The US Banks Were Bailed Out in the Past, But Uncle Sam Wasn’t The Savior September 22, 2010

Banks Have Been Bailed Out Many Times in US History

Dow Jones Since 1900

On This Date in History In 1906, San Francisco had a great earthquake. The effects of that quake led to a financial trouble spot that turned into a full-blown economic crisis. At that time, there was no central bank or Federal Reserve. With the system stretched by the stress of the San Francisco quake, some doofus tried to corner the copper market and when that failed, all of the banks who made loans to back the scheme were in trouble so they started calling other loans and the Panic of 1907 was created. People lost confidence in the system and several banks  failed. A bailout was needed. President Theodore Roosevelt was claiming that everything was fundamentally in great shape and threatened a federal takeover of all trusts if the bankers and financial gurus couldn’t get thier houses in order. Who came to the rescue? None other than J. Pierpont Morgan was the savior; the same JP Morgan who had bailed out the system in 1871 and 1895 and the same JP Morgan that is related to JP Morgan Chase who bailed out Bear Stearns in 2008.   To fend off the threats from Teddy Roosevelt, Morgan huddled with his banking brethren and convinced them that they needed to work together to salvage the system in order to save all of their hides and the future of the banking system.   He also convinced the Secretary of the Treasury to pony up $25 million to the effort. The recession did not turn into a depression and the 1907 Panic led directly to the eventual establishment of the Federal Reserve in 1913.

JP Morgan May Have Looked Like a Wild Old Man But He Saved Uncle Sam Bailed Out the Nation Several Times

While the numbers are not as large…not the $700 billion to $800 Biillion that the banking bailout became in 2008-09, the other numbers are not as large either. The Dow Jones Industrial Average fell 39% in 1907. On this date in 2008, the market had lost and gained about two percent over the previous month and politicians ran around making comparisons to the Great Depression when a comparison to 1907 might have been a better barometer . In order to equal the fall of the 1907 panic, the Dow that was around 11,015 on September 22, 2008 would have had to fall to 7000 and it was on this date in 2008 that the Dow fell some 300 points and arguably didn’t stop falling until March 9, 2009 when the Dow Jones Industrial Average bottomed out at 6547.   So, while it was, and in some measure still is, an extremely difficult and precarious situation, it was not totally unprecedented and it wasn’t necessarily a good match with the Great Depression. It’s just the depression of the 1930′s is all the general public, politicians and most people in the media know about.  Several times in the past,  it was JP Morgan engineering a bailout with some government help and this time it was the Federal Reserve and Uncle Sam engineering a bailout with some other private help. When you hear also of rumors that today’s problem was a plot by those who stand to profit, keep in mind that in 1907 it was rumored that the banks had caused the whole panic just to line their pockets.   Aside from the Great Depression, there were a bunch of “panics” in financial circles and the resultant recessions or depressions  that came fairly regularly…perhaps too regularly. The Dow is currently in a trading range between about 9900 and 10,70o and, in recent days, there has been a declaration that the recession is over. 

Year	Unemployment rate
1923-1929	3.3
1930	8.9
1931	15.9
1932	23.6
1933	24.9
1934	21.7
1935	20.1
1936	17.0
1937	14.3
1938	19.0
1939	17.2
1940	14.6
1941	9.9
1942	4.7

With unemployment still hovering near 10%, the rebound of the stock market and the claim that the recession is over are by no means a guarantee that the market and economy won’t go back in the tank.  Nevertheless, both are, and especially the Dow Jones, are certainly at a different place than anyone in March 2009 could have foreseen.   If something happens that causes a big drop in stock prices again, then maybe we can start to refer to the Great Depression as it relates to the stock market, which is but one indicator.   Unemployment is pretty bad but its more like the late 1970s and early 1980′s, not the 1930′s.

No Hoovervilles Today Like in 1930

The big thing about the Great Depression is that its depths were so far reaching that it led to new regulation by the government into financial markets than had ever been contemplated by the founders or anyone else in an effort to try to control the economy such that these setbacks wouldn’t be so deep or so frequent. To a large degree, it has worked pretty well but to expect these things to never happen or think its some sinister plot just is to not accept reality.

Sometimes, news people say they need to give commentary to “give perspective” or a particular news event. Dan Rather used to defend journalists providing analysis instead of just reporting for that specific reason. Yet, it helps if those giving “analysis and perspective” had some perspective in the first place. It’s probably hyperbole and just outright ignorance that media types or politicians trot out the Great Depression comparison.  I remember when President Clinton was running for his first term against George H. W. Bush, they said then that it was the worst economy since the Great Depression.  It certainly wasn’t even close to the economy of the Great Depression then and it’s arguably not the same now.   It’s probably best to leave that moniker on the shelf until its truly warranted.   Let’s hope it can stay on the shelf and we can call this the great recovery. Some of us need a job, not panic.

Weather Bottom Line:  We will continue with this mid to upper 90′s nonsense through Friday.  A front will be approaching then and will pass through.  As it does so, our rain chances will go up. Trouble is that we are so dry there may not be enough moisture for this guy to give us as much rain as one might ordinarly expect from a strong front.  But, it’s a chance.  The good thing is that it will knock the mercury down to the upper 70′s to low 80′s for the weekend and it may be the sign of a pattern change.  Some models are showing a big ol’ storm dropping down into the central plains and the Ohio Valley by the middle of next week.

JP Morgan Rejects GM’s Pleas, the Company Thrives; Morgan Bails Out GM, The Founder Lost His Job September 16, 2010

Nice Guess

On this Date in History: I read an article from the Wall Street Journal from January of 2008. It read that oil prices were around $90 a barrel and were expected to remain around that level. It had a quote from a learned man who said, at that time,  that he expected the price of oil  to drop to about $67 a barrel.   While he didn’t put a time qualifier on the statement,  about 6 months after this artcle came out the price of oil was over $140 a barrel.  I related this story to one of my classes and one student said that it sounded like someone sucks at their job. The point is we often hear these great ideas and pontifications from “experts” that turn out to be wrong by a long shot, if not completely opposite of reality.

