January 28, 2009
How to Solve the Subprime Mess
Turning to Pioneers of the San Juan Country, Out West Printing and Stationery Company (1942), a book of reminiscences gathered by the ladies of the Sarah Platt Decker chapter of the D.A.R., in Durango, Colorado…
…we find that every winter back in the 1880s, the town of Del Norte faced a liquidity problem of its own. To resolve it, the citizenry was presented with a stimulus plan built on deficit spending. The plan was considered by a local version of Congress and a food fight ensued.
Del Norte was a lively place, and a winter resort for the whole San Juan Country. A lot of these old miners from Silverton used to spend their winters there: Dempsey Reese, Tom Blair, Col. F.M. Snowden, Capt. Stanley, Henry Hensen of Lake City, Rasmus Hansen, Joe Taylor, and others.
When the heavy snows came on and they had to quit work in their mines they went to Del Norte, which was the nearest town, and they would sit around Cap Walker’s hotel and drink whiskey and play sluff all day long. Cap Walker was an old steamboat captain.
The miners usually had no money, they paid if they could; if they couldn’t Cap boarded them anyway. One winter he found his non-paying guests too expensive; he didn’t like to tell them to leave so he thought if he raised the board on them they would all leave; so he doubled the price of board.
The guests held a meeting and considered the raise, then sent him a formal note agreeing to it. They couldn’t pay, so it made no difference to them. They used to have high old times. Sometimes they would start throwing biscuits and wouldn’t quit until the dining room was covered with biscuits — and flour $15.00 a hundred at that.
Posted by Jerome Doolittle at January 28, 2009 10:24 AM
I wrote a long reply to this post indicating that it was about the best description of our current situation, better than any I've read in the financial papers. But just when I was about finished it disappeared when I clicked something I shouldn't have.
Mr. Lebaron, my good capitalist friend used to have a quote by Gandhi on his website:
"It has been said that to one who is good, the whole world becomes good. This is true so far as the individual is concerned. But goodness becomes dynamic only when it is practised in the face of evil. If you return good for good only, it is a bargain and carries no merit, but if you return good for evil, it becomes a redeeming force. The evil ceases before it and it goes on gathering volume and momentum like a snow-ball till it becomes irresistible."
-- Mohandas Karamchand Gandhi
He's decided that's not appropriate anymore and has replaced the quote with this one.
Owners of capital will stimulate working class to buy more and more
of expensive goods, houses and technology, pushing them to take more
and more expensive credits, until their debt becomes unbearable.
The unpaid debt will lead to bankruptcy of banks, which will have to be nationalized, and State will have to take the road which will eventually lead to communism."
-- Attributed to Karl Marx 1867
Maybe he's on to something. And maybe Mr. McCarthy wasn't so wrong after all, but he was just directing his wrath at a few honest liberals who just wanted a small measure of socialism, perhaps health care, which we spend twice as much as on and get worse results than the countries that have adopted socialist or semi-socialist health care systems. Instead, perhaps he should have been after all those banker and Wall Street types who been casting themselves as free market capitalist all these years, but have really been closet communists instead. Perhaps the communists finally won. Let's just don't let ourselves end up with a totalitarian leader if the bankers win this thing and get the communism they obviously were aiming for. We must presume that they read both the pro and the con on their ideology and knew the up and the down side of what they were doing. But I'm presuming they were competent.
And by the way, Davos looks about like the beautiful winter scene you have posted, although it is surrounded by barbed wire, or so I'm told in today's financial news. We could hope that the barbed wire is designed to not let them out and that they'll stay inside.
If I the money to do it, I'd sent them a few barrels of flower. It might do them some good to have a good old fashioned biscuit fight.
Wonderful post and great comments from Buck!