Transactions: April 6, 2009

I've been preparing myself for the Great Depression for years. I've been working on my black-on-gray look, which contrasts with the gaudy attire that lasted from my swaddling-clothes period in the '50s straight through the day before yesterday. I've been hanging Depression photos around the hut: apple sellers, hobo jungles, silent crowds of sullen overcoated men, Henry Fonda trudging through "The Grapes of Wrath." All these intervening decades seem false as a fake chinchilla coat. I sensed it was coming back (I told Nouriel Roubini), like Gomorrah residents awaiting a brimstone bath. Tell me this: You knew it too, right? Like a freight train in the night, it was out there, hooting away, hurtling toward us lashed to uncomfortable rails. Say this about the '30s: Politics meant something. The whole megillah was up for grabs. It was the end of something, the beginning of something else. It was a collapse so complete all possibilities were, briefly, possible. It was grim, it was nasty, it featured lively class warfare and proletariat headwear. And if that revolution ended up producing the Organization Man, well, hell, history is bunk accompanied by a Woody Guthrie song.

Maybe we'll do it again. It's a weird thing. We're standing at the edge of a hot-lava sea called the Great Depression, and we feel the urge to jump in. The apocalypse index hasn't been this elevated since 1933. Housing hasn't fallen this far since Hoover. And stock prices were plunging us toward the 1950s, which is adjacent to the Great Depression (except for an intervening world war), until they did a U-turn. Now this is not to discount our woes. It's not to say it's not going to get worse and last longer -- maybe a misplaced decade, confirming Paul Krugman's midnight baying -- and that unemployment won't hit a record-setting 25%. And boy, if the populi are mad now, imagine what they'll do then! Demonstrate! But I hate to bring the depression crowd down: We've been at this for a while -- in depression comparison time, it's 1932 and ticking -- and we're not there yet. Too many of us are working. We have, however, been at this long enough to begin to herd the population into different pens: optimists and pessimists, reformers and revolutionaries, centrist pantywaists and pitchforking populists, equity fools and credit mavens, members of the recessionary rump and devotees of depressionomics. These dichotomies, which are broad, mostly involve Democrats and Independents. Republicans dream of other decades, say, the '80s.

Roughly speaking, the ranks of Democrats seem to be split by the Populism Divide. Moderate Democrats, including the president and his man at Treasury, insist that despite manifold sins, mostly involving greed and more greed, banks can be saved, through various schemes to bail them out and to divest them of toxic assets. This is the reform-school, optimist wing. Some reformist types, like Tim Geithner and Larry Summers, are viewed across the divide as fat-cat fellow travelers, closet deregulators, with "reform" a bikini inadequately covering a conspiracy, which usually involves Goldman, Sachs & Co. On the far side -- the divide is thin as a worn overcoat -- roam nationalizers and ranters. The banks are, as a group, insolvent zombies. (Bank stocks were once proof of this belief, though after they fluttered to delicate life, that was less persuasive; then credit indexes were drafted as gloom-o-mometers.) They believe bankers are also guilty of greed and recklessness (the former trumps the latter) who should be punished, perhaps jailed; or, barring that, fired; or, barring that, forced to work for a $1 a year, then ritually derided. The populist brigade tends toward pessimism, not only because voters historically have rarely supported them, but because they believe the system so shattered it can't be reassembled. Banks must be nationalized, now if not faster, bankers must be reeducated, and the people must be heard, even if they speak in tongues.

In other words, welcome to the GD. The interesting thing about the original Great Depression is that this same split occurred within the New Deal. The so-called first New Deal was bold, aggressive, even transformative (alas, some was unconstitutional, some unworkable). But the "second" New Deal was, at best, reformist, at worst, nearly Republican. As the '30s wore on, Franklin Roosevelt seemed to edge from first to second. But throughout, it was clear he didn't want to replace capitalism with something shiny and newfangled, but to save it from its own contradictions. And so he did, with the help of a war. That said, you've got to be careful with historical parallels, which suck you into a past that has died and that's uglier, meaner, more treacherous and stranger than an episode of "Lost." As compensation the GD does feature Fred Astaire and Ginger Rogers.