The Story of the Greater Recession of 2021

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Buyer Beware! Now the story of the wealthiest country in the world who lost everything and the one (two?) generation(s) who had no choice but to keep all Americans together.

New York, NY–

“The fundamentals of our economy are strong. They’re getting stronger.” — 2008 Presidential candidate Sen. John McCain.

A sentence uttered that along with the events of the financial collapse, ended the competitive portion of the 2008 Presidential election campaign. Oh, how far the country has fallen since those days….

This site has often analyzed through its different formats the culture war and generational politics. While we have differed often on if the so-called “culture war” we have been relatively unanimous in agreeing (often loudly) that the country and especially the Democratic Party needs serious generational change in its leadership and downward. I won’t get into the particulars of those arguments here.

Throughout some of the Obama years it looked like we were legally settling many of our long-standing culture war issues, which is ultimately where they should end up (freedom wins out across the board, etc.) but the events of this past week have thrown that into severe doubt, if not outright professionally wrong. Make no mistake that if President Trump nominates a reactionary “conservative” that waxes philosophic about originalism, landmark decisions like Roe are likely to be overturned or at the very least, severely chipped away at. If you live in a state that doesn’t have the abortion right codified on the books, as is the case in the “blue state” of New York, I’d start lobbying your state legislature now.

With the once seemingly dying “culture war” getting exacerbated with sheer fire and brimstone by the 2016 Trump campaign, his subsequent presidency, and perhaps most accurately, the internet, where do we go from here? When does the slow pace of generational change finally overwhelm our political system? When can we move on from this 50/50 everyone hates everyone, but civility only selectively applies nightmare? For one, I think this is the new “normal” for a long time, so for your own well-being, batten down the hatches and prepare for the long storm. Finally, let me propose a thesis that will get us all thinking about the economics and foreign policy issues that dominated the 2008 presidential campaign primaries and general election — not the Great Recession, but the upcoming Great(er) Recession of 2021 to… we’ll see.

In a previous article I alluded to the grave political mistake Democrats have made in conceding to the President and GOP that this is a good economy. It is foolish to concede this because not only is the economy not good, this is unfortunately the best it’ll be for some time. We’ve had unevenly distributed secular sluggish growth for nearly two decades now, which will only fuel billionaire and millionaire appetites for more corporate tax giveaways. See below.

US GDP (00-09)US GDP (10-17)

President Bush was the first modern day president to never preside over 4% annual growth in GDP.

President Obama was the first modern day president to never preside over 3% annual growth in GDP.

For comparison sake, below is our robust post-war period of relatively shared prosperity.

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Admittedly, much of it was made possible because the rest of the developed industrialized world had been devastated and war-torn.

A regression and slowing of the post-war growth was inevitable, but the structure and soundness of the American economy going from a middle-out economy to what we have today was not. It was preventable.

President Trump, despite his boasts, will also fail to preside over 3% annual growth whether he serves one term or two. See below.

The Greater Recession
2021….just after the 2020 Presidential election, because of course it is.

The only thing that I would amend is the guarantee that 2018 will be as strong or stronger than 2017, because this forecast did not account for the effects of the tariffs, which have especially hit the areas where his strongest supporters reside.

Make no mistake — the fundamentals of this economy are not strong and have not been strong for decades unless you’re a billionaire or a comfortable member of the new professional class aristocracy.

So what is the story behind these numbers and why will this recession be even greater?

These five things I think will happen:

