Tenth Anniversary Of Financial Collapse, Preparing For The Next Crash

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Above: Jail Bankers Not Protesters, Occupy Wall Street, 2011. Photo by Stan Honda for AFP-Getty Images.

Ten years ago, there was panic in Washington, DC, New York City and financial centers around the world as the United States was in the midst of an economic collapse. The crash became the focus of the presidential campaign between Barack Obama and John McCain and was followed by protests that created a popular movement, which continues to this day.

Banks: Bailed Out; The People: Sold Out

On the campaign trail, in March 2008, Obama blamed mismanagement of the economy on both Democrats and Republicans for rewarding financial manipulation rather than economic productivity. He called for funds to protect homeowners from foreclosure and to stabilize local governments and urged a 21st Century regulation of the financial system. John McCain opposed federal intervention, saying the country should not bail out banks or homeowners who knowingly took financial risks.

By September 2008, McCain and Obama met with President George W. Bush and together they called for a $700 billion bailout of the banks, not the people. Obama and McCain issued a joint statement that called the bank bailout plan “flawed,” but said, “the effort to protect the American economy must not fail.” Obama expressed “outrage” at the “crisis,” which was “a direct result of the greed and irresponsibility that has dominated Washington and Wall Street for years.”

By October 2008, the Troubled Asset Relief Program (TARP), or bank bailout, had recapitalized the banks, the Treasury had stabilized money market mutual funds and the FDIC had guaranteed the bank debts. The Federal Reserve began flowing money to banks, which would ultimately total almost twice the $16 trillion claimed in a federal audit. Researchers at the University of Missouri found that the Federal Reserve gave over $29 trillion to the banks. These are historically these are signs of a coming recession

This did not stop the loss of nine million jobs, more than four million foreclosures and the deep reduction in wealth among the poor, working and middle classes. A complete banking collapse was averted, but a deep recession for most people was not.

The New Yorker described the 2008 crash as years in the making, writing:

…the crisis took years to emerge. It was caused by reckless lending practices, Wall Street greed, outright fraud, lax government oversight in the George W. Bush years, and deregulation of the financial sector in the Bill Clinton years. The deepest source, going back decades, was rising inequality. In good times and bad, no matter which party held power, the squeezed middle class sank ever further into debt.”

Before his inauguration, Obama proposed an economic stimulus plan, but, as Paul Krugman wrote,Obama’s prescription doesn’t live up to his diagnosis. The economic plan he’s offering isn’t as strong as his language about the economic threat.”

In the end, the stimulus was even smaller than what Obama proposed. Economist Dean Baker explained that it may have created 2 million jobs, but we needed 12 million. It was $300 billion in 2009, about the same in 2010, and the remaining $100 billion followed over several years — too small to offset the $1.4 trillion in annual lost spending. 

New York Magazine reports the stimulus was “a spending stimulus bigger, by some measures than the entire New Deal.” But unlike the New Deal, which benefited people at the bottom and built a foundation for a long-term economy, the bi-partisan post-2008 stimulus bailed out Wall Street and left Main Street behind. 

Wall Street executives were not prosecuted even though the financial crisis was in large part caused by their fraud. Bankers were given fines costing dimes on the dollar without being required to admit guilt or having their cases referred for prosecution. The fines were paid by shareholders, not the perpetrators.

Protest near Union Square in New York, April, 2010. Popular Resistance.

Still at Risk

Many of the root causes of the crisis remain today, making another economic downturn or collapse possible. The New Yorker reports that little has changed since 2008, with Wall Street banks returning to risky behavior and the inadequate regulation of Dodd-Frank being weakened. Big finance is more concentrated and dominant than it was before the crash. Inequality and debt have expanded, and despite the capital class getting wealthier in a record stock market with corporate profits soaring, real wages are stuck at pre-crisis levels.

People are economically insecure in the US and live with growing despair, as measured by reports on well-being. A May 2018 Federal Reserve report found almost 80 percent of Americans are now living paycheck to paycheck. The Federal Reserve reported in 2017 that “two in five Americans don’t have enough savings to cover a $400 emergency expense.” Further, “more than one in five said they weren’t able to pay the current month’s bills in full, and more than one in four said they skipped necessary medical care last year because they couldn’t afford it.”  People have survived by going into debt, by the first quarter of this year, household debt was at an all-time high of $13.2 trillion.

