy congressional oversight and transparency to provide loans to non financial sector businesses so they can stay in operation until the financial sector recovers.

The goals of these steps is to allow the companies to fail who should fail in this current market while trying to shield consumers from as much of the negative result of these failures as possible. Once these actions are taken the federal government should have time to explore additional measures it should take. Homeowners during the 18 months will have time to find housing they can afford if they cannot afford their present housing.

A lot of companies involved in issuing credit will fail as they should, and a result would be that credit will be much harder to acquire. Companies that survive would likely have made intelligent enough decisions regarding the issuance of credit that their consumers will be able to weather the crisis and the consumers of those that fail will be able to continue unburdened by debt even if they are burdened by low credit scores. Because a lot of people require credit for daily life, like food and transportation, there are measures to support the continuation of survival of these people. The federal emergency bank exists with the express purpose of minimizing job loss from non financial sector institutions so people can keep working as much as possible.

There will be pain felt by the American people under my proposed plan but there will be regardless of what the government does because of an overreliance on credit over the past few years. I do not have the ability to completely and correctly evaluate my plan so I desire any input, especially criticism, that other people can provide. The main goal is to keep people housed, fed, and working until a longer term, vetted, and debated solution can be found under normal legislative practices in this country. Even if this option is not a good option it is an example of alternatives to dealing with this crisis other than a bailout. There are a lot others out there but I don’t see them being discussed in the mainstream media.

Posted by Benjamin A. Schwab at September 29, 2008 10:45 PM

@ Save the Oocytes. yeah, that's probably why he said it.... why does everyone do The Turnaround after they have lost all ability to enforce it?

see also: Gore, Albert A


Posted by almostinfamous at September 29, 2008 11:03 PM

Re the Olmert interview:

It's still a step forward. It means that this is what many Israelis know in their deepest hearts is the truth. It creates yet a little bit more space for saying it in {gasp} U.S. politics.

I liked his bluntness about Israelis and Iran, too.

Posted by Nell at October 1, 2008 03:52 AM