  1. The Dodd-Frank partial repeal (of small-to-mid-sized bank lending ceilings) will continue to spur new real estate, housing, and mortgages (and by extension, mortgage-backed securities). The job market and unemployment being low will work in tandem with this. This is a good thing right?
  2. No. It’s just more short-sighted and short-term thinking. It’s more of the same: socializing the risks and costs, privatizing the gains. Risky lending has now returned under the law. And all those riskier mortgages will be concentrated throughout even fewer big banks this time (because contrary to popular belief, some did die and were not bailed out during the 07-09 Great Recession, while others merged, and my underlying assumption here is that two of the big five banks being critics and skeptics of the Trump “boom” economy see what I’m seeing and will therefore be appropriately cautious and less over-leveraged, at least in theory).
  3. At some point between now and 3 years from now, because they can, the powers that be will repeal Obama-era student loan reforms, which will have a far greater effect over time than the final trigger to the crash. Student loan debt, unlike mortgage loans, is not dischargeable. The student loan bail out that this country and at least two-generational cohorts need will be a decade too late. So the mortgages will be what people decide to unload, because what choice is there? It’s a no-brainer for them. They wouldn’t dare repeal these reforms you say? Yeah…. we keep saying that about a lot of things. The MO of this administration has more or less been to repeal anything Obama did. These relatively obscure reforms in comparison they’ll eventually get around to. After all, just another chance to “stick it to the libs” (liberal arts degrees in this case).
  4. Just like in 2006, when the housing market was a bubble that few would say would burst into pain, others said would be fine, while the vast majority argued for a soft landing somewhere in the middle, economic optimism was too high (just like today), and jobs (but not wages) plentiful, unemployment superficially low. What happened then? In 2006 the Federal Reserve raised interest rates. In 2018, the Fed raised rates to 1.75 up from 1.5 and signal two more raises will be coming. This will effect flex-rate mortgages, not nearly as common as fixed-rate mortgages but common enough to trigger the underlying problem in-tandem with the fundamental unsoundness of the U.S. economy and fiscal health of the country. With all of the repeat conditions in place and confidence surging too high, we’ll be in for a repeat. History is one damn thing after another, and it often rhymes, like poetry and the Star Wars saga.
  5. If the GOP still has majorities and is led by people philosophically disinclined to do anything. President Trump, not a candidate, but THE president, and also an economic illiterate, surrounded by self-interest, kleptocrats, and professionally wrong economic advisors, will dispense of the ridiculous myth that those who have had business success know things about the overall economy and economics. If in office, like President Bush before him, President Trump will actually be the most likely to do something just because we’ll be reeling and perhaps finally, his perpetual lying will run up against the reality of physics and economics for even his most diehard supporters. He’ll need Democratic votes to do anything, and time will tell whether the fall of ’08 W. Bush and Democratic-led bipartisan bailout effort will commence. If the GOP holds both houses of Congress, which is very well possible if ’18 is a disappointing midterm for Dems, and Trump is re-elected, may be their response will be pure-Hooverville. Who did respond, but too little, too late. Combined with the longer term automation problems that neither party has a plan for, wages not rising fast enough, if at all, and a still ineffective opposition party (but a slowly improving and learning grassroots movement outside the party desperate for reform) — we’ll enter a deep and painful Great Recession. The Great(er) Recession of 2021–?? With all of these predictions, it goes without saying that I hope I’ll be wrong. Why am I so certain?

Human nature mostly. Think of what housing entails, think of the chain of established relationships from buyer to broker to seller. From lender to developer to manufacturing to construction. Everyone is an optimist in that chain, wanting to make something happen for both themselves and their clients 

Real estate agents. Lenders. Salespeople. The dream of home ownership. The collision of self-interest. The pursuit of happiness if you will. And if it is not self -interest, it is forced consumerism.

Think of the history of the post-industrial age. Titanic. WWI. Great Depression. WWII. Every time there was a chorus of wild-eyed optimists excited for the future, and every time they were professionally and horrifically wrong.

Think to our own time, after the Cold War had ended and the Soviet Union was breaking up, one of the finest and most famous political scientists and political economists of our time had announced our great triumph. Liberal democracy has triumphed as the final stage of human organization. We’ve reached the “end of history.”

Think of 2016. Clinton will definitely win.

All of them very serious people, all of them very disastrously and professionally wrong.

A good economy they will say, don’t be so negative, etc.

But this isn’t a good economy. It’s a fictional one. Sluggish growth for nearly two decades now. Instead of the Great Depression, think the original Great Depression–the Long Depression.

I point to a quote from Gandhi about seven things that will destroy us to back up my assertion that this is a fictional economy.

The top one — Wealth without work.

