Are you feeling depressed? Well, you should. That's why it's called The Great Depression.
What happened in the 1930's is repeating itself today in a virtually identical pattern. The names have changed and certain new industries have replaced the institution of the 1920's and 1930's, but the chain of events remains unbroken.
Students of The (first) Great Depression know that the Stock Market Crash neither caused nor even marked the beginning of the depression. It was more of an early warning system. In fact, many people in late 1929 and 1930 felt we had weathered the storm of the stock market collapse and were on the way to recovery. Sadly, they were wrong.
The cascade of business and institutional collapses and, especially the banking collapse happened slowly and over time. The worst of the crisis didn't hit until 1932. And then, as today, our government did virtually everything wrong.
Actually, today the actions of our government are much worse. We may well be looking down the barrel of a loaded gun that will actually destroy our country. We have the absolutely wrong leadership team in Washington. They do not see or understand the crisis that grips our country. Our leaders are literally fiddling while Rome burns.
I am especially distressed that, in spite of the daily warning bells, President Obama seems oblivious to the crisis at hand. But, as a friend mentioned to me earlier today, that might just be for the best. He would certainly prescribe the wrong medicine.
Today might just be the beginning of the final collapse. Yesterday Advanta Bank abruptly cancelled over one million business credit cards that have virtually kept small business in America afloat. With average credit limits of $25,000.00 to $40,000.00 these cards have been a lifeline as bank loans dried up and other credit card companies, like American Express, reduced lines and limits.
Unless you work with small businesses like I do, you cannot imagine the disaster happening today. Literally one million businesses are scrambling to replace a credit card in an economy where no new credit cards are being issued.
You can look for business payroll defaults as early as next week. You can look for layoffs as early as today. You can look for bankruptcies and store closures in the next few months.
Add this to the bankruptcies of Chrysler and General Motors, the bizarre closing of over 1,000 automobile dealerships and the general layoffs at factories and white collar businesses around the nation and you will soon see the death of many small towns. It is literally a house of cards. And the first card to fall was Advanta's.
If.... if..... if..... If only we had a real stimulus package instead of the pinata of death designed by Nancy Pelosi and the clueless Democrats in Congress. Dammit America. You should never let people who have done a day's work, managed a business, made a payroll, or worked and studied in economics design a "stimulus package."
You will note from the government's own website that, 120 days later, almost no money has made it into the economy. As of 20 minutes ago the government has somehow managed to spend a whopping $31.1 billion dollars out of the$ 787 billion dollars in the stimulus package!!
Watch the House of Cards Fall:
Advanta Closes One Million Credit Card Accounts
Feel the pain in real time: The Twitter Advanta Feed
Ask The Consumerists: Small Business Credit Cards
Advanta Freezing All Credit Card Accounts
NPR: The End of Advanta