The Financial Advice of Experts, Then and Now

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By Alan Caruba

“I see nothing in the present situation that is either menacing or warrants pessimism…I have every confidence that there will be a revival of activity in the spring, and that during the coming year, the country will make steady progress.” That’s what William Mellon, the U.S. Secretary of the Treasury, had to say on December 31, 1929. The Great Depression would last until 1941 when the U.S. entered World War Two.

“Could we have a crash a la 1929? The flat answer is no.” So said Dr. Pierre A. Rinfret, a noted economist, writing in Time magazine on October 5, 1987 and, on October 19, 1987—instantly dubbed “Black Monday”—the Dow Jones average plunged 508 points.

Despite the pronouncements of Presidents and pundits, it was the December 30, 1929 edition of Variety, a newspaper for the entertainment industry, that got it right. The day after the crash its headline read, “Wall Street Lays an Egg.”

All through history, the opinions of “experts” have been subject to revision and derision. The Internet has simply multiplied our access to a multitude of opinions. It behooves us all to pick our experts very carefully. A good track record is always a good sign, along with a healthy measure of common sense.

As the economies of the U.S. and several European nations totter on default it is essential to draw on lessons from the past. The most obvious lesson is that the governments of the U.S. and the Europeans have been spending far more than they can tax or borrow.

All have spent decades since the 1980s wasting billions on “alternative” sources of energy in the name of global warming or climate change. All have stayed busy before and since the end of World War Two consolidating power in the U.S. federal government and more recently in the European Union.

Herbert Hoover on whose watch Wall Street crashed in 1929 generally gets the blame, but five years earlier in an address to the annual meeting of the U.S. Chamber of Commerce, Hoover said, “The test of our whole economic and social system is its capacity to cure its own abuses,” warning that, “If we are to be wholly dependent upon government to cure these abuses, we shall by this very method have created an enlarged and deadening abuse through the extension of bureaucracy and the clumsy and incapable handling of delicate economic forces.”

“The clumsy and incapable handling of delicate economic forces.” Spoken nearly 90 years ago!

What a perfect phrase to describe what the nation has been passing through as Congress during the last days of the Bush administration and the passed two and a half years of the Obama administration has demonstrated.

The financial crisis of late 2008 was the result of government “entities”, Fannie Mae, created in 1938, and Freddie Mac, created in 1970, both intended to stimulate the housing market by securing the loans made by banks for the purpose of giving everyone, including those who could least afford it, the opportunity to own a house. By the time the crisis hit, they jointly owned more than 50% of all U.S. mortgages.

The failure of communism in the former Soviet Union (1922-1991) should be proof enough that government ownership of property and the means of production is one of the all-time bad ideas of the last century. A modified version exists in China with other versions existing from North Korea to Cuba. All depend on oppression and coercion.

The irony, of course, is that the Great Depression was extended by Hoover’s successor, Franklin D. Roosevelt, who believed that expanding the role of government was the best way to bring the Depression to an end. Instead, the Depression, experienced as well by European nations in the wake of World War One, gave rise to totalitarian governments and World War Two.

There is a reason that President Obama’s approval ratings, along with those of Congress, are at record lows. Most astonishing is the fact that, when Obama took office, the Democrats controlled both houses of the legislature, the Senate and the House. Even more astonishing, Obama pursued the same failed programs of FDR, most famously sponsoring a multi-billion dollar “stimulus” bill, along with taking over General Motors and Chrysler, ginning up a Cash-4-Clunkers program, and discovering belatedly that there were few “shovel ready” infrastructure projects.

By 2010, the voters returned political power in the House of Representatives to the Republican Party, largely on the basis on newly minted “Tea Party” candidates. Obama’s Congress had rejected his proposed budget and the nation has been operating with “continuing resolutions” to fund its activities and a massive battle over raising the debt ceiling for the same purpose. A farcical congressional “super committee” has been told to cut a trillion and a half dollars out of government spending.

The economic advisers that Obama brought into the White House have all departed with the exception of the Secretary of the Treasury, Timothy Geithner. The various government departments continue to spend millions authorized by the Congress every week or engage in dubious “loan guarantees” which give every indication of being a series of Solyndra scandals.

Despite the increasingly absurd assertions of the President, it’s not just corporations, large and small, making decisions about the current and near-term future of the economy. It is the vast body of Americans who are deciding what to purchase, whether to expand their business by hiring or not, whether to invest in stocks or gold, and thousands of individual decisions by which the real economy is shaped.

It is their decisions that determine how long the recession lasts, not the official pronouncements about when the last one “ended” or a new one begins. Economists of a conservative point of view know what must be done and should be listened to, but they are not advising this President, nor guiding the government’s decisions.

In the midst of this latest of many financial crisises at home and abroad, the campaign for the next presidential election has begun. Much depends on who John Q. Public elects to the office. Much depends on the long, hard slog to reduce the size and grasp of the federal government.

Will the wisdom of “the crowd” prevail over the present “experts” affecting the economy?

Stay tuned.

© Alan Caruba, 2011
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Pictures Can Tell a Better Story

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This one incident had an enormous impact in your minds and you had started to think over and over again about the same thing. That is the time when you had almost decided you too would opt for a similar item. But your dream appeared to be a short-lived one the moment you realized you didn't have sufficient information about it. You had started to have a re-think about it whether or not you should go ahead and give shape to your dreams. That is the moment when you had come across this article.

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How To Get A Cheap Auto Insurance Quote

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Tips Business and Insurance Arifain - How To Get A Cheap Auto Insurance Quote
If you are looking for a car insurance policy then your first step will be to gather quotes. Gathering quotes will allow you to conduct a comparison based on the coverage that you are offered, the provider, and the price. If you want to save money on your next policy then there may be certain things you can do. Here are some tips, therefore, on how to get a cheap auto insurance quote.

The price of your policy is determined by your risk. If you are considered to be a risky driver, therefore, it will be more difficult for you to find affordable quotes. Your risk will be determined by such things as your vehicle, your age, your driving record, your gender, and many others.

In order to reduce the price of any quotes that you generate, try to reduce your perceived risk. One way of doing this would be by making sure you buy the right vehicle. Vehicles that are high risk will always lead to higher rates of insurance. You should be able to find out which sorts of vehicles will be cheaper to insure by getting in touch with some providers and conducting your own research.

Of course, it is not possible for you to change your age, but if you are young driver you can reduce your perceived risk associated with your age by demonstrating your responsibility. You can do this by maintaining good grades at school or by signing up to a safety driving course. This will help insurance companies to realise that you are more responsible than your peers which will, in turn, reduce your premiums.

Your driving record is going to play a significant role as well. By maintaining a good driving record you will maintain cheaper rates of insurance. Needless to say, therefore, your focus should be on driving carefully insensibly and always within the law. At the same time, try to maintain a more favourable credit rating as well. Showing irresponsible financial management will also have a negative impact upon your premiums.

Take time to look into discounts that you could qualify for as well. If you are young driver then you may be able to get a student discount. If you consolidate your insurance requirements then a multi-policy discount may be an option. You may have to get a discount for installing safety and antitheft devices into your vehicle. Take advantage of these discounts and you will find that your insurance quote is reduced.

How To Get A Cheap Auto Insurance Quote
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