It’s the Depression, Stupid!

In the market-totalitarian United States, where TV has long since severed the public’s neural paths from so many dimensions of vital reality, history repeats itself and, tragically and farcically, nobody even notices.

Take the onset of the hitherto credit-averted Great Depression we are now experiencing. The facts are stunningly simple: At just about the time the corporate capitalist overclass began taking back the small popular gains embodied in the New Deal and the anemic “War on Poverty” (it was more like a skirmish, if that), credit cards made the transition from upper-class convenience to a major way of making ends meet for the masses. Soon thereafter, huge sums of capital began to accumulate on Wall Street, looking for some profitable place to go next. What money didn’t chase itself in circles or become fourth homes and private jets went back into increasingly sketchy loans, very often and increasingly against what was quaintly called “home equity.”

Predictably, at the beginning of the “home equity” lending cycle, there was both a major flow of cash into previously squeezed middle-class hands, and a corresponding price boom in suburban housing. For a time, for many commoners, it felt like a bonanza that would never end.

But the basic fact was and is that loans have to be either repaid from earnings or repudiated, and, from the beginning, the whole credit expansion was a blatant substitute for expanding earning power in the middle and working classes. Why pay the rubes when you can loan them the money? And what better distraction from the fast-eroding ways to make wages and salaries than a new credit card in the mail, or, even better, a new “line of credit” secured by an assuredly wondrous future?

This game seems over now, rather obviously.

And what are we hearing from the overclass at this fork in the road? More massively amnesiac, self-serving magical thinking, of course: In fact, what we’re already in the process of getting as a purported “solution” to the economic crisis is neither more nor less than the practical implementation of the right wing’s pet theory of what causes Great Depressions.

Ever since their masters started disassembling the New Deal, the right-wing economists (whose ideology, with the indispensable help of the Democratic Party, has long since swallowed almost all the liberals) have contended that a mere failure to take decisive action to boost Wall Street in 1929 was what caused the GD of the entire 1930s. Now, they are getting their chance to put that immensely silly but now-dominant hypothesis into real action.

The other (real) explanation of the last Great Depression, of course, was that the 1920s stock bubble was a symptom not a cause of the disease, which was excessive wealth polarity. From the time of the first public deregulation of corporate mergers (the 1880s) to the Roaring Twenties, the investing class had taken all it could get while buying into its own claim that having more money at the top is always a good thing for society and the world. From 1929 to Hitler’s conquest of France, that delusion proved its accuracy in unusually clear ways.

Sound like a familiar pattern?

I predict the forthcoming “market rescue” will produce the same results as last time: Wall Street may be temporarily quasi-stabilized, but to no lasting effect. This will be because, despite overclass myopia, the disease is deeper and wider than Wall Street. It has to do with the normal workings of what Noam Chomsky calls the unmentionable five-letter word: c-l-a-s-s. When the rich player has taken all the chips, and when another round of IOUs no longer holds credibility, poker games must end. Likewise, when the overclass has flogged and hogged its way through its last viable lending scheme, its own self-seeking behavior confronts it (and all of us) at last.

All in all, I think the evidence strongly suggests that the 2010s will be a lot like the 1930s all over again, but with way bigger stakes and far less room for dawdling and error.