Reading that excerpt, it seems almost as if it was paraphrasing what Warren wrote about last July.
In that piece Warren also wrote about how the growing household debt was another fault line in the economy that could crack under the strain of a big economic shock.
A generation of stagnant wages and rising costs for basics like housing, child care, and education have forced American families to take on more debt than ever before. The student debt load has “more than doubled since the financial crisis.” American credit card debt matches its 2008 peak. Auto loan debt is the highest it has ever been since we started tracking it nearly 20 years ago, and a record 7 million Americans are behind on their auto loans — many of which have similar abusive characteristics as pre-crash subprime mortgages. 71 million American adults — more than 30% of the adults in the country — already have debts in collection. Families may be able to afford these debt payments now, but an increase in interest rates or a slowdown in income could plunge families over a cliff.
Well, guess what? Here’s a piece in Business Insider just a few weeks ago warning about — you guessed it — how America’s massive accumulated household debt was a particular point of weakness that made the economy so vulnerable to a shock like coronavirus.
Americans households are $14.5 trillion worth of debt, according to data compiled by the New York Federal Reserve. That's about $1.5 trillion more than we were holding the last time household debt peaked in 2008. The biggest chunk of this debt is held in mortgages, then student loans, then auto loans followed by credit cards.
That means that if a significant economic slowdown does come, and people are forced to work less or not at all, they'll have trouble paying down the debt they owe. We already know that coronavirus is causing massive supply chain disruptions. Manufacturing jobs, especially, depend on factories having every part they need to build what they build. Those parts come from all over the world, especially China. And in China, especially hard hit provinces like Guangdong and Hubei.
If factories can't open, employees will likely see their hours cut back. For Americans living paycheck to paycheck that could mean the difference between making and missing debt payments. Enough of this kind of household financial strain could slow the entire economy, especially since consumer spending is its brightest spot right now.
www.businessinsider.com/...
Again, it’s as if the Business Insider piece was paraphrasing what Warren wrote about way back in July of last year.
The thing is, this isn’t Warren’s first time at the rodeo, in addition to calling this crash she also famously called the 2008 financial and economic meltdown.
Back in 2005, Warren was quoted in a NY Times piece about bankruptcy in which she said:
"When you're living in a place with home values up 50 percent, you have what Alan Greenspan calls a piggy bank," said Elizabeth Warren, a Harvard law professor and an author of "The Fragile Middle Class" (Yale University Press, 2000), a study of bankruptcy. "The bubble has operated like wreckage from the Titanic -- you could climb on and float along for a while. The question is for how long."
www.nytimes.com/...
In 2006, Warren wrote a blog post for Talking Points Memo in which she explained that:
Back when everyone had 7.5% mortgages and the rates were around 4%, everyone wanted to refinance—and they were right to do so. That meant we needed a lot more mortgage brokers to handle the volume. Banks hired, companies geared up, and the Army of the Mortgage Salesmen was born. After a while, all the sensible refinancings has been done, so the Army moved on to financing a real estate bubble. A while later, they ran out of people who could afford to buy homes, so they got creative—very creative. That blew the bubble bigger, while it put a lot of families at much greater risk. But now that the Army existed, what could it do except sell more mortgages?
So why aren’t the mortgage lenders cutting back now? The problem, says my friend, is that no single bank or investment house owns those mortgages any more. They have passed them along to huge securitized pools, held in diverse ownership. That means a lot less oversight to be sure the big picture on lending makes any sense. And besides, the Army keeps on offering high returns, at least in the short run.
Nationally foreclosures are up 7% this quarter. That’s well behind Boston’s big numbers, but Boston was a leader during the boom. Will it now lead in the bust?
web.archive.org/...
As we all know, within a little over a year after Warren’s TPM post the housing bubble began to pop and within two years the great financial and economic crash of 2008 had begun, for the very reasons Warren laid out in previous years.
