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Meltdown 2008: A Grim Anniversary for the Middle Class

In addition to the usual (and deserved) remembrances of the September 11 attacks, this week also marks the grim anniversary of a very different but equally significant collapse. Ten years ago on September 15, the financial meltdown began that would usher in the recession of 2008.  

It was the single worst financial crisis in the adult lifetime of almost everyone who was alive at the time. Yet you’d never know it from the way our ruling class has behaved ever since. When they weren’t using the Great Recession for crude racial and class warfare demagoguery, they were effectively denying that it was really that bad. (Remember Democrats’ weak retort to Donald Trump that “America is already great”? Or Republicans tossing off “We don’t have a revenue problem, we have a spending problem” at the height of unemployment and low aggregate demand?)

Trenchant New Republic columnist Jeet Heer recently noted [1] in a Twitter essay that centered on the funeral of John McCain, “We’ve had decades of elite failure, elite impunity, elite coddling of racism…and also elite tolerance of corruption.” He finished by noting that “The failure of the elite to come to terms with its own responsibility vitiates everything [else].” He might as well have been writing an editorial on the meltdown and its aftermath.

In 1975, the pioneering underground playwright Robert Patrick produced his signature Boomer generation requiem, “Kennedy’s Children.” To appropriate that title, every Gen. Xer and Millennial alive today is a “child” of what happened on and immediately after Black Monday. Those of us in our late 20s and 30s were eagerly about to enter the start of what our yuppie parents called our “peak earning years,” after having worked crappy starter jobs for little or no pay. (“We pay you with the credit.”) High school- and college-aged Millennials were looking forward to the good jobs their overpriced and debt-burdened degrees were supposed to guarantee them after those first couple years of internships.  

It didn’t happen. As our World War II and Korea veterans might have said, the Meltdown threw away “the best years of our lives”—except it wasn’t for anything as honorable as halting Nazism or Communism. It was simply to feed the greed of financial sociopaths.

September 2008 spelled the beginning of the end of the “giants of industry” that had defined the mid-to-late 20th century American economy. General Motors, Merrill Lynch, Chrysler, Lehman Brothers, Maytag, Polaroid, Kodak, Continental Bakeries, K-Mart/Sears, Mervyns, Circuit City, Radio Shack, Borders, Blockbuster—all fell like 10-pins in a bowling alley. (Not to mention desiccated coal mines and steel factories and local newsrooms. [2]) The few that are still alive today are mere shadows of their former selves.

The companies that survived and thrived during the Great Recession, and are currently powering today’s recovery—Amazon, Netflix, Facebook, Google, Yahoo, Uber, Lyft, Airbnb, and Tesla—were all launched over the last two decades or so by the most fortunate factions of Millennials and Xers. These are people who have no adult memory of the Great Prosperity that their postwar parents and grandparents practically took for granted.

It’s also no accident that many of the worst racial excesses in recent years happened after the white middle class finally got a taste of the same zero-tolerance and no-excuses “bootstraps” medicine that liberals have accused conservatives of throwing in minorities’ faces. As Jamelle Bouie noted in [3] Slate, “When coupled with the broad decline in incomes and living standards caused by the Great Recession, it seemed to signal the end of a hierarchy that had always placed white Americans at the top.” But while African Americans, immigrants, and lower-middle-class whites were now forced into a Hunger Games-like competition for what little scraps were left, the bankers and CEOs and their politician enablers shamelessly rewarded themselves [4] with record-breaking bonuses and benefits. Their attitude was almost as appalling as a spousal abuser asking for thanks because he dropped you off at the ER afterwards.   

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This is because, for the most part, the people who were ruling both parties’ electoral roosts during the run-up to the 2016 election were people for whom the Great Recession had brought nothing but fame and fortune. The years from 2009 through 2012 meant lucrative book and cable deals, gorgeous jewelry and tailored suits, luxury cars, and upscale new homes for Paul Ryan, Debbie Wasserman-Schultz, Sarah Palin, Ted Cruz, Valerie Jarrett, Reince Priebus, and Robby Mook. The donor classes of both sides were so unbelievably wealthy and privileged that the meltdown never really affected them.

In this kind of Beltway bubble, how could the complaints of the working and middle classes sound like anything other than whiny sour grapes? Recession? What recession? Things couldn’t be better for me and my friends! One can almost hear these folks saying among themselves, as Betty White’s campy cooking show hostess Sue Ann Nivens once did on The Mary Tyler Moore Show, “What’s all this fuss about famine?”  

When Trump gave his inaugural address, Respectable Journalists™ were all a-Twitter about its atrocious bad taste and coded racial appeals. Yet for all its faults, the speech represented for many people the very first time that an A-list authority figure had truly recognized the shuttered factories, foreclosed homes, failing schools, and broken dreams that had been left in the wake of 2008. Indeed, much of the same speech could have been given by Spike Lee or an immigrant rights’ activist with only minor modifications.

