Franklin Delano Obama

One of the revelations in Amity Shlaes excellent book, the Forgotten Man, was that the great depression was really two problems not one. FDR came into office and proposed a wide range of solutions to the problem none of which seemed to have been even marginally successful in reducing the core problems facing the country. Then the Supreme Court had a chance to invalidate a good part of the New Deal and growth began to happen. Then FDR began making a series of either calculated or not threats to the business community and that apparent recovery began to falter. That is a bit of an oversimplification of the 1930s but it is disturbingly close to the first year of Obama, except remarkably compacted.

Obama seems to have over-reached in his first year. A different politician, with a bit more experience, might have not taken on health care as job one - looking at the destruction that it had caused presidents in the past. He might have worked hard on his interpretation of how to create jobs (which his supporters would argue he did in that bloated porkbarrel they called the Stimulus Package - with thousands of earmarks). But in the wake of the defeat of his choice to succeed Senator Kennedy, he chose this week to harangue about the evils of the financial markets. The markets responded appropriately. While he yammered about the evil banks, his proposals did nothing to reign in the hazards created by Fannie and Freddie.

The difference between this president and FDR is that if he continues in this vein it is unlikely that he will see a second term. Indeed, if something he does not respond and unemployment remains at the elevated levels of today, he is likely to lose control of one or both houses of congress. History does not repeat but you sure can learn from it. Here is a link on the loss in the Dow this week.