Durant Was No Quitter

At the dawn of the 20th Century,  animal power remained much of the energy that drove the economy, though certainly not as much as at the turn of the 19th Century.  Aside from the railroads, animal power was particularly necessary for transportation and for agricultural interests. A United States Senator, Chauncey Depew, said with full confidence that “nothing has come along to beat the horse.”  He suggested to those who might invest in alternative forms of transportation to “keep your money.” Now, one who is looked up to as one who had a great financial mind and who was quite savvy in investing was J. P. Morgan. Well, Morgan had a chance to get into the automobile business in 1908 when he was approached by William Crapo Durant for a loan. Durant and Benjamin Briscoe wanted financing for the proposed merger of their two fledgling automobile companies, Buick and Maxwell-Briscoe. Durant told Morgan that automobile sales would reach a half million per year. Upon hearing Durant’s prediction, one of Morgan’s partners sniffed, “If he has any sense, he’ll keep such notions to himself.”

Depew Left Holding the Horse Shovel

Well, the deal didn’t go through and Briscoe is left to the asheep of history. But Durant soldiered on without any backing of financiers and formed a holding company on this date in 1908 with $2000 and without J.P. Morgan. Instead, he sold shares of stock and raised about $12 million in a couple of weeks. He called it General Motors. He acquired Olds Motor Works later that year, then subsequently bought Cadillac, Pontiac (originally known as Oakland), Cartercar, Ewing and Elmore. But, in 1910, Durant was in a tight financial situation and he turned to competitors of Morgan for help. Durant apparently used the financing to continue to acquire other companies. That led to more problems but, by then,  automobiles were getting popular enough that I suppose JP Morgan had changed his mind.   Around 1920, General Motors found itself with $30 million in debt and huge obstacles ahead. Durant went back to Morgan and Pierre du Pont who were two giants of the financial world. The financiers saved the company but effectively finished off Durant at GM. See, part of the deal was that Durant was out and du Pont took over as President. But, don’t feel too bad for Durant. He’s one of those guys who never quit, following the advice of the old gridiron sage, Granville Hambright who often told his Junior High football players that “a winner never quits and a quitter never wins.”    Durant went on to found a new company. You might have heard of it…Chevrolet.

Sloan: Father of Modern Corporation?

Dupont served as President of GM until 1923 when he turned the reigns over the Alfred P. Sloan who focused his attention on managing the company more effectively. Ever wonder why there are new models to cars every year? It was Sloan’s idea. How about the different pricing structure of different brands in the company? That was Sloan too. By the late 1920′s, GM passed Ford as the leader in automobile sales.  For his company,  Henry Ford  focused his attention on more efficient manufacturing instead of management, marketing and finance. Later in the 20th century, GM became the largest corporation in the world…a title it later lost and did so in quite a spectacular fashion.

Ford Legacy: Don't Give Up Control

Some interesting aspects of this story. First off, it took the geniuses like Morgan a dozen years to figure out that a visionary like Durant was right all along. Durant had the vision but he didn’t have the know-how regarding making his dream come to fruition. What is interesting is that Henry Ford rebuffed the attempts of outside financiers to take over Ford Motor Company when things turned tough in the Depression. Yet, General Motors has an early history of near disaster before they got it right.

At the first part of the 20th century, General Motors needed help and so they went to private financial institutions for that help. When they were denied, founder Durant figured out a way to move ahead while some of his competitors went by the wayside. Then additional help came in the form of the previously reluctant Morgan. Ford probably worked with Morgan on a number of deals, but none with the expressed intent of saving the company. In fact, in the early 1920′s when Ford faced potential bankruptcy, Henry Ford turned down financing from big investment houses who required that Ford turn over control of the company, like Durant did. In the early 21st century, it’s deja vu. But, this time, General Motors turned to the Federal Government (taxpayers) to get saved and private investors (stock holders, bond holders) ended up with the short end of the stick. Instead of financiers like du Pont taking control of the company, the government fired the head of GM. Meanwhile, Ford did not take government money and continues to move forward and maintain control of the company, in the same tradition of the company’s founder, Henry Ford.   While Ford Motor Company in late 2010 still had about $27 Billion in debt, it had reduced its debt by $4 Billion, had positive cash flow and the outlook for Ford looks bright in some circles with some analysts project Ford having more cash than debt by 2012.  But, be careful, those are just “expert” opinions and remember, Morgan’s experts thought that the automobile was a loser investment 100 years earlier.  What a difference a century makes. In some ways, not one bit. In other ways, a huge difference.

Weather Bottom Line:  We got the light rain in the morning but it doesn’t look like it will help advance the notion of rain, let alone thunderstorms on Thursday evening or afternoon.  It’s just too stable an atmosphere and that’s too bad because we need the rain.  This was our big chance and it wasn’t too good to begin with.  Look for a pleasant Friday with a return to hot, but relatively dry, conditions for the weekend into early next week.

US Economy Was Salvaged By One Man February 5, 2010

JP Morgan Bailed Out Uncle Sam in 1895

Gold Used To Back US Currency-Now Backing if the Full Faith and Credit of the United States

On This Date in History:  Once upon a time, most currencies were based on the gold standard.  The US operated on the gold standard until 1971 when President Nixon took the nation off the gold standard.  Since then, the US and most other nations operate under the fiat money system.  Basically, the gold standard calls for a particular currency to be backed by an equal amount of gold pegged at a standard price set by a particular government.  Under a fiat system, a currency is not really supported by any commodity at all but instead the value is established through supply and demand market forces as well as the full faith and credit of the issuing entity.   One of the problems with a fiat system is that, since it is not based on any commodity, governments can simply print money to inject into the currency supply and that can lead to inflation because it is often an aritificial increase in supply versus the market based demand.  That is a concern involved in today’s financial and ecnomic crisis around the world.