Paving the way for both the Trump Train and the democratic socialists was the fact that both parties threw their principles completely out the window that fateful fall. President George W. Bush made hypocrites out of all free-market conservatives with his zippo-accountability bailouts and giveaways, adding to his previous track record of Cheney-style crony capitalism. (Remember Enron’s Kenny-Boy Lay? Or Bernie Madoff’s “investment” fund?) The fat cats were going to get their taxpayer-financed bailouts no matter what.

Meanwhile, Barack Obama drank gallons of Kool-Aid from people like Tim Geithner [5], Ben Bernanke, Larry Summers, Robert Rubin, and all the other Bill Clinton and George W. leftovers who had been asleep at the wheel for 15 years, and stolidly refused to lay a finger on executives’ heads. Why, if a bunch of bankers and auto CEOs were dragged before the cameras doing perp walks, how could we ever Restore Confidence In Our Institutions? If these colleagues of ours aren’t allowed to keep their gold-plated golden handshakes and bonuses and stock benefits, how could we possibly stave off  a “brain drain” right when these “brains” were needed most?

During Obama’s first term, the top 1 percent took more than all of the gains [6] from the economy after the crisis. Meanwhile, at least 9.3 million families [7] lost their homes to foreclosure due to the mortgage meltdown. For many Americans, the financial and psychological damage will be lifelong. [8]

No, there would be no Mueller Time for the Wall Street and Big Auto execs who created this mess, no prosecutors or indictments and no-knock raids forcing them to open all their books in a court of law. Forget about too big to fail. The real takeaway for the all-but-destroyed middle class was that these Masters of the Universe were too big to JAIL.  

It was that groovy 1970s grandpa and founding father of reality TV Allen Funt who said that his classic Candid Camera show “caught people in the act of being themselves.” That’s exactly what the Meltdown of 2008 did for our ruling class. It caught them in the act of being their true selves—except there was nothing funny about it because the joke was on us. And the prize package at the end of the show didn’t go to the ones who desperately needed the money, but to those who were already winners on the game show of life.

Regardless of one’s feelings about Hurricane Donald, it will probably take another eight or 10 years to undo the fallout from all of the catastrophically wrong elite failures that began on that horrible day 10 years ago. Let’s just hope and pray, for all of our sakes, that it isn’t already too late.

Telly Davidson is the author of a new book, Culture WarHow the 90’s Made Us Who We Are Today (Like it Or Not) [9]. He has written on culture for ATTN, FrumForum, All About Jazz, FilmStew, and Guitar Player, and worked on the Emmy-nominated PBS series “Pioneers of Television.”

63 Comments (Open | Close)

63 Comments To "Meltdown 2008: A Grim Anniversary for the Middle Class"

#1 Comment By Farragut On September 16, 2018 @ 9:22 am

Simple & succinct explanation of how Lehman Bros used fraud to stay solvent until the very end. CEO Dick Fuld *had* to know about this, but was never prosecuted. Yet, he walked away with millions in retirement.

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#2 Comment By MM On September 16, 2018 @ 12:32 pm

sara: “Wait, didn’t the financial meltdown begin in the fall of 2007?”

Technically, financial instability was first noted by banks and economists in 2007. I speak from experience.

But it can be argued that a slow-motion meltdown was in progress since the late 1990s under Bill Clinton and a GOP Congress:

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Bush didn’t do much to stop it. Trying to reign in Fannie Mae & Freddie Mac was a good start, but the proposal went nowhere, thanks to Democrats.

#3 Comment By JeffK On September 16, 2018 @ 4:07 pm

@MM says:
September 15, 2018 at 9:00 pm

JeffK: “The more I read about Iceland the more I like their policies… Then move there if you love it so much.”

And Texas needs more retail clerks, whether they have an economics degree or not. I suspect it won’t be held against you.

Why don’t you sell your CA house and move there, since you seem to like TX way better than CA?

BTW, I lived in TX for 8 years. I wouldn’t move back there, even for a $250K per year job. Which I could get if I wanted it.

#4 Comment By Ducks In A Barrel On September 16, 2018 @ 9:40 pm

@RR “The lingering bitterness that many middle class Americans have because of the Great Recession is because everyone knows the fat cats broke the law and were actually rewarded for it instead of facing charges, all while tens of millions of middle class Americans suffered.”

True and well put.

Since it seems all too likely that we’re headed down that road again, I’d add that a lot of people I know absolutely won’t put up with it a second time. They’re still angry about the last time. Any sign of reluctance by the government to round up and imprison either bankers or politicians, I wouldn’t be surprised to see vigilante justice.

#5 Comment By MM On September 17, 2018 @ 1:50 am

JeffK: I’ve never complained about living in California, personally. But I’ve seen it become poorer and less affordable for others my age over the years.

Not that you care about poverty anyway. What a fine, upstanding citizen you are, with such contempt for your fellow citizens merely because they don’t think like you, don’t vote the “right” way.

Honestly, with such a tribal attitude, what do you really add anything of value to these discussions?

#6 Comment By MM On September 17, 2018 @ 2:35 am

JeffK: “I wouldn’t move back there, even for a $250K per year job. Which I could get if I wanted it.”

And leaving aside your obvious modesty, middle class families don’t have your deep pockets, and cannot afford to live anywhere they want.

But you may continue to disparage them in Texas, or other states you consider inferior, or even my family in California.

