``..But that's the test. Is Paulson, and whoever succeeds him come January, going to act more like Roosevelt and be more aggressive, or are they going to be hampered by ideological convictions, interparty strife or who knows what?''
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What I tried to find out, but couldn't were there any terms and conditions in lending money under the RFC? As far I could tell, under the RFC various government owned corporations were created and these were presumably heavily regulated and directed explicitly to develop various industries, particularly in the late 30s to develop synethic rubber and other raw materials criticial to war production. These federal corporations created planations in Central America as replacements for those in Southeast Asia. Nice.
Also in the brief wiki outline:
http://en.wikipedia.org/wiki/Reconstruction_Finance_Corporation
The RFC was directed to make loans to states and localities. So far Paulson seems to have refused to do that for California and probably other states.
In contrast, as far as I can tell Paulson's plan to buy non-voting shares in failing banks is closer to his original idea of buying billions of bad assets, than it is to the RFC lending program. I assume when the RFC loaned money there were terms and conditions on what and how the money was to be used.
Taking the above into consideration, my guess is that Paulson will fail to loosen up the tight credit market. That will automatically kill the business where I work in about a month or less. If California can't get any short term loans, according to Lockyer, the state money will run out in November.
Believe me if the California stops paying its bills, that will put the state into a depression with mass layoffs, especially in sectors heavily dependent on state funding like public employees, schools, cities, the healthcare industry, critical parts of the transportation and infrastruction systems like ports, harbors, and borders---all foundational stuff to keep trade rolling into the state, and all critical to the state's economy.
We should have had a seat at the G7, since we are supposedly the sixth largest economy in the world.
Carol writes: ``But re Roosevelt. He did not stop the Depression; he didn't even make much of a dent in it. The War ended the Depression.''
I completely agree, but if you read the above link on the RFC, you will see how that was done by large increases in federal support (principally through RFC) for concrete production, either through direct loans to corporate giants like those in the automotive sector where they were paid to convert to tanks, artillary, and heavy infantry equipment, and through massive contracts to the aircraft industry that created a huge west coast boom in Los Angeles, where almost all the major aircraft production were located out in Burbank, in Commerce City, or down in Long Beach.
Recently I went back to researching all the model fighter planes I built as a kid and looked up where they were built, who produced them and how many were produced. I was a regular mass killer by eleven, with my crew cut and scars from rock fights playing war in LA vacant lots. Boy was I surprised I hated war, and said fuck you to the military when my war came along.
Up here ship building was the big economic drive from Hunter's Point to Oakland and Richmond and Mare Island. Kasier and Betheham were big winners, along with naval munitions productions systems that stretched from Richmond up the Sacramento into Antioch and Port Costa. All super polluters. These were mostly naval infrastructure systems, that drew the huge black and white migrations from the South and Midwest. Meanwhile of course there were the beginnings of super-high tech nuclear production designs coming out of UC Berkeley which was converted into a federal weapons laboratory, linked to Los Almos and the Seattle area, Hanford site where plutonium production was started based on Seaborg's experiments. Seaborg was still alive when my son graduated from the Chemistry Department.
So then, it is pretty simple to see the current over riding need is for the development of clean industrial production systems, much cleaner energy systems and a whole system of high level methods for addressing global warming. These then become the equivalent to the late 30s conversion of the RFC to war time production needs.
Ah, dreams of former glory. US capital bloomed for twenty years on those state investments. The people in power now have the mind of mollusks. So forget all that.
We are going down hard, and we will die choking on our own pollution, just as I did in the toxic brown haze of LA in the 50s when nobody ran around at school because the smog burned our lungs so bad we couldn't play.
CG