If you haven’t heard already, we’re in big trouble. I’m not talking accidentally let the goldfish go down the drain trouble. I’m not talking backed the car out of the garage while the door was still shut trouble. I’m not even talking you committed a hit-and-run in a School Zone, and now your face is on TV, trouble.
I’m talking big trouble. Macro trouble. Makes the Great Depression look like a bounced check to Pizza Express trouble.
Four two years now, the nation’s housing bubble has been deflating. Starting somewhat slowly at first, it’s now plummeting to earth and opening up a black hole that has spread beyond just our shores and to every country on the planet.
"There is only one real remaining domestic manufacturing activity in the United States, and that activity is (was?) the manufacture of suburban sprawl."
And it has spread far beyond the early fundamentals of just too many mortgages given to too many people who didn’t really qualify for them. A gaping maw into the inner viscera of the global financial system has been rent. More frightening still: as we peer into the abyss we find not only that the abyss isn’t peering back.
We find nothing. Nothing at all.
Structured Investment Vehicles (SIVs). Mortgage-backed securities. Collateralized Debt Obligations (CDOs). The new financial firmament that was supposed to provide the link between the rooftops and the people holding the risk of those rooftops has revealed itself as little more than a frothy white mousse of, of, of …
The U.S. financial system was supposed to sit, like a Galveston vacation home sitting above the beach, atop sturdy piers connecting that system to the underlying real economic assets in which the system had invested, and from which the system expected returns. Now it turns out those piers weren’t all that sturdy after all, and, when the smallest swell came in, it all came crashing down.
There is only one real remaining domestic manufacturing activity in the United States, and that activity is (was?) the manufacture of suburban sprawl. Everything about our economy is geared toward that manufacture -- and the financing of that manufacture.
Those piers started turning to frothy mousse when we woke up a couple of years ago and started wondering if there wasn’t any real value to it, if suburbia had no future. It was when the great unraveling began.
Or was it?
Bretton Woods goes to the Chicago School
"It started rather quickly, as no less likely a subject as President Carter deregulated everything from oil prices to the airlines. And the banks."
For three decades after the Second World War, the global financial system was regulated by a system of agreements drafted between financial ministers and heads of state at a small, but distinguished resort hard against the shadow of New Hampshire’s Mount Washington -- Bretton Woods.
At Bretton Woods we saw the cementing of a system of financial interdependencies based on what economist John Maynard Keynes characterized as "the importance of rule-based regimes to stabilize business expectations.”
But by the early 1970s, the liberal Keynesian policies of rule-based management of the nation’s, and the world’s, finances were under attack by a new school of thought from the University of Chicago’s economics department, the “Chicago School,” where had emerged a new, laissez-faire, thinking.
A thinking that said “rules are for chumps” and that set to change U.S. policy away from that of regulation and restraint and toward a system where the invisible hand, mounted by Wall Street Cowboys and their Republican-party enablers, would be free to run roughshod over the landscape.
The Age of Deregulation
It started rather quickly, as no less likely a subject as President Carter deregulated everything from oil prices to the airlines. And the banks.
"A gaping maw into the inner viscera of the global financial system has been rent."
What Carter had set in motion found its purchase in the ideology of the Reagan administration as it quickly moved to allow interstate banking, deregulate the savings and loan sector, and allow stock brokerages to take on traditional banking functions.
And to institutionalize the notion that a dollar, borrowed, was worth at least as much, if not more, than a dollar earned. And a national debt that swelled from $1 trillion dollars when Reagan entered office to $5 trillion in the middle of Clinton’s presidency.
At which point it started to actually go down. Down that is until Bush’s inauguration in 2001. It’s now $10 trillion, and climbing.
On that path of skyrocketing debt was also a path of plummeting regulation and a decades-long series of financial imbroglios, from the nationalization of the Continental Illinois Bank in 1984 to 1987’s “Black Monday” stock market crash to the massive Savings-and-Loan collapse (and taxpayer bailout) of the late 1980s and early 1990s.
And all the way to 1999’s Gramm-Leach-Bliley act, which allowed commercial and investment banks to consolidate -- putting the shell in the shotgun that had been placed in our economy’s mouth over a decade earlier.
A shotgun whose trigger was pulled on Jan. 20, 2001.
The Age of Scoundrels
I say “we,” but I don’t mean it. For the deregulation, and the turmoil, wasn’t a collective decision. It was a decision by a few. A decision by a few that would profit immensely from deregulation, even if it meant the rest of us paid an unimaginable price for their profit.
Charles Keating. Neil Bush. Phil Gramm. John McCain. Ronald Reagan. George Bush. Milton Friedman. George Bush, again. Alan Greenspan. The entire editorial board of the Wall Street Journal.
"There’s another set of faces that should be held to their failure. Those faces are the faces of the Grand Old Party. The Republican Party."
Those are the faces of the plunderers. Those are the faces of the individuals who wrecked America. This time, better than the past. This time, wrecked for good.
Those aren’t all the faces, however. There’s another set of faces responsible for this mess. There’s another set of faces that should be held to their failure. Those faces are the faces of the Grand Old Party. The Republican Party.
The Party That Wrecked America
I’m sick and tired of sitting here pretending that this is some kind of collective mess that we have to, collectively, get ourselves out of. It’s time to start kicking ass and assigning blame. Because we can’t demand reparations until we know who to demand them from.
Well I’m telling you who: Republicans. It is time for them to own their failure. It’s time for them to make good, what they’ve made so bad.
Right now, the Republicans say we have to add another trillion dollars to the national debt, debt owed by you, by me, by everyone, on top of the 8 trillion they’ve already added, to fix the problem that they created.
Fuck that. They took the keys to the station wagon of state and immediately drove it into a wall. Not my fault. Not going to pay for it. Not going to take one penny of blame for their failure.
It’s time to run the voter-registration tapes of the past 30 years through the computers, again. It’s time to make a list, a list of everyone who has ever registered as a Republican, who has ever voted in a Republican primary, or who has ever given money to a Republican candidate.
And, once that list is made, it’s time to go to each and every one of their doors and demand they give the money back, all $9 trillion of it. Why? Because as members of The Party That Wrecked America, it’s their fault.
It’s their failure, and we’re here to privatize it.
Gregory Travis can be reached at Greg@littlebear.com.