You the first progressive I’ve come across who’s so open about his own greed and hypocrisy, I have to say. That’s quite an accomplishment…

#7 Comment By over the hills On September 17, 2018 @ 4:34 am

I can see Kavanaugh helping the elites get away with it again. It’s one of the reasons I wish Trump would nominate someone else. Someone with less of a “anything for big corporations” track record.

#8 Comment By swb On September 17, 2018 @ 2:14 pm

Not sure how electing a billionaire grafter with a history of casino stock fraud is going to help out the folks hurt in the recession, but I assume all those tax cuts for the wealthy he passed will go a long way toward that goal. Now if he could just get one more supreme court justice that is totally committed to big business and against the workers and unions things might be back on track. Glad to those elites are on the run, good work populists!

#9 Comment By kevin on the left On September 17, 2018 @ 4:06 pm

“Whatever they say about Donald Trump he will go down as a great president for one reason: he restored democracy and gave hope to the common man. For so many years the average working person was losing faith in the nation and the democratic process and fewer and fewer voted feeling their vote didn’t matter as things were only getting worse for them. ”

Votes received by Barack Obama in 2008: 69,498,516.
Votes received by Barack Obama in 2012: 65,915,795
Votes received by Hillary Clinton in 2016: 65,853,514.
Votes received by Donald Trump in 2012: 62,984,828.

Hell- George W Bush received 62,040,610 votes in 2004, meaning that, accounting for population growth, Trump received a drastically lower share of the vote than W.

Donald Trump was elected to the presidency fair and square, but anyone attempting to pretend his election enjoys some kind of popular mandate not enjoyed by, say, Obama (or W, or Clinton, etc) is either a hack, or a racist, or a racist hack.

#10 Comment By JeffK On September 17, 2018 @ 4:45 pm

@MM says:
September 17, 2018 at 2:35 am

“JeffK: “I wouldn’t move back there, even for a $250K per year job. Which I could get if I wanted it.””

And leaving aside your obvious modesty, middle class families don’t have your deep pockets, and cannot afford to live anywhere they want.

But you may continue to disparage them in Texas, or other states you consider inferior, or even my family in California.

Again, MM, you use a logical fallacy (strawman) as a debate technique. I never disparaged the people of Texas. I spent, in total, almost 10 years of my life in TX. It is not my cup of tea for the following reasons.

1. Heat (and humidity). Houston is hot, humid, and miserable 8 months of the year. The rest of TX is just plain hot. Too hot for me.
2. Traffic. Traffic is terrible in Houston, Dallas, and Austin.
3. Public education is near the bottom of the US. 43rd Actually, according to the survey below.
4. Public services and transportation. TX does not have an income tax, and a low gas tax. Texans love their cars. Therefore, their state and local parks and infrastructure are severely lacking. If you live in the outskirts of Houston then be prepared to pay tolls almost everywhere you drive.

From the wiki link below: “There are approximately 25 current toll roads in the state of Texas.[1] Toll roads are more common in Texas than in many other U.S. states, since the relatively low revenues from the state’s gasoline tax limits highway planners’ means to fund the construction and operation of highways”.

I bring up my ability to earn a good living because it annoys you. I am a progressive that makes good money and not opposed to paying taxes. I am having a very good year due to the economy and renaissance in manufacturing. I have worked extremely hard since 1980, and in general made good professional and life decisions, including returning to school for an MS in IT.

You continue to whine about living in CA, which is surprising since I spent about a year there on various projects and enjoyed it immensely. San Diego is my favorite city in the US.

Let me make a suggestion. Sell your CA house and move to Houston. You will probably upgrade your housing a bit. But then, you will be living in Houston, which has loads of hot air. Just like you.

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#11 Comment By mrscracker On September 18, 2018 @ 3:53 pm

JeffK:
“1. Heat (and humidity). Houston is hot, humid, and miserable 8 months of the year. The rest of TX is just plain hot. Too hot for me.”
****************

I guess you wouldn’t care for Louisiana either.
🙂

#12 Comment By JonF On September 19, 2018 @ 11:11 am

MM, if you want to look at the big picture the sea change in the American economy began in the late 70s and early 80s with deregulation, deinstrustrialization and lanor arbitrage. Everything that has happened since xan ve traced to those three trends.

#13 Comment By JeffK On September 19, 2018 @ 2:02 pm

@mrscracker says:
September 18, 2018 at 3:53 pm

JeffK:
“1. Heat (and humidity). Houston is hot, humid, and miserable 8 months of the year. The rest of TX is just plain hot. Too hot for me.”
****************

I guess you wouldn’t care for Louisiana either.
🙂”

LA is not my first choice, for sure. But I really like the culture. A good friend of mine is from ‘Nawlins’. He is one of the most hospitable people I have ever met. Also, I love the food and Zydeco music (Dr John, Clifton Chenier and Rockin Dopsie to name a few).

In the early 80’s I went to a bar outside Sulphur LA somewhere. I found the sign at the entrance amusing ‘No guns, no knives, take your fights to the parking lot’. Sure made me treat others with respect, that’s for sure!

Take care.