1893 Panic Led to Near Collapse of US Treasury in 1895

But, at the end of the 19th century, the US was still on the gold standard and the underlying commodity backing the US currency was the concern.  There was a severe economic depression beginning with the Panic of 1893.  The economy became stifled and large financial institutions were fearful that there would be a devaluation in paper money.  So, they began trading in their greenbacks for gold.   By January 1895, gold reserves in the United States were flowing out at a rate of $3 million a day.  That led to a fear that the public would lose confidence in the dollar and the paper money would be worthless.  So,  the solution would be to replentish the gold supply.  It wasn’t really practical for the government to quickly go to public lands and start mining for gold so they needed to find another solution.  President Grover Cleveland looked into the political crystal ball and decided it was best to push Congress to act with a bill that would authorize a sale of bonds.  In other words, the president thought that governmental borrowing was the answer.  Sound familiar?   The money borrowed would then used to buy gold.  Now, the financial expert of the day was not the President of the United States but instead was John Pierpont Morgan and he wasn’t so sure that publically announcing that the government was going to borrow money  for the purpose of replentishing the gold supply in the treasury was a great idea .  He reasoned that an announcement of such a bond sale would signal that the treasury was weak and only intensify the rush to cash in dollars for gold.  In other words, the government solution would make a bad situation worse.

Grover Cleveland's Great Idea Might Have Led to Disaster

So, J.P. Morgan decided to meet with President Cleveland to try and show him the error of his ways even though Cleveland continued to be convinced that his plan was the way to go to save the nation’s financial system.   While in that meeting, the president and Morgan learned at noon on this date in 1895 that the New York subtreasury only had $9 million of gold left and Morgan knew of at least one man who could present a draft for $10 million in gold that day that would send the system into collapse.  So, Morgan used the opportunity to present the president with a better idea.  For some reason, no one else knew of a law that was already on the books, thus making any announcement of governmental borrowing necessary.  But information is a key ingredient to success so it is not really surprising that J.P. Morgan knew of a Civil War era law that allowed the US Treasury to acquire gold coins directly through the issuance of bonds.  In essence, it was still governmental borrowing to buy bonds but the law would allow Cleveland to buy his gold the way he wanted but to do so privately and not with an act of Congress that might panic the public.   But, surely the saavy financial institutions would know what was going on and what was to keep them from going ahead and cashing in their greenbacks for the same gold that Uncle Sam would acquire.  Enter the power of persuasion of John Pierpont Morgan. 

JP Morgan Knew How To Take Charge...And The President Needed Him to Take Charge

It is rather amazing but in order for this scheme to work, President Cleveland needed one man, J.P. Morgan to assume control of the entire international financial community in order to maintain support of American paper currency.  Morgan had to convince large financial institutions to stop converting their currency to gold.  Perhaps no one else in American history could do what Morgan could do; Morgan promised that there would be no further drain from the financial community.  The bond gold currency exchange took place and no further drain of gold from the treasury took place due almost entirely to Morgan’s power of persuasion.  Now, at this point, it may be common to think that Morgan must have had a dog in this fight; he had to profit from this.  He did in the sense that the system that had made him wealthy and powerful was saved but as to the transaction and the effort, Morgan’s company made less than a one percent profit.   This little story tells us a few things.  One is that the US has been in severe crisis situations many times in the past.  This 2009 fiasco was not the first  time that we have been “on the brink.”  Another is that government alone is rarely the solution; it usually takes cooperation between public and private policy and action to solve a complex problem.  

University of Chicago Founded by John D. Rockefeller

Now, J.P. Morgan bailed out the US government on many occasions and he is often labled as one of the “robber barons.”  But, while these men of great wealth did have tremendous power on a large scale, they used their power for the general good of the public.  John D. Rockefeller argued that a monopoly was the most efficient way to bring products to the public at the lowest price.  You know what? He’s right and he generally did that, though he did run competitors into financial ruin to gain that monopoly.  But, the trouble is that it is impossible to expect everyone who is in charge of a monopoly, including any government, to actually deliver products to the public at the lowest rate. Rockefeller is often demonized for his fortune that pushed toward $1 billion in 1912 yet, he established education systems in the South specifically to bring education to minorities, though this researcher trys to denegrate his Calvinist intention to aid Blacks with ulterior motives.  Even if he’s right about the motives, the fact remains that Rockefeller was instrumental in helping to bring equality of education to America.   He established the Rockefeller Institute for Medical Research, the University of Chicago and provided so much philanthropic funding that when he died, his worth had dwindled to about $26 million.  He gave most it away and his son used his inhertitance to revive Colonial Williamsburg.  

Andrew Carnegie's Legacy Lives in Today's Libraries

Then there is Andrew Carnegie who has a tremendous rags to riches story and he left a legacy of the free public library system across the United States and other parts of the world when he donated over $56 million for that cause.  He believed that his gift of attaining wealth should be used for the benefit of all.  But, early 20th century labor issues were often tumultuous and Andrew Carnegie is associated by many for the brutal response to the Homestead Strike.  I suppose that the point I am trying to make is that wealthy people aren’t necessarily bad simply due to their wealth.  They do good for society, if nothing else, they provide incomes and opportunity to people. Same is true of corporations.  And historically, it is been shown repeatedly that cooperation between the public and private sector most often provides the best solutions to problems that face the nation and society as a whole…but we tend to forget that. Perhaps a few more “robber barons” today may be a better alternative to many who currently call  Wall Street home.

NAM Fri 18Z seems content with 2 inches of snow

GFS Fri 18Z Likes 3 Inches of Snow

Weather Bottom Line:  Okay, it’s here.  Rain all day then turning to snow overnight.  Daytime temps mainly in the upper 30′s will be the rule and as the upper low swings around, the air column will chill down from above and so there will be no risk of icing except on roadways and I think that is somewhat of a concern.  The wet roads will probably still be wet when we eventually get to freezing and since there was no opportunity to treat the roads, Saturday morning drive will be problematic areawide.  I’m still thinking something like 2 inches of snow with areas north of the river with higher amounts.  I still think that afternoon temperatures on Saturday will be in the upper 20s for most people. 

The next system for Tuesday still looks interesting but there are so many potential solutions that I don’t want to deal with it right now.   There are some machines claiming a fair amount of rain, others call for a huge amount of snow while others have a some of both with  a popular idea being snow, rain, snow.  I don’t like that last solution because I don’t want it.  It does appear though that it will be more of a Tuesday/Wednesday event and not Monday.  We’ll look at it closer when there is something more concrete to deal with.  I wouldn’t totally pooh pooh the risk of decent snow just yet but the trend in the models has been for a track of the storm to not support the giant event that one bucket of bolts still is looking for.

