Economic Crisis; How the Current Financial Rescue Schemes are Following the Failed Model of the Hoover Administration

Herbert Hoover Copycats

by Ismael Hossein-Zadeh
Global Research, February 21, 2009

"Faced with the financial meltdown of the Great Depression, the Hoover administration created the Reconstruction Finance Corporation that poured taxpayers’ money into the coffers of the influential Wall Street banks in an effort to save them from bankruptcy. Like today’s Bush/Obama administrations, the Hoover administration used the “too-big-to-fail” scare tactic in order to justify the costly looting of the national treasury. All it did, however, was to simply postpone the day of reckoning: almost all of the banks failed after nearly three years of extremely costly bailouts schemes.

In a similar fashion, when in the mid- to late-1990s major banks in Japan faced huge losses following the bursting of the real estate and loan-pushing bubble in that country, the Japanese government embarked on a costly rescue plan of the troubled banks in the hope of “creating liquidity” and “revitalizing credit markets.” The results of the bailout plan have likewise been disastrous, a disaster that has come to be known as “Japan’s lost decade.”

Despite these painful and costly experiences, the Bush/Obama administrations (along with the U.S. Congress) are following similarly ruinous solutions that are just as doomed to fail....."