Kennedy Lives... The Great Recession

[Fenwick]

President Kennedy does not die on Nov. 22, 1963. Sweet right? Why? Uh, Oswalt arrested hours before hand for being a shady fellow. Was he gonna kill JFK? Maybe but we put it down as a "close one there."

So Kennedy is alive. Yet something is going on behind the scenes which thanks to the President being alive does not create a fine number of banks closing for the day, and the public not fixated on a national tragedy. What could be more important?

Salad Oil. In particular the Great Salad Oil Scandal of 1963.

The Salad Oil Scandal, also referred to as the "Soybean Scandal", was a major corporate scandal in 1963 that ultimately caused over $150 million – approximately $1.1 billion in 2008 dollars – in losses to corporations including American Express, Bank of America and Bank Leumi, as well as many international trading companies. The scandal's ability to push otherwise cautious and conservative lenders into increasingly risky practices has prompted some comparisons to recent financial crises including the 2007–2008 subprime mortgage financial crisis.

The scandal involved the company Allied Crude Vegetable Oil in New Jersey, led by Anthony "Tino" De Angelis, a former commodities broker who had been in trouble previously for providing the federal school lunch program with poorly prepared meat. Despite this, he was able to obtain a contract with Food for Peace, a federal program which sold excess food stocks to poor countries.[2] De Angelis discovered that he could obtain loans based upon the company's supposed inventory of salad oil.[3] Ships apparently full of salad oil would arrive at the docks, and inspectors would confirm that the ships were indeed full of oil, allowing the company to obtain millions in loans. In reality, the ships were mostly filled with water, with only a few feet of salad oil on top. Since the oil floated on top of the water, it appeared to inspectors that these ships were loaded with oil. The company even transferred oil between different tanks while entertaining the inspectors at lunch.[4] In all, Allied claimed to have 1.8 billion pounds of soybean oil, when it actually only had 110 million pounds. The claimed inventory was the basis for the company raising $180 million from investors.[2]


Once the scandal was exposed – because the Russian soybean market did not open up, and soybean prices fell drastically as a result, causing the investors to attempt to cash in – American Express was one of the biggest casualties. Its stock dropped more than 50% as a result of the scandal, which cost the company nearly $58 million. De Angelis was convicted of fraud and conspiracy charges in connection with the scandal and served seven years in prison, gaining his release in 1972.[5]

Simply picture Bernie Madoff but have that man being the center of the Home Mortgage industry. De Angelis had created a market bubble which had a massive amount of US, and Western Nations financial institutions doing poor investments seeking solid payoffs.

Kennedy is now not dead, and thus the bank closures to stop the panic which was setting in is not overshadowed by a dead President. So the free weekend of no one paying attention to the Stock Market and banks is gone. What occurred that week? Not a whole lot. Beatles came out with a 2nd album. Disney picks Orlando for the new park. C.S. Lewis and Aldous Huxley died. Dr. Who comes out on Saturday. A fire kills a bunch of nurses. And minus JFK dying... not a lot else occurred.

Meaning that stock market issues are somewhat the only news there is.

Now how big of a stock market issue was this?

Look at that. Yet OTL we had days of silence and bankers working behind the scenes to fix things.

The closure of the NYSE gave the exchange some breathing space to address the problems De Angelis had created. If the NYSE didn’t resolve this problem, not only would the collapse discourage investment by small investors, but the U.S. Securities and Exchange Commission would intervene, reducing the NYSE’s power. The NYSE solved the problem by imposing a $12 million assessment on exchange members and used the money to make Ira Haupt & Co.’s customers whole. Creditors were not as lucky. American Express and other lenders lost millions. For the first time, the NYSE had assumed responsibility for a member firm’s failure. When the stock market reopened on Tuesday, it quickly recovered and moved up for the rest of the year.