Positive Money writes: “Ten years on, big banks are still behaving in reckless, unfair and neglectful ways. The structural problems with our money and banking system still haven’t been fixed. And many experts fear that if we don’t change things soon, we’re going to sleepwalk into another crash.”

William Cohen, a former mergers and acquisitions banker on Wall Street, writes that the fundamentals of US economy are still flawed. The Economist describes the current situation: “The patient is in remission, not cured.”

From Occupy Washington DC at Freedom Plaza.

The Response Of the Popular Movement

Larry Eliott wrote in the Guardian, “Capitalism’s near-death experience with the banking crisis was a golden opportunity for progressives.” But the movement in the United States was not yet in a position to take advantage of it.

There were immediate protests. Democratic Party-aligned groups such as USAction, True Majority and others organized nationwide actions. Over 1,000 people demonstrated on Wall Street and phones in Congress were ringing wildly. While there was opposition to the bailout, there was a lack of national consensus over what to do.

Protests continued to grow. In late 2009, a “Move Your Money” campaign was started that urged people to take their money out of the big banks and put it in community banks and credit unions. The most visible anti-establishment rage in response to the bailout arose later in the Tea Party and Occupy movements. Both groups shared a consensus that we live in a rigged economy created by a corrupt political establishment. It was evident that the US is an oligarchy, which serves the interests of the wealthy while ignoring the necessities of the people.

The anti-establishment consensus continues to grow and showed itself in the 2016 presidential campaigns of Senator Bernie Sanders and Donald Trump. They were two sides of the same coin of populist anger that defeated Jeb Bush and Hillary Clinton. Across the political spectrum, there is a political crisis with both mainstream, Wall Street-funded political parties being unpopular but staying in power due to a calcified political system that protects the duopoly of Democrats and Republicans.

Occupy Wall Street 2011.

Preparing for the Next Collapse

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.

There is also greater awareness of alternatives to the current economy. The Public Banking movement has grown significantly since 2008. Banks that need to be bailed out could be transformed into public banks that serve the people and are democratically controlled. And there are multiple platforms, including our People’s Agenda, that outline alternative solutions.

We also know the government can afford almost $30 trillion to bail out the banks. One sixth of this could provide a $12,000 annual basic income, which would cost $3.8 trillion annually, doubling Social Security payments to $22,000 annually, which would cost $662 billion, a $10,000 bonus for all US public school teachers, which would cost $11 billion, free college for all high school graduates, which would cost $318 billion, and universal preschool, which would cost $38 billion. National improved Medicare for all would actually save the nation trillions of dollars over a decade. We can afford to provide for the necessities of the people.

We can look to Iceland for an example of how to handle the next crisis. In 2008, they jailed the bankers, let the banks fail without taking on their debt and put controls in place to protect the economy. They recovered more quickly than other countries and with less pain.

How did they do it? In part, through protest. They held sustained and noisy protests, banging pots and pans outside their parliament building for five months. The number of people participating in the protests grew over time. They created democratized platforms for gathering public input and sharing information widely. And they created new political parties, the Pirate Party and the Best Party, which offered agendas informed by that popular input.

So, when the next crash comes. Let’s put forward a People’s Agenda. Let’s be like Iceland and mobilize for policies that put people first. Collectively, we have the power to overcome the political elites and their donor class.

  • Howard

    We should understand that if the people’s agenda does not include removing the money creation privilege from banks who issue money as a debt, and give it to elected government to issue as a public asset then we will fail. As Sir Josiah Stamp 1880 – 1941
    President of the Bank of England in the 1920s, the second richest man in Britain said, “The Bankers own the Earth. Take it away from them, but leave them the power to create deposits, and with the flick of a pen they will create enough deposits to buy it back again. However, take it away from them, and all the fortunes like mine will disappear, and they ought to disappear, for this world would be a happier and better world to live in. But if you wish to remain slaves of the Bankers and pay for the cost of your own slavery, let them continue to create deposits.”

