What happened? How did this glorious pinnacle of capitalism turn to dust, as the stock market cratered, wiping out an entire country’s, American, wealth, seemingly overnight? It was because, as Eleanor Roosevelt observed, the country became divided — rural vs. urban, left vs. right. Republicans, having reached a seemingly permanent majority, controlling the House, the Senate, and the Executive branch with the election of Herbert Hoover, were complacent, and determined to implement their platform: No taxes, no defense spending, no social safety net. NO NO NO. The Party of No reigned supreme.
Did the great stock market crash of 1929 really come out of no where? Was it really that shocking? It was not, and keen observers, many of them academics, many of them journalists, were sounding the alarm, from the mid 1920’s. Did anyone listen? Of course not. We were drunk on bathtub gin, women were experiencing the right to vote, some amount of freedom. They marched to the future, cut their hair, raised their hems. Americans then, in that seemingly great and glorious decade, marched on. Radio, the internet of its time, blasted news and consumer advertising nationwide. Edward Bernays, Sigmund Freud’s nephew, his mother was Dr. Freud’s sister, invented modern public relations.
Yet, if you were in the rural midwest, misery reigned. Agriculture prices plummeted, then plummeted more. People were hungry, unemployed, in debt, and miserable. No one seemed to notice, or care. Hordes of World War One veterans, promised pensions when they came home, lived on the mall in Washington, in misery. Hoover called out the national guard to get rid of them. You are, I hope, getting the picutre. This sounds familiar because we are there again, God help us.
The Great Recession of 2008 started where all of these things start, on Wall Street. Bankers, ever in search of products, developed and refined the collateralized debt security, which sounds complicated, but it is not. As people, desperate to own homes, began to search for money to purchase them, Wall Street helpfully gave them the cash. They bought up mortgages, packaged them, (securitized,) and sold the bonds in the debt markets. These instruments, supposedly secure, safe, Triple A rated, became the rage. Theybecame such the rage, alas, that Wall Street, forgetting lessons learned, became addicted. Really addicted. Addicted to the money, which was billions, and, as usual, tossing good sense aside, they did more. And more. And more. It was insane, the amount of fees they made. They couldn’t believe it. I couldn’t believe it. It was that most elusive of animals, the formula that turned dust into the gold. But, oops, a small crack appeared in the dike. It grew. It burst, washing away Bear Stearns, Lehman Brothers, AIG, the Harvard endowment, the little guy and his house. The government was shocked, shocked, that they didn’t notice this. Sure.
So, everyone panicked. There was a run on the bank. But, Wall Street, ever wise, knew what to do. They turned to the federal government, for a loan. It was whopper, 200 billion and counting, and, not surprisingly, it worked. Wall Street, used to these periodic tsunamis, knew the drill. They recouped, they invented more products, they prospered. The Harvard endowment doubled down, and it worked. The little guy, shaking in fear, walked away from her house. Her major asset had turned to dust. She was ruined, her family crammed into an apartment, the future bleak. Her credit was shredded. She was blamed, for making poor choices. She, believing this, smokes cigarettes, and berates herself for being dumb. She ISN’T actually the cause of this, she is the victim, but she is deep into Stockholm Syndrome, and believes it.
So, what can be done? The Atlantic Magazine, in a moment of intense clarity, pointed out that the usual solution to intense income inequality is disater: economic, natural, Ebola, stock market crash and depression. Fingers crossed that history can be wrong. (Doubtful.)
The Democrats, reacting to all of this, elected Obama. We cheered. We were saved. The depression was avoided. Wall Street recovered. The little guy, somehow overlooked, never recovered. Democrats, giddy with their enlightened outlook, “We elected OBAMA,” neglected to notice that their coalition was about to bolt, and were surprised when it did. Trump was elected. We were shocked.
Yet, none of this is a surprise. The, and I am making an educated guess, top 10% of the Democratic coalition is doing great. They have prospered in Trumps America. Their portfolios are up 40%. They have real estate that has eye popping prices. They are “Against Trump,” but worry. The little guy, as quiet as ever, labors on. The bottom 90% of the coalition, burdened by student debt, bad credit, no access to capital, shitty jobs, and no money, is mystified why the leadership doesn’t help them. So, they voted for Trump. The democrats sail on, confused that they keep losing. America, ever optimistic, ever the busy body, waits with baited breath. Something, alas, is coming. Is it 1914? Is it 1928? Is it April, 1861? Is it December, 1941? I have no idea. I hope it is none of these. I hope that the little guy, she of great common sense, will get angry, will march to voting booth, will “Throw the bums out.” It is the only solution, and works. We have our vote, and we should use it. Let’s hope everyone does.
Update: I wrote this originally before the election. We have started. It was a good showing, and although everyone is claiming credit, Tufts University did an exit poll that showed that the young voted, thank god. We have 4 million people turning 18 this year, we have a huge population bulge in the millennials, and they can run the country if they choose to. Let’s hope they do.