When my generation was taught history in high school and college, we were taught not merely about the depressions that have plagued this country, but also about periods which could only be characterized as panics. Panics took place in 1819, 1837, 1857, 1873, 1893, 1901 and 1907. The Panic of 2008 did not display the classic historical pattern of runs on savings banks with hordes of frightened depositors storming their doors. New Deal reforms eliminated that dangerous prospect after the Great Depression. Instead, the recent panic took place in the corridors of the most powerful. That 600 trillion dollars in I.O.U.s that even Republican legislators now blithely reference in their speeches was enough to bring down so venerable a firm as Lehman Brothers and initiate the biggest bailout of the financial system in American history. There is the temptation to characterize the panic we are currently experiencing even now, some three years after the initial shockwaves took place, as a "quiet" panic, which is to say that everyone is feeling it, but we do not have as yet, (with some exceptions such as the demonstrations that grew out of the application of the right wing remedy in Wisconsin and that are taking place on a small scale all the time across the country), a frightened and angry working class taking to the streets. The irony, of course, is that Republicans have the liberal reforms of the New Deal to thank for the relative calm that has marked American economic life for the last eighty years. The American working class is no longer accustomed to overt expressions of class warfare. Nevertheless, there is a palpable panic just beneath the surface of our collective consciousness at this historical juncture.
Another irony is that if there is a single parallel for what Americans are now feeling it is what took place among the millions in the former Soviet Union when their way of life collapsed around them. We have our own version of what is called Soviet nostalgia with millions of Americans longing for a return to a period of unbridled consumption, carefree debt accumulation and the confidence that the pre-eminent symbol of private ownership, their homes, would not only keep its value, but grow in value and serve as a bulwark against all economic perils. When Soviet communism fell, the quip was that "the party is over," well, it appears that our party is over as well, and there is the inevitable, lingering hangover and accompanying butterflies in the stomach.
Even before the Panic of 2008, there were economic elder statesmen taking to the Charlie Rose Show and other such venues sounding the alarm about U.S. deficits and growing debt. When the recent bubble was finally pricked, or more accurately shattered with a huge club crafted of the greed manifest among financial wizards who invented overly clever, esoteric investment "products" such as derivatives and collateralized debt obligations, or CDOs, it merely hastened a crisis many observers had been warning us about for years.
In the brief interlude after World War II, the incredible but stubborn delusion arose that the U.S. had accumulated so much wealth that it could have as much guns and butter as it wanted, bascially forever, and had, at the same time, ended for all time the prospect of depressions and panics. By 1969, President Nixon was taking us off the gold standard, and within a few short years, Reagan and Thatcher were proving to the world that the growing clouds of economic crisis, which is to say, the growing awareness that capitalism was once again falling apart, could be dispersed by a frontal assault on Soviets abroad and social democrats closer to home.
As it turned out, communism in the U.S.S.R. and Red China proved to have been paper tigers. In fact, we needed them more than we realized, and were forced to create another global threat to take their place when the Russian regime proved to be completely moribund and the Chinese reverted to their traditional preoccupation with wealth even before Mao's body had had time to cool. By the year 2000, Chinese wags were observing that America had become its own economic back yard. The action was all overseas where millions of smart young men and women were leaving the farms for factories where they were "happy" to work for pennies an hour.
To be continued: Next, "Confessions of a Social Democrat"
No comments:
Post a Comment