You all may know the story of Cassandra who in Greek mythology was able to predict the future but was cursed to have no one believe her. Warren is our modern day economic Cassandra, and sadly not only has she been cursed to have no one believe her, we have been cursed in a way to not have chosen her as our party’s standard-bearer.
Throughout its history, America has mostly been lucky to have the right person in charge at the right moment, specifically someone who correctly identified the problems afflicting our nation and also knew both what to do about them and how. But sadly, and perhaps I am wrong, I’m not sure we’ve been so lucky this time around.
Not knocking our current candidates, but while Joe Biden, our presumptive nominee, is a fine individual, his repeated statements about not wanting to fundamentally change anything and wanting to share power and work with Republicans, not to mention his career-long tendency to simply go along with the conventional wisdom, tell me that he does not totally get it. Bernie Sanders is also a fine individual who has the right big picture view of what ails our country, but on the specifics of how to go about fixing our problems and how to overcome the obstacles to those fixes, Sanders comes up short.
On the other hand it is abundantly clear that Elizabeth Warren not only understands what the problem is — as I’ve highlighted above, she clearly saw this crash coming and in such precise detail — she also understands precisely what must be done about it. Just watch this exposition she gave to Rachel Maddow a few weeks ago right after she dropped out about what the country should do to address the coming coronavirus-induced shock to the economy.
Here’s Warren just the other day speaking to Chris Hayes about what the economic response to coronavirus should look like:
What Biden does not get about why we have the problems we are dealing with, Warren clearly does get. And what Sanders lacks in terms of details on exactly what to do about our current problems, Warren clearly has complete mastery of those details.
But wonkiness is not the only thing that makes Warren special. Hillary Clinton was plenty wonky. What separates Warren from your typical wonk is, first, her identification of the obstacles to progress — wealthy, powerful interests who corrupt government with their money, procedural hurdles such as the filibuster which impedes truly impactful policies from becoming reality, and the consequent distrust of government that comes from that corruption and inaction.
And secondly, Warren also has the moral conviction, boldness, and requisite courage to carry out her ideas to their logical conclusion. Unlike many previous politician-wonks, Warren is clearly not encumbered by any ties or familiarity with the existing ruling power structure in this country, for as we all know Warren became a household name by fighting that existing power structure and reducing arrogant, intellectually bankrupt business and political elites to rubble. And as we saw from her evisceration of Michael Bloomberg a month ago, tearing apart and holding accountable the rich and powerful is what she lives for and what she excels at.
Also, whereas Democratic leadership continues to show an all too predictable lack of imagination and audacity in its approach to the economic response to coronavirus, which has allowed Republicans and the Trump White House to gain the initiative and outflank them on some matters that are supposed to be within the Democrats’ ideological wheelhouse, Warren has shown no such fear, hesitation, or intellectual banality in what she believes should be the Democrats’ response.
As Warren put it in her recent piece on CNN:
First, this stimulus must be large enough to match the challenges that families and communities face. In 2008, the stimulus package was too small, too tilted towards ineffective tax cuts and too unwilling to make the structural changes needed to address serious damage to our economy. Once economists figured this out, Congress refused to pass another stimulus bill. The economic fallout was predictable: a sluggish recovery that left too many working families behind. Based on the latest projections of the likely economic harm of coronavirus, I have called for an immediate $750 billion stimulus -- roughly 3.5% of GDP.
www.cnn.com/...
Warren goes through a litany of policies from broad cancellation of student loan debt to halting evictions and a moratorium on foreclosures, to filling in the gaps in paid sick leave and family leave left by the emergency coronavirus bill negotiated by House Democrats and the Trump White House, and other novel and impactful ideas.
But importantly, Warren puts particular emphasis on directing money to the grassroots rather than the treetops as she puts it, and that unlike what happened in the wake of the 2008 financial and economic crisis, any money that goes to large corporations must come with conditions.