Recent Bank Bailout Just One of Many-Uncle Sam Doing Work That JP Morgan Did September 22, 2009

Banks Have Been Bailed Out Many Times in US History

Dow Jones Since 1900

On This Date in History  In 1906, San Francisco had a great earthquake.  The effects of that quake led to a financial trouble spot that turned into a full-blown economic crisis.  At that time, there was no central bank or Federal Reserve. With the system stretched by the stress of the San Francisco quake, some doofus tried to corner the copper market and when that failed, all of the banks who made loans to back the scheme were in trouble.  started calling other loans.  People lost confidence in the banks as several failed. A bailout was needed.   President Theodore Roosevelt was claiming that everything was in great shape and was threatening a federal takeover of all trusts if the bankers and financial gurus couldn’t get thier houses in order. Who comes to the rescue?  None other than  J. Pierpont Morgan was the savior the same JP Morgan who had bailed out the system in 1871 and 1895 and the same JP Morgan that is related to JP Morgan Chase who bailed out Bear Stearns last year. He got together with his banking brethren and convinced them that they needed to work together to salvage the system in order to save all of their hides and the future of the nation. He also convinced the Secretary of the Treasury to pony up $25 million to the effort. The recession did not turn into a depression and the 1907 Panic led directly to the eventual establishment of the Federal Reserve in 1913.

JP Morgan May Have Looked Like a Wild Old Man But He Saved Uncle Sam Bailed Out the Nation Several Times

While the numbers are not as large…not the $700 billion to $800 Biillion that the banking bailout became in 2008-09, the other numbers are not as large either. The Dow Jones Industrial Average fell 39% in 1907.   On this date in 2008, the market had  lost and gained about two  percent  over the previous month and politicians ran around making comparisons to the Great Depression when a comparison to 1907 might have been a better barometer . In order to equal the fall of the 1907 panic, then a Dow that was around 11,015 on September 22, 2008 would have had to fall to 7000 and it was on this date in 2008 that the Dow fell some 300 points and arguably didn’t stop falling until  March 9, 2009, the Dow Jones Industrial Average was down to 6547.   So, while it was, and in some measure still is, an extremely difficult and potentially catostrophic situation, it was not totally unprecedented and it wasn’t necessarily a good match with the Great Depression.  It’s just that’s all the general public and certainly most people in the media know about.  Before it was JP Morgan engineering a bailout with some government help and this time its the Federal Reserve and Uncle Sam engineering a bailout with some other private help. When you hear also of rumors that today’s problem was a plot by those who stand to profit, keep in mind that in 1907 it was rumored that the banks had caused the whole panic just to line their pockets.   Aside from the Great Depression, there were a bunch of “panics” in financial circles and the resultant recessions or depressions came fairly regularly…in fact to regularly.  The Dow is now knocking back at the 10,00o door and while it is by no means a guarantee that it won’t go back down, it’s certainly at a different place than anyone in March could have foreseen.  If something happens that causes a big drop again, then maybe we can start to refer to the Great Depression as it relates to the stock market, which is but one indicator.  Unemployment is bad but its more like the late 1970s and early 1980′s, not the 1930′s. 

No Hoovervilles Today Like in 1930

The big thing about the Great Depression is that its depths were so far reaching that it led to new regulation by the government into financial markets than had ever been contemplated by the founders or anyone else in an effort to try to control the economy such that these setbacks wouldn’t be so deep or so frequent.  To a large degree, it has worked pretty well but to expect these things to never happen or think its some sinister plot just is to not accept reality.

Sometimes, news people say they need to give commentary to “give perspective” or a particular news event. Dan Rather used to defend journalists providing analysis instead of just reporting for that specific reason. Yet, it helps if those giving “analysis and perspective” had some perspective in the first place.  It’s probably hyperbole and just outright ignorance that media types or politicians trot out the Great Depression comparison.  It’s probably best to leave that moniker on the shelf until its truly warranted. Let’s hope it can stay on the shelf and we can call this the great recovery.  Some of us need a job, not panic.

Pattern Conducive for Heavy Rain Threat in SE US

Weather Bottom Line: The pattern has set up as expected.  That is with almost a cutoff low in the west as part of a big trof that dug out in the west.  The long wave pattern is such that with the low to our west and a surface high in the extreme southeast, there is a very strong southerly flow into the Southeastern quadrant of the country.  That has resulted in the expected influx of deep Gulf moisture.  With the trof situated as it is, little disturbances rotate around anywhere from going through the Ohio Valley to going through the Dixie states.  With abundant deep moisture, this sets the stage for potential flooding events anywhere in the region.  It was our turn on Sunday and then parts of Georgia took a hit on Monday.  This pattern will remain in place for the rest of the week.  The result for us will be muggy nights with fog potential each morning.  We will be cloudy quite often than not with any sunshine that comes about to create convection in the afternoons producing at least scattered t’storms.  Afternoon highs should be held in the lower 80′s by the time of year, cloud cover, rain and the moisture content.  Rain chances will remain in the picture through the week with the potential of any situation that develops to produce very heavy rain.  The pattern will shift over the weekend.  The trof out west will move east and lift somewhat with a push of colder air behind.  I would think that any strong storms would be most likely on Sunday or Saturday night with the front.  The expected cooler weather will get here for next week.

Once Upon a Time, General Motors Didn’t Get a Bailout September 16, 2009

Nice Guess

On this Date in History:  I just read an article from the Wall Street Journal from January of 2008.  It read that oil prices were around $90 a share and were expected to remain around that level.  It had a quote from a learned man who said that he expected the price of oil at that time to drop to about $67 a barrel.  Now, he didn’t put a time qualifier on the statement but just about 6 months after this artcle came out, the price of oil was over $140 a barrel.  My student said that it sounded like someone sucks at their job.  The point is we often hear these great ideas and pontifications from “experts” that turn out to be wrong by a long shot, if not completely opposite of reality.

