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


Banks Have Been Bailed Out Many Times in US History

Banks Have Been Bailed Out Many Times in US History

Dow Jones Since 1900-It Took Until the 1950's for the Dow to reach Pre-Depression levels
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

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

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

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.

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