History Repeating Itself

Just listened to Thom Hartmann's show from 1 October.  He had dug up NY Times articles from the days surrounding the stock market crash of 1929.  It is absolutely SPOOKY how much it is like today's events.  

1. First, the whole thing was caused by a mortgage crisis caused by a housing bubble--in Florida
   
2. It was followed by a runup of stock speculation, and people buying stocks on margin.  Everybody and their mother was in the stock market.
   
3. When things started looking bad, Hoover tried to bail out the BANKS. He used money from the treasury to buy up bad assets.
   
4. After the stock market crash, Hoover stated that the "fundamentals of the economy are sound," and the Rockefellers announced that they were buying lots of stock.  This caused a dead cat bounce in the market.
   
5. Things got MUCH worse after that.  
   
6. FDR came into office and started the New Deal, which included sensible regulation of the banking and investment industries (many of which are still protecting us today), converting 5 year balloon payment mortgages into 30 fixed rate mortgages for people in danger of default, and transaction taxes for stock transactions.
   
7. Things got much better, we won a war, infrastructure was strengthened, and the middle class was built.
   

So now we have:

1. A mortgage crisis caused by a housing bubble and deregulation of the mortgage industry, development of the sub-prime mortgage crisis.
   
2. Stocks have run up irrationally.
   
3. Now that things are getting hairy for the investment banks, Paulson wants to bail them out using $700 Billion from the Treasury.
   
4. McCain and Bush say that the "fundamentals of the economy are strong."
   
5. After the crash, there was a dead cat bounce, which followed Warren Buffett loaning $5 Billion to Goldman Sachs and planning to buy $6 Billion worth of GE.
   

It looks like the Senate has passed a modified stinker of a bailout bill, and we can expect the House to follow suit.  In my opinion, Obama has tied his dingy to Bush's sinking ship, and has sold out his first term. This may prevent him from taking the kind of bold action FDR did, even if he is so inclined.  Very disappointing.  

Is there any chance we can skip 5, 6, and 7 of the old list?  Maybe.  The bailout bill is set up to go out in stages, not all at once.   Thus, Obama can get political cover for helping usher this bill through (McCain is getting hammered for it), but can then put on the brakes after the first $350 Billion.  That is not great, but maybe not catastrophic, either.  I hope that he will also encourage Congress to repeal the draconian powers afforded to the Treasury Secretary.