How To Survive The Crash
March 28, 2019 9:59 AM   Subscribe

“The importance of the progressive beachhead on Financial Services may not be felt this year or even this session, but after the next financial crisis. Having progressives willing to carry forward structural responses to financial misconduct could make a huge difference. “In 2008 the public was alerted and alarmed and angry to do something, but there wasn’t the Washington leadership necessary,” says Marcus Stanley of Americans for Financial Reform, a coalition formed to bridge that gap. “It’s unpredictable what would happen in another crash, but if there is one, we won’t miss the opportunity again.” The House Financial Services Committee—long a landing place for pro-bank Democrats—now includes AOC and a flock of leftists. And Maxine Waters is its new chair. (American Prospect) What Will It Take For The Progressive Congressional Caucus To Win? (Splinter)
posted by The Whelk (18 comments total) 28 users marked this as a favorite
I predict the next crash will be handled the same way the last one was.

Trillions will be borrowed on behalf of the little people and used to replace the funds stolen from the corporations and countries owned by our true lords. So they can do it again. They've followed this pattern since Milliken/Boesky who were the pioneers, and there's no reason for them not to continue. There are no consequences.

Between 2008 and 2014 the combination of the feds balance sheet and currency in circulation increased by 14 trillion. That's how much you borrowed to make the rich whole. Next time it will probably be 140 trillion. There is no limit, it will not collapse, it will not stop.
posted by benevolent at 10:14 AM on March 28, 2019 [1 favorite]

Two words: Solid Gold Bitcoin
posted by sammyo at 10:15 AM on March 28, 2019 [3 favorites]

Two words: Solid Gold Bitcoin

Are you saying that that's "two words" because you're implying "bitcoin" doesn't count as a word because it's ridiculous?

If so I agree
posted by EmpressCallipygos at 10:19 AM on March 28, 2019 [15 favorites]

Ok, one word: plastic
posted by sammyo at 10:27 AM on March 28, 2019 [5 favorites]

I could claim that my thinking on this matter is derived from the people who Kim Stanley Robinson cited in New York 2140, but that would be a lie: my thinking on this matter is derived from Kim Stanley Robinson's New York 2140.

spoilers: the utopian — well, not utopian, call it utopi-ish — scenario he presents in that novel is of the following things happening in close succession:
  • A financial markets crash along the lines of the 2008 crash occurs (in the novel, this one is triggered by a superhurricane hitting the eastern seaboard, thereby ruining a bunch of banks with overleveraged investments in semi-submerged lower Manhattan, which at this point has become "the new Supervenice" )
  • A movement arises wherein a small but significant fraction of the population engages in nonviolent noncompliance — refusing to pay student loan debts, refusing to pay credit cards, not buying anything, participating in sickouts from work, going on rent strike.
  • A popular radical DSA-type organization/movement within the Democratic Party elects enough legislative representatives to hold real power in Congress, despite the efforts of the Democratic Party as a whole to marginalize them.
  • The newly radicalized Congress goes to the banks one by one, starting with the largest and worst of them, and offers them a bailout deal that's tantamount to nationalization — i.e. the deal that the government should have offered in 2008.
  • The newly radicalized Congress allows the banks that don't take the deal to collapse, pour encourager les autres.
  • The newly radicalized Congress thereby seizes "the commanding heights of the economy," which in turn gives space for the government of the United States to actually at long last become a government by, for, and of the people.
tl;dr: support yr local DSA chapter, get as many radicals as possible in Congress, and get ready to participate in extra-parliamentary activity — as KSR puts it, we need to engage in:
Strategic defaulting. Class-action suits. Mass rallies. Staying home from work. Staying out of private transport systems. Refusing consumer consumption beyond the necessities. Withdrawing deposits. Denouncing all forms of rent-seeking. Ignoring mass media. Withholding scheduled payments. Fiscal noncompliance. Loud public complaining.
in order to apply further stress to the markets and in order to get more power and legitimacy into the hands of elected radicals.

If we play this right, during the next financial crisis the people with the power to make real decisions won't be Pelosi, Schumer, or the barbarians in that other party. The people with the power to make real decisions might be Maxine Waters and AOC.

It's a thin thread to hang from, but it's the only thread we've got. If we don't get it right this time, we'll make another run at it during the next crash. and the one after that. and the one after that. It might take us until 2140 to get it right — but then again, maybe we'll get lucky and win this time.
posted by Reclusive Novelist Thomas Pynchon at 10:46 AM on March 28, 2019 [38 favorites]

Reclusive Novelist Thomas Pynchon, I was scrolling down to write a lot of what you wrote, but you took care of it. Thank you.

Though I'll add that I'm a little bit skeptical of waiting for (systemic or environmental) catastrophe to strike. It makes for a good novel, but in the real world, it seems like a great way to get caught flat-footed. Banks have lots of advantages in a catastrophe, since they've got all the institutional knowledge on extracting rescues from the public. And it's hard to predict how even sympathetic decision-makers would act under stress (another KSR spoiler: in the book, taking over the banks involves, at least in part, on some specific, personal relationships—I don't want to rely on AOC having an ex working at the Fed).

There are lots of pieces of our financial system that seem vulnerable even without a broad crisis. Student loans, for example, might be vulnerable to public action now (though with the risk that it might kick off a broader crisis).
posted by ddbeck at 11:45 AM on March 28, 2019 [1 favorite]

My view on what will happen is informed by what happened to Elliot Spitzer.