    Therefore, if we are to be ready for the next crash we should be educating/organizing about making the money system a public system in which there is no excuse for not having the money to give people what they need and real impetus for electing people dedicated to the public interest…becasue they would actually be able to do stuff with the bank’s shackle’s off. The basic legislation is already written in the form of the National Emergency Employment Defense Act, HR 2990 which contains the same three essential reforms recommended in the Green Party Platform, the same essentially as the 1939 Chicago Plan which would have ended the depression without war. By claiming the sovereign right for our government to issue the money, and not the banks, we can put the public back in public policy.
    The transition would be smooth and seamless putting no one out of business becasue your local bank does provide valuable services, they just shouldn’t be creating money. Instead 50 million jobs could be created along with a national dividend so the people will have more money to put in the bank and the bank can lend the existing money held in time deposits, the way many people mistakenly believe it works today. With a public money system liberals can win a more caring and responsible government and conservatives can have a smaller government with less taxes. Also, the current establishment owes us 50-60 trillion dollars unaccounted for or misappropriated, at least as long as we have the Constitution. I say lets fund the Constitutional Mandate as articulated in its first sentence and do it right this time.

  • kevinzeese

    Yes, the money system is a major area of needed radical change. We only mention the issue briefly in this article but have written about it in more detail, see e.g. https://truthout.org/articles/remaking-the-federal-reserve-public-banks-and-opting-out-of-wall-street/.

    There were a number of issues we raised in this article that require a full length treatment, e.g. guaranteed basic income, free college, National Improve Medicare for All.

    We also write a publish a great deal on the issue on Popular Resistance.


  • I was ground zero in this financial collapse, losing my house, my retirement savings and nest egg. I really wished at the time the economy would have collapsed and a new system born. The collapse did motivate me to take my head out of the sand after burying it for 20 years in blind pursuit of the American dream. I have found an amazing and inspiring group of activists, including you and Margaret, and hope that others have found people working towards common goals. We must continue moving forward and believe that the changes you describe are possible.

  • P_a_u_l

    It is reassuring to see that my progressive brothers and sisters have finally overcome their avoidance behavior when it comes to money. The money power has been quite pleased with the impact that their well-planned obfuscation of the true and fundamental nature of money has had on the left. We are wising up now. Money should be nothing more than a public utility, a democratically created medium which provides us all the access to the vast abundance we’ve created.

  • Alan MacDonald

    Kevin, there is no ‘surplus value’ in this scam, con, sham, corny, and phony economy of capitalism — under this dual-party Vichy-political facade covering-up the EMPIRE!

    [No NYT links on this one — so it should be usable, eh?]

    it’s worse than even you (or BERNIE) thinks — : “Capitalism isn’t

    broken; it’s working precisely as it’s supposed to: generating surpluses

    and giving all of them to a small ownership class.” [Jacob Bacharach]

    So Bernie, as I shouted to you in Manchester (and was reported in the
    Washington Post, by David Weigel) — “Be a real Socialist” and
    “Speak-out about EMPIRE!”

    (see the end of my comments here on CD)

    Actually, surpluses, or more accurately “surplus value” as economists say, is the

    fiction created (and approximating) the faux-profits of what crony

    capitalist corporations and banks achieve only through their dumping of

    ‘negative externality costs’ on all of us, our children, our government,

    and our planet.

    There is little or no actual ‘surplus value’ —

    only the perceived ‘value’ created by doing immoral actions which dump

    ‘negative externality costs’ (as hidden multi-trillions of corporate

    taxes) on everyone else except the UHNWIs of the globe who are looting,

    extracting, exploiting, expropriating, hoarding, monopolizing, and most

    importantly ‘taking-out-of-productive-use’ the human, humane, natural,

    and societal “surplus values” of our world by replacing ‘earth values’

    with the massive ‘negative externality costs’ that will surely end our

    earth values.

