Recover is not right around the corner:
As George Bush did with the creation of the Troubled Asset Relief Program, Herbert Hoover oversaw the founding of an unaccountable organization making secret loans to banks and other failing institutions, the Reconstruction Finance Corporation. As President Barack Obama has done with his “stimulus” program of massive federal spending, Hoover convinced Congress to increase federal spending 30 percent in 1931 alone. In relative terms, this failed spending package was larger than Obama’s incredible $775 billion “stimulus” plan, which would only amount to a 25 percent increase even if all of the spending were to take place in 2009.
But one of the more striking things [chronicled in America’s Great Depression] was the way in which the politicians and professional economists almost uniformly expected recovery to take place in 1931, and their panic when their expectations were dashed. Depression set in despite a resort to extreme measures that are all too familiar to the modern observer. Interest rates were cut to historic lows. Millions of dollars were loaned to the states to finance a vast series of public works and stave off unemployment. Taxes were increased at both the state and federal levels, and the Federal Reserve made use of every tool at its disposal to prop up failing banks.
On a related note, this WSJ article by two economists is timely and informative, if nothing new to the AGDers.