If you go after big money you'd better be 100% squeaky fucking clean because every power in the moneyed universe will be gunning for you.
posted by srboisvert at 12:32 PM on March 28, 2019 [13 favorites]

One of the interesting subplots with the new leftist Congresswomen is that because they've been able to avoid the constant fundraising grind more than their peers, they have more time to actually get things done as opposed to sitting alone in a room begging car dealership owners for $1000 donations. In addition to the political and optics advantages you get from opting out of that system and not being or appearing to be beholden to moneyed interests, there are also pragmatic ones, too. Ocasio-Cortez was very effective in that hearing with Michael Cohen, especially for someone with no formal legal training, and a large part of that is that she was able to prep for it in a much more serious way without having to devote hours every evening to cold-calling and glad-handling.
posted by Copronymus at 1:42 PM on March 28, 2019 [14 favorites]

Along with Elizabeth Warren, I suspect that Katie Porter's hammering on now-former Wells Fargo CEO Tim Sloan is a major reason he's been golden-parachuted out the door today. Her Twitter feed makes it clear she takes all aspects of representing constituents seriously. She'd be an excellent VP choice for any candidate that wants to demonstrate their progressive bona fides to voters.
posted by They sucked his brains out! at 6:02 PM on March 28, 2019 [1 favorite]

What Will It Take For The Progressive Congressional Caucus To Win?

Dismembering Jamie Diamond and scattering the pieces like so much confetti across Wall Street.
posted by Going To Maine at 6:55 PM on March 28, 2019 [1 favorite]

(use sharp knives and work quickly, lest his flesh knit itself back together)
posted by Going To Maine at 6:57 PM on March 28, 2019 [2 favorites]

I think we should put on red jumpsuits, stab the rich to death with sharpened scissors, and then link hands across America. all the way from New York to San Francisco.
posted by Reclusive Novelist Thomas Pynchon at 7:29 PM on March 28, 2019 [3 favorites]

-Jamie Dimon says we've split the US economy, leaving the poor behind
-Jamie Dimon, spare us your crocodile tears about inequality

How Jamie Dimon would fix income inequality: "he would implement a negative income tax and declare a national emergency on infrastructure and education"
posted by kliuless at 11:34 PM on March 28, 2019

The newly radicalized Congress goes to the banks one by one, starting with the largest and worst of them, and offers them a bailout deal that's tantamount to nationalization — i.e. the deal that the government should have offered in 2008.

or just go over them! :P
Should governments finance themselves through their central bank?
There is one asymmetry that might worry me as a citizen. Treasury bills are a useful instrument for individuals and businesses (like insurers) because they are quite safe. Bank of Canada deposits are likewise very safe, but whereas anyone can buy a treasury bill, deposits are exclusive. Only commercial banks can keep an account at the central bank. So if our soldiers are to be paid $400 million by the Bank of Canada, the supply of treasury bills will contract by $400 million leaving folks like me with fewer options for investing.

But there's an easy way to fix this shortage. Introduce central bank accounts for all. In short, allow non-banks like insurers and individuals to keep accounts at the Bank of Canada. A similar fix would be to provide a means for commercial banks to establish 100%-reserve pass-through accounts. Life insurers and individuals who open a pass-through accounts at a bank would be assured that these accounts are 100% backed by Bank of Canada deposits, the interest flowing straight from the Bank of Canada to the account holder. These accounts would function just like treasury bills.
posted by kliuless at 1:23 AM on March 29, 2019

Yeah, taking on the bankers, that’ll work....
posted by Middlemarch at 1:52 AM on March 29, 2019

I am also very skeptical that some sort of external crisis would be a good thing; its utility as a plot point in a novel aside. The current system has shown itself to be very adept at using crises to its own ends. Generally speaking when you look over the last century, you can find a lot of examples where externally-imposed stresses have been used to catalyze power consolidation, oppression, etc. And in those instances where crises did result in major shifts in political power, often the result was hastily built and led to pretty awful outcomes.

If you zoom into the micro scale, this really shouldn't be all that surprising. People are not at their best, in terms of decision-making, when they are under a lot of stress or facing literally existential questions. So when you multiply that across the population of a country or even a region, it's no wonder that it leads to questionable outcomes.

IMO, we—and I mean broadly, as a species—tend to make the best decisions when we are under the least stress. That's when people seem to be the most kind, the most generous, the most open to countervailing viewpoints, the most likely to consider others who are not either physically or tribally proximate to themselves, etc. The greatest civil-society accomplishments of the 20th century were built during times of peace and prosperity, and I don't think it's exactly coincidental that as the global order has started to come under stress, that the best and most ambitious parts of that order have started to be torn down.

Waiting for a crisis strikes me as one step removed from the worst kind of accelerationism, which is just so much secular eschatology.
posted by Kadin2048 at 8:00 AM on March 29, 2019 [2 favorites]

The takeaways I got from the article where

1) we are better suited to survive a market crash now then in 08 due to the new makeup of the Committee

2) a market crash is inevitable under current conditions
posted by The Whelk at 8:24 AM on March 29, 2019 [2 favorites]

Yeah, taking on the bankers, that’ll work....

There is a fine line between taking on and taking out.
posted by Going To Maine at 8:36 AM on March 29, 2019

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