Durant Was No Quitter

At the dawn of the 20th Century, animal power remained a large part of the energy that drove the economy.  Particularly when that involved transportation.  A United States Senator, Chauncey Depew, said with full confidence that “nothing has come along to beat the horse.”   He suggested to those who might invest in alternative forms of transportation to “keep your money.”  Now, one who is looked up to as a great financial mind who was quite savvy in investing was J. P. Morgan.  Well, Morgan had a chance to get into the automobile business in 1908 when he was approached by William Crapo Durant for a loan.  Durant and Benjamin Briscoe wanted financing for the proposed merger of their two fledgling automobile companies, Buick and Maxwell-Briscoe.  Durant told Morgan that automobile sales would reach a half million per year.  Upon hearing Durant’s prediction, one of Morgan’s partners sniffed, “If he has any sense, he’ll keep such notions to himself.”

Depew Left Holding the Horse Shovel

Well, the deal didn’t go through and Briscoe is left to the asheep of history.  But Durant soldiered on without any backing of financiers  and formed a holding company on this date in 1908 with $2000 and without J.P. Morgan.  Instead, he sold shares of stock and raised about $12 million in a couple of weeks.   He called it General Motors.  He acquired Olds Motor Works later that year, then subsequently bought Cadillac, Pontiac (originally known as Oakland), Cartercar, Ewing and Elmore.  But, in 1910, Durant was in a tight financial situation and he turned to competitors of Morgan for help.  Durant apparently used the financing to continue to acquire other companies.  That led to more problems but  I suppose that automobiles were getting  popular enough that JP Morgan changed his mind.  Around 1920, General Motors found itself in $30 million in debt and huge problems ahead.  Durant went back to Morgan and Pierre du Pont, two giants of the financial world.  The financiers saved the company but effectively finished off Durant at GM.  See, part of the deal was that Durant was out and du Pont took over as President.   But, don’t feel too bad for Durant.  He’s one of those guys who never quit, following the advice of the old gridiron sage, Granville Hambright.  He went on an founded a new company.  You might have heard of it…Chevrolet.

Sloan: Father of Modern Corporation?

  Dupont served as President of GM until 1923 when he turned the reigns over the Alfred P. Sloan who focused his attention on managing the company more effectively.   Ever wonder why there are new models to cars every year?  It was Sloan’s idea.  How about the different pricing structure of different brands in the company? That was Sloan too.  By the late 1920′s, GM passed Ford as the leader in automobile sales and Henry Ford had focused his attention on more efficient manufacturing instead of management, marketing and finance.  Later in the 20th century, GM became the largest corporation in the world…a title it later lost and did so in quite a spectacular fashion. 

Ford Legacy: Don't Give Up Control

Some interesting aspects of this story.  First off, it took the geniuses like Morgan a dozen years to figure out that a visionary like Durant was right all along.  Durant had the vision but he didn’t have the know-how regarding making his dream come to fruition.  What is interesting is that Henry Ford rebuffed the attempts of outside financiers to take over Ford Motor Company when things turned tough in the Depression.  Yet, General Motors has an early history of near disaster before they got it right. 

At the first part of the 20th century, General Motors needed help and so they went to private financial institutions for that help.  When they were denied, founder Durant figured out a way to move ahead while some of his competitors went by the wayside.  Then additional help came in the form of the previously reluctant Morgan.  Ford probably worked with Morgan on a number of deals, but none with the expressed intent of saving the company.  In fact, in the early 1920′s when Ford faced potential bankruptcy, Henry Ford turned down financing from big investment houses who required that Ford turn over control of the company, like Durant did.  In the early 21st century, it’s deja vu.  But, this time, General Motors turned to the Federal Government (taxpayers)  to get saved and private investors (stock holders, bond holders) ended up with the short end of the stick.  Instead of financiers like du Pont taking control of the company, the government fired the head  of GM.   Meanwhile, Ford did not take government money and continues  to move forward and maintain control of the company,  in the same tradition of the company’s founder, Henry Ford. 

What a difference a century makes.  In some ways, not one bit.  In other ways, a huge difference.

Rain Mainly South Thu Evening

Weather Bottom Line:  The other day I told you about the inverted trof to the south and the front to the north and I opened up the possibility that the front might sag farther south and, if it did, our rain chances would not be so good.  Well, that’s the story.  While we may have a errant shower or two, particularly to the south, rain chances probably won’t get to anything worthwhile until the second half of the weekend when a storm system from the southwest may lift at least toward our way.  Hey, it’s September….one of the driest months in Louisville annually.

Jim Morrison Conspiracy Theories Rival Those of Michael Jackson; The Wall Street Witch; General Washington July 3, 2009

 

Lizard King Still Walking the Earth With Elvis?

 Independence for the big Door:

Morrison Shrine/Grave

Jim Morrison died in a Paris bathtub on this date in 1971. He officially died of heart failure though a drug overdose was suspected. Just like with the conspiracy theories concerning the recent death of Michael Jackson, some of which suggest Jackson’s death was a fake,   almost immediately claims that Morrison really wasn’t dead hit the news.  Had there been a world wide web, I’m sure that the blogosphere would have been going wild.  Many conspiracy theorists floated the idea that Morrison was tired of his fame so he faked his own death.   That was the one that I always heard but there are a bunch of Jim Morrison conspiracy theories out there.  There was even a notion that the J. Edgar Hoover led FBI had him knocked off in an effort to stop the hippie movement.  I think his grave is some sort of haven or shrine for those who…well…I don’t know what they do or think. You can take the Jim Morrison Grave Tour on the web if you like.

