Sunday, March 15, 2009

Depression or Recession, This Too Shall Pass, A Testimony

In March 1974 I became a father of a "bouncing baby girl". Actually this one did bounce because
she loved a contraption called the "Johnny Jump Up" that hung in a door frame and let the baby jump up and down in a swing like apparatus with springs. Then in May I graduated with a Masters degree in Geography. At that point in time I was 29 years old. I had spent four years in the Army Security Agency (now defunct), serving in Africa, Vietnam, Washington D.C., the hills of Virginia, and short short stints (TDY and transits) in Lebanon and Yemen.

My last year of college had many distractions. For those of you born after 1968 or so, let's review the fall of 1973 through the Spring of 1974:

The Yom Kipper War and the Arab Oil Embargo

October 6—Egypt and Syria attack Israel on Yom Kippur, starting the fourth Arab-Israeli War.
October 8–October 10—OPEC negotiations with oil companies to revise the 1971 Tehran price agreement fail.
October 12— The United States initiates Operation Nickel Grass, an overt strategic airlift operation to provide weapons and supplies to Israel during the Yom Kippur War.
October 16—Saudi Arabia, Iran, Iraq, Abu Dhabi, Kuwait, and Qatar unilaterally raise posted prices by 17% to $3.65 per barrel and announce production cuts.
October 17—OPEC oil ministers agree to use oil as a weapon to punish the West for its support of Israel in the Arab-Israeli war. They recommend an embargo against unfriendly states and mandate a cut in exports.
October 19—US President Richard Nixon requests Congress to appropriate $2.2billion in emergency aid to Israel, including $1.5 billion in out-right grants.[10] Saudi Arabia, Libya and other Arab states proclaim an embargo on oil exports to the United States.
October 26—The Yom Kippur War ends.
October 23–October 28—The Arab oil embargo is extended to the Netherlands.
November 5—Arab producers announce a 25% output cut. A further 5% cut is threatened.
November 23—The Arab embargo is extended to Portugal, Rhodesia, and South Africa.
November 27—U.S. President Richard Nixon signs the Emergency Petroleum Allocation Act authorizing price, production, allocation and marketing controls.
December 9—Arab oil ministers agree to another five percent cut for non-friendly countries for January 1974.
December 25—Arab oil ministers cancel the five percent output cut for January. Saudi oil minister Yamani promises a ten percent OPEC production rise.
January 7–January 9, 1974—OPEC decides to freeze prices until April 1.
February 11—United States Secretary of State Henry Kissinger unveils the Project Independence plan to make U.S. energy independent.
February 12–February 14—Progress in Arab-Israeli disengagement brings discussion of oil strategy among the heads of state of Algeria, Egypt, Syria and Saudi Arabia.
March 17—Arab oil ministers, with the exception of Libya, announce the end of the embargo against the United States.

Nixon resigned the presidency in disgrace Aug. 9, 1974

The 1973–1974 stock market crash was a stock market crash that lasted between January 1973 and December 1974. Affecting all the major stock markets in the world, particularly the United Kingdom,[1] it was one of the worst stock market downturns in modern history.[2] The crash came after the collapse of the Bretton Woods system over the previous two years, with the associated 'Nixon Shock' and United States dollar devaluation under the Smithsonian Agreement. It was compounded by the outbreak of the 1973 oil crisis in October of that year.
In the 694 days between 11 January 1973 and 6 December 1974, the New York Stock Exchange's Dow Jones Industrial Average benchmark lost over 45% of its value, making it the seventh-worst bear market in the history of the index.[2] 1972 had been a good year for the DJIA, with gains of 15% in the twelve months. 1973 had been expected to be even better, with Time magazine reporting, just 3 days before the crash began, that it was 'shaping up as a gilt-edged year'.[3] In the two years from 1972 to 1974, the American economy slowed from 7.2% real GDP growth to -2.1% contraction, while inflation (by CPI) jumped from 3.4% in 1972 to 12.3% in 1974.[1]
(sources Wikki)

So here I was. Twenty nine years old, with a brand new baby, aging parents that needed attention, in a world with no gasoline, a deep recession and no jobs. Moving back to Oklahoma City we found a place devastated by the effects of Racism. A very large chunk of the city proper had moved out to the sub-burbs in order to avoid school integration that had been court order in 1973. Some neighborhoods were ghost towns. Being a oil processing State as well as a producer the Embargo had hit had.

I spent the next 18 months being a house husband and primary care giver to my daughter. I got my wife off each morning crying as she went to her teaching job in a miserable school that she hated. I applied for 35+ jobs, with only a hand full of interviews granted. Most never bother to even acknowledge my application. Even Jack-In-Box didn't want me.

The savings we had (which had lost a large part of its value due to inflation) dwindled each month and my father-in-law subsidized his daughter and grand-daughter to a large extent. By Fall 1975 I attained an internship at a State Board based on my Geography education and put my daughter in day care and went to work at a dime on the dollar job. By July 1976 I had a real job with benefits and such. May 1974 to August 1976.
That was 18 months with no income at all for me, and 26 months without a "real" job.

That made me real cautious as to money, work, and all things economic. Now that baby girl is 35 years old and has two brothers. That woman that cried every morning as she left her baby and broke my heart is still married to me after almost 43 years. When I retired in 2001 I invested in a contractually guaranteed fix annuity and put any extra money in old fashion safe places.

We survived that recession, that inflation, that joblessness, the emotion wrenching. You can too. That's my message to the people under the gun today. You will survive. It will hurt. You will be different on the other side, but you will survive and things will get better.

Hell in 1973 to 76 we had President's Nixon and Ford and we still survived. Obama can do no worse and will actually do much much better.

Friends, neighbors , strangers, this too shall pass, yes it will.


TStockmann said...

Just sad to think that some families - even some lives - won't make it through this, that without the added strain, might have, and might have made it back to happiness. Aggravating to think many of the geniuses that caused much of the bubble are still making more money in a year, despite culpable malpractice and failure, than many, many hardworking men and women will see in a lifetime of toil.

drlobojo said...

TS I had the same thoughts back in 74-75 that the culpable people were getting away with it.The two recessions are more closing knit that most would know. The Neo-Cons were the young men of Nixon's and Ford's administrations what they did then and repeated recently as old men have more than a slight impact on our economy.

The difference is this time, the White collar perps won't have the luxury of skulking in darkness. We have a new tool, the internet, to shed light on who they are and where they are. Like roaches caught out in the light one way or another this time they will be squashed.