    Eg. There is no ‘surplus value’ in devaluing life on

    earth only to shift ‘apparent value’ to the UHNWIs who have, in the

    past, and continue to invent via the most awful “creative destruction”

    by inventing newer and more deceitful ways of hiding, extending, and

    disguising more complex convoluted and polluted schemes of converting

    the potential value of our natural world into false ‘surplus value’

    through the scam of more inventive new ‘financial engineering’ (and AI

    machine engineering) by the supposed ‘smartest people in the room’

    working for the self-appointed “Masters of the Universe” in coming up

    with newer schemes to hide the world-ending crime of turning us and our

    earth into nothing but the apparent ‘surplus value’ of the alchemists’

    trick of turning, not lead, but tobacco leaves, oil, and paper (CDOs,

    CDSs, synthetic ETFs, derivatives, et al. into gold, and human-values

    into gold with the trick of making ‘negative externality costs’ (like

    global warming and environmental destruction) disappear as if by


    This form of black magic is akin to the type of robbing

    and killing people, hiding the bodies, and pretending that they are

    “Making America Great Again” — which both Hitler and Stalin tried to

    do with less perfectly designed and merely single-party facades of

    faux-Republic, faux-Socialist, and faux-peoples’ revolutions hiding

    earlier Disguised Global Empires.

    Don’t beware the “Ides of March”

    but beware the March of this dual-party Vichy-political facade of this

    current 21st century first and last effectively Disguised, truly Global,

    Capitalist-fueled Empire under Emperor Trumpius Caesar —- for which he

    prevailed in our 10th ‘least worst (s)election’ cycle over

    “Empress-in-waiting’ and certified War Hawk Hillary!

    WakeTF-up folks — because another coming 11th ‘least worst (s)eletion’ cycle in 2020 will surely be our last!

    It is incomprehensible that almost no one in America can comprehend
    that they are all living in a Disguised Global Capitalist Empire, which
    is only nominally HQed in, and merely ‘posing’ as our formerly promising
    and sometimes progressing country PKA America.

    Only Professor Robinson’s reality cuts through this fog of bull shit

    to reveal the “Crisis of Humanity” that the spawning of capitalism and

    empire both create & destroy, which he so accurately and correctly

    has diagnosed and revealed in his most notable ‘exposure’ of this

    uniquely 21st century Disguised Global Capitalist Empire of cancer

    in our world to be the following;

    “The U.S. state is a key point of condensation for pressures from

    dominant groups around the world to resolve problems of global

    capitalism and to secure the legitimacy of the system overall.

    In this regard, “U.S.” imperialism refers to the use by transnational

    elites of the U.S. state apparatus to continue to attempt to expand,

    defend, and stabilize the global capitalist system. We are witness less

    to a “U.S.” imperialism per se than to a global capitalist imperialism.

    We face an EMPIRE OF GLOBAL CAPITAL, headquartered, for evident

    historical reasons, in Washington.” [Caps added]

    Global Capitalism and the Crisis of Humanity, 2014 Robinson, William Cambridge University Press.

    As far as the actual structure and form of this newest and last

    Empire on earth is concerned, it is composed by at least seven sectors;

    corporate, financial, militarist, media/propaganda, extra-legal, CFR

    coordinated ‘plot-tanks’, and both the “tougher-talking” neocon ‘R’

    Vichy Party and the “smoother-lying” neoliberal-con ‘D Vichy Party —

    which since the OSS’s research of the Nazi Empire’s installation of a

    single party Vichy regime under Marshall Petain in France (c. 1940 to 1944)

    didn’t fool the French people —but by 1947 as the re-named and expanded

    CIA/NSA/NSC, had promulgated a “New and Improved Model” of DUAL-party

    Vichy Empire control of our former country by the “National Security State

    and Double Government” [Michael Glennon], which the naive haberdasher Truman

    replacement president for Henry Wallace in ’44 which the un-Truman

    didn’t even suspect during “Red Scare II” and the McCarthy era/error,

    but which the more strategic-thinking Ike tried to ‘blow the cover on’in Jan ’61.

