Epitaph or Prophecy: Great Recession 2008

The quote, “forgive your enemies, but never forget their names,” is attributed to President John F. Kennedy. In that spirit, my gospel on the financial crash ten years ago this month leading to the September/October 2008 Great Recession is the word according to Matt Taibbi (author of the legendary Rolling Stone magazine article in 2009 where he searingly referred to Goldman Sachs, then and now the world’s most powerful investment bank, as a “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”)

Here is his latest – Ten Years After the Crash, We’ve Learned Nothing. Summary: if it looks, smells, quacks, walks and talks like an ongoing Wall Street bait and switch, it probably is and the decade past may soon prove an agonizing and destabilizing prologue. Taibbi highlights “the just-released Financial Exposure by Elise Bean of the Senate Permanent Subcommittee on Investigations, probably the most aggressive crew of financial detectives who sifted through the rubble over the past 10 years. Bean’s account of what went on at banks like Goldman, HSBC, UBS and Washington Mutual is terrifying to read even now.”

The 2008 Great Recession’s reoccurring nightmare framed as an ubiquitous bumper sticker might read, “bankers got bailed out, homeowners got sold out,”  Again from Taibbi, “In 2008, 861,664 families lost their homes, and homeowners lost a breathtaking $3.3 trillion in home equity (coincidentally, this was the TARP inspector’s estimate for the entire net outlay of the bailout). By 2011, a full 11.6 million homeowners were underwater on their homes. Out there, in foreclosure – er, flyover – country, the only way out of the crisis was a big hit. You either foreclosed and lost your credit rating forever, or you sold your home, usually the chief investment in your life, at a gigantic loss… The biggest victims in this miserable story turned out to be poor, nonwhite, and elderly. One of the main things the financial press missed in its countless crash post-mortems is that the subprime scam was significantly about race. In its particulars, it was really just a rehash of ancient race crimes like “contract selling,” a predatory white-on-black home loan scam from the Jim Crow days that often involved no money down, but severely punitive rates.  The housing rush similarly involved no-money-down “100%” mortgage deals, often given by rich banks to poor minorities. The most infamous example was probably Wells Fargo’s efforts to push toxic “ghetto loans” on “mud people” in Maryland.  The housing bubble devastated black and Latino homeowners, disproportionately to white counterparts… Subprime blighted minority neighborhoods with similar speed and ferocity. Debt was the crack of the early 21st century. And we bailed out the dealers.”

But not the homeowners. Never the working and middle class homeowners, those who played by the rules, worked the double shifts, paid their dues, and trusted the system to be equalizing, fair and transparent. America’s rising homeowners were screwed to the point of no return, locked into downward spiraling geographies with no home equity scratch to pay a ticket out and catch the fabled labor mobility express train that no longer stopped in their outsourced, out-shored, and opiate-addicted neighborhoods. Today’s polarizing economic class civil war between red and blue state America is a direct result of that deliberate policy failure.

Neal Irwin in the New York Times doubles down on this point in “The Policymakers Saved the Financial System. And America Never Forgave Them” “…it was the experience of the crisis, and the sense among Americans of all ideological dispositions that they were being asked to foot the bill for someone else’s mistakes”… which, in turn, “also undermined any widespread popular support for that mode of governing for the foreseeable future.  It turns out, when you throw trillions of dollars at rescuing a system that most people don’t like very much in the first place, the result isn’t relief.  It’s anger.”

When politicians, philanthro-pundits, corporate poohbahs, and policymakers call for a return to bipartisanship, for a more civil, fruitful and inclusive public discourse in the name of shared civic solidarity but then refuse to take the steps to level and extend the nation’s wealth, mobility and opportunity playing fields in order to visibly share America’s aspirational equity with a vastly broadened and deepened concept of all stakeholders as equally entitled shareholders – they are wasting their breath and our time. Those who have been marginalized and disenfranchised now constitute enraged voting majorities who would rather blow it up than settle for a repeat performance.