More than 450 banks failed, and more than 10 million houses were foreclosed (Grusky et al., 2011 Martin and Niedt, 2015). Over the course of the crisis, the unemployment rate increased to 10%, and the GDP fell by over 4%. The economic crisis of the late 2000s – now referred to as the Great Recession – did not end up being as deep or as long as its predecessor, but it was still severe, as shown in Figure 1. The economy, which was believed to be “roaring” in the preceding decade, had plunged into the Great Depression.

By October 1931, the number of unemployed had reached nine million, entire neighborhoods in industrial towns had been devastated, and farm and home foreclosures had risen sharply (Fox Piven and Cloward, 1977). In the months that followed, production began to fall drastically and unemployment increased on an unprecedented scale. On October 25, 1929, only four days before Black Tuesday, President Herbert Hoover had declared that the fundamentals of American business were “on a sound and prosperous basis” (U.S. When the Republican candidate for president, Senator John McCain, declared the fundamentals of the American economy to be strong on September 15, 2008, the day Lehman Brothers filed for bankruptcy, his words sounded familiar to students of American political economy.

Retrospective relief