Salena Zito

“I think the analogy between the 1890s and today is better than the analogy with the Great Depression … that we often focus on,” said Hugh Rockoff, a Rutgers University economics professor. “One of the many similarities is the real estate crisis. There was a subprime mortgage problem in the 1890s that was very similar to what precipitated the recent crisis.”

Before 1893’s crisis, many farmers bought homesteads on the Great Plains with short-term “balloon” mortgages supplied by small local mortgage companies and banks. The borrower paid only the interest for five years – until the principal then came due.

Mortgage companies bundled those mortgages and sold them to investors in New York and London.

The bundles supposedly were insured – all very much like the securitization of mortgages that preceded our recent crisis – but they plunged in value, igniting an international banking panic.

“Industrial production fell … and unemployment rose to double-digit levels,” Rockoff recalled. “It took years to work our way out.”

The 2006 midterm election that threw Republicans out of power in Washington was the first noticeable sign of what has been brewing on Main Street since the electoral mess of the 2000 presidential election: Americans are fed up.

While people call the 2008 presidential contest a “change election,” it was merely a small part of the unsettling of the country, rooted in economic uncertainty that has crippled the middle class.

If Barack Obama’s election truly was the “change” the nation sought, then solid-Democrat New Jersey would not have rebuked his policies less than a year later by electing Republican Chris Christie as governor.

Nor would Virginia have given Republican Bob McDonnell a landslide victory that same year.

And Republican Scott Brown had no political rationale to run for Teddy Kennedy’s U.S. Senate seat in Massachusetts, let alone to win it – but he did.

Despite all of the warnings, the White House was blindsided when Republicans took back the U.S. House in historical numbers in 2010.

Last week, New York voters in a Democrat-stronghold district reminded President Obama that nothing is safe, not even in the Bronx: Republican Bob Turner comfortably won the House seat that text-happy Democrat Anthony Weiner was forced to give up.

Economics drives politics, Loyola’s Genovese says, adding: “If the past is a prelude, another angry election is on the way.”

Salena Zito

Salena Zito is a political analyst, reporter and columnist.