CBS Trots Out 'Great Depression' References in Wake of Bear Collapse
Chicken Little is loose again, this time on CBSâs âEarly Show.â
The March 17 âEarly Showâ reported the news of J.P. Morganâs bailout of the troubled investment bank Bear Stearns as if it were a sign the Great Depression was going to repeat itself.
â[I]tâs an emergency move,â Bloomberg TVâs Deirdre Bolton said. âThe Federal Reserve is doing something it has not done since the Great Depression. So the idea, prevent a meltdown in the financial markets. So the Fed is going to loan money directly to other kinds of financial institutions, not just banks.â
CBS News correspondent Randall Pinkston said the investment bank survived the Great Depression, but said it couldnât survive this economic downturn.
âBear Stearnsâ fall was breathtaking and awful,â Pinkston said. âOn Friday, the stock closed at $30 a share. By Sunday night, J.P. Morgan Chase offered to buy it for $2 a share, dropping the firm's value from $3.5 billion to $236 million. It was an excruciating turn for what had been a financial powerhouse, Wall Streetâs fifth-largest investment bank. Bear Stearns survived the Great Depression, World War II, and more than eight decades of Americaâs worst financial crises. But it could not survive its investments and securities backed by shaky mortgages, subprime loans.â
But as bad as this may seem, it is a far cry from the Great Depression, according to CNBC âKudlow & Companyâ host Larry Kudlow.
â[I]n free-market capitalism there are winners and losers,â Kudlow said on MSNBCâs March 17 âMorning Joe.â âBear Stearns was a loser. Right now the rest of the banking system is going to be just fine. And Iâll tell you what will damage this thing. [Democratic Sen.] Chuck Schumer is on TV yesterday calling [President] George Bush âHerbert Hoover.ââ
Kudlow also warned the policies touted by the Democratic presidential candidates are very dangerous.
âTry this on for size â one of the causes of the Great Depression was the Smoot-Hawley protectionist bill. [Sens. Barack Obama and Hillary Clinton] Hill-Bama, on the campaign trail, want to undo NAFTA. That's protectionism. That will throw us into a downturn, the likes of which you havenât seen. Herbert Hoover signed a huge tax hike. Whatâs Hill-Bama saying on the campaign trail? What are the Democrats saying in congress? Raise your taxes. Herbert Hoover lives in the Democratic Party today. Letâs let this economy work itself through without tax hikes, without trade protectionism and let the fundamentals reassert themselves. Weâre coming to the end of this so-called credit crunch. Just keep your cool. Thatâs the best advice.â