Although stock prices on the volatile and shaky Wall Street and Hong Kong exchanges continued to set new records and hedge-fund traders were still pocketing millions in complicated, opaque deals in derivatives, the working people were sliding deeper and deeper into what was euphemistically called the post-2008 ‘Recoveryession’ with millions unemployed, millions under-employed and forced into contingent part-time work with no security and no benefits. By now, unemployment benefits, vastly diminished, were only available to former full-time workers with a year on the job and were reduced to six weeks maximum in order ‘to prevent dependency on Big Government.’ The figures out of Washington remained confident of an ‘upturn.’ On the other hand, the vast numbers of long-time unemployed were no longer counted, even as statistics, nor were the women and young people who had never worked. Meanwhile rents skyrocketed, foreclosures continued and more and more families were forced to move in with relatives, live in their cars, or end up among increasingly numerous homeless in crowded ‘shelters’ – dirty, deplorable crime-infested (but extremely profitable to their private owners). So things were already bad enough when capitalism’s shit finally hit the fan.
Within the first thirty seconds of trading on Black Thursday, the N.Y. Stock Market fell faster and farther than during the whole of Black Friday in 1929 or the Crash of 2008. The 21st Century global financial markets now functioned 24/24, and transactions were measured in nano-seconds. By 9:30 am on Black Thursday, prices were in free fall panicky investors tried to salvage their investments before they vanished into smoke. Billions of dollars worth of basically fictitious capital were being wiped out every minute as stock and bond prices plummeted. The financial markets had long been bloated with these imaginary riches, as the amount of speculative capital circulating exceeded by a ratio of more than five to one the amount of capital actually invested productive activity. Of course the small investors and the middle class with its IRA’s, unable to move quickly, were the first to be wiped out. By the end of the day, big capital had swallowed up their life savings along with their privatised Social Security. Their savings had helped to inflate the market with the help of the US Government, which had long ago privatised Social Security and broken down the 1930s firewall preventing banks from acting as investment brokers to lure customers’ money into the Stock Market.
A number of factors were held responsible. First of all, nothing had been done to curb the unregulated trading of complicated leveraged securities and subprime lending that had led to the previous 2008 crisis or to insure that banks keep sufficient equity on hand to face a rapid decline of depositor confidence. Moreover, the big banks were still able to find ways of gambling with depositors’ savings and checking accounts (insured by the government), making huge profits on the upturn. At the same time, civil wars and nationalist insurgencies (‘terrorism’ in Washington parlance) had choked off much of the supply of oil from the Middle East. This dearth encouraged a new unity among the OPEC nations, provoking a series of oil shocks which sent the price per barrel over the symbolic 300€ mark (Euros being the new international reserve currency).
Indeed, since the crash of the dollar, all commodities were now quoted in Euros.
After years of tax cuts, war spending, and huge budget deficits, the debt crisis in the US – the world’s biggest borrower – had finally exploded. Big ChiJapanese and Asian Arabian lenders, who owned the bulk of US Federal Treasury Bonds, began by withdrawing their capital, which was slowly loosing value with the steady decline of the dollar. The T-note sell-off was accelerated by White House insistence that ChinaJapan ‘level the playing field’ by obliging its banks ‘reign in’ on decades of mountainous outstanding corporate debt that had been keeping the stagnant Japanese economy afloat. But the neo-liberal American leaders forgot that the only way they Japanese could settle their domestic debt was by cashing in their US investments! These Asian withdrawals provoked a run on the dollar, which nearly bankrupted the U.S. Treasury. Officially the blame was placed on the Hungarian-Jewish financier Georg Soreass (a known member of the super-secret “International Jewish Homosexual Banker Conspiracy”) who had allegedly made billions by speculating against the dollar and then donated them to so-called liberal causes, which only ‘encouraged the terrorists’ and enraged the right-wing Coke brothers.
Immediately interest rates skyrocketed. This in turn provoked a consumer credit crunch within the US, where personal debt – the pillar of consumer society – had ballooned out of control with the so-called middle class mortgaged to the hilt, living on maxed out credit cards. Indeed, a ‘house of cards’ describes the hollowed-out US economy of that period when America’s principle exports were waste and arms, America’s largest employers were temp agencies, America’s retail industry was driven out of business by Amazon, America’s capital was mostly invested in the FIRE sector (Finance, Insurance, Real Estate), and when the American economy’s dominant position was based on the US being the world’s ‘consumer of last resort.’
By the end of the year, upwards of forty million ruined American families reportedly had filed for bankruptcy. Happily for American business interests, the succeeding George Bush III and IV Administrations had had the foresight to change the fiscal code, making it nearly impossible for middle class working people to declare personal bankruptcy, while loosening the rules for corporations. This ‘reform’ enabled CEO’s to keep their billions when, after striping their companies of capital through astronomical executive salaries, insider speculation and outright embezzling, they went bankrupt. It also enabled banks to foreclose on millions of private debtors. Soon ‘middle class’ workers were being stripped of their assets and reduced to debt-slavery – working long hours to pay off the credit companies who attached their pay checks. Not that many had paychecks. All over the country, companies were downsizing or going belly up, leaving their employees without salaries, retirement funds or medical coverage. Unemployment soared, families lost their homes, children went hungry and died of curable illnesses. Over a million people were living in the streets, and the few good jobs still available were for Security Guards and Repo Men.
Fortunately for America’s billionaires, wise legislators of both parties had with foresight (and a little help from the lobbyists who prepared the draft legislation) previously enacted regulations sharply curtailing unemployment compensation and making it much more difficult to collect, as we have seen. The quasi-abolition of Welfare and the privatisation of hospitals had long ago completed the longstanding bipartisan social program designed to relieve American business of any financial responsibility for the survival of their employees or of the US population. Indeed, successive Administrations took credit for these savings, which they could then disburse in the form of tax-cuts for Billionaires and bailouts of failing corporations under the Job-Saving Act (decried by conservatives as ‘socialism’ and by the Left as ‘corporate welfare’). So when the Great Collapse threatened to wipe out the major banks (consolidated into five megabanks after the 2008 Crash), it was a matter of course for the US Government to declare them ‘too big to fail,’ save the economy by bailing them out with trillion-dollar no-interest loans, and ‘nationalize’ their debts, to be paid back over generations by working taxpayers.
Thus, the Collapse didn’t hurt all Americans equally. The rich retired to their yachts, estates, ranches, private islands, heavily guarded gated communities and tropical tax havens to sip Martinis and live off their fat while waiting for ‘business conditions to improve.’ The steep decline of the dollar against the yen and the euro suited them to a tee. Inflation enabled them to pay off billions of dollars in debts with near-worthless greenbacks. It was a ‘fun’ era of fast cars, high fashion, and action-packed entertainments which playboy spies and detectives acted out escape fantasies and billionaires flew private rocket-ships into space. As entertainment fodder for the masses, show-biz concentrated on vampires (symbolic of banks sucking the life out of the young through high-interest student loans), the Zombies of the Working Dead (oops, I mean Walking Dead) and the Apocalypse (presumably to prepare the audience for the real thing).
The common people were left to their own devices. It turned out that these were many.