On This Date In History:  Hetty Green died on this date in 1916. Who is Hetty Green? Why the Witch of Wall Street! Seems kinda sexist to call a rather ornery rich woman a “witch” when rich old coots might be called “tough” or “hard nosed.” Anyway, she is said to have learned to read the financial pages at age 6. She inherited a million dollars from her father at age 30. At that point, she became quite shrewd as she bought Civil War Bonds when others thought it was a bad investment. She made a mint. Basically, she took her million inheritance and increased it 100 fold. But, she was rather odd in that she lived like a pauper. Supposedly, Hetty married so that her heirs would be her children and not other relatives that she didn’t care for. She kept an office in a bank from which she negotiated a rent free lease. She moved from hotel to hotel to avoid paying property taxes. Hetty had a son and a daughter and when her boy hurt his leg in a sledding accident, she took him to a charity hospital. Well, hospital personnel recognized her and demand that she pay. She refused and decided to treat the child’s injured leg herself. He ended up losing the leg. She forced her children to eat as she did, which was ham sandwiches. Some call her thrifty, others a miser or the Witch of Wall Street. She is but one of a list of eccentric wealthy Americans.  Hetty died on this date in 1916 of a stroke suffered while arguing with a maid over the price of milk!! Can you imagine what she would be like with today’s rising prices?

Wonder if Hetty's Dog Was Toto?

Don’t worry, The Who may have been aware of the story because the Kids Are Alright. Hetty left each child $50 million. The more famous J.P. Morgan was worth a reported $70 million and her wealth equaled that of Henry Ford. In 2008 dollars, her fortune would have been near $2 Billion.

See what happens when you watch your pennies? She may have been a witch, but she was probably the wealthiest witch Wall Street had ever seen. Here’s a Forbes list of early wealthy Americans.

On This Date In 1775, Virginia planter and former British officer George Washington strode before the Continental Army, drew his sword and formerly took command as General of the Armies. While some opposed his appointment, he was chosen because of his leadership and because, as a Virginian, it was hoped he could bridge the differences between the southern colonies and those in New England. Washington had accepted the appointment two weeks prior under the stipulation that he not be paid except for reimbursement of expenses.

I Think The General Liked This Painting

While he is called the “father of the country” I think much is lost regarding Washington. He was quite remarkable and he really set the tone for the nation today. After he led the defeat of the most power nation on earth, Washington had all of the power. He had political power and the loyalty of the army. Other men in his position might have seized the reigns of power in the nation. There was some fear he may strike up a dictatorship. But he voluntarily gave up his sword and returned to Virginia. In 1787, the fledgling nation called again and he took the position of President of the Constitutional Convention. It is said his quiet resolve was inspiring to the delegates as they argued and compromised over a document that would last the ages. He was elected as the first President and won an overwhelming re-election. He could have served another term but instead, voluntarily gave up power for a second time.

FDR Broke Washington Tradition

Until Franklin Roosevelt, no one broke the two term tradition, though US Grant came reasonably close to gaining a third consecutive term. The two term tradition became a point of law following the passage of the 22nd Amendment to the Constitution which was ratified in 1951. If you think about it, that is the general tone of the nation. How many other nations in history have conquered as much territory and defeated so many nations in battle and then voluntarily given up the spoils? Again, I take you to his farewell address of 1796 in which you can see all of the wisdom poured forth for the nation he helped to build. Washington died in 1799 from what most think was a cold or the flu….though there is speculation that he would have lived except for the practice of bleeding a patient. Washington himself may have been the cause of his own demise as he supposedly urged the doctor to let him bleed after the doctor was going to close the wounds. Speculation is that Washington bled to death. Here is the text of George Washington’s  farewell address, that is often quoted and paraphrased, in case you missed it before. Look for all of the items that would apply today and also look for his interesting take on religion in society.

Weather Bottom Line:  Really not much change in the story line for the Fourth of July weekend.  Today will be great with tons of sun and a high in the mid 80′s.  A low will be ejecting out of the southwest and get up to say, Memphis on Saturday.  That should be sufficient to throw over some moisture and create some isolated t’storms in the afternoon.  The short makes its closest approach on Saturday evening and that is when t’storm activity will have its greatest risk.  I intimdated that the SPC might widen its slight risk area and they have done so such that Louisville is barely in the risk region.  As I said previously, not a slam dunk for strong storms but not totally out of the question.   There will be clouds sticking around on Sunday with the risk for rain probably being greatest in the first half of the day.   As the long wave pattern continues to slowly shift, we should be out of the influence of the Great Lakes trof that brought us such cool weather the past few days and a slight ridge will start building in.  There’s a chance for a shortwave to come through the flow on Monday perhaps bringing a t’storm chance then, but otherwise, the signature of next week will be our afternoon temperatures moving back into the upper 80′s.

DAY 2 CONVECTIVE OUTLOOK 
   NWS STORM PREDICTION CENTER NORMAN OK
   1257 AM CDT FRI JUL 03 2009
  
   VALID 041200Z – 051200Z
  
   …THERE IS A SLGT RISK OF SVR TSTMS FROM THE UPPER OH VALLEY INTO
   THE SRN PLAINS…
  
   …THERE IS A SLGT RISK OF SVR TSTMS OVER ERN PARTS OF WY AND CO…
  
   …SYNOPSIS…
   QUASI-STATIONARY UPPER LOW OVER THE LOWER GREAT LAKES IS FORECAST TO
   PERSIST INTO SATURDAY…WITH AMPLITUDE OF THE ERN US LONG WAVE
   DIMINISHING.  THIS WILL RESULT IN BROAD WNWLY FLOW ALOFT ACROSS MUCH
   OF THE US FROM THE NRN/CENTRAL INTERMOUNTAIN REGION TO THE ATLANTIC
   COAST…DOWNSTREAM FROM AN UPPER RIDGE AXIS OVER THE INTERMOUNTAIN
   WEST. 
  
   AT THE SURFACE…A LOW IS FORECAST TO MOVE ESEWD ACROSS THE MID MS
   VALLEY TOWARD THE UPPER OH VALLEY BY THE END OF THE PERIOD…WITH A
   TRAILING COLD FRONT MOVING SWD ACROSS THE OZARKS AND INTO THE SRN
   PLAINS. A QUASI-STATIONARY FRONT WILL EXTEND EWD FROM THE LOW. 
  