GOP politicians love to wax philosophic about work but they cannot see fit to agree to a tax code that treats wealth-based and passive income the same as labor income. If you work you are taxed more than if you don’t work in this country. The GOP doesn’t value work, they value wealth. Citizens United has created few incentives for elected officials to put the interests of workers ahead of the interests of organized wealth and money. Only a government in D.C. that challenges concentrated wealth and money can stem this tide at this moment in our history.

The truth is that we’ve been doing wealth without work for some time, and it’s that truth that has continued to erode at our democracy, and as we’re seeing this week — our rights.

7 Things That Will Destroy UsAnd this is why housing and real estate is the key, and a middle-out economy essential. It’s entirely possible, as some believe, that all U.S. growth the past few decades can be accounted for through real estate, which itself has contributed to and driven increasing economic inequality, as the rapid rise in real estate values have created obscene levels of wealth in some major cities, sending homelessness levels to a crisis point, as well as creating an affordable housing crisis along with it, especially in the tech-hubs, while creating “sacrifice zones” elsewhere. Real estate is a great investment throughout human history, the most reliable one. But there is an ocean of difference between that 1985 home purchased in NYC, LA, Seattle, or San Francisco and Detroit, St. Louis, etc.

Rural America has not faired much better than the sacrifice zones, with some small towns disappearing off the map entirely. Family farms being sacrificed to corporate farming. Wall Street winning out over the concerns of Main Street time and again.

This unsoundness to the American economy isn’t a weather pattern. It’s been in our choices, in our policies and budgets, in our media and culture, and was warned about on the horizon by President Jimmy Carter, a crisis of confidence that lingers with us today and has been exacerbated, a speech that many still deride as the “malaise” speech. But President Carter was right. I’m not here to tell you what you want to hear. You have President Reagan or President Clinton for that, and while they were smiling and making you feel better, their policies were setting the stage for the current era in which we live.

President Trump may similarly make some people feel better that America is back and can be great again. But once again, his policies have doubled-down on exactly what got us here, have set the stage for making things worse in the long run, and his lack of adherence to democratic norms and traditions, combined with a consistent need to drum up increased fear and hatred within his base, make the next economic downturn a potential catalyst for even worse and unthinkable events. But we can do better, and we can go another way. If we can only summon the courage to stop lying to ourselves.

Ultimately, like the election of Trump itself — the fault is not in our stars, but in ourselves. 

Agreeing Loudly Debuts New Feature that does a Think Piece on latest Trump Supporter Think Piece

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The Villages are America’s largest retirement community, and also one of its most Republican. This week, Politico published the 35,475th think-piece on Trump supporters, joining the New York Times and other outlets on a zealous pursuit of dedicating an op-ed or profile on each one of President Trump’s 62,985,134 supporters. This new Agreeing Loudly feature is a behind the scenes look at the latest think piece.
Evergreen Terrace, America —
Earlier this week we dispatched a field correspondent to get a behind the scenes look at the editorial development of the latest think piece dedicated to Trump/GOP supporters. This is an excerpt of what he/she found. 
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Author Michael Grunwald:
Have you glanced at that long think piece I sent you on Friday afternoon?
Editor:
I did. The advertisers and the other staff members have some concerns.
Grunwald:
Such as?
Editor:
Well…the first draft is something like eighteen thousand words. Most of the direct quotations consist of profanity mixed with racial slurs.
Grunwald:
They’re conveying plain-spoken views of regular voters.
Editor:
I get it. Present the unfiltered truth, ordinary Americans, strong convictions and all that, but advertisers are never going to accept something like this.
Grunwald:
You told me to write about the honest opinions of Trump voters.
Editor:
The clerical staff says that there are seventeen paragraphs in which your interview subjects either admit to or fantasize about committing hate crimes. What the fuck are we supposed to do with that?
Grunwald:
I’m fine with substantial changes. If we have to censor some of the more inappropriate, ultra-nutty stuff, so be it. As long as the overarching theme remains…
Editor:
Also, the risk management attorneys are asking for a separate meeting with you because based on your transcripts, you’re in possession of evidence that relates to dozens of felonies. You know that portion with the retired Marine and his girlfriend, where they brag about carrying pistols to fend off carjackers? Well, they’re wanted in three states for arson and attempted murder. The FBI says that they have a history of firebombing Mexican restaurants.
Grunwald:
So you’re saying that I should rewrite substantial portions?
Editor:
We’ll throw in some meaningless horse shit about demographics and economic anxiety. It’ll be fine.
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A visual representation of our think piece.