    Books worth reading about the current state of this Disguised Global Capitalist Empire:

    “Dark Ages America, The Final Phase of Empire” Morris Berman

    “Revolution Against Empire” Justin du Rivage

    “Secret Team” Fletcher Prouty

    “The Condor Years” John Dinges

    “It’s Even Worse Than You Think” David Cay Johnson

    “How Democracies Die” Levi=tsky and Ziblatt

    “Democracy in America” Page and Gilens

    “Global Capitalism and the Crisis of Humanity” William Robinson

    “Hegemony or Survival” Chomsky

    “The Making of Global Capitalism” Panitch and Gindin

    “Hearts and Minds” Tanner Mirrlees

    “The New Imperialism” David Harvey

    “Empire” Michael Hardt and Antonio Negri

    “In the Shadows of the American Century” Alfred McCoy

    “Empire of Illusion” Chris Hedges

    “Governing the World” Mark Mazower

    “Wall Street’s Think Tank” Laurence Shoup

    “The True Flag” Stephen Kinser

    “War and Empire” Paul Atwood

    “They Rule” Paul Street

    “Unspeakable” Chris Hedges

    “Empire, Racism & Genocide” Robert Fantina

    “Killing the Host” Michael Hudson

    “God and Empire” John Crossan

    “The Politics of Empire” James Petras

    “The Empire of Chaos” Pepe Escobar

    “The Changing Face of Empire” Nick Turse

    “Among Empires” Charles Maier

    “Empire of Capital” Ellen Meiksins Wood

    “The Pentagon’s New Map” Thomsa Barnett

    “Exorbitant Privilege” Barry Eichengreen

    “The Rule of Empires” Timothy Parsons

    “The One Percent Solution” Ron Suskind

    “Why America Failed, The Roots of Imperial Decline” Morris Berman

    “Dismantling the Empire” et al. Chalmers Johnson

    “Democracy Incorporated” Sheldon Wolin

    “Against Empire”, “Superpatriotism” “The Face of Imperialism” Michael Parenti

    BTW, if Bernie wanted to do something more useful than play
    economist, when he ain’t one, he could respond to my deal with him —
    that I would continue donating to his site (as a fromer Maine delegate
    of Bernie) — if he would just get his arse over from Vermont to Maine
    here and do something for Zak Ringelstein who is the young 32 year old
    DSA progressive with most of the same ‘issues’ as Bernie, since Zak is
    the Democratic candidate for U.S. Senate (like Bernie) and since ZAK is
    getting none of the LOVE that Bernie shed on Alexandria in NYC.

    What the hell is up, Bernie brother, we made a deal and I kept my end of the deal.

    Now the Maine Democratic Party is treating Zak Ringelstein like
    kriptonite and not doing shit for ZAK and of coruse, as the Portland
    Maine based COMMON DREAMS knows the Maine MEDIA including the “Portland
    Press Herald”, WCSH 6, WMTW 8, and WGME 13 are doing NOTHING — so most
    of the people in Maine have no effin IDEA that their current 2018 MAINE
    DEMOCRATIC PARTY candidate for SENATE is named ZAK RINGELSTEIN and that
    they could (and SHOULD) VOTE for ZAK instead of A KING who is a IINO
    (Independent In Name Only) and a ‘middle of the road’ phony who votes
    47% of the time with EMPEROR TRUMP.

    So Bernie, be honest with me, don’t welsh on our deal —– I contribute to YOU and YOU come to MAINE and help ZAK.

    It would also be nice if the nice progressive COMMON DREAMS as a
    MAINE progressive site tossed an article or two to poor socialist
    progressive ZAK RINGELSTEIN in Common Dreams own back yard, hey Craig,
    just sayin — I contributed to you guys also.

  • Alan MacDonald

    After “Wealth Reform” it will be.

  • P_a_u_l

    First things first

  • Alan MacDonald

    The only thing before Wealth Reform is its precursor, the fast approaching American people’s peaceful Political/economic and socialist “Revolution Against Empire” — [Justin du Rivage’s deeply researched and definitive history of our first one against the British Empire, which will be continued and completed when,as few as 5% of ‘we the American people’ simply fire a; loud, public, sustained, ‘in-the-streets’, but totally non-violent “Shout (not shot) heard round the world” to ignite the coming “Revolution Against Empire”]!

  • Alan MacDonald

    Yes, Howard, and that “money creation privilege” that you mention is backed and enforced by this Disguised Global Capitalist EMPIRE (which is only nominally HQed in, and merely ‘posing’ as our former country PKA America) which global EMPIRE has the “Extraordinary Privilege” [Eichengreen] of monopolizing the privilege of being the world’s ‘Reserve Currency’ — which is about to go away.

  • P_a_u_l

    Its coming. Once people understand the money system is invented by humans, they will realize they can change it for public good.