Although Allied Crude was bankrupt, De Angelis wasn’t since he had stashed half a million dollars in a Swiss bank account; however, this lead to charges of contempt because he had claimed he was bankrupt. De Angelis also couldn’t explain the large cash withdrawals he had taken from Allied’s accounts. For his fraud, De Angelis received a seven-year jail term. When he got out in 1972, he got involved in a Ponzi scheme involving Midwest cattle, but this effort collapsed before it really got going. This shows that a swindler will always be a swindler.

So what happens if this issue never is fixed? Kennedy is alive, but he is sitting on a massive public loss of faith in the market combined with major companies failing due to the event of a single con-man.

To me Kennedy has to be alive for this to be a major issue. With him dead the focus is not on banks, and stock markets. Likewise the "closures" are not easily hidden away with "respect for the President."

Namely how does Kennedy deal with the Great Recession?

 

[Indicus]

That is one helluva coincidence.

Well, first of all, I suspect this would be a pure recession. The energy rot of the Seven Sisters hasn't quite come to roost at this point. However, I would not put it entirely out of the question that the energy market falls apart. If this happens, you likely see a minor stagflation more like 1971 than 1973, but it'll be quite difficult to resolve - an economic struggle that would last until 1966, at the least. If, instead, the Seven Sisters remain intact, you'd likely see a quick recession, but a much harder recovery. That said, it won't be as bad as the OTL Great Recession by any means, and I suspect that the US would recover in 1965 at the latest.

Either way, you see a large recession that puts an end to the post-war boom early, but probably won't be as destructive and impossible-to-solve as 70s stagflation.

 

[Sasalele]

Oh my god. This is probably one the biggest butterflies I've ever seen.

 

[Emperor Norton I]

Oh my god. This is probably one the biggest butterflies I've ever seen.

A Mothra?

 

[Sasalele]

A Mothra?

Well that's a moth but yeah... I see what you mean.

 

[Emperor Norton I]

There is an argument to be made that Kennedy's assassination itself was bad for the stock market, as it lead to uncertainty and fear. Therefore, Kennedy surviving, indeed not be shot and injured at all, would be good for the stock market.

http://www.businessinsider.com/the-great-salad-oil-scandal-of-1963-2013-11
At 1:41 pm, word that JFK had been shot flashed on the floor of the New York Stock Exchange (NYSE) at 1:41 pm, and stocks began to sell off. The Dow Jones Industrials, which was recorded at hourly intervals in 1963, had been at 735.87 at 1 pm on November 22, and fell to 730.18 by 2 pm. Over the next seven minutes, the market traded 2.2 million shares and lost an additional nineteen points, erasing around $11 billion in capitalization, before NYSE officials halted trading at 2:07 pm to stop the panic selling. The market rested, and the next day, JFK’s body lay in repose at the White House.

Well that's a moth but yeah... I see what you mean.

Butterflies are weak and fluttery. Mothra is strong but reclusive.

 

[Fenwick]

There is an argument to be made that Kennedy's assassination itself was bad for the stock market, as it lead to uncertainty and fear. Therefore, Kennedy surviving, indeed not be shot and injured at all, would be good for the stock market.

Some argue however that while a dip occurred it was merely adding to the situation at hand. It is like AIG's loans failing after Lehman's went down. It was an event seemingly independent of the fault but it added to the general panic.

As for butterfly... what? Kennedy is not shot and the on going economic issue in the stock market does not have the nearly week long lock of the US stock market and major lenders. Kennedy dying added needed days for bankers and stock brokers to map out how to fix the issue.

Some companies went under but thanks to last minute wheeling and dealing it stopped true economic downturn for the markets.

 

[Indicus]

As for what Kennedy would do, he'd probably increase spending, as well as pass his tax cut a few years earlier than OTL. I'd think this would boost the economy pretty well if it turns out to be a standard recession. If the energy market goes down under and instead there's a stagflation, Kennedy will likely pursue Keynesian measures anyways, but I think they'd cause high inflation, even higher than what happened in the OTL 60s.