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4 Dead in OHIO

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SF Bart

OOH …Here’s One Thing  


by Jim Johnsen,
Managing Director, Johnsen, Fretty & Company




4 Dead in OHIO


Since we are all trying to re-invent ourselves during this period, I clicked through to a link someone sent me for an online American history course at Hillsdale College.  Never heard of Hillsdale College before but I have to admit the course is pretty good.

So today I find myself on the class on the Great Depression.  I actually watched it twice since I couldn’t believe some of the parallels.  Here are a few mentions during the class.  Rather than draw the parallel I will leave it to your imagination:

  1. Hoover enters office in one of the biggest boom periods in American history.  March 1929.  When he exited in 1933 the country was in free-fall.
  2. The car industry was one of the largest drivers of the U.S. economy.  In 1929 4.5MM cars rolled off the line.  In 1932, 1.1MM units rolled.
  3. 75,000 workers laid off at Ford alone.
  4. Between 1930 and 1932, 8,700 banks failed.  They represented 4 out of every 5 banks.
  5. 25% of the work force was unemployed.
  6. Politicians blamed the Depression on “a lack of confidence in the economy”
  7. The Hawley-Smoot Tariff Act was passed in 1930, dramatically taxing imports in an effort to favor American made goods.  Other countries quickly retaliated.
  8. In an effort to prop up “critical” designated businesses, the federal government formed the Reconstruction Finance Corporation.  The goal was to lend to banks who would then lend to other banks, railroads, insurance companies and other key industries.
  9. This move alienated the common man, as he felt the government was deaf and blind to his needs.
  10. FDR, a democrat, defeated Hoover by a landslide in 1932.  Supposedly FDR was not elected for his intellect but rather for his sunny and perennially optimistic disposition and his ability to connect with the common man.
  11. His inauguration speech included reference to the demon Wall Street: “the money changers” who had now “fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths…[to] social values more noble than mere monetary profit.”
  12. FDR immediately went to work on his “New Deal” and promised the public he would have it done in 100 days.  Among other things he formed the Works Progress Administration (WPA) and other organizations that sought to put people back to work.
  13. For the first time, the President embraced the wise counsel of those outside of government.
  14. The President also embraced a relatively new national medium, the radio to deliver weekly fireside chats.
  15. He rolled out a second 100 day plan after the first one which was also largely unsuccessful.
  16. One of FDR’s largest power grabs was the establishment of the National Industrial Recovery Act.  It gave the the federal government broad powers to set pricing on goods and services.
  17. FDR also came up with a plan to control the judicial branch through court packing.
  18. The country experienced a second sharp recession in 1937, even deeper than the first one, demonstrating that the New Deal was not working.
  19. It took a world war to ultimately lift us out of recession.

Okay, history class is officially over.  While there are some interesting parallels in there, let’s hope history doesn’t repeat itself!

In other news…the DPAA put on a great webinar this past week.  Lots of great insights shared.  I thought Marc Kidd crushed it when he said,  (and I loosely paraphrase) “I’ve worked alongside private equity for a number of years now and our mantra has always been to manage and grow EBITDA.  Well in very short order we pushed that mantra aside and have had to adopt a new one called “manage cash”.  It’s a strange new paradigm but we are adapting.”

If you were feeling a little down about your 401k this past week…perhaps this will cheer you up just a touch.  Even the biggest and “smartest” guys in the business took it in the shorts.  “An unusually painful earnings season continued this week for publicly traded private equity firms, with Apollo Global Management reporting a $2.3 billion net loss and Carlyle logging a $612 million loss. Apollo’s private equity portfolio depreciated by 21.6% in Q1, the exact same figure Blackstone reported the week prior, while Carlyle’s depreciated by 8%. The S&P 500 fell by about 20% over that same span.”  Pitchbook Weekly Newsletter

Wishing everyone an excellent start to May.  Remember to mail your Mother’s Day card tomorrow.    

Okay Johnsen, what’s with the title?  It’s the 50th anniversary of the Kent State massacre.  I thought it might make sense to pay them and it a little respect.  It’s the young that bring the change.



Jim Johnsen


Securities transacted through StillPoint Capital Member firm FINRA/SiPC



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