Doug in NY Press

[Peter K.]

Doug, I agree with what you're saying
and with master Kalecki. I've read that
there once was a faction of the left which
said that the worse things were, the better
(*Tanto pio, tanto meglia* as the Italian
Red Brigades used to say.) However,
I think I'd be less surprised if things
came apart in the near future. There's
a lot of agreement that the Long Term
Capital Management debacle was a
near miss. That highlighted the skills
of Alan Greenspan and Rubin and
it seems to me your main point is that


>The major reason a rerun of the 1930s is so unlikely is that state bailout
>managers have learned how to contain a financial panic and keep it from
>turning into a deflationary collapse.

Of course they could unlearn it. Or there could
be politically mitigating circumstances. Or
private money and corporate power could
outgrow the power of governments to manage
them. This doesn't mean I hope it will happen.

The New York Review of Books recently had an interesting review of
_It Didn't Happen Here: Why Socialism Failed in the United States_

http://www.nytimes.com/books/00/09/03/reviews/000903.03glennt.html

and Doug's piece brought to mind this part:
"They [Lipset and Marks] cite the Depression -- when most elements of labor
and the left were kept firmly within the Democratic coalition -- as ''an
excellent example of the way the American presidential system has worked to
frustrate third-party efforts.'' But doesn't it seem in hindsight highly
contingent -- mighty improbable, in fact -- that a Democrat with F.D.R.'s
supreme political skills happened to occupy the White House then? It's hard
to imagine that Al Smith, though similarly sympathetic to labor, would have
been able to enact the New Deal so aggressively or to shepherd the left into
the party's tent so successfully. And in that scenario it's not outrageous
to conjecture that a true Labor Party might have emerged (perhaps built of
the same elements as the La Follette Progressive coalition of 1924, which
managed 16.6 percent of the vote in that prosperous year). The Democratic
Party might then even have gone into eclipse, just as Britain's Liberal
Party did two decades earlier. Now, all of this might have been
disastrous -- a Labor Party born in the 1930's might well have wound up
controlled by Stalinists -- but my point is that during the Depression
crisis our two-party configuration may have hung on the slim thread of
Roosevelt's charisma..."

Sort of the Great Man Theory of history, but still, imagine if Greenspan had
been less pratical or cognizant of what was happening and had let LTCM sink
which in turn pulled down the banks and amidst the rising fear, Brazil went
down hard, etc. If there is a nasty downturn, what really could turn ugly
and metastisize is the populist, anti-trade, protectionist sentiments.
Greenspan has been warning that there's been a growing turn away from "free
trade" world wide, even in these "most prosperous of times."

Peter