That’s all for now folks, take care of yourself out there. 

Democratic Leaders Concerned That Popular Ideas Might Take Over the Party

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Democratic leaders have chosen not to run on ideas and a platform more appealing to the general electorate, citing fears that they’d lose control of the party.

Washington, D.C. —

Fresh off the emboldening Democratic establishment victories in California and the likely one coming up in New York state, the two U.S. states with an outsized role in shaping the narrative of one of the two major political parties in the country, have decided not to run on ideas that would be politically popular to most of the country, Democratic, independent, and Republican alike.

Take tri-partisan popularity of policies like Medicare-for-All for instance, which enjoys broadly shared support in 42 of the 50 U.S. states. 

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Medicare has for years been one of the most popular programs in the country, expanding it to everyone as favored by Sen. Bernie Sanders (I-VT) has fallen on deaf ears for most of the Democratic establishment. Sen. Senators as you know, is largely seen as discredited for “not being a Democrat”(TM) or something… meanwhile, real Democrats like Sen. Joe Manchin (D-WV) are openly considering supporting President Trump in 2020. #HesNotEvenADemocrat

Meanwhile, the sterling economy has made the Democrats shift gears to focusing on restoring checks and balances to the government, and a laser-focus on the public corruption of the Trump administration. Not a bad strategy in theory, but two problems with that:

1. Conceding the economic argument to the Trump administration is a huge mistake, especially considering the fact that the economy is average-at-best, poor-for-the-many, and only good in a universe of diminished expectations and acceptance of national decline.

2.  The Democratic Party has its own problem with corruption too, especially in states like New York, where corruption has enjoyed a bipartisan consensus. New York’s status as a “blue state”, whatever that means, will contribute to undermining this as an electoral strategy. It certainly won’t persuade anyone, as many polls have backed up the fact that most Trump/GOP supporters don’t care about public corruption. And the Republican Party remains more behind this president than any party has been since World War II at the 500-day mark of a presidency, with the exception of President George W. Bush just after 9/11.

Also, this happened. In New Jersey, Lisa McCormick, a first-time candidate with no money, no endorsements, and no campaign appearances, captured 38 percent of the primary vote against Bob Menendez, a two-term U.S. senator who has raised more than $8 million and had the endorsement of every major Democrat in the state. Sen. Menendez was indicted on public corruption charges (which were dropped earlier this year) and recently was “severely admonished” by US Senate Select Committee on Ethics.

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Make no mistake, the Democratic Party is the only current and viable vessel out of this long and potentially permanent national nightmare. That being said, all of the problems frequently cited by this website, its podcast, commentary and articles are still present, and are still on display, arrogantly so even, by the party itself.