Any stimulus package must also pass an important test: federal money that goes to big corporations or specific industries must be used to help their employees. Funds must come with strings attached to ensure that the money goes to maintain payroll, not to enrich shareholders or pay executive bonuses. Giant corporations that receive substantial loans from taxpayers should be required to set aside one or more board seats for a representative elected by the company's workers. Violations should trigger criminal penalties and clawbacks.
When the 2008 financial crisis hit, the federal government responded with a bankers' bailout. The rich and powerful got richer and more powerful. We should learn from the past and meet the challenges of this pandemic head-on, this time to deliver meaningful, grassroots relief directly to American families.
But Warren wasn’t done just yet. On Twitter yesterday she laid out eight specific conditions that should be placed on any bailout money that goes to large corporations:
- Companies must maintain payrolls and use federal funds to keep people working.
- Businesses must provide $15 an hour minimum wage quickly but no later than a year from the end
- Companies would be permanently banned from engaging in stock buybacks.
- Companies would be barred from paying out dividends or executive bonuses while they receive federal funds and the ban would be in place for three years.
- Businesses would have to provide at least one seat to workers on their board of directors, though it could be more depending on size of the rescue package.
- Collective bargaining agreements must remain in place.
- Corporate boards must get shareholder approval for all political spending.
- CEOs must certify their companies are complying with the rules and face criminal penalties for violating them.
markets.businessinsider.com/...
But wait, there’s more. Just this morning as I was putting the finishing touches on this diary, Warren came up with yet another brilliant, bold, outside-the-box idea to help address the coronavirus outbreak:
Sen. Elizabeth Warren (D-MA), the one-time Democratic presidential hopeful, will ask President Donald Trump to deploy part of the military across the country to turn existing facilities into hospitals as part of the country’s response to the coronavirus pandemic.
Warren, a member of the Senate Armed Services Committee, will send a letter to the president with the request on Wednesday. In the letter, obtained by Vox before its release, she will insist that Trump direct the Army Corps of Engineers to retrofit existing buildings to care for Covid-19 patients.
“Given the reality of the exponential growth of the virus, supplemental infrastructure must be designated and ready to receive patients immediately,” the senator writes. “The Army Corps is in position to help address this public health emergency by converting existing space into temporary medical centers. Taking this action will save lives.”
www.vox.com/...
I realize this all probably sounds like I’m making a case for Warren to be president, even though obviously she is no longer running. I am well aware that she will not be the Democratic presidential nominee this year.
What I am arguing in this diary is that if Democrats and progressives are thinking of what approach to take now and going into the future, especially if they regain the White House and full control of Congress next year, they should cast off the tired, outdated, and obsolete approach that Democrats have too often taken recently and over the last 40 years or so. And they should look to Warren’s approach both on policy and politics as a template for how to boldly move into the future and truly bring about the real, structural change that we so desperately need.
It is the best way in my view to finally break us from this stale and bankrupt economic and political paradigm that we’ve existed under for far too long which has so completely failed the American people and brought our country to this extremely precarious and perilous moment. Our country is behaving like a failed state in its failure to respond to the coronavirus outbreak and the economic fallout from it. We are potentially being afforded a second chance to get this right, and to finally break the stranglehold that the rich and powerful have over our affairs, but if we waste this crisis I fear our party, the progressive tradition, and our country will not get another chance, and the downward spiral we are in will become irreversible.
And lastly, I have to just get this off my chest, but I believe we seriously fucked up in not nominating Elizabeth Warren. That cannot now be undone obviously, but I firmly believe with every fiber of my being that the Democratic Party blew it by not choosing Warren as our standard-bearer this year, at this particular moment. That much has become painfully obvious over these past weeks, especially when her expositions on and response to the crisis, as well as the composure, command of issues, and complete confidence with which she has stated her case, are contrasted with those of the two remaining Democratic candidates and especially with our current President.
I hope to God we learn from this, and the best way to demonstrate that we now finally get it is to at least move forward along the lines that Warren has so painstakingly laid out and with such uncanny, almost eerie prescience. Please, let us not fuck this up again.