JP Morgan Chase Warns Mass Social Unrest Ahead
JP Morgan Report: Financial Crisis On The Horizon and Mass Uprising Along With It
In a 168 page report, 10 Years After the Financial Crisis, issued this month, JP Morgan predicts another economic crisis and concludes warning, “The next crisis is also likely to result in social tensions similar to those witnessed 50 years ago in 1968.”
The crisis could come as early as the second half of 2019, and if central banks are unable to prevent the impacts of the next collapse, “then you’re spiraling into depression, social unrest and a lot more disruptive changes that can negatively affect returns for a very long time,” Marko Kolanovic, who is JP Morgan’s global head of macro quantitative and derivatives research, told CNBC.
It is this scenario, on top of the already existing unrest and anger at the unfair economy, that will continue to expand the popular movement and create the national consensus for an economy that puts people and planet first, which could lead to a positive change — IF we prepare for it.
Kolanovic describes the next crisis as likely being “the Great Liquidity” crisis because stocks are more liquid, or fast moving, today. They can be bought and sold rapidly due to a trillion dollars being shifted to computerized trading and electronic trading desks. He is talking about computer algorithms that now dominate trading sectors. The algorithms sell-off stocks in short order based on a series of learned triggers, which can lead to “flash crashes.” He describes the potential next collapse as “Sudden, severe stock sell-offs sparked by lightning-fast machines. Unprecedented actions by central banks to shore up asset prices. Social unrest not seen in the U.S. in half a century. “
But, it is more than the mechanics of trading and algorithms that will cause the crash. Those may be technical factors, but the underlying causes are a market inflated by corporations buying back their stock to increase prices, the loss of major industries, inadequate wages, massive debt and wealth inequality. Most of the money is in the hands of the few, while the many struggle to meet their basic needs. This creates a weak foundation for the economy.
Even in the current bull market, there have been significant moments of stock values dropping. Kolanovic describes extended periods of calm punctuated with spasms of selling known as flash crashes, e.g. a nearly 1,600 point intraday drop in February and a 1,100 point decline in August 2015.
He describes the potential impact of a “flash crash”, saying, “Suddenly, every pension fund in the U.S. is severely underfunded, retail investors panic and sell, while individuals stop spending. If you have this type of severe crisis, how do you break the vicious cycle, the negative feedback loop?” The current political and social situations create “a climate ripe for severe and dangerous social unrest.”
WSWS analyzed the report through a prism of the class conflicts of inequality, increasing labor strikes, widespread poverty and insufficient wages. They write:
The report went on to note that political explosions on the scale of 1968 could develop, facilitated by the role of the internet as a means of dissemination for radical political views and a means of political self-organization. “The next crisis is also likely to result in social tensions similar to those witnessed 50 years ago in 1968,” the bank report warned. “Similar to 1968, the internet today (social media, leaked documents, etc.) provides millennials with unrestricted access to information … In addition to information, the internet provides a platform for various social groups to become more self-aware, polarized, and organized.”
JP Morgan is warning the people in power that massive social unrest is coming. WSWS points to the attacks on the Internet and social media, the building up of the security state and the increased surveillance of people in the United States as the power structure preparing for widespread social unrest.
In our newsletter, Tenth Anniversary of the Financial Crash, Preparing for the Next Crash, we described the potential for another economic collapse and how the movement must be better prepared than in 2008 to push for changes in the economy and political system. We wrote:
When the next financial crisis arrives, the movement is in a much stronger position to take advantage of the opportunity for significant changes that benefit people over Wall Street. The Occupy movement and other efforts since then have changed the national dialogue so that more people are aware of wealth inequality, the corruption of big banks and the failure of the political elites to represent the people’s interests.
In other articles, we have written how the 2020s could be a time of major progress as multiple crisis situations come to a climax. In order to advance the goals of economic, racial and environmental justice as well as peace, the movement must keep building power and be prepared when opportunities arise to push our demands. We wrote, in “Ensuring Justice In An Era of Transformation:
The movement must position itself for this coming era of transition by: (1) weakening the power structure by protest of mistaken policies and building alternatives to replace them; and (2) specifically defining the transformations we want so that the power holders cannot deceive us with false measures.
In addition to the financial collapse that JP Morgan describes, we are also experiencing an environmental crisis that includes the Sixth Mass Species Die-Off (the Fifth being the extinction of the dinosaurs), environmental degradation and climate change, as well as a governance crisis with mirage elections disguising an oligarchy and resulting in policies that expand inequality, poverty and a racially-biased economy.
In our recent podcast, So, You Want To End Capitalism? Here’s How, we discussed the type of new solidarity economy that could be created. The solidarity economy is rooted in cooperation, equity, anti-oppression, sustainability and democracy. It could create systemic changes that would address the crises we face and provide the possibility of avoiding the dark future that another crash portends.
The elites see unrest coming, and so do people in the popular movement. Our opportunity to advance on multiple fronts of struggle is approaching. The time is right to create transformative change, if we are prepared.