  1. An aversion to actual competitive primaries, especially against average or poor incumbents in safe Democratic states and districts. Why does this matter? Because it is through safer seats, that long term bench-building and party-building becomes easiest and controllable. The Democratic Party has long had an addiction to political dynasties, incumbency and careerism where none is warranted, and from being unwilling to have an actual conversation with its base about the direction of the party.
  2. A party that is increasingly dependent on the young to be viable, is led by the old. Indeed, the gerontocracy of the leaders in the Democratic Party has long been a problem, and its a problem that the Republican Party has taken advantage of, first through active recruitment of younger candidates. The few times the Democratic Party establishment has gotten behind younger candidates, those candidates have been poor avatars of the growing consensus of their generation (see: Jon Ossoff).
  3. The party is still awful at harnessing grassroots energy. The party was mostly adversarial and awkwardly silent during Occupy Wall Street, Black Lives Matter, and other movements, and while I’ve seen some improvement here, I’ve also seen a foolish tendency to come and take credit for grassroots victories. It’s highly embarrassing that state parties with next to zero social media following act like they’re the grassroots, while there is very real work going on. Simply put, the GOP let the Tea Party energy go through them, whether they wanted it or not, the Democrats often go out of their way to put up roadblocks to put out grassroots energy that ideally, could flow through them as a vessel. Make no mistake, if you’re waiting for change to come from the Democratic Party, we’ll be waiting forever. But that doesn’t mean change cannot be brought to it. And that change will happen faster if they get out of their own way.
  4. No new ideas nor desire to adopt popular ideas from progressives. While movement progressivism and the democracy movement have provided much in the way of pushing new ideas the past few years, the Democratic establishment has been slow to adapt any of them. I’ll give individual Democratic leaders like Senators Kamala Harris, Kristen Gillibrand, Cory Booker, and others credit for adopting popular positions in the past 18 months on health care for all and other issues, but overall — this adoption of new ideas is happening to slow. Notice that Harris, Gillibrand, and Booker are all relatively younger for a Democratic officeholder. It’ll probably be faster to continue to run viable primary challenges like the GOP did when they were in opposition. Until the party fears their base, they have no reason to adopt the change that we need and seek.
  5. They frustrate the small-d democratic process itself. In recent cycles, and in this cycle, despite strong grassroots developments around the country through groups like Our Revolution, Indivisible, etc., the Democratic establishment has continually frustrated the process by intervening before the voters have decided. Recently in New York state, DNC Chair Tom Perez intervened and endorsed Governor Andrew Cuomo for a third term. This story has been quite common this cycle. Cuomo has deep campaign coffers, support from the state establishment, has even helped pass a few progressive reforms, but he also has deliberately held up reform through the creation and allowance of the Independent Democratic Conference, which for years caucused with state Republicans and continued to do so the last few years. He also is backed considerably by big real estate interests who give unlimited sums to his campaign and continue to benefit through the LLC tax loophole. He also has shut down the investigatory board meant to crack down on public corruption in the politics of New York itself. Similar to New Jersey this cycle, back in 2014 he had a little-known and barely-funded challenger receive a surprising amount of support just by standing up — Zephyr Teachout. Teachout is a Fordham Law professor who literally wrote the book on public corruption (see: Corruption in America). Teachout ran for Congress last cycle and is running for NYS Attorney General in 2018 in the wake of Eric Schneiderman resigning in shame last month. At this point, the “very serious” and “very smart” people at the top leadership positions of the Democratic Party should strive to remain “actively and passionately neutral”, allowing the process to play out and the voters to decide. After all, if the establishment leadership was so good at what they do, they’d win more often.
  6. The question must be asked–does the Democratic Party even want to win? I say this because this is a time where left-leaning parties should be gaining steam considering there are Gilded Age-levels of economic inequality, and most Americans are one bad week away from being in poverty. Historically, and especially in modern times, the Republican Party has been the party of elites. The problem is, with but a few exceptions today, the Democratic Party has also become a party of elites. In a political system and political culture that is growing more and more distant from the common people, voting your pocket book may very well be the measly couple hundred bucks you receive from the Trump tax cuts, even though math and future attacks on Medicare and Social Security because of record budget deficits will say otherwise and say that decision was short-sighted. It’s an unsettling reality of our time, but voting with anger, fear, and frustration is going to give a slight advantage to those who hate stronger in an era where voter mobilization and active participation is fueled by hatred of the other side.
  7. In an era where the Republican Party has waged a war on facts, the tastes and sentiments of the Democratic Party seem ill-prepared to be an effective opposition party. It is a problem to be led in the Senate by a leader like Sen. Chuck Schumer, who voted against the Iran Deal. This undermines any effective opposition to that ill-considered move by Trump and co. This is similarly true on the issues related to the boomer bipartisan consensus. Whether it’s missile strikes against Syria, complete silence with few exceptions on Israeli snipers killing unarmed protesters who were at worst, throwing rocks, or repealing key provisions of Dodd-Frank (which will most likely lead to another Great Recession, the Greater Recession of 2021 we’ll say, that article and argument is to come at a later time).
  8. This is a terribly ineffective opposition party. They’re so bad that I almost wonder if they genuinely agree with the Republican Party on most of this agenda. Perhaps it is just the continuation of the boomer bipartisan consensus of forever war, tax giveaways to the rich, and unconcern about Gilded Age-levels of economic inequality. In the end, like Barzini before him, it was AL.com contributor Carson Starkey and his “should-be famous” refrain all along. Look at the Trump tax cut bill for instance. At the time of its passage, the bill had the support of 20 percent or fewer Americans, depending on the poll. At nearly this same time, DACA had the support of over 3/4th’s of the country. Yet the tax bill that continued the near-four decade long trend of wealth redistribution to the very top was pushed through, and DACA recipients owe their legal status in this country to judges, not to Democrats standing up for them. The brief time the Democrats stood tall and tough, shutting down the government over DACA, they caved in mere days. Throughout their time in opposition, the voters have clearly not punished the Republican Party for their numerous partisan government shutdowns, nor their consistent shunning of the democratic legitimacy of the only boomer President that was any good, President Barack Obama. Democrats in Congress could have done the same thing, if only to show the country and their base that they care. Maybe I’m being too tough on the Democrats here, maybe the timing of this message will not be well-received, but I cannot help but feel that any momentum toward a blue wave, despite the encouraging signs in special elections, despite the encouraging signs at the grassroots level, I have the creeping notion that it will be wasted. There is still a lot of time left, so consider it a warning. But if the election were held today — I do not believe the Democratic Party would pick up either the House or the Senate. The graphs below show a closing of the gap on the issues, on enthusiasm, and in the generic balloting (which Democrats have historically underperformed the general ballot polling anyway).