   …MID MS VALLEY INTO THE OH VALLEY…
   AN MCS IS EXPECTED TO BE ONGOING AT THE START OF THE PERIOD OVER
   PARTS OF NRN MO…ERN IA AND NRN/CENTRAL IL.  THE CONVECTIVE SYSTEM
   WILL BE PRIMARILY ELEVATED TO THE NORTH OF THE SURFACE LOW AND
   QUASI-STATIONARY FRONT…MAINTAINED BY STRONG LOW LEVEL CONVERGENCE
   AND WARM ADVECTION LIFT NEAR THE NOSE OF A 50 KT SWLY LOW LEVEL JET.
   GIVEN THE BACKGROUND 35-45 KT MID LEVEL WINDS AND RESULTANT STRONG
   VERTICAL SHEAR…THERE IS POTENTIAL FOR A FEW SEVERE STORMS TO OCCUR
   IN THE SRN PART OF THE MCS DURING THE MORNING…ALTHOUGH WEAK
   INSTABILITY SHOULD LIMIT THE OVERALL SEVERE THREAT.  STORMS MAY
   INTENSIFY BY LATE MORNING/EARLY AFTERNOON AS STRONG DIURNAL HEATING
   OCCURS ALONG THE SRN EDGE OF THE CONVECTIVE CLOUD SHIELD OVER PARTS
   OF THE MID MS VALLEY AND UPPER OH VALLEY.  CONTINUED FAVORABLE
   LOW-LEVEL AND DEEP LAYER SHEAR WILL ENHANCE STORM ORGANIZATION AND
   INTENSITY…AND MAY COMPENSATE FOR WEAK MID LEVEL LAPSE RATES ACROSS
   THE AREA.  DAMAGING WIND GUSTS AND HAIL WILL BE POSSIBLE WITH
   STRONGER STORMS…WHICH SHOULD DIMINISH AFTER 03Z.
  
   …SRN PLAINS INTO THE OZARKS…
   AIR MASS IS EXPECTED TO UNDERGO SUBSTANTIAL DIURNAL HEATING AHEAD OF
   THE ADVANCING COLD FRONT…AND WHEN COUPLED WITH SURFACE DEW POINTS
   IN THE 60S TO LOW 70S…WILL RESULT IN MLCAPE OF 1000-2000 J/KG.
   STRONG HEATING WILL GRADUALLY WEAKEN THE CAP DURING THE
   AFTERNOON…AND LOW-LEVEL CONVERGENCE ALONG THE FRONT WILL PROMOTE
   DEVELOPMENT OF SCATTERED THUNDERSTORMS.  ALTHOUGH MID LEVEL
   WINDS/DEEP LAYER SHEAR WILL BE MODEST AT BEST…LARGE
   TEMPERATURE/DEW POINT SPREADS ASSOCIATED WITH A RELATIVELY DEEP
   MIXED LAYER…AND DRIER AIR IN THE MID LEVELS WILL CONTRIBUTE TO
   LARGE DCAPE VALUES INDICATIVE OF ENHANCED DOWNDRAFT INTENSITY AND
   THREAT FOR DAMAGING WIND GUSTS.  THERE WILL ALSO BE A THREAT FOR
   LARGE HAIL WITH STRONGER CELLS.  SEVERE THREAT IS EXPECTED TO SPREAD
   SWD ALONG THE FRONT AND ASSOCIATED OUTFLOW BOUNDARIES THROUGH THE
   EVENING HOURS.
  
   …ERN PARTS OF WY AND CO…
   WEAK UPSLOPE LOW LEVEL WINDS ARE FORECAST TO DEVELOP OVER THE ERN
   SLOPES OF THE ROCKIES ON SATURDAY AS A WEAK SURFACE RIDGE MOVES INTO
   PARTS OF SD AND NEB.  THIS WILL MAINTAIN SURFACE DEW POINTS IN THE
   LOW 50S…AND CONTRIBUTE TO AN UNSTABLE AFTERNOON ENVIRONMENT WITH
   MLCAPE AROUND 1000-1500 J/KG.  THUNDERSTORMS ARE LIKELY TO DEVELOP
   OVER THE HIGHER TERRAIN DURING THE AFTERNOON AND MOVE EWD/ESEWD INTO
   THE HIGH PLAINS WITHIN A BAND OF 25-35 KT MID LEVEL FLOW.  DEEP
   LAYER SHEAR WILL BE SUFFICIENT FOR ORGANIZED STORMS TO
   DEVELOP…INCLUDING A FEW SUPERCELLS CAPABLE OF PRODUCING LARGE HAIL
   AND STRONG WIND GUSTS THROUGH THE EVENING HOURS.
  
   ..WEISS.. 07/03/2009

 

7/3 SPC convective outlook for 7/4/09

Something of Interest in the Tropics; Yanks Take Ryder Cup; Current Financial Situation Not Unprecedented September 22, 2008

Gotta Like A camouflage wearing Guy Named Boo Signaling for a First Down on the Links

for hurricane ike damage photos and video, CLICK HERE and scroll down. Many of the slideshows update daily.

Last Friday, Snow White and I went on an excursion to Springfield, KY just because our power was still out (we got it back Sat. Night@8:49 pm…nearly a week after we lost it) and we both had the idea at the same time. So, we blew off our sculling expedition for the day and tootled down the road listening to my Sirius radio. As I heard updates on the Ryder Cup, it occurred to me that the US team would win simply because everyone said that they would lose and because of guys like Boo Weekley, JB Holmes, Anthony Kim and Kenny Perry as well as the other names not at the tip of the tongue of most casual golf fans. I had thought that perhaps if they lost, it would be because one of the stars failed miserably. Well, I’ll take credit for my fearless forecast and you can get a little local perspective by linking to THIS WEBSITE FOR A LOUISVILLE VIEW OF THE RYDER CUP WEEKEND. Its not something that you will find on most national websites.

If you didn’t get any rain this weekend, and you probably didn’t, then you are out of luck for much of the week ahead. At the end of the week, there is some indication that an area of low pressure will move into the SE from the Atlantic. At this time, it does not appear to be tropical in nature but its not totally unreasonable to think that could change. More significantly, many models show it moving onshore and continuing inland. At this time, it does not appear that it would get close enough to us to bring rain though some of the data try to bring it close enough that perhaps we can hold out some hope…not enough to put in the forecast…but something to consider as the week progresses. There is another system, currently called Invest 93.

