Just finished “A Colossal Failure of Common Sense”. It was written way back in 2009 by a Wall Street insider named Lawrence G. McDonald. He was a Vice-President at Lehman Brothers a huge stocks and bonds trading bank. Its collapse in 2008 set off the Great Recession. There’s a lot of interesting stories about the greed and recklessness within that company and generally by the mortgage industry crooks who hustled poor people to take huge loans at teaser rates (which ballooned triple in a couple of years). But what I found gripping was the speed at which the government could work (on behalf of capitalism). Within days after Lehman bit the dust stock market prices crashed, and lending froze up. The Secretary of the Treasury demanded and got $700 billion from Congress to give to the banks in return for temporary part-ownership in some of the biggest banks, insurance companies and automakers. It didn’t turn things around for years, but the capitalists knew what levers to pull and what cash spigots to open.
Amazingly we didn’t even get an FDR. Instead it was an Obama. An article this week appeared in The New York Review of Books by Charles Kuttner called “The Crash that Failed”. He explained President Obama basically just hired back Bill Clinton’s guys and ultimately lent or gave the banks $14 trillion. A few inadequate regulations were passed, but nothing really changed. Where FDR had the federal government hire millions, Obama cut the federal work force by 500,000. Where the Great Depression ended with a lot more equality, the Great Recession ended with a new bloom of billionaires and multi-billionaires. Bitterness let to the Populist Right, but not all was lost. The capitalists are rewarding the Obamas. Barack and Michelle have a nice little book deal arranged for themselves. $65 million for their eloquence.
We had no plan. Socialists criticized capitalism endlessly and had talked vaguely over the years about nationalization, but no one had a full proposal for what to do during the next big crash . There were the examples of Soviet Russia and “Red” China. They had collectivized economies, but the Left was afraid to talk about them. Something about purges and gulag and mass murders that had left bad tastes in the mouth. But there was tons of economic experience that should have been analyzed.
We knew the climate was tanking, but besides calling for a “Green Economy” there were no actual plans. Of course, few would have listened to us then, but at least we’d have had a starting point We’re still at square one. Yes, you can say the word “socialism” now, but the “socialism” being talked about these days is little more than FDR liberalism. When the next crash comes that’s all going to be irrelevant.
We better start making plans. The next crisis may come sooner than you think.
Stanley Heller is the author of “The Uprising We Need”. Buy digital book at amazon.com