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It ain’t over ’til it’s over folks, but as of today I see little evidence that a #BlueWave will come. While I hope I’m wrong about these warnings, and I look forward to having very #actuallysmart people I respect say otherwise this weekend on the AL.com podcast (back from the dead), I wouldn’t be writing this if I didn’t think it was going to happen.

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To summarize and play the devil’s advocate, switching gears to an Against Trump campaign could end up being the right strategy because it a.) worked for the Republican Party these past eight years, and b.) President Trump is still very unpopular overall even after accounting for the uptick in his ratings. His personal approval lags behind his job approval, the opposite of President Obama (whose personal approval ratings typically were higher than his policies and job approval ratings). My worry is like the electoral college itself, where he is liked is strategically spread out throughout the country in a narrowly sufficient manner, the very manner which scored him and the GOP a surprise upset in the ’16 election.

And the greatest frustration of all won’t be a midterm disappointment, which I’m currently expecting, it’ll be the continued and predictable insistence from party leadership that it should keep driving the bus. Because at the end of the day, I do not think it is the willingness or unwillingness to compromise with their base or not that drives progressives crazy about the Democratic Party — it is their electoral track record.

Progressives of all stripes are not stubborn, at least not as stubborn as movement conservatives were from the days of Barry Goldwater to Mitt Romney (the last conservative Republican nominee, as it does a disservice to the word to consider Trump conservative, he’s personally and fundamentally an authoritarian nationalist to the extent you can pinpoint an ideology), but progressives do want to win and help bring this country back from decades of national decline in actual hard numbers, and decline in image. And to do that they need to have a legal vessel, a political party that can win elections and at least perform the basic tasks an opposition party is supposed to perform in a democracy falling into tyranny… and if it cannot, progressives need to stop compromising with a party leadership that doesn’t know how to win elections, and continue the long march toward taking over the Democratic Party the same way the Goldwater grassroots movement took over the Republican Party in the 1960’s. It is the best shot.

Final Note: In the many states where the national party, and most importantly (since most of the actual party organizing goes through state parties), the state parties, have “given up”, which are predominately red states — progressives have succeeded in more or less taking over the state party. And while there have been disappointments for progressives in most statewide races, that is to be expected. If you look down-ballot at the Congressional and state legislative seats, there is reason for optimism.

I said after the 2016 Election that this reform project would take six to eight years. I stand by that and there will be some growing pains along the way, but we’ll get there.