Across the pond

We – that is most human beings living their lives, while the stock markets are crashing – go into this weekend, fearing that the world may be facing a crisis comparable to the Great Crash of 1929, which led to a world-wide recession for several years. Because the stock markets have gone on falling despite what has been done to deal with the financial crisis.

This financial crisis – like that of 1929 – is due to the combination of the volatile stock markets and the influence of the mass media, who magnify what is happening on the stock markets. So people everywhere become fearful, withdrawing their money from the banks. And also by doing nothing. Because of the uncertainties. Not buying new houses. Not buying new cars. So The Guardian today tells me that both of the high priests of American consumer capitalism, General Motors and Ford, are thought to be in danger of going bust!

The facts are that in 1929 America was governed by the Hoover administration, which reacted by looking after the tax-payers’ money. The recession was not stemmed until Franklin Roosevelt took charge in 1932, and pumped government money into the economy.

Three years after the Great Crash.

In the last few weeks governments, including the present administration of George W Bush and the British Labour government and the EC leadership, have shown that they have learnt the lessons of the 1929 crash.

But the stock markets are continuing to plunge. Because the public are fearful. And because, amongst the financiers, with their huge bonuses on top of their salaries, are selling shares short.

They are still trying to make money, out of the current debacle. By speculating in the hope that they can make their fortunes, out of a situation which frightens the average citizen out of their wits.

That is why we are all in for a fearful weekend.

But the reality is that the behaviour of Governments in the last few days, has shown that Governments – and their advisers, who include a lot of people who have studied the reasons for the 1929 Crash – say that our present situation is quite different.

The world is not collapsing. American consumer capitalism is not dead. But it needs continual reform. So that the dreams of Margaret Thatcher, Ronald Reagan and George W Bush are not a stable basis for builiding the world of 2008.

The world will only have to wait a few weeks – not three years – to find a viable solution to today’s problems.

On November 4 the US votes for a new President. They can either vote in Barack Obama, who is an admirer of Franklin D Roosevelt. Or they can vote in John McCain, who thinks that his war experience fits him to be President, because some upstart like the President of Iran, or the inheritor of the Soviet Union, Vladimir Putin, might launch their military might against the US.

Possible.

But not very likely.

The real threat is that stock market panics will push voters to panic as well.

The world, as we know it, is not collapsing.

But it requires clear headedness on the part of our leaders. And an understanding of the economic verities.

And that is where John McCain is woefully inadequate. Barack Obama, although years younger, has read it all in books. And in books written by the scholars of the world.

We are currently facing a PANIC.

Because far too many people have believed in the dreams of Thatcher and Reagan. That we could live a Hollywood dream in which everyone lived happily ever after. If only they worshipped at the shrine of the unregulated free market.

The lesson of the Great Crash of 1929, is that the free market, despite its manifold advantages, needs regulation.

I rest my case.