Invest93 Spaghetti Model 0921 18Z

Invest 93: There was some indication through the weekend that the tropical

Invest93 Spaghetti Model Intensity Graph 0921 18Z

disturbance south of Puerto Rico could develop into a depression. Well, when the boys with the Hurricane Hunters flew out for a looksee, it was over Puerto Rico. Land, aerial and satellite observations suggest that winds may indeed be around depression level but that the circulation is not defined enough to warrant it being classified as a depression. However, the spaghetti models all indicate a track with a northerly component that would take the storm back over the water. The bad news is that 10 of the models make it a hurricane. The good news is that most do not take it to the East Coast…though if the current tracks hold…and they’ll probably change…then New England may be a concern.

Can it Happen Again?

One must consider that On This Date in History, Sept 22, 1938 New England and specifically Long Island were reeling from the Great New England Hurricane aka The Long Island Express which was a hurricane that came off of Africa wandered through the Bahamas and then north…the forecasters of the day thought it would turn out to sea. Most of the time at that far north latitude the coriolis force turns storms to the right. But…there was a big fat high in the Atlantic that would not allow such a turn. It did aid in the acceleration so the result was that Long Island got nailed by a Category 3 hurricane moving at 70 mph. 600 people in New England died. (here is more on the Long Island Express in 1938) Now, I am in no way suggesting that this guy will be a repeat or even that it will indeed even be a hurricane. What I am suggesting is that it has happened before and it had nothing to do with Global Warming. Just like it is tenuous at best for anyone, regardless of their expert credentials, to claim that Katrina had anything to do with Global Warming. Funny how when people try to make that claim they neglect to mention Hurricane Camille in 1969.

Speaking of things that have happened before…On This Date in 1907…The United States was in the midst of an economic crisis. At that time, there was no central bank or Federal Reserve. There had been some doofus who tried to corner the copper market and when that failed, all of the banks who made loans to back the scheme were in trouble. They started calling other loans. People lost confidence in the banks as several failed. A bailout was needed. At the time, President Theodore Roosevelt was claiming that everything was in great shape and was threatening a federal takeover of all trusts. Who comes to the rescue but J. Pierpont Morgan. He got together with his banking brethren and convinced them that they needed to work together to salvage the system in order to save all of their hides and the future of the nation. He also convinced the Secretary of the Treasury to pony up $25 million to the effort. The recession did not turn into a depression and the event led directly to the eventual establishment of the Federal Reserve. While the numbers are not as large…not the $700 billion to $1.2 Trillion being tossed around this time, the other numbers are not as large either. The Dow Jones Industrial Average fell 39%. We recently lost and gained less than one percent and politicians are running around trying to make comparisons to the Great Depression. In order to equal the fall of the 1907 panic, then a Dow of 11,400 would have to fall to 7000. So, while this is serious and potentially catastrophic and far reaching, the solution is not totally unprecedented. It’s just that before it was JP Morgan engineering a bailout with some government help and this time its the Federal Reserve and Uncle Sam engineering a bailout with some other private help. When you hear also of rumors that today’s problem was a plot by those who stand to profit, keep in mind that in 1907 it was rumored that the banks had caused the whole panic just to line their pockets.

Sometimes, news people say they need to give commentary to “give perspective” or a particular news event. Dan Rather used to defend journalists providing analysis instead of just reporting for that specific reason. Yet, it helps if those giving “analysis and perspective” had some perspective in the first place.

Here are some more articles relating to JP Morgan and the panic of 1907.

JP Morgan-Savior-The Panic of 1907

JP Morgan

Bear Stearns Bailout as it relates to JP Morgan in 1907 Panic

Panic of 1907

Still Not Too Exciting Except For the Wall Street Witch July 3, 2008

Locate and Track Storms Anywhere in the Country with a National Interactive Radar…Click Here.

SPC DAY ONE OUTLOOK

Same story as previous. SPC still doesn’t like severe threat too much with Thursday night Frontal passage. Lapse rates are not good as mid-level temperatures fall with frontal approach. Moisture also appears to not have much time to get back here and we may have numerous clouds for much of the day. I’ll have more later Thursday. Friday and Saturday look to feature scattered showers. Probably won’t see a total washout on the fourth but scattered afternoon storms seem likely. Not totally out of the question for many people to dry out in time for fireworks, but it’s a timing issue both with regards to the weather and in regard to when you have fireworks.

On This Date In History: Hetty Green died on this date in 1916. Who is Hetty Green? Why the Witch of Wall Street! Seems kinda sexist to call a rather ornery rich woman a “witch” when rich old coots might be called “tough” or “hard nosed.” Anyway, she is said to have learned to read the financial pages at age 6. She inherited a million dollars from her father at age 30. At that point, she became quite shrewd as she bought Civil War Bonds when others thought it was a bad investment. She made a mint. Basically, she took her million inheritance and increased it 100 fold. But, she was rather odd in that she lived like a pauper. Supposedly, Hetty married so that her heirs would be her children and not other relatives that she didn’t care for. She kept an office in a bank from which she negotiated a rent free lease. She moved from hotel to hotel to avoid paying property taxes. Hetty had a son and a daughter and when her boy hurt his leg in a sledding accident, she took him to a charity hospital. Well, hospital personnel recognized her and demand that she pay. She refused and decided to treat the child’s injured leg herself. He ended up losing the leg. She forced her children to eat as she did, which was ham sandwiches. Some call her thrifty, others a miser or the Witch of Wall Street. She died on this date in 1916 of a stroke suffered while arguing with a maid over the price of milk!! Can you imagine what she would be like with today’s rising prices?

Don’t worry, The Who may have been aware of the story because the Kids Are Alright. Hetty left each child $50 million. The more famous J.P. Morgan was worth a reported $70 million and her wealth equaled that of Henry Ford. In 2008 dollars, her fortune would have been near $2 Billion.

See what happens when you watch your pennies? She may have been a witch, but she was probably the wealthiest witch Wall Street had ever seen. Here’s a Forbes list of early wealthy Americans.

LIST OF EARLY WEALTHY AMERICANS